Future of controversial Ineos project in port of Antwerp uncertain, construction refinery postponed

Petrochemicals manufacturer Ineos is temporarily suspending the construction of the PDH unit that would make up half of ‘Project One’, a billion-dollar project that envisaged the construction of two plastics factories in the port of Antwerp. The news was confirmed to MO* by Nathalie Meert, spokeswoman for the chemical company, owned by Brexiteer Jim Ratcliffe . The future of the project seems uncertain.

Petrochemicals giant Ineos is putting their plans for a PDH unit, a refinery producing propylene, on hold for the time being. The provisional cancellation means that half of the initial ‘Project One’ will not be realised. The construction of the ethane cracker is still planned to go ahead. Both plants convert shale gas into raw material for making plastics.

The reason given is the financial situation of the project. Partly due to the corona crisis, the petrochemical sector finds itself in dire straits. According to the same sources, there have already been layoffs in the team responsible for the PDH unit. At the end of December, Moody’s downgraded Ineos’ credit rating. One of the reasons for that downgrade was the negative macroeconomic outlook for the company.

The news is confirmed by Nathalie Meert, spokeswoman for Ineos. ‘This is merely a rephasing of the project. At the moment there is more demand for ethylene. We therefore choose to give priority to the ethane cracker,’ she says in a brief reaction.

No plant?

The question remains whether the PDH unit will ever be built at all. Rumour has it that a delay of a few years could result in the total cancellation of its construction. According to sources, the end of the entire project could even be in sight, including the ethane cracker: ‘If you look at the overall picture of the company, it would be absurd to install it at this point.’

Besides the financial aspect, the changing political context is at play.

Besides the financial aspect, the changing political context is at play. The European Union is working on stricter regulations within the framework of the European Green Deal. Moreover, in the years to come the port of Antwerp will pursue a policy of climate neutrality, and the port authority is aiming for complete climate neutrality by 2050. Also, the Flemish ‘Klimaatzaak’ (a lawsuit filed by tens of thousands of Belgian citizens against the Belgian government that aims at enforcing stricter environmental regulation) is due to start March 16^th. The lawsuit may have implications for environmental legislation in Belgium.

Whether or not the slimmed-down version of the project will be realised will probably depend on how investors react to this news. Will they withdraw from the project or not? Since 2016, Ineos could count on an investment of three billion euros. A lot of banks, including KBC and BNP Paribas, invested heavily in the project.

Controversial

In 2016, Ineos, the City of Antwerp and the Flemish government signed a cooperation agreement for the construction of the two plastic factories. These were to appear on the Antwerp horizon by 2025. From the outset, the project was met with criticism from environmental and civil society organisations.

‘This is a victory for us, but the fight against the ethane cracker that Ineos still wants to build continues.’

Greenpeace and Ineos Will Fall emphasized the enormous emissions that both refineries would produce. In addition, foreign shale gas would be used in the production process. Shale gas is a fossil fuel and its extraction is very polluting. In the process, water is injected into the ground at high force, a technique that consumes a lot of water and could lead to more and heavier earthquakes.

Action groups also fear that the ethylene and propylene produced would be used for disposable plastic.

Action group Ineos Will Fall responds satisfied: ‘This is a victory for us, but the fight against the ethane cracker that Ineos still wants to build continues. We will continue to fight for a port that does show vision and ambition.’ ClientEarth notes in a press release that ‘The news of the cancellation of this unit is a relief for anyone concerned about the plastics and climate crises, but it’s also overdue. The sheer breadth of the environmental implications of this project mean that it should have been a no-go from the start.’

Salami tactic

Another thorn in the side of the action groups was the ‘cutting up’ of the dossier. With this “salami tactic”, an application file is divided into several parts. A separate environmental impact report (MER) is submitted for each part. As a result, an overall picture of the true environmental effects of a dossier is missing.

Partly due to the cutting up of the dossier, Flemish environment minister Zuhal Demir (N-VA) approved an environmental permit at the end of October that allowed Ineos to cut 55 hectares of forest for the construction of the refineries.

Fourteen environmental organisations - including ClientEarth, Bond Beter Leefmilieu, Natuurpunt, Klimaatzaak, Grootouders voor het Klimaat, WWF België and Greenpeace - appealed the decision to the Council for Permit Disputes. The Council ruled in favour of the plaintiffs, suspending the environmental permit for the time being. The judge ruled that Ineos did not provide an overall picture of the environmental effects.