Innovating for Global Growth

Transcription

1 April 2010 chemicalweek A Chemical Week Custom Publication Innovating for Global Growth

2 company history Total merges with the Belgian company PetroFina and later with the French oil company Elf Aquitaine, creating one of the leading international oil majors, TotalFinaElf. The chemical branch is from then on named ATOFINA. January ATOFINA acquires a polystyrene plant at Foshan, Guangdong Province, its first petrochemical facility in China. May TotalFinaElf changes its name to Total. The group unveils its new identity and logo. August ATOFINA and Samsung create a joint venture that will produce and market a wide range of base chemicals and polymers from an integrated manufacturing site at Daesan, South Korea. October Total restructures its chemicals portfolio to create Arkema, which will ultimately operate as an independent company. Arkema encompasses vinyl products, industrial chemicals, and performance products. ATOFINA changes its name to Total Petrochemicals. October Total and Samsung start expanding the Daesan petrochemicals complex through a huge investment program. December Qatofin, a jv among Qapco, Total Petrochemicals, and Qatar Petroleum confirms construction of a world-scale ethane cracker at Ras Laffan, Qatar and a linear low-density polyethylene (LLDPE) plant at Mesaieed, Qatar. September Total Petrochemicals announces an industrial restructuring project in France, intended to safeguard the company s competitiveness there. The core of the project is a reorganization of its styrene activities via an upgrade and modernization. July Total Petrochemicals announces a petrochemical project at Arzew, Algeria including construction of an ethane cracker with an annual capacity of 1.4 million m.t. The feed gas will come from southern Algerian fields. September Successful expansion by 200,000 m.t./year of the Qapco ethane cracker at Mesaieed bringing its capacity to 720,000 m.t./year April Samsung Total Petrochemicals announces it will build a polypropylene (PP) compounding facility at Dongguan, southern China. June Saudi Aramco and Total sign agreements to establish a jv, the future Saudi Aramco Total Refining and Petrochemical Co. October Total Petrochemicals inaugurates its methanol-to-olefins pilot plant at Feluy, Belgium, intended to produce polyolefins from methanol. 2 CHEMICAL 2009 WEEk CUSTOM PUBLICATION, April 2010 January Total Petrochemicals announces the start up of its revamped, world-class styrene unit at Gonfreville-l Orcher near Le Havre, France. March Total Petrochemicals announces a second industrial restructuring project in France, concentrating on its polyethylene (PE) business. March The Qatar Science & Technology Park (QSTP) is opened in Doha. Total Petrochemicals is among the international companies active in the complex. November Futerro, a jv established in September 2007 by Galactic and Total Petrochemicals, announces the start up of a demonstration unit to produce polylactic acid bioplastics of renewable vegetable origin. November Total Petrochemicals announces its new technology platform of metallocene PE and PP products under the brand name: Total Petrochemicals Lumicene November Qatofin inaugurates its LLDPE plant at Mesaieed. The Ras Laffan cracker starts up in the first quarter of

3 Building on Firm Foundations T Product focus: Total Petrochemicals has concentrated its European styrene capacity at a new plant at Gonfreville under a major expansion and modernization program. Total Petrochemicals (headquarters in Brussels, Belgium) is the largest petrochemical producer in Europe by sales, and the world s eighth-largest petrochemical company. Petrochemicals, together with Total s fertilizer business, generated sales of 8.7 billion in 2009, 59% of the Total group s overall chemical revenues. Total is the world s fifth-largest oil and gas company, and Europe s leading refiner, with group sales of 131 billion last year. Total Petrochemicals operates 19 production plants across Europe, the U.S., Middle East, and Asia. It also has four R&D and technical centres in Europe, the U.S., and Qatar. The company has a global workforce of 6,250. Total Petrochemicals operations are split into three business units: base chemicals, consisting of olefins, C 4 fractions, and aromatics; polyolefins, comprising polyethylene (PE) and polypropylene (PP); and styrenics, made up of styrene and polystyrene (PS). They have an impressive range of leadership positions. Total Petrochemicals is the global leader in PS, and the third-biggest producer of styrene and PP, as well as the number-five producer of propylene. The company is also a leading producer of ethylene, aromatics, and PE. Specialty chemicals accounted for the remaining 41% of the Total group s chemical sales in The company s specialties businesses include the Bostik adhesives brand, as well as the Atotech electroplating business and the Hutchinson rubber processing company. Total also owns the Cray Valley and Cook Composites and Polymers businesses, which together are the leading manufacturers of structural resins, as well as the Sartomer photocure resins business. TABLE OF CONTENTS Interview with FranÇois Cornélis...p. 5 Interview with Graeme Burnett...p. 7 activities in asia...p. 9 Plastics Innovation... p. 10 strategy Focus... p. 13 Groundbreaking Technologies... p. 15 Cover photo: Total s MTO-OCP pilot plant at Feluy. CHEMICAL WEEk CUSTOM PUBLICATION, April

4 Building on Firm Foundations continued 4 CHEMICAL WORLD leader: The La Porte, TX complex is one of Total Petrochemicals major locations in the U.S. Total Petrochemicals strategy is to adapt its structures in the mature markets of Europe and the U.S., to place its manufacturing sites among the most competitive in those regions. It is, meanwhile, seeking growth opportunities in emerging markets, developing sites with access to advantaged feedstock in the Middle East and North Africa, and strengthening its operations in the high-growth markets of Asia/Pacific. The company s main focus is on large, integrated manufacturing sites. Total Petrochemicals has a large asset base in Europe and the U.S., and aims to expand its assets in the Middle East and Asia to levels comparable with those in the mature regions. The company aims to increase the proportion of its business in the Middle East and Asia from 15%, to 25% during the next five years, about the same level as the U.S. Europe is expected to account for about 50% of Total Petrochemicals business in five years time. Another key target is to maximize feedstock flexibility at each of the company s plants in all regions. Maximizing integration between Total s refining operations and Total Petrochemicals activities at large-scale production sites forms another key part of the company s drive to improve competitiveness in Europe and the U.S. Total is concentrating investments in Europe at its integrated refinery and petrochemical sites at Gonfreville and Lavéra, France; and the Antwerp-Feluy hub in Belgium. The company has focused its European styrene production at Gonfreville, completing a 320-million modernization and expansion program there in The program involved construction of a modern, energy-efficient styrene unit with a capacity of 600,000 m.t./year that replaced an older, smaller unit at Gonfreville and another styrene plant at the company s Carling, France site. Total Petrochemicals is planning similar projects at the Gonfreville steam cracker and PE plants. The company s biggest production site for PP is at Feluy, Belgium, and the company is focusing its European PS production at Carling. Total Petrochemicals biggest asset in the U.S. is a 40% stake in a naphtha cracker jv with BASF at Port Arthur, TX, which is integrated with Total s Port Arthur refinery. Captive consumption is assured by supplying ethylene from the Port Arthur cracker to Total s highdensity polyethylene plant at Bayport, TX and propylene to Total s PP unit at La Porte, TX. Total Petrochemical s other main U.S. facility is a styrene and PS complex at Carville, LA, the world s biggest for those products. Total Petrochemicals Middle Eastern strategy is focused on Qatar and Saudi Arabia with world-scale production facilities coming onstream in the region this year and in the coming years. Total s involvement with Qatar began more than 30 years ago with a 20% stake in Qatar Petrochemical Co. (Qapco), which started up the country s first olefins complex at Mesaieed. Further expansion is underway at this site with construction of a new low-density polyethylene line. Total Petrochemicals also has a 49% share including an indirect stake via WEEk CUSTOM PUBLICATION, April 2010 A FOCUSED PORTFOLIO* Polyethylene 16% Polypropylene 19% Base chemicals 42% Styrenics 23% *Total Petrochemicals sales by product, based on 2008 figures. regional manufacturing hub: The Samsung Total Petrochemicals complex at Daesan, Korea is Total s largest petchem site in Asia. Qapco in Qatofin, which commissioned a linear low-density polyethylene plant at the Qapco complex at Mesaieed last November. The company has a 22% stake, via Qatofin, in the giant Ras Laffan Olefins Co. (RLOC) ethane cracker that is currently starting up at Ras Laffan, Qatar. Plans in Saudi Arabia focus on Saudi Aramco Total Refining and Petrochemical Co. (Satorp), a planned refinery joint venture between the Total group and Saudi Aramco at Al Jubail. The Satorp refinery will include a large-scale aromatics complex producing paraxylene and benzene. The refinery will also produce propylene on completion by Total Petrochemicals, meanwhile, is negotiating a major jv at Arzew, Algeria with oil and gas company Sonatrach. Total Petrochemicals manufacturing activities in Asia are focused on China and Korea. The company s biggest Asian operation is the Samsung Total Petrochemicals jv with the Samsung group. The jv operates a cracker integrated with an aromatics complex and olefin derivative plants at Daesan, Korea. Samsung Total has been expanding its complex over the years, including a $600-million investment that concluded in 2008 with start up of an olefins conversion unit to make propylene. Total Petrochemicals expansion drive is accompanied by a firm focus on innovation, aimed at reducing the company s environmental footprint and developing novel products that can generate rapid demand growth and capture market share. The energy intensity of the company s petrochemicals business decreased 2%/year on average since 2005, partly due to energy-reduction projects at cracker furnaces and cogeneration units, as well as a turbine replacement program. The company aims to cut energy intensity 16% by 2012 compared with 2005 levels. ian young

5 Q&A Five years from now, we will be firmly established in Qatar and Saudi Arabia, and will probably operate in Algeria, and be much stronger in China; we will have grown at a rate higher than 4%/year for 10 years. An Interview with François Cornélis, President of Chemicals and Vice-President of the Executive Committee of the Total Group. Q. Total Petrochemicals forms part of Total, the world s fifth-largest oil and gas company. How does the business fit within the Total group and what advantages do you see in being part of an integrated oil and gas firm? A. Total wants to remain an integrated company facing the customer, and the user of its products. Polymers are an important oil derivative and Total wants to develop the products and their usage. We believe that our customers--motorists, motor manufacturers, and plastics processors--are part of our business. A constant dialogue helps us promote a product and forecast its future. The whole chain brings value and may, in some instances, bring value to the host countries where we explore and produce oil and gas. Q. How did petrochemicals perform in 2009 and was the business profitable? What returns do you expect from petrochemicals over the cycle? A. Performance was marginally positive in 2009 yet hugely disappointing. It is attributable to our lack of ethane cracking in the U.S. and the Middle East, the weight of the underperforming European business, and operational difficulties. Fortunately, all these elements will be corrected in the coming years and we expect to be able to achieve a return on capital employed (ROCE) of more than 12% through the cycle. Q. There is a lot of new petrochemical capacity coming onstream in the Middle East. How is that likely to impact your business? A. We will be part of it, with world-scale facilities in Qatar and Saudi Arabia just started up or coming onstream in the coming years. We are restructuring our European facilities and they will be competitive. Q. How has Total Petrochemicals weathered the global economic recession? A. In late 2008 and early 2009, we lost close to 20% of our volumes. Sales are gradually coming back and we expect that, within two years, we will be running at capacity in the U.S. and Europe. We had anticipated a low cycle and prepared rationalization plans with closure of the less competitive assets to concentrate on key sites. These actions will reinforce our positions at the end of the crisis. Q. Total Petrochemicals is the eighth-largest petrochemical company and a leading player in its markets in Europe. A large proportion of your assets is in Europe and the U.S. How do you plan to change this? A. Coming from a mainly European position at the beginning of the last decade, by 2015 Europe will represent 50% of our business, with the U.S. at 25% and the Middle East and Asia at 25%. Total Petrochemicals growth strategy is to raise its sales in Asia from 15% of the global total, to 25% by Growth in Asia is attributable to our investments in the Middle East and Korea. Q. What is the strategy for specialty chemicals within the group? A. We are gradually concentrating our specialties on the best and most promising businesses. In that context, after selling Mapa Spontex, we are looking for acquisitions to grow Bostik, Atotech, and the aerospace/industry activity of Hutchinson. The last three are exceptional material science businesses, which also have a strong presence in Asian growth markets, in particular China. Material science is the science of the 21st century and we intend to be a major player. Q. In Qatar, ExxonMobil Chemical recently won the contest for the construction of the third cracker. You were also in negotiation with the Qatari authorities. What does that mean for your future projects in the region? A. Qatar is becoming a world leader in natural gas and a regional leader in petrochemicals. We have been successfully associated with Qatar for more than 30 years and just started up the world s largest ethane cracker at Ras Laffan. We stand by all of the country s efforts to upgrade its technical capabilities. Our Qatari partners reacted very positively to our proposal of a new mixed-feed cracker. The decision on the third cracker is pushing us to the fourth, if and when it is built. We remain confident about our long-term perspective of pursuing our partnership with the Qatari energy and chemical industry. And we are also contemplating other opportunities, while we still negotiate a major investment at Arzew, Algeria. CHEMICAL WEEk CUSTOM PUBLICATION, April

6 Q. Total has announced plans to restructure refining and petrochemical activities in France, which should be completed by Could you explain what is involved in the restructuring and modernization, and how that will affect employment levels? A. The plan is mainly concentrated on the modernization of Gonfreville. The refinery s distillation capacity will be reduced to adjust it to the size of the revamped hydro cracker, and the fluid catalytic cracker will be shut down. The steam cracker and the polyethylene facilities will be modernized to first-quartile status. This expresses our ambition to be the leading player in European markets. Interview with FranÇois Cornélis continued 6 RLOC. Q. What are your hopes for Saudi Aramco Total Refining and Petrochemical Co. (Satorp) as a growth platform in Saudi Arabia? A. Satorp will be an exceptional installation, based on the most modern refinery in the world. We are building a world-scale para-xylene plant there, which will grow our Asian market presence and may be a precursor to other petrochemical developments in Saudi Arabia. Q. Recent reports indicate that the Arzew petrochemical project may have to be renegotiated. What is the status of this project and when is it likely to start production? A. We are negotiating certain issues that have changed since the project was originally bid. We cannot prejudge the result of those negotiations but still expect to reach an agreement by 2011, which would imply a start up of this plant in Q. Could you provide some more details of your plans at your joint venture with Samsung at Daesan, Korea? You have carried out a major expansion and more debottlenecking is on the agenda. A. Continuous expansion plans are being proposed by our Korean joint venture. We support them because they are extremely good operators and efficient investors. Present debottlenecking plans are related to the cracker, and the polypropylene and styrene plants. Q. What are your plans for investment in China? A. We are looking at building an inte- CHEMICAL WEEk CUSTOM PUBLICATION, April 2010 Q&A world s largest ethane cracker: The recently completed Ras Laffan olefins joint venture reinforces Total Petrochemicals long-standing presence in Qatar. grated platform in China but have so far not found a prospect that would satisfy our needs. We have nevertheless expanded our polystyrene operations and believe that our methanol-to-olefins (MTO) technology may be the right formula that brings our technology to China and gives us an attractive entry into the market. Q. What is being planned in the mature regions of Europe and the U.S.? A. Our aim, worldwide, is to concentrate on first-quartile assets. That is the objective of all our investment efforts. In Europe, we focus our investments on developing the Antwerp, Gonfreville, and Lavéra sites. Gonfreville s styrene assets have been massively upgraded to top quality in Europe. We now intend to upgrade the Gonfreville cracker and the site s gas-phase polyethylene assets. Our next investments will probably go to the crackers at Antwerp and Lavéra. All in all, we plan nominal fixed-cost reductions of 1%/year, energy consumption reductions of 2%/year, and reductions in wastewater everywhere. Q. What is Total Petrochemicals capital expenditure budget and what are the main investment projects, in addition to Qatar and Saudi Arabia? A. The chemicals businesses have a budget of about 1 billion/year, split roughly between petrochemicals and specialties. The largest projects outside the Middle East and Korea are at Gonfreville. Q. R&D is a major focus at Total Petrochemicals. The MTO process being developed at Feluy, Belgium in a pilot plant is the second-largest research undertaking within the group after a CO 2 capture and storage pilot at Lacq, France. Could you outline the main benefits of the MTO technology? A. Coal is the largest hydrocarbon resource in the world. We believe that coal s usage will increase, mainly for power generation in China, India, and the U.S. Carbon capture and storage is, accordingly, a technology of utmost importance. Clean coal technology will provide access to methanol production at competitive prices. When that happens, the field will be open for the production of polymers. We sincerely believe that it is a promising technology for countries like China that are rich in coal and short in oil. It will not change the equilibrium of polymer production in the world but it can reduce the energy dependence of countries like China. Q. What is Total doing to increase its offer to the plastics sector? A. Total is committed to participate in all of the industry s efforts to improve the image of plastics and reduce plastics waste. As a company, we will add recycled material to our offering of products, and be involved in plastics combustion to produce steam and power. Q. Where do you see Total Petrochemicals five years from now and are plans based mainly on organic growth? A. Five years from now, we will be f irmly established in Qatar and Saudi Arabia. We will probably operate in Algeria, and be much stronger in China. We will have grown at a rate higher than 4%/ year for 10 years. We do not really need acquisitions to improve that plan. natasha alperowicz

7 Q&A There are very few companies in the world today that can offer a combination of technology, know-how, and expertise from exploration to the final polymer product. An Interview with Graeme Burnett, Senior V.P./Middle East & Asia Q. By 2030, 50% of global polymer demand will be in Asia including 28% in China, according to estimates. Asia s share of Total Petrochemicals sales is currently 15% but is expected to soar to 25% by As the person in charge of that region, how do you plan to meet the target? A. Starting around 2003, we significantly strengthened our position in Asia, in particular through the joint venture Samsung Total Petrochemicals (STP). The production site in Daesan, Korea has been substantially enlarged since 2005 and is one of the world s leading petrochemical sites. Our growing involvement in Qatar with a participation in the world s largest ethane cracker in Ras Laffan and the new linear low-density polyethylene (LLDPE) production facility of Qatofin in Mesaieed is also strengthening our market position in Asia. Qapco has also begun an expansion, with a new low-density polyethylene line due onstream in I should not forget to mention the acquisition of the polystyrene (PS) plant in China, which was also completed in In addition to these investments, I am confident that we will develop new opportunities in the Middle East and in Asia in the short-tomedium term. Q. What are your sales in China and how do you expect to grow in that market? A. Today our industrial activities in China are predominantly styrenics. Total acquired a PS plant in Guangdong Province in 2003 and has since upgraded this plant to meet our global standards for safety and product quality. Despite a very challenging market environment today, Total has achieved an enviable reputation as a reliable supplier of premium-quality PS, used predominantly in a range of high-end applications such as TV, refrigeration, audio, office automation, and air conditioning. In order to meet demand growth from our customers, Total plans to significantly increase production capacity by 2011, capturing approximately 7% of the Chinese PS market. Earlier this year, under the Samsung Total Petrochemicals banner, we inaugurated a new polypropylene (PP) compounding facility in Dongguan, China. This unit is already operating near capacity and expansion plans are being considered. Production from our new jv assets in Qatar will help further develop our sales position in the fast-growing film markets for LLDPE, as will our metallocene grades produced in Europe. We should not overlook the fact that we are also one of the biggest traders of aromatics and styrene in the region. Q. Total Petrochemicals is a leading producer of polyethylene (PE), PP, and PS with total polyolefins tonnage of about 6 million m.t./ year. How much of that is being sold in China and how is that likely to grow? How is the Chinese government s stimulus program helping sales? A. The Chinese stimulus package definitely helped support, directly and indirectly, the petrochemical market, with record high imports of polyolefins in However, it is also thanks to the acknowledged quality of its products all over the world that Total Petrochemicals and STP succeeded in selling more than 500,000 m.t. of polyolefins in China in We believe that the Chinese government will continue to balance elements of the stimulus plan, such as credit availability, against the overheating of the economy, to try to maintain a sustainable GDP growth rate in the region of 8%-10% for the foreseeable future. In line with this desire for sustainable growth, there has been an emphasis on the development of Chinese domestic consumption, with decreasing reliance on the export market. Our product marketing will incorporate this significant change in the demand pattern. Q. Which polyolefin segments in China do you now serve and which ones are you targeting? A. Polyolefin sales in China from our European or U.S. plants focus on highgrowth and high value-added products. We have already succeeded in developing a strong reputation and achieved a significant market share in some of these segments, which in addition are projected to enjoy double-digit growth in the coming years. Examples of these segments are gas-pipe and fuel-tank grades of PE; metallocene PE grades for film applications; specific medical random PP grades; and high-performance PP impact copolymers. Q. Could you elaborate on styrenics developments in Asia? A. Total Petrochemicals is positioning itself as the leading global integrated styrenics CHEMICAL WEEk CUSTOM PUBLICATION, April

8 Interview with Graeme Burnett continued 8 CHEMICAL Q&A player. We believe that our business model, adapted at a regional level--which is based on feedstock integration, low-cost production, differentiated products, and a high level of technical service--positions us well to serve the needs of both mature markets and growth markets such as Asia. We are committed to develop our scale in Asia, to reflect our market leadership position in other parts of the world. Our Foshan and Singapore plants are recognized as reliable and consistent producers of high-end PS to a broad range of customers, and to underline this we debottlenecked the Singapore plant in In the near term, we see our Singapore plant benefiting from the recent tariff changes within the ASEAN zone. In terms of acquisitions, Total continues to evaluate opportunities that arise in this fastchanging environment. Q. At present STP is the closest supplier to the Chinese market within the Total Petrochemicals group. You recently completed a major expansion of that complex and are planning more debottlenecks there. Could you give an outline of that investment? A. At Daesan, we have achieved a considerable build-up of capacities. In less than three years, annual capacities for ethylene, propylene, and styrene rose by 30%-40% and PP capacity more than doubled to 580,000 m.t./year. All of the projects were completed on or ahead of schedule, and on budget. Our production has also benefited from very high reliability stemming from some innovative approaches to design, maintenance, and operation. Recently STP started its first production unit in China, in order to take even more advantage of the expected growth there. Having just completed these major projects, we are anticipating a large number of smaller debottlenecking and upgrading projects that will push these new assets to their limit. So we anticipate incremental growth in our major product lines, including para-xylene, styrene, PE, and PP. Another aspect will be increased feed flexibility, enabling STP to process more condensates and liquefied petroleum gas (LPG), hence increasing its competitiveness. Q. Are you still looking for opportunities to invest in China such as a methanol-to-olefins (MTO) complex, based on coal? A. China s good performance throughout the recent economic crisis confirms the importance of this country for the world economy. As mentioned earlier, we note a shift towards domestic consumption in China, and given the size of this market, we naturally recognize the importance of growing our presence WEEk CUSTOM PUBLICATION, April 2010 there. Total s specialty chemicals businesses are already very strong in China and Total Petrochemicals has a solid position in marketing. Nevertheless, our manufacturing presence is relatively modest, so we continue to investigate opportunities to develop a good platform in the mainland. The barrier to entry in China is also changing--for major projects the state will give preference to foreigners bringing technology and/or feedstock as part of the deal. We therefore believe that the MTO technology we are currently testing in our research centre at Feluy, Belgium might offer an opportunity in China. The concept is to produce polyolefins from coal, on a cost basis competitive to conventional naphtha-based production. We have made a significant investment in an industrialscale demonstration unit that will ultimately give us a competitive advantage in this area. Combined with other proprietary technology, we will have the highest-yielding methanolto-olefins conversion. In addition to this project, we are looking at joint opportunities with other branches of the Total group inside China. The ethane ratio in our ethylene production will rise from 14% in 2010, to 25% in Q. Is the huge build-up of domestic petrochemical capacity in China likely to impact sales? A. The growing capacities in China will indeed have an impact on the market, eventually limiting the growth in imports seen recently. On the other hand, Chinese demand and domestic consumption will continue to grow, which means that imports such as those coming from our facilities in Korea and the Middle East will continue to be a major part of the overall supply picture for China. Commodity grades from older, naphtha-based producers will most probably be squeezed out by the new capacity in China and the Middle East, hence our strategy to have world-scale highly efficient plants either located close to the market or based on advantaged feedstock. Q. What is your total ethylene production in 2010 and how will that rise by 2015? How will that change by region and by feedstock? A. Total Petrochemicals ethylene production will increase from 3.1 million m.t./ year with the Ras Laffan ethane cracker start up in Qatar in early 2010, to 3.7 million m.t./year in Our first objective is to increase access to feedstocks other than naphtha. The naphtha ratio will decrease from about 70% of our total feed slate in 2010, to 55%, replaced by ethane, which will rise from 14% in 2010, to 25% in 2015 from production in the Middle East and Africa, and mainly LPG or ethane in other regions. Our strategy is to continue to globalize the activity and increase our asset base in Asia and the Middle East. So we have to expand in the fast-growing Asian markets and develop strategic partnerships in producing areas of the Middle East. Our ethylene production share in the Asia- Middle East-Africa regions will increase from 28%, to 37% in Q. You were at one stage also interested in investing in India. What is your view of that market and what opportunities do you see for Total Petrochemicals there? A. India is obviously an attractive market. The Total group is already present there in LPG and natural gas liquids. As for petrochemicals, the lack of infrastructure and limited regionalized domestic demand is a concern because we are not interested in building export facilities. Therefore, it is not our first priority. However, the Indian market is growing fast. New local production capacities will continue to be built, but will be subject to competition from Middle East imports. We have worked, and will continue to work with key local players to define adequate schemes in what is, frankly speaking, a challenging business environment. Q. You sound rather optimistic about the future development of Total Petrochemicals. What distinguishes you from your major competitors as far as your proposition and business model are concerned? A. We are offering all the advantages of a fully integrated oil and gas major with huge experience in successfully realizing big projects all over the world, as well as the optimization of integrated refining and petrochemical facilities. There are very few companies in the world today that can offer such a combination of technology, knowhow, and expertise from exploration to the final polymer product. Our integration also helps from a financial stability viewpoint. You only have to look at the number of major chemical players who remain in financial difficulties today to realize the benefit of working with Total Petrochemicals. natasha alperowicz

9 Asia Is a Major Growth Driver A Asia is the fastest-growing region for Total Petrochemicals, and the company is investing in its businesses there to keep pace with demand. China is Total Petrochemicals biggest regional market for polyolefins, and it is expected to remain that way in the near future. Total Petrochemicals produces polystyrene (PS) at a 100,000-m.t./year unit at Foshan in southern China, and at a plant in Singapore. The company also has a 50% stake in petrochemicals joint venture Samsung Total Petrochemicals at Daesan, Korea, which supplies a range of petrochemicals and polyolefins to the Chinese market, and recently opened a polypropylene (PP) compounding unit at Dongguan, China. Total Petrochemicals also exports large volumes of products to Asia from the Middle East. The company has sales and technical-service teams at Beijing, Guangzhou, Hong Kong, Shanghai, and Shenzhen to handle sales of polyethylene (PE), PP, and PS in the Chinese market. More than 80% of Total s polyolefin sales in China were driven by local consumption, rather than export-driven demand, in 2009, and the company expects the figure to remain the same this year. We expect export-driven demand to pick up in China in 2010, but based on polyolefin customers feedback, they are unlikely to return to pre levels, says Jean Viallefont, v.p./china and Southeast Asia. On the other hand, the recent initiative by the Chinese government to encourage urbanization will see rapid growth of local demand, Viallefont says. Chinese demand for polyolefins is driven by infrastructure development, and the automotive and food packaging industries, says Hianmeng Low, polyolefins business manager/asia. Total supplies PE pipe compounds, PE fuel-tank resins, PP compounds, and the company s Lumicene range of metallocene polyolefins to these markets, Low says. Metallocene polyolefins are Total Petrochemicals fastest-growing products in Asia, Low says. The company is increasing production capacity in Europe to meet Asian demand for Lumicene polyolefins, and expanding its capabilities to offer closer and more rapid developmental and technical support to Asian customers, he says. Orange pipe compounds used for gas transportation are also a fast-growing product in Asia for Total, Low says. Demand for PS grew by more than 10% in China in 2009, driven by very strong domestic demand, Viallefont says. Export-driven demand, however, was extremely weak because of the global financial crisis, he says. Strong domestic growth was led by customer restocking in the early part of 2009, after significant destocking at the end of 2008, as well as by the government stimulus packages, which boosted sales of products such as home appliances. The government has demonstrated that it is very keen to enhance domestic spending and as such we understand that the stimulus aimed at appliance consumption will, at least in part, continue for some time, Viallefont says. Demand for PS based on domestic Chinese consumption will taper somewhat this year, and export-driven demand will grow about 5% in the near to medium term, says Yongjian Yu, general manager of Total Petrochemicals Foshan plant. Total Petrochemicals raised capacity at its Foshan PS plant last year, which resulted in a 20% increase in sales. Total will increase the plant s capacity to 200,000 m.t./year in December, which will enable an almost doubling of sales compared with 2008 levels, Yu says. Total Petrochemicals obtains feedstock for the Foshan plant from the Samsung Total jv. Samsung Total plans to expand its styrene monomer capacity by 250,000 m.t./year, to 1.1 million m.t./year in Raw material supply will definitely not hamper Total s ambitions to grow its PS activities in China, Viallefont says. local production: Chinese manufacturing enables Total Petrochemicals to supply key regional markets throughout the country. Total Petrochemicals supplies PS in the key southern Chinese market and is growing its activities in the fast-growing central Chinese market. Total continues to develop new grades to meet growing demand from our customers and so we expect further growth in southern and central China, in line with our expanded capacity, he says. kerri walsh PRODUCING HIGH-QUALITY POLYMERS IN CHINA: Total s polystyrene plant at Foshan. CHEMICAL WEEk CUSTOM PUBLICATION, April total laurent zylberman. total laurent zylberman.

10 Product Innovation: A Driving Force for the Plastics Business T adaptable products: Lumicene polyethylene has applications ranging from films with high tensile strength and transparency, to synthetic grass yarn with strong resistance. Total Petrochemicals is a leading producer of three types of polymer: polyethylene (PE), polypropylene (PP), and polystyrene (PS). The company underpins its manufacturing and sales of these plastics with major investments in R&D to develop new technologies and products, as well as novel applications. The aim is to boost sales, gain market share, and reduce the company s environmental footprint. The strategy is bearing fruit with a number of announcements in recent years including a range of polyolefins based on metallocene catalysts, and new refrigeration applications for PS. Total Petrochemicals unveiled last November a technology platform of PE and PP products under the Lumicene brand name. Lumicene is a new generation of metallocene polyolefins, built on proprietary technology, with superior cleanliness, improved gloss and transparency, better gas barrier and chemical resistance, and improved processing and mechanical properties. The Lumicene range includes PE resins for film, rotational moulding, blow moulding, artificial grass, and caps and closures; and PP for fibers, film, injection moulding, and medical applications. Lumicene is the result of continuous investment at Total Petrochemicals research and technology centres. The company says that a key factor in its innovation capabilities is the capacity to develop its own catalyst systems. This enables Total Petrochemicals to differentiate its products from those of its competitors. It took Total Petrochemicals several years to transform Lumicene PE from a laboratory success into an industrial-scale success, says Philippe Orts, marketing manager/ PE, Europe at Total. Lumicene PE is produced in commercial volumes at Antwerp and Feluy, Belgium; and Bayport, TX. From quite a narrow niche approach, we have increased the volume of these grades into very significant contributors, Orts says. We revamped a second production line in Europe in 2007 to make metallocene PE, to continue to fulfil growing customer orders. Total is the only company making metallocene PE at two sites in Europe, which gives customers additional guarantees of supply continuity, he says. Total Petrochemicals started commercializing metallocene PP from early in 2000, but only in limited volumes, mainly due to the high associated production cost, says Jérôme Thierry-Mieg, marketing manager/pp, Europe at Total. Their astonishing properties compared with standard Ziegler-Natta products were well known, and in 2005 it CHEMICAL WEEk CUSTOM PUBLICATION, April was decided to boost the development of metallocene PP in large-scale production lines to achieve economies of scale. This was possible through modification of the catalyst structure and investments in production lines initially in Europe and then in the U.S., Thierry-Mieg says. Total Petrochemicals produces Lumicene PP at La Porte, TX and Feluy. We can convert as many production lines as commercial success requires, Thierry- Mieg says. These sites both have about 1 million m.t./year of PP capacity, so there is enough to supply fast-growing demand. The specific advantages of Lumicene PE vary depending on application. The most important film application for Lumicene PE is as a downgauging enabler, due to the product s mechanical properties, such as tensile strength and stiffness, and optical properties, such as transparency and gloss. Lighter films translate into direct material savings for converters but more recently the trend has gained more momentum because lighter film also means lower packaging waste and environmental footprint, Orts says. Lumicene PE is also used in caps and closures due to its organoleptic properties and excellent processing on an injection moulding machine, Orts says.

11 a variety of uses: Lumicene polypropylene offers unmatched visual qualities such as gloss and clarity; polystyrene is the ideal material for refrigeration applications. Lumicene PE is used in blow moulding as an outside skin layer of coextruded multilayer bottles, allowing converters to make very shiny bottles for the cosmetic and body care industry. Lumicene PE is highly regarded in the roto moulding sector for its chemical resistance, and its resistance to permeation, making it ideal for the manufacture of fuel tanks for buses, trucks, and other large vehicles. Lumicene PE is replacing octene linear low-density polyethylene (LLDPE) in synthetic grass yarn thanks to its better processing performance, and excellent resistance to fibrillation, Orts says. This makes it an excellent material for making synthetic grass surfaces that will have better long-term resistance, he says. Lumicene PP has unsurpassed environmental properties very low extractable species and low volatile organic compounds as well as unmatched visual qualities such as gloss and clarity, superior mechanical properties, and excellent dimensional reproducibility in moulded parts, Thierry-Mieg says. Other benefits include downgauging opportunities, he adds. Certain grades of Lumicene PP for the nonwoven industry have an inherent, very narrow molecular weight distribution resulting in polymer chains with very uniform length and nature, which results in much finer or stronger fibers, and with a weight reduction of 15%-20% easily achievable. The fabric is also softer and gives off a lot less fumes during production. Lumicene PP products include a range of homopolymers and random copolymers for thermoforming and injection moulding of cups, household articles, or technical and medical parts. Cups made from Lumicene PP have increased top-load resistance and containers have increased impact resistance. In short, Lumicene raises the bar for PP, Thierry-Mieg says. It will establish a new standard of PP in Europe and the U.S. In terms of application potential, Asia and especially China will also benefit from its improved properties, Thierry-Mieg says. Total Petrochemicals, as the global leader in PS, manufactures a range of products, including crystal or general-purpose polystyrene (GPPS) and high-impact polystyrene (HIPS). They cover the whole range of common PS applications including industrial packaging, food packaging, consumer products, insulation boards, and industrial sheets. The company also makes specialty PS grades for flame retardant applications and other uses. Total s PS business is managed globally to provide products and services in an efficient way. Production is based at four plants in Europe, and one each in the U.S., China, and Singapore, several of which are integrated with styrene production. The refrigeration market is one of the fastest growing for Total s PS products, and the company is making a substantial R&D commitment to meet demand. Total Petrochemicals has been working for several years at laboratory, pilot, and finally industrial scale to develop a full range of HIPS and GPPS grades adapted to the refrigeration market, says Philippe Montagné, product manager/polystyrene, Europe. The company has, since 2007 in North America, and since 2009 in Europe and Asia, been recognized as a strong player in PS for this application, Montagné says. PS is the ideal material for refrigeration applications, Montagné says. It is crystal clear and rigid for refrigerator drawers, resistant to stress cracking for the liner, and has been used for 50 years in food contact applications, he says. And PS is a recyclable plastic that is recycled through the Waste Electrical and Electronic Equipment directive in Europe. PE and PP, as well as PS, can be recycled, and their recyclability depends on national waste management and private initiatives. Applications for recycled PE include bottles, film, and corrugated pipes. PS cups, and refrigerator liners and drawers, can be recycled for applications such as flower pots, compact disc boxes, and stationery. ian young CHEMICAL WEEk CUSTOM PUBLICATION, April

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13 A Strategy Based on Efficiency and Innovation TTraditionally strong in the mature markets of Europe and North America, Total Petrochemicals has developed a growth strategy based on three axes. The first covers modernization of the company s major installations in Europe and North America in order to maintain Total s strong position in those markets. Topquartile installations, high-quality products, and a high level of services reflecting the close relationship with our customers will help us to maintain a leading position in these mature markets, says Nathalie Brunelle, v.p./strategic planning at Total Petrochemicals. A growing presence in regions with direct access to feedstock represents the second priority of this long-term strategy, demonstrated in recent months by the start up at Ras Laffan, Qatar of the world s largest ethylene plant and, downstream of this unit, the Mesaieed linear low-density polyethylene facility, both with a strong participation from Total Petrochemicals. Developing the company s presence in the growth regions of Asia is the third priority, highlighted by the joint venture between Total Petrochemicals and Samsung in Korea but also expressed via a growing marketing and production presence in China. Efficiency and innovation are core elements for the success of this strategy, summarizes Brunelle. Innovations based on Total Petrochemicals network of R&D facilities are focused not just on new production technologies such as the methanol-to-olefins (MTO) project launched in 2008 (p. 15). Catalyst development and product innovation are considered by Total the most efficient ways to guarantee market success. Total Petrochemicals has a team of more than 400 researchers working in a worldwide network of R&D centres, the largest of which is at Feluy, Belgium. Other research and technical support activities are located at La Porte, TX as well as in Qatar and France. The company s R&D spending did not dip in 2009 despite the global recession. That s a strong signal of intent, Brunelle says. R&D and technical assistance services are integral to the efficient operation of Total Petrochemicals individual business units, Brunelle says. We have to improve the competitiveness of our assets in mature markets to lower the breakeven point, such as by looking at alternative feedstocks, improving energy efficiency, increasing yields, lowering major costs, and looking for new technologies, Brunelle says. The company is increasingly launching projects that have an environmental benefit, ranging from energy-efficiency improvements at manufacturing plants to process technology innovations. The company improved the average energy efficiency of its facilities by 2%/year in recent years and it intends to maintain these efforts during the coming years. We are continually looking at ways to improve our plants and processes, Brunelle says. Recent successes include significant energy-efficiency improvements at the new Gonfreville styrene plant and at sites in the U.S. The company also is steadily improving the energy efficiency of its naphtha crackers. Brunelle: No let up in technology investment. CHEMICAL WEEk CUSTOM PUBLICATION, April new products responding to customer expectations Core areas of R&D expertise within the group include catalysis and materials science. We really want to build on that position, Brunelle says. This expertise is augmented by the company s network of collaborations with research centres and academic institutes around the world. A team of R&D specialists helps to develop Total Petrochemicals presence in regions that have the highest sales growth rates for the company s products. Developing innovative products to fulfil Total Petrochemicals growth strategy is a key role for the company s R&D team. We listen to what the market requires from us today and tomorrow, Brunelle says. As a result of customer demand, we are seeking to introduce environmentally friendly products to the market, Brunelle adds. Not only is it a challenge to develop new products but also to continue improving those products once they have been rolled out into the market, she says. Building on its strong position in metallocene technologies, Total Petrochemicals launched recently a new brand: Lumicene. Building on proprietary technology, Lumicene products are a new generation of metallocene polyolefins with superior qualities to those of other products on the market. Total Petrochemicals Lumicene allows our customers to develop significantly improved products in their own markets, Brunelle says. The Lumicene

14 global research hub: Total Petrochemicals Feluy R&D centre is the biggest in the company s worldwide network. A Strategy Based on Efficiency... continued range includes polyethylene resins for film, rotational moulding, blow moulding, artificial grass, and caps and closures, as well as polypropylene grades for fibers, film, injection moulding, and medical applications (pp ). With products from its Lumicene range and others such as polystyrene for insulation panels, Total Petrochemicals is leading the Total Ecosolution program, a group-wide initiative aiming to develop more and more products that have an outstanding environmental performance compared with competing products in their respective markets. One of the main criteria for the Ecosolution label is that these products help the client to reduce its environmental footprint. Total Petrochemicals, in line with this strategy, is giving careful consideration to the end-of-life stage of its products. To make the best use of resources, we must pay more attention to the entire life cycle of plastics, Brunelle says. Developing more recycling solutions for all forms of plastics is an important contribution that our industry can deliver. Beyond that, recovering the energy content of plastics waste is another important step toward valorizing plastics after their use as a material, she says. Access to new feedstocks Some of the major research activities of Total Petrochemicals are concentrated on new feedstocks. The company traditionally uses naphtha and gas feedstock for basic petrochemicals production, with gas increasingly important in the Middle East. Total Petrochemicals efforts to access alternative feedstocks include the use of methanol derived from coal or natural gas via flue gasification technology, as well as renewable feedstock. Petrochemicals demand will grow at a faster pace than oil production and we believe oil prices will continue to rise, Brunelle says. This will create an advantage for alternative feedstock. Total Petrochemicals MTO research project involves converting methanol into olefins and polyolefins (p. 15). The MTO pilot plant, inaugurated in late 2008 at Total Petrochemicals research centre at Feluy, is the second-largest research project of the entire Total group, after the carbon capture and storage project launched by Total in the Lacq region of southwestern France. This unique scheme involves the capture of carbon dioxide produced by a power and utility unit at Total s Lacq industrial facility and reinjecting it into a depleted gas field close by. CHEMICAL WEEk CUSTOM PUBLICATION, April Total Petrochemicals is also developing processes for generating polymers from renewable resources. The company in 2007 created Futerro, a joint venture with Belgian lactic acid producer Galactic, to develop a process for making polylactic acid (PLA) from biomaterials. The venture recently started commissioning a 1,500-m.t./year PLA demonstration unit at Escanaffles, Belgium. The pilot testing should enable Futerro to improve the successive process steps for production of PLA plastic granules. Futerro plans to offer to the market a range of products made from lactic acid including lactide, as well as oligomers and PLA polymers for disposable and durable applications. Lactic acid can be produced from crops including beet, sugarcane, and corn. Other renewable resources such as forestry or agricultural waste are foreseen for possible future use. Expectations of the market in terms of environmental aspects, new products, and technologies are growing, summarizes Brunelle. In particular, energy efficiency and aspects linked to the entire life cycle of our products will be more and more decisive for success in the petrochemicals business and the acceptability of our industrial activities. And, as in general, we want to be in the first quartile of the market, she says. alex scott

15 T Making Plastics from Alternative Feedstocks a Totally Innovative Approach New route to plastics: Tests at the Feluy pilot plant show the MTO-OCP process is ready for commercial use. The petrochemical industry will have to broaden its feedstock sources, moving away from crude oil to alternative raw materials, if it is to continue meeting global demand for petrochemical products at competitive prices through the middle of this century. Faced with this reality, the ideal approach may be to use technologies that enable companies to use a variety of feedstocks including natural gas, coal, and even biomass. Total Petrochemicals, in conjunction with UOP, is developing such a technology: an olefin cracking process (OCP) that can be integrated with methanol-to-olefins (MTO) technology. The MTO process, developed by UOP and Hydro, converts methanol produced via a synthesis gas step from natural gas, coal, biomass, or even carbon-based waste into ethylene and propylene, as well as heavy olefins. The OCP technology uses a catalytic process to convert the heavy olefins into additional ethylene and propylene, with a high propylene yield. All of the ethylene and propylene can be converted into polyolefins at a polymerization unit. The MTO-OCP technology represents a major commercial opportunity, particularly in coal-rich regions where this process could be combined with clean coal technologies to create plastics from coal, says Nathalie Brunelle, v.p./strategic planning at Total Petrochemicals. We believe MTO-OCP has a very promising future, she says. Total Petrochemicals began testing the MTO-OCP process several months ago at a 45-million demonstration facility in Feluy, Belgium. The facility is the first in the world operating at a semi-industrial scale to feature an MTO plant, an OCP plant, and a polymerization unit in a single production line. The reaction is running as expected, says Eric Duchesne, base chemicals R&T manager, who is in charge of the demonstration project. We are building our level of experience so that we can transfer it to commercial operations. The process is particularly attractive in a world where polypropylene (PP) demand growth is strong because approximately 60% of the olefins output from the production line is propylene, with the remainder ethylene. Total Petrochemicals has determined from its tests so far that the MTO-OCP unit is about 90% efficient. That means 90% of the carbon entering the unit will come out as ethylene and propylene, Duchesne says. It is the highest on the market. This is very important as the higher carbon efficiency means less feedstock is needed to produce the final polymer, he says. Commercial prospects for the technology are good. The company has established a business development team in Beijing to promote the process in China. We are already in discussions with local parties. Energy conservation is a key concern for the Chinese central authorities. The high carbon yield of the UOP and MTO-OCP processes is a very good response to this concern, says Guillaume Lessage, who is in charge of the Beijing-based team. We intend to bring this new technology to China, he says. alex scott Gas Methanol C2 Polyethylene Biomass C4 C6 MTO C3 Polymerization Polypropylene Coal C2 (Ethylene) C3 (Propylene) OCP CHEMICAL WEEk CUSTOM PUBLICATION, April

16 At home in your world Wherever you need us we re right there beside you Total Petrochemicals is an integrated global petrochemicals company spanning the entire oil and gas chain. We are committed to sustainable development, to the safety of our operations and the communities in which we work, and to limiting our environmental footprint. All to ensure that we offer world class products, services and expertise to help you prosper - wherever you do business. Hunterskil Howard