Austria’s OMV Investing $1.1 Billion as Bavarian Polys Pipeline Links to Northern Europe

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Researched by Industrialinfo.com (Sugar Land, Texas). The $190 million Ethylene pipeline Sud (EPS) is a key element in the plans of OMV, Central Europe’s leading oil and gas group, to make investments of $1.1 billion by 2010 to strengthen its position as a supplier of petroleum products and petrochemicals. The 360-kilometer EPS will provide a connection between the South East Bavarian chemical triangle and the major North West European ethylene network at Ludwigshafen. The state of Bavaria is investing about $57 million into the project and OMV (DE:874341) (Vienna, Austria) and its subsidiary Borealis (Copenhagen, Denmark) will bear 33% of the investment not provided by the state. The EPS is seen as a strategic plus for OMV’s complex at Burghausen and by providing a connection to the main European pipeline secures the long-term competitive capacity of the chemical and petrochemical industry in Bavaria. The new pipeline will have a 200,000 tons per annum (tpa) ethylene capacity in the first phase, which will be upped to 400,000 tpa in the final stage.

Approximately $812 million of OMV’s total planned investment will go into the refinery complex at Burghausen. Production capacity for ethylene will be expanded by 110,000 tons to 450,000 tons per annum and propylene production will be boosted by 315,000 tons to a total output capacity of 560,000 tpa. The expansions will be implemented with the construction of a new metathesis plant, by enlarging the ethylene plant and by the construction of a major cracking furnace. The capacity will allow OMV to supply the plastic producer Borealis at Burghausen with 100% of its propylene requirements.

Borealis will be expanding production concurrently with OMV’s petrochemical boost and will invest $254 million in a 330,000 tpa polypropylene plant. Borealis will use its own Borstar technology in constructing the state-of-the-art plant capacity. The expanded plant will raise capacities at Burghausen from 415,000 tons to 745,000 tpa of polyolefin. By 2010, Burghausen will be the seventh largest polyolefin and third largest polypropylene site in Europe. OMV will strengthen its value chain to Borealis and secure its position as the major monomer supplier to Borealis.

In a previous $508 million investment OMV and Borealis extended petrochemical and polyolefin capacities at the company’s Schaech site near Vienna. This investment plus the current schedule will strengthen Borealis’ position in the European plastics market to No. 2.

The BAYERNOIL refinery network will have a total investment of $890 million from all participants in infrastructure, plant improvement and efficiency enhancement. As a 45% stakeholder in BAYERNOIL, OMV will contribute $400 million of the total. The long-term trend towards diesel products and jet fuel will be directions followed by the restructured BAYERNOIL. OMV holds 43% of Bavaria’s refinery capacity and is the most important supplier of petroleum products

OMKV will invest $230 million in its gas station network through 2010 and with output from a new bitumen plant in Grossmehring near Ingolstadt the company will provide for the strong demand for special bitumen for road construction.

OMV is Austria’s largest listed company. In 2005, group sales were $19.8 billion with 5,226 employees and a market capitalization of $16.5 billion.

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