Tiszai Vegyi Kombinat Rt (TVK) is Hungary's largest chemical company and only polyolefin producer. The company accounts for 20% of the petrochemical capacity in central eastern Europe. TVK's recent profits have been heavily influenced by the high prices of polyethylene and polypropylene. TVK has taken the strategic decision to concentrate its focus on the petrochemicals sector and is investing heavily in the new plant.
PROPYLENE PRODUCTION INCREASES
TVK erected a new polypropylene plant, which began commercial production in the first quarter of 2000. The expansion at a new polypropylene plant is part of a $450 million investment plan by the company over 2000-2003.
The company decided to invest in a new polypropylene plant with a capacity of 140,000t/yr in 1998. The polypropylene plant was built by Montell and Tecnimont for a cost of approximately $87.5 million. It was then decided to expand the plant's capacity by a further 40,000t/yr. This is a huge expansion, given that the new plant had already doubled the company's polypropylene capacity.
The total ethylene capacity of the plant complex will be expanded by 345,000t/yr. The first phase will be the construction of a facility with a capacity of 265,000t/yr by 2003, if TVK's plans are all fulfilled. The rest of the expansion would be deferred until 2007, when a further 85,000t/yr would be added.
The major new ethylene plant will be constructed by Linde. The ethylene will be produced using feedstock supplied by MOL, the Hungarian oil and gas company. The provision of feedstock by MOL has already been the subject of an agreement between the companies. The ethylene plant will be used to provide feedstock to a polyethylene facility that TVK will also invest in.
POLYETHYLENE UNIT TO BE BUILT
The expansion plan also includes an intention that a 180,000t/yr polyethylene unit be constructed, with an option for further expansions. The original olefins plant was built in 1975, and uses Linde technology. The intention regarding the new polyethylene plant is to change the product range of TVK, putting a greater emphasis on the more value-added grades of polyethylene.
TVK PETROCHEMICAL STRATEGY
The decision to increase capacity in petrochemicals production was taken shortly after TVK announced that it would sell all of its plastics businesses to Hungarian plastics firm Pannonplast. This deal fell through, but TVK still has the same commercial case to sell its extrusion, blow moulding and injection moulding operations to someone. The company's divestment plans also include operations in Venezuela and geotextiles.
The finance to fund this ambitious programme of expansion is intended to come from the company's own cash flow over the years to 2003.