INEOS to advance in UK shale, buys interest in IGas licences

Lyndhurst, UK – Petrochemicals major Ineos has announced a deal to acquire a 50-percent interest in seven IGas shale gas licences in the north west England.

The company is paying IGas a cash sum of £30 million (€42 million) for the Bowland licences. It also committed to fund a two-phase work programme of up to £138 million to develop the sites.

IGas will reimburse its share of the work programme to Ineos upon commencement of commercial production.

Ineos has been one of the proponents of shale gas in the UK and Continental Europe and has voiced its support for the technology, stating it was vital to keep the European chemical industry competitive.

“Ineos believes that an indigenous shale gas industry will transform UK manufacturing, and that we can extract the gas safely and responsibly,” said Gary Haywood , CEO of Ineos Upstream.

The chemical giant has warned the EU that its chemical industry would face “dire consequences” if it does not develop low-cost energy to make it able to compete with other regions like the US.

Ineos chairman Jim Ratcliffe recently criticised the EU’s competitiveness strategy in relation to manufacturing, energy and raw material costs, and regulation.

According to Ratcliffe, in order for a chemical company to be profitable it needs competitive raw materials, competitive energy, and competitive labour.

Gas in Europe is more expensive than many parts of the world, three times more expensive than in the US.

The US and more recently the Chinese pose the highest level of competition to Europe, both of which can source energy and feedstock from low-cost resources.

While 22 chemical plans closed down in the UK in the past five years, the US is investing nearly €121bn in its chemicals industry, including shale gas production, according to Ratcliffe.