INEOS Secures Loan to Save $3.7 Billion Cracker Project

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--U.K. chemical giant INEOS Limited (London, England) has secured a bridging loan of 400 million euro (US$424 million) to help save its troubled 3.5 billion-euro (US$3.7 billion) low-carbon ethane cracker project in Antwerp, Belgium.

The loan is needed to cover the costs of delays to Project ONE, billed as one of Europe's largest and "greenest" petrochemical projects. A 250 million-euro (US$265 million) guarantee by the Flemish government was needed to facilitate INEOS securing the loan from banks. Project ONE's environmental permit was revoked in July by a local court, following submissions from environmental groups and nearby regions in both Belgium and the Netherlands. The decision centered around nitrogen emissions from the project and the impact on local nature habitats. It said that the Flemish government did not take the emissions fully into account when granting the permit. A statement read: "Because the permit has been canceled, INEOS Olefins Belgium no longer has permission to carry out the works for the ethane cracker. The Government of Flanders has six months to decide again on the license application."

INEOS is conducting more in-depth research into the impact of nitrogen emissions on nearby nature reserves in the hope of securing a new permit. Anti-project groups are mounting legal challenges to the government's loan guarantee in the hope of finally derailing the project. Speaking to the Antwerp Gazette, Nathalie Meert, INEOS communications manager, explained: "It's like this: since our permit for Project One was revoked, we have had liquidity problems. We need about 100 million euros every month. This is because despite the termination of our project, we are still contractually obliged to spend a total of at least three billion euros on Project One. We cannot avoid that. But because the banks have stopped our credit due to the withdrawal of the permit, we do not have that money. The banks are now willing to give us a bridging loan of 400 million euros. But only if the Flemish government acts as guarantor. That is what the discussion is about now. We say that this guarantee is 'urgent'. Not that it has to be there 'in a few days'."

Project ONE is the largest potential investment in the European chemical sector for a generation and, according to INEOS, the new cracker "will have the lowest carbon footprint of all European crackers, five times better than the worst in Europe and two times better than the best." With an original commissioning date of 2026, it will be capable of producing up to 1.45 million tonnes of ethylene per year. Ethylene is one of the most widely used basic chemicals in the world, spanning medical applications, lightweight car and wind turbine components, water and gas pipes, food packaging and smartphones, among others. It will cover an area of 75,000 square meters, on a massive site the equivalent of 128 football fields. Construction will require "four Eiffel Towers of steel, 2,000 kilometers (km) of piping and around 8 million working hours." It will also feature storage tanks and utilities, workshops, warehouses, an administrative campus with offices, restaurant and fitness room.

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