Grupa Azoty Group’s PDH Propylene Production Plant, Police, Poland

The new PDH unit will produce approximately 400,000t of propylene a year.

Grupa Azoty Group's proposed propane dehydrogenation (PDH) unit for the production of propylene is the company's biggest project announced to date. To be located in Police, Poland, it will be Europe's most advanced and biggest PDH unit when it comes online in 2019.

The project was conceptualised in 2008, the decision to implement was made in 2014, and the technology licencing agreement was signed in May 2015. Construction is expected to start in the first half of 2016.

The site in Police was selected due to the presence of the group's existing infrastructure, which can be integrated to meet the project needs, the site's close proximity to the Western European Market, and access to the Baltic Sea, which can serve as the main transport route.

Purpose and benefits of the Polish propylene production plant

The project is being implemented to offset the propylene deficit in Poland and Europe. Poland currently imports approximately 150,000t of propylene a year, majority of which is purchased by Grupa Azoty ZAK, and a decrease in propylene production is expected in Western Europe in the future. The current annual deficit of propylene in Germany alone is approximately 850,000t.

The new plant is expected to generate approximately 1,000 jobs during the construction phase and 200 permanent jobs when it starts operations. It is also expected to add approximately zl2bn ($537bn approximately) a year to Groupo Azoty Group's revenue.

Details of Grupa Azoty Group's flagship project

The PDH unit will have a designed annual propylene production capacity of approximately 400,000t, of which roughly 150,000t will be supplied to Grupa Azoty ZAK for production of OXO alcohols at its existing Kedzierzyn plant, while the remaining will be exported.
The by-product from the project will be hydrogen, which will be supplied to the group's ammonia production unit at Police.

The project additionally involves the construction of a power plant and expansion of the Police port facilities owned by the Group to include a new liquids and fuel terminal that will be capable of accommodating the biggest LPG ships when completed.

Honeywell's technology for Grupa Azoty Group's new propylene plant

The technology licensed for the project is Honeywell's proprietary C3 Oleflex process technology. Honeywell will additionally provide software solutions for the project.

Compared with other dehydrogenation processes, the technology is touted for its low cost of production, high return on investment, high-yield, small environmental footprint and use of a fully recyclable, platinum, alumina-based, catalyst system using just four reactors.

Financing the biggest PDH-based propylene plant

The project is estimated to involve a capital expenditure of zl1.7bn ($457m approximately). The financing will be overseen by a special purpose vehicle (SPV).

"It will be Europe's most advanced and biggest PDH unit when it comes online in 2019."

According to a co-operation agreement signed between Grupa Azoty Police, Grupa Azoty ZAK, and Polskie Inwestycje Rozwojowe (PIR - Polish Investments for Development) in May 2015, Grupa Azoty POLICE will be the project sponsor, Grupa Azoty ZAK will be the trade investor, and PIR will be the preferred financial investor in the SPV.

Key players involved

The economic adviser for the project is PwC, the market adviser is Nexant, whereas APS KTI Poland and Tecnimont are the technical advisers.

Marketing commentary on Grupa Azoty Group

Grupa Azoty Group, headquartered at Tarnów, is Poland's biggest chemical company and the European Union's second biggest producer of nitrogen and multi-component fertilisers. Other products produced by the Group include melamine, caprolactam, polyamide, OXO alcohols and titanium doxide.

The Group was formed in 2014, with the merging of the four biggest chemical companies in Poland. It generates 90% of its revenues through sales in the European market.