BP moves to twin-track strategy for petrochemicals

30-Mar-2004

BP today said that it is moving to a twin-track strategy and management approach for its petrochemicals segment. BP will now approach aromatics and acetyls differently from olefins and derivatives (O&D). BP outlined key differences in the following areas: Investment - organic capital expenditure will reduce from around $1bn per annum between 2000 and 2003 to about $750m from 2006. Discretionary spend will be focused on the 'advantaged' PTA, paraxylene and acetyls products with a bias to the Asia markets. The exceptions will be the completion of the SECCO ethylene cracker development in China and the ongoing ethylene capacity extension at Chocolate Bayou, Texas. Portfolio - the company will continue to look at all options for performance improvements in its O&D business, and assets which BP believes have a more natural fit with other industry players will be offered for sale. BP therefore announced today that it intends to sell its Fabrics and Fibers division, as well as its specialty business manufacturing and marketing linear alpha olefins and poly alpha olefins (LAO/PAO). Performance improvements - the company's priorities will be safe operations and improvements in cash returns across all businesses. It will look for efficiencies from simplification, optimisation of its operations, reducing complexity in its product grades and offers, and will look for cost savings through further attention on fixed and variable costs. The pressure on returns is particularly strong in the O&D business. Speaking at BP's annual strategy meeting for the financial community in London today, Iain Conn, Chief Executive, Petrochemicals, said: "These two management approaches recognise the differing strategic and performance agendas for the two parts of our portfolio." A twin-track approach reflects growing demand in China and BP's existing strong position in PTA and acetyls, compared to the more fragmented nature and lower growth in the European marketplace where O&D dominates the company's portfolio. Conn characterised the aromatics and natural gas value chains as 'advantaged', based on the combination of global leadership positions in PX, PTA and Acetyls combined with distinctive technologies in each product. He pointed out that the remainder of BP's petrochemicals portfolio, Olefins and Derivatives, has enjoyed significant investment in recent years and performs well in its sector, but nonetheless needs to improve its performance relative to the rest of the BP Group.

https://www.chemeurope.com/en/news/36406/bp-moves-to-twin-track-strategy-for-petrochemicals.html