Eni to shutter plants in Italy

The downsizing of Europe’s petrochemical sector continues, this time in Italy, where the energy firm Eni plans to shutter two ethylene crackers—in Brindisi and Priolo Gargallo—as part of an overhaul of its struggling Versalis chemical business.

With the move, the Italian firm joins a growing list of companies closing European olefin and polyolefin facilities that are older, are smaller, and have higher operating costs than newer facilities built in the US, China, and the Middle East. ExxonMobil and Sabic both announced similar closures earlier this year. LyondellBasell Industries is reviewing its European fleet.

“This is a necessary response to the structural disadvantage European basic chemicals manufacturing faces versus other regions,” Francesco Gattei, Eni’s chief transition and financial officer, said in an earnings call. The business has lost $3.2 billion over the past 5 years and $7.6 billion over the past 15, Eni says.

The site in Brindisi, on Italy’s Adriatic coast, was established in the 1960s to make olefins and chlor-alkali. The cracker in Priolo Gargallo, in Sicily, is on a site that has been making chemicals since the 1950s. According to the industry group Petrochemicals Europe, the Brindisi cracker has 440,000 metric tons (t) per year of ethylene capacity; Priolo has 530,000 t.

Eni isn’t walking away from these sites. As part of a $2.2 billion investment, the company says it will import raw materials to continue polymer production in Brindisi. It will also build a factory there to make stationary batteries. In Priolo, Eni is considering a plastics pyrolysis plant and a biorefinery to make sustainable aviation fuel.

In addition to the cracker shutdowns, Eni will close a polyethylene plant in Ragusa, Sicily, and plans to sell some or all of its ethylene cracker in Dunkerque, France. The firm had announced plans to convert the Dunkerque cracker from naphtha feedstock to lower-cost ethane imported from the US but didn’t follow through. It has 380,000 t of annual capacity, according to Petrochemicals Europe.

Steve Lewandowski, vice president of global olefins and derivatives at Chemical Market Analytics by OPIS, says he is not surprised by Eni’s announcement, as the company has been telegraphing a shift in focus to specialty materials, biobased fuels, and plastics recycling.

In all, Lewandowski says, with the recent announcements of plant closures, as well as ones under study, some 2.5 million t of ethylene capacity is likely to close in Europe. This would amount to roughly 10% of the continent’s total compared with Petrochemicals Europe’s figures. If Ineos builds a 1.5 million t cracker in Belgium as planned, “more will have to go,” he says.