INEOS Olefins & Polumers UK has confirmed that it has received notification from Chief Secretary to the Treasury, Rt Hon. Danny Alexander MP that its application for an infrastructure loan guarantee has been successful.
This confirmation now allows INEOS to raise the funds necessary to invest in a new terminal import, to store and process ethane from shale gas at its site in Grangemouth, Scotland, as North Sea supplies dwindle. The project protects thousands of jobs in Scotland and across the UK.
Jim Ratcliffe, INEOS Chairmain said:
“Without doubt, this is one of the most important projects of recent times in Scotland, with implications to be felt right across the UK, not only for employment but also for manufacturing in general.
“Our ability to import US shale gas underpins the future of manufacturing at Grangemouth and across many businesses in Scotland. It is a vital step towards preserving the long term future of the Grangemouth site and those businesses that depend upon its continued presence in Scotland.”
INEOS AG has invested more than £300m at its Grangemouth site as part of a long term survival plan necessary for the site to manufacture petrochemicals beyond 2017. The loan guarantee from the UK Government now enables it to raise financing on £230m specifically to cover the import facility and storage tank to be built at the site.
“Over £1bn of infrastructure projects have now been brought forward as a result of the UK guarantees scheme and £36bn worth of projects are pre qualified.
“Our action is creating the right conditions for more investment in our infrastructure, helping to build a stronger economy and a fairer society across the country. The Grangemouth guarantee is fantastic news for Scotland’s economic future, and for the UK’s energy security.”
This is major step forward that ensures the long-term future of petrochemical manufacture at Grangemouth. The ethane tank will be the largest in Europe and is central to the site’s plans to import shale gas from the USA. By 2016 Grangemouth will be a shale gas-based facility, essential if it is to compete in world markets beyond 2017.
Gerry Hepburn, CFO, O&P UK says:
“The news that the UK Government is supporting our plans to build an ethane import and storage facility at Grangemouth with a loan guarantee is a critical element to ensure the long term future of the site. We will use the loan guarantee to raise funds through a public bond issue.
“The proceeds of the bond will be used to fund the ethane tank project at Grangemouth. It will be very rewarding to see the renewal of the site starting to take shape as we begin construction work.”
INEOS O&P UK has also finalised contract agreements with specialist engineering company TGE Gas Engineering GmbH for the construction of what will be the largest ethane storage tank in Europe.
TGE Managing Director, Werner Schlott said:
“We are very pleased to have been awarded the contract to build the ethane storage tank for INEOS O&P UK at their site in Grangemouth. As a company we have extensive expertise and knowledge of tank construction and relish the opportunity to bring this to Scotland. We look forward to working with the project team at Grangemouth and to delivering the ethane storage tank.”
Harry Deans, CEO, Olefins & Polymers UK says:
“We are delighted to confirm we have finalised a contract with TGE for them to build the ethane storage tank. The construction of the storage tank is complex and needs specialist knowledge, but in TGE, we know we are working with a company that are truly leaders in their field.”
Pictured is Chief Secretary to the Treasury, Rt Hon. Danny Alexander MP