Total SA will shut a money-losing steam cracker at Carling in France and invest 160 million euros ($211 million) in making resin and polymers at the site in a bid to boost profitability of petrochemicals production.
The closure in the second half of 2015 will result in a net loss of 210 jobs without redundancies, Europe’s third-biggest oil company said in a statement. The northeastern steam cracker is losing about 100 million euros a year, unions have said.
“The European petrochemicals market is facing continued overcapacity and growing international competition,” said Patrick Pouyanne, Total’s head of refining and chemicals. Hydrocarbon resins and polymers are “promising” markets.
Chief Executive Officer Christophe de Margerie has pledged to boost profitability of the explorer’s refining and petrochemicals businesses as European demand for fuel products falls. Total has had to tread carefully in announcing job losses amid government pressure to keep industrial production in France and after a battle with unions over the shutdown of the Flanders refinery.
The Carling site will become Total’s European center for resin production through its Cray Valley company, said Total, based near Paris. The move will ensure delivery to local customers of ethylene and propylene that was made by the steam cracker.
Cray Valley specializes in the production of resins for adhesives, automotives and electronics like touch-screen tablets, it said.
Lack of investment and a rapid souring of the market led to a decline of activity at the site, the CFDT union said in a statement today, condemning the job cuts.
The changes at Carling are part of a wider reorganization of Total’s refining and petrochemicals businesses. The explorer wants 2015 downstream profitability to rise by 5 percent compared with 2010 and has promised to reduce European refining and petrochemicals exposure by 20 percent, according to its website. It is focusing on six facilities including Normandy in France as well as plants in Saudi Arabia, Qatar, South Korea and Port Arthur in the U.S.
Total in 2010 sold resin units for 550 million euros to Arkema SA, the chemical maker it spun off. Total unveiled an overhaul in 2011 to merge crude processing and petrochemicals and separate out fuel marketing.
Europe accounts for 56 percent of Total’s petrochemicals capacity.