Chemical Week • July 3/10 • Cepsa Química’s next chapter

Little more than a year ago, in May 2022, energy company Cepsa SA (Madrid) announced that it would retain its chemicals business, Cepsa Química SA, after completing a wide-ranging review of options for the division, and in April 2023 José María Solana was appointed to lead Cepsa Química as its new executive vice president. Solana’s vision is to turn Cepsa Química into “the safest and greenest chemical company” with next-generation chemicals.

Cepsa Química comprises three main petrochemical business lines: linear alkylbenzene (LAB); cumene, phenol and acetone; and solvents. The company is the world leader in LAB, a detergent raw material, with plants in Spain, Canada and Brazil, and is a leading producer of cumene and the second-largest player in phenol and acetone, with plants in Spain and China. It also has facilities in Germany, Indonesia and Nigeria.

“Our strategy is to become the safest and greenest company in addition to continue being a leader in our field,” Solana told CW, adding that he is still in the process of considering and working on how the exact strategy of Cepsa’s chemicals business should look going forward, considering he has only been at the helm for a few months.

Solana has more than 25 years of experience in the chemical industry and was global commercial director of Cepsa Química before taking over as the business’s head, having carried out other functions in Cepsa Química’s sales and business operations. He was also deputy CEO and CMO at Sinarmas, Cepsa Química’s Singapore-based subsidiary, for six years.

Safety is a key priority for Cepsa Química. “We want to transform our technologies with safety guiding us and our business model, to be the best in class. We are already working to improve the technologies we own further and toward a transformation of the industry to move to a technology that is much safer and more efficient — an evolution of the technology,” Solana said.

Cepsa owns the Detal technology that it codeveloped with UOP, to produce a novel type of LAB that can be used as a raw material for biodegradable detergents, and in a safer, more efficient and sustainable way, the company said.

“Detal is the safest technology for the production of LAB and we are working to improve this technology and incorporate innovation, and secondly within our planning agenda is to transform all our LAB plants using hydrofluoric acid [HF] technology to Detal,” Solana said.

In May 2021, Cepsa’s San Roque, Spain, LAB plant became the first in the world to replace HF technology with Detal.

Through the use of Detal technology, the plant’s safety and efficiency have been improved, and waste and the need for maintenance have been reduced, according to Solana. In addition, the use of Detal has resulted in an increase in the plant’s capacity, Solana said.

“We want Cepsa to become the greenest chemical company in our sector, and to become the greenest there are a lot of elements we need to work on, such as accelerating decarbonization, which is one of the business’s priorities. This means we are going to work very hard to support our customers in their plants, while working to make sure we are the first mover and all our actions are targeted toward decarbonization,” he said.

Advancing next-generation chemicals

Securing the supply of renewable raw materials is another key issue that Cepsa Química is prioritizing, as is creating new demand for sustainable products, according to Solana.

“We all talk about sustainability, yet actual demand for green products is still low. We need to create that demand and we need to test the market for new products with prices that will be able to reflect the investments in our green agenda,” he said. “There are a lot of investments we need to do to bring these new products to the market and there will be a lot of actions that will have an impact on the cost,” he said.

Cepsa announced recently that it would invest €75 million to build the world’s first plant for the sustainable production of isopropyl alcohol (IPA) from renewable or circular materials in the La Rábida energy park at Huelva, Spain. The plant will be integrated into the Andalusian Green Hydrogen Valley project and be operational by 2025, the company said.

The plant will be developed by Cepsa Química and be the first facility of its type to replace the fossil-based raw materials currently used to produce IPA, with sustainable materials, the company said.

The new facility will enable the chemical business to offer fully sustainable IPA to its customers, expanding its platform of “Next” products made from renewable raw materials and green energies such as NextLab LAB and NextPhenol, Cepsa said.

The project enhances Cepsa’s portfolio with the addition of a new sustainable product that creates opportunities for new applications, Solana said.

IPA has disinfectant properties and represents “significant added value” that is in high demand globally, Cepsa said. IPA forms the basis of hydroalcoholic gels, and it is used in the medical-pharmaceutical sector as well as in cleaning products, electronics, cosmetics, paints or as a solvent.

“Our next-generation products are at the center of our strategy and decarbonization agenda as we aim for them to have a huge impact on the carbon footprint of our customers and on Scope 3 emissions,” Solana said.

Cepsa’s “Next” products are a family of solutions. They include NextLAB-R, which is based on renewable raw materials and will bring up to 80% in carbon footprint reduction, and NextLAB-Low Carbon, which is produced using renewable energy and brings an up to 20% reduction in carbon footprint, Solana said. “So, by producing NextLAB with renewable raw materials while using renewable energy we could achieve a carbon footprint reduction of up to 100%,” he added. “We are already selling these products, but we need to scale up their production as our customers are telling us that they want safe and next-generation chemicals. To scale up the production of these solutions, however, we need new technologies, a secure supply of green raw materials and to accelerate our decarbonization plan,” Solana said.

Growing the business

Diversifying Cepsa Química’s portfolio to respond to market trends is one of the ways the business aims to grow, Solana said. “It is very important to diversify our portfolio to be able to provide our customers with more solutions in the future,” he said.

Cepsa said it is seeking to respond to major customer trends, which may differ from quarter to quarter or from region to region. It sees an overall sustainability trend in the home care industry, which, like the chemical sector, is seeking new and more sustainable products, with the critical priority to decrease greenhouse gas (GHG) emissions.

Being in a position to respond to this shift in the home care industry will require many partnerships and a new way of working with other companies, Solana said.

“We need to move from a transactional approach to a strategic approach with our customers, suppliers and other technology partners. Cepsa is already a company that has a strategic approach to collaborations, but I want to reinforce this,” he said.

Cepsa Química will have to test the market to see whether the public is willing to pay a premium for the company’s new solutions, but it will also need to consider their affordability, since providing affordable solutions will be key to making them available to more consumers and achieving the business’s market expansion goals, Solana said.

“We also need to be very open-minded in exploring partnerships, including collaborations to co-develop solutions. It is through partnerships that a business can become a pioneer in something and collaborations have a special significance for the business since it is through a collaboration that Cepsa’s chemicals business started in the first place,” Solana said.

The business aims to use this approach, which has worked in the past, and also partner with customers and suppliers to develop its technologies further, Solana said. “We are exploring with them hundreds of products that could offer solutions and working on innovations that could bring forth the molecules we need to create new materials,” he said.

In addition, Cepsa Química will look to expand its presence in Asia to be closer to emerging Asian markets, because the company is currently mainly focused on the West, Solana said. “We have a plant in Indonesia and one in China, but we need to strengthen our position in places like India, Southeast Asia and even expand our presence in China,” Solana added.

Market headwinds

The world has changed enormously in the past few years with the COVID-19 pandemic, the war in Ukraine and raw material and energy inflation, but one of the two main headwinds affecting the petrochemicals market is weak demand for single-use plastic items that generate waste, which means much lower demand for the raw materials used to make these products, Solana said.

The other current headwind is the very slow process of destocking, he said. As a result, petchem demand in the second half of this year will remain weak and any demand recovery is unlikely before the end of the year, he said. Uncertainty around inflation and demand recovery is one of the challenges that needs to be addressed in determining Cepsa’s chemicals business strategy, Solana added.

LAB sales were weaker in the first quarter of the year due to slow demand in home and personal care applications, while demand for intermediates was low due to high energy costs and high inflation, Cepsa said.

In addition, Solana said the EU’s policy framework has not been very helpful to the chemical industry and needs to become more supportive, because chemicals play a fundamental role in the green transition and a competitive European chemical industry is needed if Europe is to lead the world in the energy transition. More supportive regulation will help to attract investment that is currently being directed to other countries, to make it possible for the materials needed for the transition to be produced in Europe, as is happening now in the US, he said.

“EU officials and regulators need to understand that they are also part of the solution and new European regulations should really support and prioritize the industry’s transformation. A different approach to imposing penalties and restrictions is possible as the US has shown,” Solana said.