Higher energy prices in Europe have played a role in ExxonMobil Corp. and Sabic closing units making the plastic feedstock ethylene and some resins in that region.
Houston-based ExxonMobil is closing a chemicals production unit in Port-Jerome-sur-Seine, France. In a news release, officials said the plant has lost more than 500 million euros ($530 million) since 2018. The closing will eliminate almost 700 jobs at the site, which is known as Gravenchon.
"Despite efforts to reduce costs and improve the site's economics, it is not competitive in the market," officials said. "The configuration of the steam cracker, its small size compared to newer units, high operating costs in Europe and higher energy prices make it uncompetitive."
Energy costs in Europe have risen in recent years, primarily because of Russia's invasion of Ukraine. Natural gas prices in the European Union region averaged around $8.50 per million British thermal units in March. By comparison, U.S. prices for that material closed at $1.76 on April 18.
Capacity additions for ethylene and related materials in other parts of the world — primarily North America and the Middle East — also have created overcapacity for those materials.
An oil refinery at the Port-Jerome-sur-Seine site will remain open. The chemicals plant is expected to close later this year.
Market sources said the plant has annual production capacity of almost 900 million pounds of ethylene. The plant also supplies polyethylene and polypropylene resins. No production totals for those materials were available.
"We are incredibly proud of our employees, their work and of our long history at Gravenchon," ExxonMobil France President Charles Amyot said. The closing "is in no way a reflection of their efforts. It has been a very difficult decision for us to take, but we cannot continue to operate at such a loss."
In Geleen, Netherlands, Sabic is taking six chemicals units down for a maintenance turnaround. One of those units — one that makes olefins, including ethylene — will not be restarted, officials with Sabic in Riyadh, Saudi Arabia, said in a news release.
The maintenance happens every six years and is part of "a broader future strategy for the site which will entail a significant change in the operations of the naphtha cracker complex."
"The investment in the turnaround project emphasizes Sabic's ongoing commitment to its production facilities in both Geleen and the Netherlands," officials added. The decision not to restart the olefins unit "is part of the site's strategic reorientation … and will enable Sabic to position the Geleen site for future success in a competitive market," according to Sabic.
