Polish chemical industry: new opportunities through innovation
The annual Nafta/Chemia petroleum and chemical industry conference, organised by the editorial team of the ‘Nowy Przemysł’ monthly and wnp.pl web portal, was held in Warsaw on December 6th.
Industry insiders, managers representing domestic firms and foreign investors, experts, and policy makers responsible for formulating and implementing Poland’s economic policies met to discuss structural transformation of the Polish chemical industry, its vision for growth and global market prospects, as well as security of feedstock and fuel supplies.
Participating in the opening session called ‘Innovation, investment, responsiveness. A time of transformation for the Polish chemical industry’ were Sławomir Brzeziński, Vice President of the Grupa Azoty ZAK Management Board, Piotr Chełmiński, Member of the Management Board for Development and Power Generation at PKN ORLEN, Andreas Gietl, Managing Director of BASF Polska, Igor Korczagin, R&D Director at PCC Rokita, and Tomasz Zieliński, President of the Polish Chemical Industry Chamber.
During the debate, Piotr Chełmiński stressed the large capital outlays made in recent years by PKN ORLEN, chiefly on petrochemical projects: the almost EUR 1bn PX/PTA complex in Płock (giving the Group an over 17% market share in Europe), metathesis unit in Płock, biorefining projects in Trzebinia, and PE3 unit in the Czech Republic, to name just a few. Mr Chełmiński further noted that innovation does not happen overnight but requires a change in the organisational culture, something that PKN ORLEN has been working on hard for the past four years. To attain that goal one needs a willingness to take risks and allow people the freedom to make mistakes, but also the ability to terminate a project without throwing good money after bad. Embedding an innovation DNA into an organisation is worth the effort but takes time. PKN ORLEN works with numerous scientific research institutions. For instance, it has half-a-century-long, multi-dimensional collaborative relationships with the Płock branch of the Warsaw University of Technology, encompassing research and technologies, preparation of workforce and education tailored to PKN ORLEN’s needs, theses and dissertations, and student training. According to Mr Chełmiński, the era of fossil fuels is far from over. The currently unfolding transition to e-mobility will need petrochemicals and plastics to feed its development, bringing fresh opportunities for chemical companies.
Sławomir Brzeziński stressed the need for fast-track commercialisation of new ideas. A major challenge for businesses these days is to operate in-house application centres, providing valuable insights into customer needs. Competition is very strong in the chemical market, with low-cost energy, direct access to feedstocks, and product innovations among the building blocks of competitive advantage. Andreas Gietl noted that 20 percent of the world’s chemical output originates in China. However, the chemical giant is facing the challenges of slow internal market growth and loss of global market shares. This stimulates work on innovative solutions and speciality products. There is also an urgent need for effective project evaluation that would strike a balance between unrestrained freedom to innovate and the usefulness of novel ideas. Igor Korczagin observed that the main challenge lies in taking a project from laboratory to industrial scale, since the farther we go from the lab testing stage the less likely it gets for the project to receive government funding. This creates risks that someone has to bear, and more government backing would surely be in order. Tomasz Zieliński said the chemical industry in Europe is facing huge challenges associated with the current climate policy and ETS reform, adding that the chemical sector in Poland is growing faster than other branches of manufacturing, with innovation firmly ingrained in its daily practice. The participants of the ‘Innovation, investment, responsiveness. A time of transformation for the Polish chemical industry’ session agreed that in Poland’s economic reality it is through innovation that the industry can gain the most powerful, albeit not immediate, advantage. It would also be worthwhile to advance the knowledge and know-how that is already there.
According to participants in the panel discussion on ‘Polish chemical products successfully competing in the European and global markets’, enhanced product portfolios and more speciality, top-selling products could help domestic chemical companies. Some chemicals manufactured in Poland are among the world’s best, but it is commodity chemicals that still account for the vast majority of domestic chemical output (roughly 75 percent). High-margin products, on the other hand, that drive competitive advantage and earn profits for chemical giants, represent a mere 25 percent. Jacek Podgórski, the Anwil CEO, stressed that the end of 2016 has been a challenging time in terms of gas supplies. Foreign companies are investing in feedstock security. Also relevant are plans announced by president-elect Donald Trump for the US energy policy. We need to come to terms with the fact that competition in the chemical industry will only grow.
The Nafta/Chemia conference also addressed diversification of oil supply. An oversupply on the crude oil market is a perfect time to explore logistics chains for supply sources other than those lying east of Poland, which have played a dominant role for years. According to Mirosław Kochalski, Vice President of the PKN ORLEN Management Board for Corporate Affairs, what is of the essence is not so much the relative quantities of crude oils from different sources processed by Poland’s largest refinery, but whether the refinery has the ability to process diverse crude oils, source them from alternative directions, and enter into negotiations with key players, such as Saudi Aramco. For PKN ORLEN the answer to all these questions is yes. Mr Kochalski also emphasised that diversification of supply is a common market tool, and PKN ORLEN’s relative shares of crude oil sourced from countries other than Russia are a sufficient argument to underpin a strong negotiating position with suppliers. An optimal minimum solution for the ORLEN Group would be to have access to more than one supply pipeline, and the Group is working toward that end. What PKN ORLEN is doing for diversification of oil supply can be summed up as a rational approach respectful of the fundamental principles for building a secure supplier portfolio.
The conference also saw the presentation of the ‘Best Practices in Business, Education, and Science’ awards to representatives of industry and science for setting good standards of mutually beneficial collaboration. The award winners included:
• PKN ORLEN and the Płock branch of the Warsaw University of Technology for collaboration in the areas of scientific research and technologies. PKN ORLEN is also engaged in workforce preparation, inspires dissertation topics, and builds a student training portfolio
• Fluor and the Silesian University of Technology of Gliwice for a transparent and pragmatic approach to collaboration
• Grupa Azoty and the Ignacy Mościcki Technical School Complex of Tarnów-Mościce for quality education delivered through collaboration, matched to the needs and expectations of the future employer
• PCC Rokita and the Chemistry Faculty of the Wrocław University of Technology for pursuing a common goal of the business and academic communities, which is to promote top talent and inspire students to explore new areas of interest, chiefly innovation, technologies, and chemical industry practice.