Notice

Category A project supported: INEOS Project One, Belgium

Published 14 April 2023

1. Project description

UK Export Finance has agreed to provide support to INEOS Olefins Belgium NV (INEOS) in relation to the design, engineering, procurement, construction, commissioning, and operation of an ethane cracker (ECR) and associated utilities at the Port of Antwerp in Flanders, Belgium (Project One or “the Project”).

The Project ECR will convert ethane (1,910 kilo tonnes per annum [kta]) to ethylene (1,450 kta). Other high value chemicals (HVC), such as propylene, pyrolysis oil, C4 and C5+ hydrocarbons, are formed in limited quantities as by-products. Hydrogen is also formed during the cracking process. The feedstock, ethane, is a by-product of shale gas extraction, shipped in very large ethane carriers (VLECs) from the USA (specifically the northeast and Gulf of Mexico coast).

INEOS has confirmed that the ethylene produced by the Project will predominantly be used by third parties to produce durable applications e.g., pipes, cable ducting, additives, etc., with less than 10% anticipated to be destined to the production of single used plastics (defining these as specified in the EU Directive 2019/904). This estimation is based on INEOS’s analysis of the potential and likely Project off-takers over time.

The Project includes:

• Construction of an ECR and associated utilities;
• Laydown Area (during construction) and contractor yard (during operations); and
• Associated facilities, including a quay wall and a four-kilometre-high voltage underground cable connection.

2. Project sector

The Project is in the petrochemicals sector.

3. Project sponsors

The Project is being developed by INEOS Olefins Belgium NV (INEOS).

4. UK exporters

Wood Group UK Limited; TGE Gas Engineering GmbH; T.EN Netherlands B.V.; Linklaters LLP; and INEOS Sales (UK) Limited.

5. Export Credit Agent Bank

Credit Agricole Corporate and Investment Bank

6. Amount of UK Export Finance support

The principal value of the support is EUR€ 700 million.

7. OECD common approaches and equator principles

UK Export Finance categorised the Project as Category A i.e., having potentially significant environmental, social and human rights (ESHR) impacts in accordance with the definition in the 2012 (Revised 2016) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”) and the Equator Principles (2020).

As required by the OECD Common Approaches, UK Export Finance disclosed its possible involvement in the Project at least 30 days prior to support being committed to. A notification was posted on the UK Export Finance web site on 17th August 2022, which directed interested parties to the contact from where published ESHR information can be sourced. UK Export Finance did not receive any comments from interested parties.

8. Environmental, social and human rights standards

Project related ESHR documentation was reviewed for their alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines.

The applicable IFC PS were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts;
• PS2: Labour and Working Conditions;
• PS3: Resource Efficiency and Pollution Prevention;
• PS4: Community Health, Safety and Security;
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; and
• PS8: Cultural Heritage.

The applicable World Bank Group EHS Guidelines were:

• General EHS Guidelines (2007); and
• EHS Guidelines for Large Volume Petroleum based Organic Chemicals Manufacturing (2007).

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:

• climate change;
• biodiversity;
• occupational health and safety;
• emissions to the atmosphere (including land, air and water);
• waste and hazardous material management;
• emergency planning and response;
• grievance mechanisms; and
• community engagement.

10. Assessment of ESHR impacts

A review was undertaken in line with the requirements of the OECD Common Approaches and Equator Principles to identify potential ESHR risks and impacts of the Project and how these would be effectively managed.

A review of project-related documentation by an Independent Environmental and Social Consultant (IESC), was also undertaken.

The review included:

• Desk-based review of project-related documentation: Environmental and Social Impact Assessment (ESIA), Environmental and Social Management Plans (ESMPs); Climate Change Risk Assessment (CCRA) including physical and transition risks; External Safety Report; Human Rights Due Diligence in the Supply Chain; and a Stakeholder Engagement Plan (SEP); and
• Follow-up meetings and interviews with relevant Project representatives.

A physical site visit was not organised, due to COVID-19 travelling restrictions.

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

Taking account of the review, the Project was deemed to have potential to cause a number of adverse environmental and social impacts both during construction and operation. However, a proposed suite of controls as part of the Project’s environmental and social management systems, if implemented effectively, should facilitate the management of these impacts.

11. Climate change considerations

UK Export Finance considered the potential direct and indirect greenhouse gas (GHG) emissions of the Project and effects of climate change factors on the Project as part of its ESHR review.

A CCRA was conducted by UK Export Finance. It considered the Project context, host country commitments and policies related to climate change, the Project’s emissions and climate-related factors potentially affecting the Project. Estimated scope 1, 2 and 3 emmissions were considered reasonable and in accordance with the GHG Protocol. The Project has committed to become carbon neutral (for Scope 1 & 2 emisisons) 10 years after the start of the operations phase. As a result, the Project is not considered to hinder the ability of the European Union (EU) to meet current climate-related policy or international commitments, including the Paris Agreement.

UK Export Finance also considers that scope 1 and scope 2 Project emissions have been effectively minimised via the consideration of technology options, with the most efficient option selected.

12. Decision

Various actions have been agreed between the Project sponsor and parties involved in the financing, which are necessary to ensure the Project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the Project cycle. UK Export Finance has therefore decided to provide its support in respect of the supply of goods and services by UK exporters to the Project.

A condition of support is that Project will be subject to ESHR performance monitoring and reporting in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.

UK Export Finance

12th April 2023