Total to shut ethylene unit at French petrochemical plant-unions

Tue Sep 3, 2013 5:42pm BST

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* Job positions to be cut at plant but workers to stay on -unions

* Total declines to comment

* European petrochem firms vulnerable to cheap US ethylene

STRASBOURG, France, Sept 3 (Reuters) - Total is expected to announce a decision to close the ethylene manufacturing operation at its Carling petrochemical plant, which faces surplus supply in eastern France and competition from cheap U.S. ethylene, union officials said.

Total will present its project on the future of Carling's 550-strong workforce on Wednesday afternoon during a works council at the group's headquarters in Paris.

"We are convinced that the plan is to shut down the last operating steam cracking unit (on the site)," Aldo Scalzo, a senior CGT union official at the factory, told Reuters.

"There is a high probability that this is the scenario that is shaping up," said Geoffroy Caillon, who heads the CFDT union at the site.

Closing the unit would bring the production of ethylene and propylene - the basic products used in many types of plastics - to a halt. Total plans to invest in boosting polystyrene output instead, the union officials said.

Cheap U.S. ethylene - a basic building block for plastics and textiles - is forcing European and Asian plants to rethink their output mix. Shale gas crackers in the United States can produce ethylene at less than half the cost of oil-based naphtha-fed crackers.

Over the next three to four years, as many as 16 plants using shale gas are expected to start up in the United States.

Total declined to comment. It is not legally allowed to publicly discuss the content of a works council before it takes place.

The union representatives said the closure was likely to lead to the elimination of 350 jobs at the plant, although the workers would be moved to other positions in the company.

Total shut the first steam cracking unit on the Carling site in 2008. The other unit was out of action for several months after an accident in 2009 and has since run at 320,000 tonnes annual output out of a total capacity of around 400,000 tonnes.

European crackers earned $659 per tonne for ethylene after subtracting feedstock and energy costs this year, versus $798 in the United States, according to market researcher ICIS.

Forty-eight of these sites, called steam crackers, are spread across Europe, mainly in Benelux, Germany and France.

Eastern France has a surplus of ethylene output, Scalzo said.

The union representatives also said the Carling site had handicaps, including not being close to a refinery or a port.

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