Sabic to invest £850m on reopening Wilton cracker

Sabic, a subsidiary of the oil firm Saudi Aramco, is to invest £850m on reopening its hydrocarbon cracker at Wilton on Teesside, creating about 300 jobs and safeguarding thousands more.

The cracker, Europe’s second largest, known as the Olefins 6 plant, breaks down hydrocarbons into chemicals such as ethylene which are then used in a host of further processes, and has been shut down for over a year.

It will be converted to run on hydrogen, a greener source of energy, and therefore aid the government’s green energy ambitions, as hydrogen is a natural by-product of the cracking process.

It is a further boost to Teesside following recent news that both bp and Kellas are to develop blue hydrogen production facilities there and Protium will develop a green hydrogen plant.

Tees Valley Mayor Ben Houchen met Yousef Abdullah Al-Benyan, the global Chief Executive of Sabic, at this month’s Global Investment Summit hosted by the Prime Minster and the Queen to rubber-stamp the investment.

Mayor Houchen said: ‘I’m delighted to announce that following my meeting with the global CEO of Sabic he has committed to strengthening ties with Teesside even further and will pump hundreds of millions of pounds of investment into the Wilton site.

‘I would like to thank him for identifying that the Tees Valley is leading the UK in clean energy technologies and we’re set to become the country’s first decarbonised industrial cluster.

‘This investment will help support and create hundreds of well-paid, good-quality jobs for people across Teesside, Darlington and Hartlepool, boosting our economy in the process and again putting our region firmly on the map at the heart of innovation.

‘Investments like these within hydrogen, offshore and carbon capture taking shape across the whole Tees Valley bring about less pollution, and drive forward an environment that, like these industries, is also cleaner, healthier and safer’.

Jacob Young, MP for Redcar, said: This is genuinely fantastic news for Wilton site and for the wider Teesside Industrial Cluster. On a day where we’ve seen investment from government and the UK Infrastructure Bank announced for our region, to get this over the line too is phenomenal.

‘Hundreds of millions of pounds invested in the site, a secure future for decades to come, and creating and protecting over 1,000 jobs. What a result.

‘Having worked at Sabic on Teesside, being part of its rebirth is personally really special to me, and I want to thank Lord Grimstone [Minister for Investment] and Mayor Ben Houchen for all their work in helping us secure this.

‘After years of industrial decline, we are seeing a revival in our industry on Teesside – spurred on by our freeport and the decision on Net Zero Teesside – and I could not be more buzzing about what our future holds and the amazing opportunities we are creating here’.

COMMENT

Recent developments in Tees Valley, combined with the development of electric vehicles by Nissan at Sunderland and the battery gigafactories to power them at Sunderland/South Tyneside and Blyth, add to the reputation of the North East region as a whole as a centre of the green energy revolution.

Nevertheless, for the second time this year it is Tees Valley that is celebrating a bonanza Budget week while the North East has been disappointed by comparison.

Tees Valley has received £310m for improving local transport, along with similar funding for England’s other city regions with mayors, as well as a £107m investment from the UK Investment Bank, inclusion in the East Coast Cluster, one of the UK’s first two carbon capture, usage and storage (CCUS) projects, and now £850m to reopen the Wilton cracker.

That is not to say there have been no positive developments for the North East. The news that phase 1 of the International Advanced Manufacturing Park at Sunderland/South Tyneside, to be home to the Envision vehicle battery gigafactory, is fully let is welcome.

So are £20m grants from the Levelling Up Fund for a new sports centre at West Denton, restoration of the Grainger Market in Newcastle city centre and a Housing Innovation and Construction Skills Academy in Sunderland.

The Grainger Market scheme, according to The Journal today, adding detail not included in the Treasury documents, will also turn Old Eldon Square into ‘an elegant civic space with fountains and cafes and bars adding a sense of vibrancy day and night’.

These grants, though comparatively modest in scale, should not be under-estimated in importance. They have the potential to contribute significantly to what Levelling Up Secretary Michael Gove, when defining levelling up, described as the pride people feel in the place they live.

Tees Valley’s successes this week are not all a direct result of having a devolution deal, though its £310m for local transport is. But devolution is an indirect cause. It has created the right conditions for momentum to build behind the expansion of its green energy sector, such as a mayor who speaks for the entire area and has the ear of ministers, and a mayoral development corporation to push ahead with site preparation.

There is evidence that the North East too is creating some momentum behind its green industries – not just electric vehicles but the subsea and offshore sectors. How much more strongly this momentum could build if the region had the same active ministerial support as Tees Valley is impossible to tell.

What is clear to see is that without a devolution deal the North East is missing out on direct government investment, particularly in transport. North of Tyne Mayor Jamie Driscoll says he has been told by the government that there is £600m for local transport just waiting to be picked up by the region, if its seven councils do a devolution deal.

Meanwhile, councillors are dependent on ministers’ good will for the £804m they want for their ambitious bus service improvement plan. Without a deal that too seems like a distant hope. Yet what they are doing to secure a deal, if anything, five years after rejecting the government’s last offer, is far from clear.