Ineos

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Ineos is a major chemicals company and a 50 per cent owner of the Grangemouth refinery in Scotland. It is part of the Ineos Group, a privately owned multinational chemicals company headquartered in Rolle, Switzerland, with its registered office in Lyndhurst, United Kingdom. British billionaire Jim Ratcliffe is the founder, chairman and main shareholder.

Sometimes described as 'the biggest company you've never heard of', Ineos has more than 80 separate firms registered at the UK Companies House. It is the largest privately owned company in the UK. [1] In 2013 the Group's turnover was £43 billion.

Since 2014 Ineos has made substantial investments in shale gas exploration in the UK, buying up licences from BG Group and IGas Energy, making it the UK's third largest shale explorer.

In July 2016 Ineos announced it intended to accelerate UK shale gas development by lodging as many as 30 planning applications to drill test fracking wells in the north of England in early 2017. It said it hoped to begin extracting gas within 18 months.

Tom Crotty said he believed that once drilling started, people would 'see [fracking] is not the Frankenstein monster they thought it was'. According to the Financial Times, 'he was confident that recent changes to rules allowing ministers to intervene if local councils delay granting permission would finally lead to Ineos drilling test wells'. Until permission was granted, he admitted it 'would continue to be “difficult” to convince critics'. [2]

Ineos also announced it would end a six-year tax exile with the opening of a new headquarters in London for its mainly UK-based upstream oil and gas businesses. However questions remain in mid-2017 over the details of its tax structure.

Background

INEOS Group is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell). It employs over 15,000 employees at 51 manufacturing plants in 11 countries.

In the UK:

INEOS Group own and run major plant at Runcorn (chlorine and caustic soda, used in many products – pharmaceuticals, synthetic fibres, bleach, water purification etc), Grangemouth in Scotland (two high energy ‘crackers’ to produce commodity chemicals used in fuels, solvents, nylon, packaging etc) and have plants based at Seal Sands, near and linked to the Wilton cluster, in the North East.

It co-owns Grangemouth with PetroChina. In July 2014 Ineos received a UK government loan guarantee to build Europe’s largest ethane storage tank at Grangemouth. The following month Ineos bought the rights to explore fracking for shale gas in a 127 square mile area around Grangemouth and the Firth of Forth.

In August 2015 Ineos Upstream was awarded a further three blocks (SK45, SK48 and SK58a) by the UK government in its first tranche of the 14th onshore licensing round.

The move into shale gas

Views

Ineos PR supplement published in newspapers January 2017

In 2013 INEOS published a lengthy article in its in-house magazine outlining its views on Europe's 'dithering' in the debate over shale gas exploration and production. It argued that action to facilitate shale gas production in the UK is imperative or chemical production in other regions, particularly the US, will gain such a competitive advantage that UK production will become uneconomic.

The firm plans to use imported US shale-derived feedstock in their chemical plants at Grangemouth. INEOS is one of very few companies able to use shale gas as both a fuel and a feedstock.

INEOS has decided it cannot wait, and has struck a deal with the US to bring US raw materials to its European plants to maintain a competitive global Olefins & Polymers business. From 2015 INEOS Olefins & Polymers in Norway will begin taking ‘shipments of US-derived ethane – an essential ingredient necessary to produce ethylene. [3]

INEOS warned in a report to the House of Lords EU sub-committee 'that rising energy costs threaten to undermine the ability of manufacturers in the EU to compete on the world stage'. Chemical industries that rely heavily on fossil fuels to run its plants were 'particularly at risk' it said.

'We are acutely vulnerable to fluctuations in energy prices,' said Tom Crotty, INEOS' group director. 'We sell our products in fiercely competitive international markets and cannot pass on costs to our customers. But we cannot afford to operate in jurisdictions with uncompetitive energy prices.'

INEOS believes that Europe 'should shield energy-hungry industries from steep price rises' while it moves towards creating affordable low-carbon energy sources.

'If it doesn’t, production will be forced out of Europe to more competitive locations which will mean the loss of jobs, investment and tax revenue,' he said. Decarbonisation should not mean deindustrialisation, said Tom. 'The aim must be to connect industry to green energy supplies, not push industry away,” he added. He said energy-intensive industries were not ‘sunset industries’ standing in the way of environmental improvements. 'They are actually a vital source of raw materials and innovations required to make the green economy a reality,' he said.

Headquarters move to London

In December 2016, Ineos opened a new headquarters in London, UK, saying the move reflects its increased confidence in this country. Jim Ratcliffe said they were 'planning to extract shale gas in the north of England and to grow the newly revitalised Grangemouth. We have immense confidence in Britain’s economic future – the current business climate makes siting our new headquarters in the UK an easy decision. INEOS will continue to grow both in the UK and worldwide. Britain is a good location to ensure both of these goals.'

Climate change and industry minister Nick Hurd welcomed the company's arrival with open arms, saying: 'This decision is another vote of confidence in the British economy and confirms the company’s commitment to further long-term investment and growth in this country.' [4]

Buying up shale exploration licences

2014

INEOS-pedl-licences-768x497.png

In August 2014 Ineos made its first move into onshore shale gas exploration in the UK, buying from BG Group a 51 per cent share of a shale licence covering 329 square km of the Midland Valley in Scotland, which includes the area around the Grangemouth refining and petrochemical complex. Dart Energy (now owned by IGas Energy) owned the other 49 per cent [5] however in March 2015 Ineos announced it was buying IGas's stake in the shale licence around the Grangemouth plant, thus giving it full ownership of the site.

2015

Click to enlarge

In March 2015 IGas agreed a deal with chemicals giant Ineos to sell it at least a 50% interest in seven of IGas’ shale gas licences in the North West along with the option to acquire a 20% interest in two further IGas licences in the East Midlands. The deal is worth £30 million in cash and a further £138 million committment to fund a two phase work programme to develop the sites. [6]

Ineos also pledged an extra £138m to help IGas expand its shale gas operations in the North West and East Midlands regions in England. [7]

2016

In September 2016 it was reported that Ineos was planning as many as 30 applications for fracking sites in the UK within the next year. 'Ineos estimates that it will be at least five years before any of its UK wells are actually producing shale gas'. [8]

2017

Ineos bought up 15 shale licences from French energy company Engie for an undisclosed sum, increasing by 10 per cent its rights to explore across 1.2m acres in the East Midlands, Yorkshire and Cheshire.

Meetings on shale gas with UK government ministers and officials

  • Stephen Lovegrove, DECC Permanent Secretary met with Jim Ratcliffe on 28 June 2013 at 3 Whitehall Place. The government's briefing notes described Ratcliffe as 'very well connected and has had a number of meetings with Ministers in various Departments and with Jeremy Heywood'. A section discussing INEOS' potential activities in shale gas was redacted from the briefing note. This meeting appeared to have been suggested to Lovegrove at a 'recent Lancastrian dinner' (held in April 2013). The focus of the meeting was 'primarily... about shale gas and the importance of supporting its development' in the UK. [9]
  • Duarte Figueira (Energy Development) Head of the UK Office of Unconventional Gas and Oil - with Ineos chairman Jim Ratcliffe attended the same meeting above. [9]
  • Jeremy Heywood, May 2013 met with unnamed representatives of INEOS, Cuadrilla, Carillion, UKOOG, the Environment Agency and Lancashire County Council to 'discuss the potential for UK Shale Gas'. [10] [11] He met again in September 2014 with an unnamed representative of INEOS for a further 'discussion on shale gas'. [12]
  • James Wharton, minister for the Northern Powerhouse met with INEOS in September 2015

Chemical industry meetings with Ministers

Revolving door

In early 2017 Spinwatch revealed that a highly influential senior government official, Patrick Erwin had been seconded to lead Ineos' strategic push for shale in the UK since 2014.

One stark example of the fracking industry and government interests aligning is the case of Patrick Erwin, a former top civil servant in the department of energy and climate change (DECC) and the department for communities and local government (DCLG).
Three years ago, Erwin was seconded to work at Ineos, the petrochemical giant. His move coincided with the firm’s foray into fracking. As Ineos Upstream’s new commercial director, he was central to the development of its shale gas plans, helping it secure over one million acres in government licences to become Britain’s biggest onshore oil and gas operator.
Erwin was Ineos' point-man for its ‘relationship with government and industry’. Documents released to Spinwatch under the Freedom of Information Act (FOIA) reveal how in 2014 he organised meetings for Ineos’ billionaire owner, Jim Ratcliffe, with permanent secretary Stephen Lovegrove and other DECC top brass, ahead of the company’s final decision to enter the shale gas market.
A regular on the shale gas conference circuit, Erwin has argued that fracking is vital for the country’s future. In a speech in summer 2015 he warned that without shale gas the UK risked becoming an environmental ‘theme park'; a strategy he called ‘massively irresponsible’.
At the same event Erwin acknowledged the importance of talking to and 'standing up in front of communities' in potential shale gas areas. Yet less than a year later he and two other senior Ineos directors held a series of closed private meetings with parish councillors to discuss plans for Ineos license blocks in Cheshire, Derbyshire and North Yorkshire.
Despite FOIA requests, DECC refused to publicly name Erwin as the government’s man seconded to Ineos. Erwin only declared the secondment on his LinkedIn profile after it had ended in 2016. Last month he joined Northern Powergrid as its policy and markets director. [14]

Lobbying against green energy taxes

In April 2017 it emerged Ineos was pushing the government to use Brexit as a chance to exempt the chemicals sector entirely from climate policy costs. Documents obtained by Friends of the Earth revealed that an industry-government initiative Chemistry Growth Partnership chaired by Ineos director Tom Crotty, was lobbying to get rid of the UK’s carbon floor price ( a carbon tax on electricity generators) as part of their efforts to cut energy costs passed on to chemical companies.

The objective, as revealed in the documents, is to: 'Support appropriate policies to enable the safe exploitation of unconventional gas [shale gas], sustainable use of biofuels and optimal use of waste resources.'[15]

Bullying tactics: threatens to sue the National Trust if it doesn't agree to seismic surveys

In July 2017 Ineos said that it had been trying to get permission to carry out seismic surveys in Nottinghamshire's historic Clumber Park from the National Trust for over a year, but claimed that the Trust had refused to discuss and so Ineos was considering legal action.

If the National Trust refuses to change its position, Ineos will have no choice but to write to the Oil and Gas Authority, asking for permission to seek a court order enforcing its rights to carry out these surveys on National Trust land,” Ineos said in a statement.

Director Tom Crotty argued that Ineos's abitliy to extract shale gas would be 'significantly limited' if tests could not be carried out on the Trust's land.

Ineos Shale's commercial director Lynn Calder claimed the trust was playing politics.

'The National Trust is taking an overtly political position against all fossil fuels. What it fails to recognise is that shale gas is 50% cleaner than coal and 30 per cent cleaner than oil. The development of shale gas will actually reduce greenhouse gas emissions. We are developing a shale gas industry that is safe and essential for the UK and the economy. It is estimated that the industry will create tens of thousands of well-paid jobs and Ineos has pledged to give 6 permission of revenue to local people - potentially amounting to billions of pounds.” [16]

Injunction against potential protestors at its sites

In July 2017 Ineos Shale secured an interim High Court injunction against anti-fracking protestors. [17]

Fracking in Scotland

In 2015 Ineos launched a 'Scottish shale gas community engagement programme' to help tackle the opposition that has emerged against fracking in the region. Its campaign was engineered to show people that fracking technology was safe and how the process would bring about huge economic benefits to local people.

The petrochemical company's sudden concern for the nation's economic performance was considered somewhat perplexing, given the Grangemouth controversy that had erupted just a few months earlier, when Ineos chose to keep its plant shut despite the cancellation of the planned strikes - actions that saw it accused of holding Scotland 'to ransom'.[18]

Scotland has had a moratorium on shale gas, coal bed methane and underground coal gasification since 2015. In June 2016 when the Scottish Parliament voted for a permanent ban Ineos responded by stating that the vote made little difference.

The vote this evening changes very little. A process remains in place in Scotland to further assess scientific, evidence based research before a decision is taken on fracking.
This has important implications for the people of Scotland and its economy and should not be prejudged before it has reached its conclusion. INEOS has been clear that it believes shale gas can be extracted safely and that Scotland is losing out as the centre of excellence moves south.
We are focused on England where we believe that shale can provide much needed jobs, investment and energy security.” [19]

Meetings with ministers

  • 21 June 2017 - Senior Scottish ministers held private meetings with INEOS and Grangemouth executives from China five times in 13 months, reports Rob Edwards at The Ferret. Briefings released under freedom of information law show that in 2016 Nicola Sturgeon met Ineos boss Jim Ratcliffe and Chinese businessmen who are involved in helping to run the Grangemouth refinery. The Deputy First Minister John Swinney and economy secretary Keith Brown also met with Ineos managers. The purpose of the meetings has been kept secret.[20]

PR films countering anti-fracking concerns

  • INEOS, Fracking facts water contamination: 'Some campaigners claim fracking leads to water contamination. That is not the case. This video explains the facts.' Published on Youtube May 2016.
  • In September 2016 it was reported that '[a]s part of its campaign to win over critics, Ineos invited journalists to tour fracking sites in Pennsylvania operated by Consol, a Pittsburgh-based producer of natural gas and coal and, supposedly, an example of why fracking will be good for the UK.' [21]

First shipment of shale gas

In September 2016, a tanker carrying ethane from the US sailed up the Forth to the Ineos refinery in Grangemouth. Ineos said the shipment was the result of a £1.6billion investment in eight tankers that will form a 'virtual pipeline' for shale gas between the US and the UK and Norway. 'The Intrepid' - its smaller sibling, the INEOS Insight, was the one to dock in Forth - is one of four Dragon-class vessels that have already been delivered to Ineos. Over the next year, another four will be built and launched. [22]

Ineos claims the gas will replace dwindling North Sea supplies, and secure the future of Grangemouth’s 1300 workforce, and a further 9000 Scottish jobs.

When the shipment arrived, many politicians and environmental groups criticised the gas, fearing it will be a first step on the road to allowing fracking in Scotland. Mark Ruskell MSP, the Scottish Greens' climate, energy and environment spokesman, said:

'As well as shale gas, the so-called 'dragon' fleet of ships docking in Scotland will also bring with them a renewed campaign by Ineos for fracking to be given the go ahead. The Scottish Government must legislate for an outright ban on fracking because its vague 'moratorium' policy is clearly giving hope to fossil fuel giants intent on digging up Scotland.' [23]

Responses to the Scottish Government report and moratorium

On the Scottish Government's decision to impose both a report and moratorium on fracking, Ratcliffe said: 'We have no objection to people evaluating safety and environmental issues, I think that’s all very fair and proper. But it probably would have been quite sensible to let us at least do the exploration phase in Scotland.' [24]

One of the biggest fears of the Scottish government regarding shale gas is the lack of regulation shown in the US. In September 2016, Ineos insisted that fracking in the UK will be different than in the US. For one, the technology has come a long way over the past decade. As the US fracking industry has matured, lessons were learned, making it easier to replicate best practices on fracking sites in the UK. To ease the inconvenience of light, noise and traffic during drilling, Ineos also promised to give 6% of its profits to the UK communities where it will frack. [8]

Debate on fracking in Scotland

In a debate hosted by the All Party Parliamentary Group on Unconventional Oil and Gas (APPGUOG) in December 2016, Stephen Tindale, now a consultant to INEOS Shale, defended the idea of fracking in Scotland. He argued that '[s]hale is a necessary part of decarbonisation' as the demand for gas-based sources of heating will remain high for several decades. Tindale also argued that, while shale gas extraction did not have a public license now, it did have a human rights element to it as it would mean less dependency on imports from states who do not respect the human rights of their people. He responded to the argument that fracking destroyed jobs in other sectors such as renewables and conventional oil and gas by blaming the government instead for its erratic policies on renewables.

On the question of whether shale gas extraction is beneficial to the economy, Tindale said:

'Nobody knows because the geology of the UK is very different from the US so it needs to be tested. Is that a waste of money? It might be. The question then is whose money is it? Is it public money? No. [...] [W]e shouldn’t give public money to it but we should be prepared to allow them [the companies] to proceed [investments] if they have their own money. [25]

Constituencies including INEOS licences

Legal action against Chinese companies over misuse of trade secrets

In March 2014 Ineos announced it was taking legal action against a number of Sinopec and Sinopec subsidiaries (SNEC, Anqing and others) for breach of contract and/or misuse of trade secrets.

INEOS says that Sinopec Ningbo Engineering Company has broken a long established technology agreement which, together with trade secret misuse by other Sinopec companies, has enabled development of a series of new world scale Acrylonitrile plants without INEOS agreement or consent. INEOS, which has otherwise excellent relationships with Sinopec and with China, has no choice other than to protect its intellectual property. INEOS fears that these breaches of rights will cause major harm to its Acrylonitrile business which generates up to $500m per annum of profit and has a replacement value of $3 billion. It supports around 5,000 direct and indirect jobs in the USA and Europe. [26]

Affiliations

People

Former executives

  • Patrick Erwin, commercial director of Ineos Upstream, leading on commercial strategy, developing partnerships and on asset purchase - led the economics and work programme parts of for INEOS’s application to the 14th Onshore Licensing Round. Seconded from central government 2013-May 2016, then on staff until December 2016 before leaving to join Northern Powergrid.

Lobbying and PR firms

External

  • Burson-Marsteller (B-M) took over the Ineos account in July 2014 from Portcullis Public Affairs who had retained it for several years. Freedom of information requests reveal that B-M has set up meetings with UK government ministers for INEOS
  • PPS Group provides public affairs advice to Ineos Enterprises Ltd (2014-2015)
  • Media Zoo’s UK media relations and reputation management brief includes communicating with trade organisations and governments in the US and Germany, which are key markets for Ineos. [27] Creative director Mark Killick works on the Ineos account. [28] along with Andrew McLachlan and Hannah Brandstaetter. Media Zoo has also facilitated press trips from the UK to view the company's operations in the US
  • Edelman [29]

Internal

Contact

Website: http://www.ineos.com/
Twitter: @INEOS_Upstream
London address: 38 Hans Cres, London SW1X 0LZ

Resources

On Powerbase and Spinwatch

See: Fracking lobbying firms See: Fracking Spads

Ineos

Ineos Public relations video series

PR supplements

  • Ineos, [File:Ineos-fracking-supplement-2017.pdf Fracking, What everyone should know], advertising feature pull-out, this version published in the Derbyshire Times,28 January, 2017 [pdf download]

Freedom of information requests

News articles and video

Notes

  1. ↑ Nick Mathiason, Ineos tax deal sparks fury as firm plans move to Switzerland, theguardian.com, Thursday 4 March 2010 21.05 GMT
  2. ↑ Peggy Hollinger, Industry Editor Ineos targets British test wells to kick-start shale gas market, Financial Times, 17 July 2016, accessed same day
  3. ↑ Inch Magazine Material Gain, 2013
  4. ↑ Ineos opens new base in London, Energy Voice, 6 December 2016, accessed 22 December 2016.
  5. ↑ Ineos, INEOS moves into UK shale gas exploration, Press release dated 18 August 2014
  6. ↑ INEOS to acquire significant share of key IGas North-West shale gas assets, Ineos press release, 10 March 2015, accessed same day
  7. ↑ IGas signs £30m shale gas deal with Ineos to expand, BBC News, 10 March 2015, accessed same day
  8. ↑ 8.0 8.1 Jana Kasperkevic, In Ohio, frackers are drilling. Soon Ineos will be doing the same in Britain, The Guardian, 17 September 2016. Accessed 22 December 2016.
  9. ↑ 9.0 9.1 Email exchanges of 30th June between Ineos and DECC Officials. Briefing material for 28th June Meeting 3. Email exchanges between Ineos and DECC Officials, see page 7 of 17 for this reference.
  10. ↑ Damian Carrington, Emails reveal UK helped shale gas industry manage fracking opposition, The Guardian, 17 January 2014, accessed 5 January 2017.
  11. ↑ Jeremy Heywood's released external meetings April to June 2013
  12. ↑ Jeremy Heywood's released external meetings Q2 2014-2015
  13. ↑ Transparency data BIS ministerial meetings: October to December 2013, Published May 2014, acc 6 November 2013
  14. ↑ Melissa Jones, Meet the Frackers’: a Spinwatch lobbying tour , Spinwatch, 15 January 2017
  15. ↑ Adam Vaughan, Fracking firm Ineos leads industry lobbying to avoid green tax, The Guardian, 3 April 2017
  16. ↑ Ineos threatens to sue National Trust so it can carry out fracking survey on its land, Independent, 20 July 2017, accessed 21 August 2017
  17. ↑ Upstream Limited and others v Persons Unknown Approved Note of Judgment of Mr Justice Morgan dated 28 July 2017
  18. ↑ Holyrood Exposed: A Guide to Lobbying in Scotland, squarespace.com, 12 October 2015, accessed 12 October 2015
  19. ↑ INEOS Upstream, Twitter
  20. ↑ Rob Edwards, Revealed: Scottish ministers’ meetings with fracking firm The Ferret, June 21, 2017
  21. ↑ Jana Kasperkevic, In Ohio, frackers are drilling. Soon Ineos will be doing the same in Britain, The Guardian, 17 September 2016. Accessed 22 December 2016.
  22. ↑ Shale tsunami: the virtual pipeline funnelling oil to Europe's shores, Offshore Technology, December 19 2016, accessed 22 December 2016.
  23. ↑ First shipment of shale gas from US arrives in Grangemouth, met by angry environmentalists, Daily Record, 27 September 2016. Accessed 22 December 2016.
  24. ↑ First shipment of US shale gas to arrive in Scotland as fracking debate continues, Daily Record, 26 September 2016. Accessed 22 December 2016.
  25. ↑ [ http://www.theenergycollective.com/energy-post/2394513/fracking-gang-plank-to-climate-chaos-or-necessary-part-of-decarbonization Fracking: ‘Gang Plank to Climate Chaos’ or ‘Necessary Part of Decarbonization’?], Energy Collective, December 7, 2016, accessed December 22 2016.
  26. ↑ INEOS announces legal action against Sinopec and Sinopec subsidiaries, 21 March 2014, acc 5 May 2014
  27. ↑ Glen Munro, Grangemouth owner Ineos awards corporate work to Media Zoo, prweek.com, 21 January 2014
  28. ↑ Mark Killick, The comms battle for Grangemouth, PRWeek, January 07, 2014, acc 20 August 2014
  29. ↑ PRCA Public Affairs Register: Consultancies – March to May 2013
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