Communicator

Lindsey Refinery was placed into insolvency | Photo: Mike Seaman, shutterstock.com

30^th June 2025

Europe’s Industrial Backbone Shattered: Lindsey Refinery Collapse Signals Petrochemical Exodus

A wave of closures is decimating the landscape of Europe’s refining and petrochemical industry. The collapse of the UK’s Lindsey oil refinery—one of the country’s last major refining assets—has thrown 420 jobs into immediate jeopardy and sent shockwaves through the sector. This dramatic shutdown is only the latest in a series of high-profile exits that underscore the existential crisis facing European refining. Just weeks prior, Scotland’s Grangemouth refinery—after a century of operation—ceased crude processing, transitioning to an import terminal and marking the end of oil refining in the country. Meanwhile, SABIC’s decision to shutter its Olefins 6 steam cracker at Wilton, Teesside, after 46 years, has sent further tremors through the sector, with hundreds of jobs in jeopardy.

No Profits, No Future: Lindsey Refinery’s Struggles Under Prax Ownership

The Lindsey Oil Refinery’s descent into insolvency starkly illustrates the vulnerability of small-scale refineries in today’s fiercely competitive market. With a capacity of 113,000 barrels per day, Lindsey is one of the UK’s smallest remaining refineries, and it has struggled to compete against the economies of scale enjoyed by much larger, more modern facilities elsewhere. Persistent financial losses—totaling around £75 million since Prax acquired the site in 2021—ultimately forced the refinery’s owner to seek administration, putting 420 jobs at risk and threatening to deepen the UK’s reliance on imported fuels. The government, left with little time to intervene, has called for an immediate inquiry into the circumstances behind the collapse, underscoring the systemic challenges faced by smaller refineries in an era of global oversupply and razor-thin margins.

The Rationalization Imperative

These closures are not isolated incidents but part of a broader rationalization of Europe’s olefins and refining capacity. The continent’s steam crackers—once the backbone of its chemical industry—are under siege from a perfect storm: high energy and feedstock costs, weak demand, and a global supply glut exacerbated by massive capacity expansions in China. Naphtha, the main feedstock for European crackers, is costly and less efficient compared to ethane, which dominates in the US and Middle East. Naphtha crackers typically achieve only about 50% olefin yield (ethylene, propylene and butenes), while ethane crackers can reach 80% of ethylene alone—a stark difference in a margin-driven business.

Feedstock-dependent Cracking Yields (in weight-%)

The numbers tell the story. Since April 2024, six European crackers have been closed or marked for closure, including ExxonMobil’s Notre Dame de Gravenchon (France), SABIC’s Geleen (Netherlands), and now Wilton (UK). TotalEnergies is set to shut its oldest Antwerp cracker by 2027, citing a “significant surplus of ethylene expected in Europe”. The cumulative ethylene capacity lost from these moves reaches 4.35 million metric tonnes per year over the 2020 to 2027 time period, representing 17.2% of the 25.3 million metric tonnes installed ethylene capacity according to the Petrochemicals Europe database. Meanwhile, there is only one single project scheduled for start-up in 2026, INEO's Project ONE ethane cracker in Antwerp, Belgium, which will add 2 million tonnes of olefins (ethylene and propylene) annually.

Competitive Pressures and Strategic Failures

Europe’s chemical industry is caught in a vice. On one side, it faces relentless competition from regions with lower feedstock and energy costs. On the other, it suffers from stagnant demand at home, with key downstream sectors like automotive in decline and regulatory changes further eroding traditional markets for naphtha cracker byproducts. The result: margins for naphtha crackers have turned weak or negative, with spreads hovering around $200/ton—a level insufficient to justify reinvestment.

Historical and forward European steam cracker margins (US $/metric tonne) | Sparta, 29 August 2024

While Asian and Middle Eastern players have invested in feedstock flexibility and integration—the former converting naphtha crackers to ethane, the latter building up mega scale ethane cracking capacities—Europe has lagged. The region’s fragmented, aging asset base is often poorly integrated, with many sites requiring major capital just to meet new environmental standards. Strategic reviews and divestments are accelerating, with companies like SABIC openly contemplating a full or partial exit from the European market.

Policy Response and the Road Ahead

The European Commission acknowledges the urgency. High-level dialogues are underway to address the competitiveness crisis, with a focus on modernization, simplification, and financing rather than new regulation. Yet, the challenge is formidable. Many of Europe’s steam crackers are over 40 years old—environmentally inefficient and under-performing by global standards. Without bold action, the risk is not just further closures, but the hollowing out of the region’s industrial base and a growing reliance on imports for both fuels and chemicals.

Portfolio Planning PLUS Perspective

For market participants, the implications are clear:

• Asset rationalization will continue: More closures are likely as companies seek to stem losses and reallocate capital.
• Integration and feedstock flexibility are critical: Survivors will be those who can pivot to lower-cost, more sustainable operations—mirroring the successes seen in Asia and the Middle East.
• Import dependence will rise: Europe is expected to import 15–20% of its ethylene needs in the coming years, reversing decades of self-sufficiency.
• Workforce and community impacts are severe: Each closure brings not just economic loss, but social and political fallout, as seen in Grangemouth and Teesside.

Outlook

The European chemical industry stands at a crossroads. Without decisive investment, integration, and policy support, the current wave of closures may prove to be only the beginning of a deeper transformation—one that will redefine Europe’s place in the global petrochemical value chain for years to come.

#prax #sabic #totalenergies #exxonmobil #lyondellbasell #ineos #repsol #versalis #refining #steamcracker #feedstock

Wilton International, Teeside, Aerial View

SABIC's Teesside Closure: A Strategic Retreat Amid Europe's Industrial Decline

Saudi Basic Industries Corporation (SABIC) has confirmed the permanent shutdown of its Olefins 6 ethylene cracker at Wilton International, Teesside, ending 46 years of operations and placing approximately 300 jobs at risk. The decision, communicated to employees on June 25, 2025, follows a months-long pause on a £200 million conversion project to shift the plant to gas feedstocks. This move underscores a calculated corporate realignment driven by structural economic pressures rather than isolated financial struggles.

Vetted Motives: Beyond Profitability

• Energy Cost Crisis — SABIC’s closure directly results from Europe’s unsustainable energy economics. UK natural gas prices remain 3–5 times higher than U.S. and Middle Eastern benchmarks, eroding the plant’s competitiveness. Internal sources cited Britain’s "crippling energy prices" as a primary factor, compounded by insufficient government support for energy-intensive industries. The paused conversion—intended to modernize operations—became economically unviable amid these conditions.
• Policy and Regulatory Pressures — The UK’s carbon taxation regime added approximately £50 per ton of CO₂ emissions, disproportionately impacting cracker operations. Tees Valley Mayor Ben Houchen condemned the closure as "another symptom of national policy failure," noting the chemicals sector’s absence from the government’s newly unveiled Industrial Strategy. This regulatory burden, coupled with perceived governmental indifference, accelerated SABIC’s exit calculus.
• Global Market Realignment — SABIC’s retreat reflects a deliberate pivot away from high-cost regions. CEO Abdulrahman al-Fageeh explicitly linked the Teesside closure to a broader "rationalization of [SABIC’s] footprint in Europe," including options for "partial or full exit". The company recently shuttered its Geleen cracker in the Netherlands and is marketing €3 billion in European assets through Lazard and Goldman Sachs. These moves prioritize investment in integrated hubs in Saudi Arabia, Asia, and the U.S., where feedstock and energy advantages bolster margins.

Profitability Paradox and Strategic Reality

While Unite union criticized SABIC’s "disgraceful" closure amid £300 million in 2024 net profits, regional financial data reveals a stark contrast:

• SABIC’s European operations bled SAR 1.89 billion ($504 million) in Q4 2024 alone.
• Profits derived overwhelmingly from Middle Eastern and Asian assets, not European facilities.
• The Teesside plant—idle since 2020—represented stranded capital in a region where ethylene overcapacity and import competition suppressed margins.

Industry Implications

The shutdown intensifies Europe’s ethylene deficit, forcing derivative units like SABIC’s adjacent System 18 LDPE plant to rely on imported feedstocks. It also signals sector-wide vulnerability: BASF, Dow, and LyondellBasell face similar portfolio reviews amid what SABIC termed "sustained pressure on capacity utilization rates". Without intervention on energy costs and carbon leakage protections, Europe risks losing 20–30% of its ethylene capacity by 2030.

Stakeholder Responses

• Unite Union: Demanded government intervention, noting limited alternative employment for skilled workers.
• Tees Valley Mayor Ben Houchen: Urged "urgent intervention" to protect industrial jobs and supply chains.
• UK Government: Faced criticism for excluding chemicals from its Industrial Strategy days before the closure.

Conclusion

SABIC’s Teesside exit is not an anomaly but a bellwether for European heavy industry. The shuttered cracker epitomizes a structural shift: capital is fleeing high-cost, policy-constrained regions for competitive hubs. As SABIC’s al-Fageeh asserted, this closure aligns with "strategic portfolio optimization"—a euphemism for Europe’s industrial decline. Without coherent energy and industrial policies, such retreats will accelerate, eroding the continent’s manufacturing base irreversibly.

#sabic #wilton #plantclosure #teeside #europeanexit

The Berre petrochemical plant is one of the sites involved in exclusive sales negotiations between LyondellBasell and Aequita | PHOTO: Frédéric SPEICH, La Provence

LyondellBasell’s (LYB) agreement to divest four major European production sites to AEQUITA marks a pivotal moment not only for the company but for the continent’s entire petrochemical sector. The transaction, encompassing plants in France (Berre), Germany (Münchsmünster), the UK (Carrington), and Spain (Tarragona), is emblematic of a broader industry shift as producers grapple with persistent overcapacity, high costs, and the need for structural transformation.



LyondellBasell Transaction Footprint | Jun 5, 2025 | LyondellBasell Investors Presentation

Strategic Rationale: From Rationalization to Refocus

LYB’s decision to sell these assets is rooted in a deliberate strategy to sharpen its operational focus and enhance profitability. The divested sites, which together account for roughly 1.4 million tonnes per year of polyolefins and olefins output, have delivered only modest returns while consuming significant capital—averaging €110 million in annual capex from 2020 to 2024. By transferring these facilities to AEQUITA, LYB expects to reduce its fixed costs by approximately €400 million per year and reallocate capital toward its most competitive and sustainable European operations.

Notably, this move is not an isolated event. LYB’s review initially spanned six sites, including Brindisi (Italy)—where one polypropylene plant has already been shuttered—and Maasvlakte (Netherlands), a joint venture (with Covestro) asset not included in the AEQUITA deal. This highlights the depth of LYB’s strategic review and underscores the scale of rationalization underway across the region.

Industry Context: A Wave of Closures and Consolidation

LYB’s asset sale is part of a much larger trend. European petrochemical producers are facing unprecedented headwinds: high energy costs, aging infrastructure, tightening environmental regulations, and lackluster demand. Other industry leaders, such as ExxonMobil, Sabic, and Indorama Ventures, have also closed or downsized European operations in the past year. Ultimately, up to half of the continent’s ethylene crackers could ultimately face closure, as the economics of small, old plants become increasingly untenable.

This rationalization wave is not simply a response to cyclical weakness but a recognition of structural change. Freight disruptions and temporary supply shocks have only delayed the inevitable need for consolidation and transformation.


LyondellBasell' Assets for Sale | Jun 5, 2025 | LyondellBasell Investors Presentation

Deal Structure and Financial Terms

The transaction with AEQUITA is structured to enable a smooth transition:

• LYB will contribute €265 million (of a €275 million carve-out support fund) to facilitate the separation, with AEQUITA providing €10 million.
• LYB stands to receive up to €100 million in earnouts over three years.
• AEQUITA will assume approximately €150 million in pension and employee liabilities, as well as all environmental obligations.
• The deal is expected to close in the first half of 2026, subject to regulatory and works council approvals.

Importantly, LYB’s exit from these sites will also spare it from the need to invest hundreds of millions in decarbonization upgrades, particularly at Berre and Münchsmünster, where meeting 2030 emissions targets would have required major capital outlays.

LYB’s European Commitment: Core Sites and Circular Ambitions

Despite the high-profile asset sale, LYB has made clear that Europe remains a core region. The company’s retained portfolio includes technologically advanced and economically advantaged sites in Ferrara, Frankfurt, Ludwigshafen, and Rotterdam, as well as integrated supply hubs in Cologne and specialty operations in APS. These facilities are positioned to support LYB’s ambitions in circular and low-carbon solutions, including advanced recycling (MoReTec) and the CirculenRecover product line.

LYB’s future European footprint will be more focused, with a higher share of capacity in cost-advantaged regions (U.S. and Middle East), rising from 61% to 68% post-transaction. The company is also stepping up investment in recycling and circular economy initiatives at its core sites, aiming to deliver 2 million tonnes per year of recycled and renewable polymers by 2030.

Market Implications and Competitive Dynamics

LYB’s withdrawal from these European assets will reshape the regional supply landscape, opening opportunities for Middle Eastern and Asian exporters to increase their market share. The move also contrasts with the strategies of some competitors, such as SABIC, which is expanding its footprint in Asia. For LYB, the divestment enables a sharper focus on direct customers, brand owners, and high-growth segments, while freeing up resources for innovation and portfolio upgrades.

Berre Petrochemical Cluster Process Flow Diagram | ppPLUS Interactive Visualization Tool

Outlook: More Closures Ahead

The European petrochemical sector is entering a “new normal” characterized by ongoing rationalization. With many crackers and polymer plants facing existential threats due to age, size, and economics, further closures are likely. LYB’s asset sale could be a bellwether for additional portfolio actions across the industry.

How ppPLUS Can Help

For investors and stakeholders evaluating LyondellBasell’s divested assets, Portfolio Planning PLUS (ppPLUS) offers tailored economic modelling capabilities to assess risks, opportunities, and transaction value. ppPLUS specializes in developing site-specific models that integrate:

Asset configurations: Detailed analysis of production units, technologies (e.g., Steam Crackers at Berre and Münchmünster, Novolen Gas-Phase PP at Tarragona, Hostalen ACP HDPE at Münchsmünster, Lupotech T LDPE and Spheripol Bulk-Slurry PP at Berre), and feedstock flexibility.
Capacity utilization: Scenario-based projections accounting for market demand, regulatory constraints, and operational synergies.
Financial and operational metrics: Capex/opex forecasting, decarbonization cost avoidance, and liability assumptions (e.g., pensions, environmental obligations).

Using ppPLUS’s interactive platform, users can:

• Generate gross margin models for individual sites or combined portfolios.
• Simulate the impact of energy price volatility, carbon pricing, and feedstock availability.
• Benchmark asset performance against industry standards and regional competitors.

ppPLUS’s tools align with global best practices in economic modelling, including compliance with frameworks like the UK’s TAG M5.3 supplementary economic modelling guidelines for rigorous validation and scenario testing.

Explore ppPLUS’s asset-specific insights:

• Berre, France
• Münchsmünster, Germany
• Carrington, UK
• Tarragona, Spain

Contact ppPLUS to leverage its expertise in petrochemical asset valuation, strategic due diligence, and regulatory risk assessment for informed decision-making in this transformative transaction.

#portfolioplanningplus #ppplus #transactions #divestment #marginanalysis #economicmodelling #capacityutilization #opex #capex #lyondellbasell #sabic #indorama #ineos #exxonmobil #aequita #aramco

Sabic European Head Office in Sittard, The Netherlands

Sabic, the Saudi chemicals giant majority-owned by Aramco, is preparing to exit its European petrochemicals business—a move that underscores the mounting pressures facing the region’s manufacturing sector. The company’s plants and operations, spanning Germany, Spain, and the UK, are now up for sale, with investment banks Lazard and Goldman Sachs overseeing the process. These assets, which generate billions in annual sales, are among the largest of their kind in Europe.

Why Is Sabic Leaving Europe?

Sabic’s planned departure is not simply a business reshuffle but a reflection of deep-rooted challenges in Europe’s chemicals industry. Over the past several years, European producers have been squeezed by a combination of macroeconomic headwinds, persistent overcapacity, and intensifying global competition. The sector has faced years of oversupply and falling prices, with demand for petrochemicals closely tied to sluggish GDP growth. Sabic itself recently cut its 2025 GDP forecast, citing weaker prospects for the industry as a whole.

The economic backdrop is further complicated by Europe’s high energy prices and strict environmental regulations. European producers pay significantly more for natural gas than their US counterparts, and the cost of emitting carbon dioxide continues to rise under the EU’s ambitious climate policies. While American and Middle Eastern producers benefit from cheaper feedstocks and less stringent emissions rules, European plants—many of them older and reliant on naphtha—struggle to compete. The result is a cost gap of up to $300 per tonne for key products like ethylene and propylene, putting relentless pressure on margins.

Industry Consolidation and Rationalization

These structural disadvantages have triggered a wave of rationalization across the continent. Sabic is not alone: ExxonMobil, Dow, and other multinationals are also closing or idling European assets, as high costs and weak demand make it difficult to justify continued investment in aging facilities. In 2024 alone, nearly 1 million tonnes of ethylene capacity is being permanently phased out, with more closures likely as the industry adapts to the “new normal” of lower profitability and higher sustainability standards.

The European Union’s push for emissions reductions-targeting at least a 55% cut from 1990 levels by 2030-adds another layer of complexity. Modernizing old plants to meet these goals is often more expensive than closing them, and the introduction of mechanisms like the carbon border adjustment tax could further deter outside investment.

Who Might Buy Sabic’s Assets?

With Sabic’s portfolio now on the market, potential buyers are weighing both risks and opportunities. European rivals such as BASF and INEOS may see value in expanding their networks, while Middle Eastern energy firms could be interested but wary of Europe’s carbon costs. Private equity investors, particularly those focused on green technology, are also watching closely, drawn by the chance to modernize facilities and tap into EU subsidies for hydrogen and recycling projects.

Global Shifts and the Road Ahead

Sabic’s strategic pivot comes as the global chemicals market is being reshaped by geopolitics and shifting trade flows. Ongoing trade tensions between the US and China, along with the prospect of increased supply from Iran, are pushing more business toward the Middle East and Asia, further eroding Europe’s traditional advantages. Meanwhile, Sabic and Aramco are doubling down on investments in high-growth Asian markets, including a $6.4 billion petrochemical complex in China, betting on robust demand for plastics and chemicals in the region.

#sabic #aramco #ineos #basf #dow #exxonmobil #recycling #carbontax

Saudi Arabia, 27 Feb 2025 - Saudi International Petrochemical Company (Sipchem) and global chemical giant LyondellBasell have announced a significant partnership to explore the development of a world-scale mixed-feed cracker in Saudi Arabia, bolstered by their successful securing of feedstock allocation from the Saudi government.

The two companies have signed a memorandum of understanding (MoU) to conduct a joint feasibility study for the proposed facility, which would utilize both ethane and refinery off-gases as feedstock. This mixed-feed approach offers greater flexibility in raw material sourcing while potentially improving the economics of the operation.

The proposed cracker would be integrated with downstream units to produce a range of high-value petrochemical products, including polyethylene, polypropylene, and various specialty chemicals. Industry analysts estimate the total investment could exceed $5 billion, though the companies have not confirmed specific figures pending the feasibility study's completion.

For LyondellBasell, the partnership represents a strategic move to expand its presence in the Middle East, a region that offers competitive feedstock advantages and growing domestic markets. The company has been actively restructuring its global portfolio, seeking opportunities in regions with favorable economics while potentially divesting from higher-cost locations.

The Saudi government has strongly supported the development of domestic petrochemical capacity through initiatives like Vision 2030, which aims to reduce the country's dependence on crude oil exports by developing downstream industries, aligning with national priorities to capture more value from the country's natural resources.

If the feasibility study yields positive results, construction could begin as early as 2026, with production potentially starting by 2029. The facility would likely be located in Jubail Industrial City, where Sipchem already operates several petrochemical plants and where existing infrastructure could support the new development.

The project faces competition from similar large-scale petrochemical developments in the region, including those being pursued by Saudi Aramco and SABIC. However, industry experts believe growing global demand for petrochemical products, particularly in emerging Asian markets, provides room for multiple new facilities.

The announcement comes as part of a broader wave of petrochemical investments in Saudi Arabia and the wider Gulf region, as producers seek to capitalize on competitive feedstock costs while meeting growing global demand for plastics and other petrochemical derivatives.

#aramco #sabic #sipchem #lyondellbasell #steamcracker #ethane #rog #polyethylene #polypropylene #saudirabia

#polycarbonate #tianjin #sabic #sinopec

Release time: 2023-09-15 15:21:50 Source: Saudi Arabia News (Reprinted by Business Department 3)

Saudi Basic Industries Corporation (SABIC, Riyadh, Saudi Arabia) and China Petrochemical Corporation (Sinopec) announced the commercial operation of a new polycarbonate (PC) plant built by the SSTPC joint venture. SSTPC is jointly funded by both parties in a 50:50 ratio.

Founded in 2009, Sinopec (Tianjin) Petrochemical is a large petrochemical company with nine world-class chemical, polyethylene (PE) and polypropylene (PP) production plants. The new polycarbonate plant is designed to produce 260,000 tons per year and is an important part of Saudi Basic Industries Corporation's polycarbonate growth strategy in China, which will promote cooperation with international and local customers.


#sabic #aramco #saudiarabia #china #sinopec #tianjin #petrochemical #binhai #polycarbonate #sstpc

Mass Balance of SSTPC (Sinopec Sabic Petrochemical) has been initialized.

#sabic #sinopec #jointventure #massbalance #tianjin #china

#sinopec #sabic #jointventure #petrochemicals #china #tianjin

LDPE production capacity with adjoined technology added to Geelen site in 🇳🇱 The Netherlands.

#sabic #ctr #ldpe #highpressure #tubularreactor #geelen

Petlin has been created and its LDPE plant has been added.

#ldpe #sabic #highpressure #tubularreactor

LDPE plant based on CTR LDPE Technology from SABIC and its 300,000 tpa capacity have been added to site.

#ldpe #highpressure #sabic #tubularreactor

Subsidary of Singapore JV-Holding between #Sabic and #SK , producing Polyolefine.

Company profile

From SABIC's 2022 Annual Report:

SABIC SK Nexlene Company will expand the capacity of its Ulsan plant in South Korea to use its #Nexlene ™ technology for the production of advanced material solutions in its joint venture with SK Geo Centric. The plant will support the production of SABIC’s broad portfolio of COHERE ™ metallocene polyolefin plastomers (POP), SUPEER ™ metallocene linear low density polyethylenes (mLLDPE) and FORTIFY ™ polyolefin elastomers (POE)

subsidary of #sabic and #sk , producing Polyolefine in Korea