Ineos has announced plans to invest $2 billion to construct a world-scale propane dehydrogenation (PDH) plant in Europe and expand ethylene capacity in the UK and Norway to increase its feedstock self-sufficiency.

The three major projects are the first substantial investments in the European chemicals industry for many years, said CEO Jim Ratcliffe. He said they have only been made possible because of Ineos’ £2 billion investment in the Dragon multigas carriers that import large volumes of ethane and LPG from the US.

A PDH plant producing 750,000 t/y of propylene will be built at a site yet to be determined. Ineos said it is looking at locations across Europe, including a number of sites in Antwerp, Belgium. The crackers at Grangemouth, UK, and Rafnes, Norway, will be expanded to more than 1 million t/y each, adding up to 900,000 t/y of extra ethylene to Ineos’ overall production capacity.

The additional ethylene and propylene capacity will reduce the Swiss headquartered group’s dependence on merchant markets. Ineos is Europe’s largest buyer of ethylene and propylene currently, even though it produces nearly 4.5 million t/y of the olefins.

Gerd Franken, CEO of Ineos Olefins & Polymers North, commented: “These expansions and new builds will increase our self-sufficiency in all key olefin products and give further support to our derivative businesses and polymer plants in Europe. All our assets will benefit from our capability to import competitive raw materials from the US and the rest of the world.

Speaking to British newspaper Financial Times, Patrick Lambert, a chemicals analyst at Raymond James, said: “Europe is an importer of propylene, mostly from the Middle East, so if you can make it cheaply in Europe there should be a competitive advantage. Ineos is making a bet that gas prices will remain weak because there’s so much of it available.”

A timeframe for the projects was not disclosed. In addition to Grangemouth and Rafnes, Ineos also operates two crackers in Cologne, Germany.

Major polyolefins group Borealis is also planning to build a PDH plant in Belgium. Jacobs Engineering is performing a feasibility study for Borealis’ second PDH unit in Kallo, Belgium. Annual capacity will be 740,000 t/y of propylene with start-up potentially set for the second half of 2021. The study is expected to finish by mid-2017 with a final investment decision due in the third quarter of 2018.

In addition, Grupa Azoty is considering building a PDH plant in Police, Poland, with commercial operations expected to start in 2021.