French energy giant TotalEnergies announced today its decision to permanently shut down its oldest steam cracker located in Antwerp, Belgium, by the end of 2027. The move comes in response to an anticipated "significant surplus of ethylene expected in Europe" and the non-renewal of a major supply contract.

TotalEnergies stated that the decision to shutter the decades-old cracker was partly driven by the expiry of a key contract in 2027 with a major client, who opted not to renew. Historically, this unit was the primary source of ethylene  for this specific customer.

Despite the shutdown, the company assured that the 253 employees affected would not face layoffs. Instead, they will be offered either a retirement package or the opportunity for an internal transfer within TotalEnergies.

This announcement follows similar moves by other chemical companies in Europe. Last year, ExxonMobil Chemical France initiated the closure of its steam cracker and petrochemical production at Port Jerome. Just last week, LyondellBasell and Covestro jointly announced the permanent shutdown of certain production units in the Netherlands, further highlighting the sector's ongoing adjustments to market conditions.

TotalEnergies will maintain operations at its more recently constructed steam cracker in Antwerp. The ethylene produced by this newer unit is entirely utilized by TotalEnergies' own industrial facilities situated in Antwerp and Feluy, ensuring continued supply for its internal needs.

TotalEnergies CEO Patrick Pouyanne had previously acknowledged the overcapacity issue within the European refining landscape during earnings call in October. He indicated the company's intention to review its six European sites and strategically convert the underperforming ones into biorefineries focused on producing renewable fuels. This strategy has already been implemented at TotalEnergies' La Mede and Grandpuits facilities in France.

Interestingly, the Antwerp site slated for the steam cracker closure is already undergoing a transformation towards sustainability. The facility is set to commence production of sustainable aviation fuels later this year. Furthermore, TotalEnergies has ambitious plans to utilize green hydrogen, generated from its offshore wind farms, to produce even more renewable transport fuels at the Antwerp site by 2027. This strategic shift suggests a long-term vision for the Antwerp location, albeit with a focus on greener energy solutions rather than traditional petrochemical production from the older cracker.

The shutdown of the Antwerp steam cracker by TotalEnergies signifies a further consolidation within the European petrochemical industry as companies navigate challenging market dynamics and adapt to evolving energy landscapes. The focus on renewable fuel production at the same site indicates a potential pivot towards a more sustainable future for TotalEnergies' operations in the region.