London: Royal Dutch Shell, which last produced polyethylene plastics eight years ago, is poised to re-enter the market to increase profit from petrochemical production.
Shell is considering the construction of an ethylene cracker in the United States as one route back to polyethylene, known as PE, Graham van't Hoff, chemicals executive vice-president, said at a briefing in London.
There are other options and management has yet to commit to any project, he said.
"It's more than possible that we will reenter PE," said the executive, who became head of chemicals on January 1. "For the technology, do you buy off the shelf or do more than that? And these are the key questions that we are working through."
PE is used in consumer goods including garbage sacks and food packaging. The Anglo-Dutch energy company exited the market when it sold its stake in Basell in 2005. Since then the field has become populated by low-cost producers in Asia and the Middle East, including Saudi Basic Industries Corporation.
The emergence of the shale industry in North America has now changed the market and Shell is considering a new cracker complex in western Pennsylvania, van't Hoff said.
For cost of production, the stiffest competition is in North America and the Middle East rather than Asia, the Oxford University chemistry graduate said, adding that it's probably cheaper to build a plant in the US because of abundance of raw materials.
Shell remains indirectly involved in PE production through an equally owned joint venture with CNOOC Petrochemicals Investment. Shell first supplied PE in a partnership with BASF called Elenac, which in turn became one-half of the joint venture with Basell. Shell exited that agreement on strategic grounds. Chemicals still generated $1.4 billion in profit.