Recent figures produced by specialist consultancy, Spiritus Consulting, suggest that during 2006 Western European markets grew at around half the rate of their Eastern European counterparts. Western Europe gas revenues grew by a healthy nine percent in 2006 to around â‚¬12.3bn (US$15.4 bn).
The Linde Group, currently under going restructuring, following its BOC acquisition, recently reflected this pattern in its results. The gas division saw first quarter sales up 9.2 percent to â‚¬1.139bn (2006: â‚¬1.043bn). But the company says that most of the impetus continued to come from Eastern Europe. The company generates almost 60 percent of its revenues in Europe.
In Western Europe's mature markets, many industries are moving to Central and Eastern Europe's current lower cost base, so it's not surprising that some focus in these established markets is shifting to innovations such as the development of hydrogen for transport and growth in healthcare applications. $quot;We expect a double-digit growth of the home care business, i.e. ventilation with medical oxygen, in Western Europe due to increased life expectancy,$quot; stated Adolf Walth, regional manager for the Messer Group in Western Europe. Other profitable operations include on-site and pipeline expansion opportunities in locations including Spain and other countries.
$quot;Thanks to the relatively stable market and a continuous flow of interesting projects, Western Europe is an important stability factor for The Linde Group,$quot; according to Dr. Aldo Belloni, member of the Executive Board of Linde AG. $quot;Moreover, many of our innovative products and solutions are designed and developed in Western Europe given the demand for innovative technological solutions here.$quot;
Here we look at some of the recent activities in the main industrial gas markets in Western Europe.
France - a new revolution?
Despite being number one in Europe, Air Liquide, based in Paris saw slightly lower growth of 5.6 percent for its gases business in Europe in 2006. The home grown company attributes to lower volumes and weaker results in France yet despite this slowdown Mr Walth says he expects the market to improve.
Messer's regional manager told gasworld that expectations related to the new French president Sarkozy are very high. $quot;Ninety percent of company owners, manufacturers and industrialists have voted for Sarkozy and are expecting a flood of new investments in France,$quot; Walth says. Messer specialises in environmental technologies, and is upbeat that Sarkozy is looking to mobilize environment organizations to find rapid and pragmatic solutions. $quot;We expect a strong boom for treatment of waste water and drinking water with carbon dioxide and oxygen.$quot;
Exhaust gas treatment is not advanced in France, says Walth. But a positive move from pharmaceutical company Sanofi Aventis at its Vitry-sur-Seine near Paris will see Messer installing its DuoCondex technology which uses nitrogen to avoid dichlormethane emissions.
Also on the environmental front, Air Liquide and Total Group have joined forces to supply oxy-combustion technology to France's first pilot CO2 capture and storage installation in Lacq. The first CO2 will be injected 4,500 metres underground, starting in November 2008.
Germany - higher than expected growth
The German market saw surprisingly healthy growth of 10 percent to reach â‚¬2.6bn (US$3.2bn) in 2006 where on-site opportunities included refining, energy and chemicals helped drive up volumes. In southern Germany, Linde's ASU for Wacker/OMV is due on-stream during the second half of 2007, while in eastern Germany at Leuna a further ASU plus H2 liquefaction will be officially inaugurated in September.
Air Liquide completed the installation of a new ASU at Degussa subsidiary, Rohm's methacrylic acid plant in Worms, Germany at the end of 2006. The new unit supplies 320tpd of oxygen to a novel sulphuric acid recycling process.
While the major companies in Germany focus on the bulk and on-site opportunities and innovative technologies, the smaller companies such as Westfalen Gas, Guttroff and SWF continue to grow rapidly in the smaller bulk and cylinder market. Competition may get tougher in this sector following the recent announcement that Stefan Messer is to head up a new German gas company named Gase.de GmbH. The company will have headquarters in Sulzbach and cylinder distribution facilities in Siegen, and will supply predominantly small to medium scale businesses in the cutting and welding equipment sector.
Gas market growth in Scandinavian countries was more reserved at four percent rise in 2006 over 2005. Overall these countries account for some â‚¬1.25bn ($1.56bn) in gas revenues in 2006, of which Sweden is by far the largest market.
There is still demand for on-site supply in Scandinavia, both for new projects and to improve quality. Linde says one of its most important ongoing projects is the LNG plant at Hammerfest in Norway, which is now in the final testing phase. Official start of production is in August.
Yara International ASA and Praxair, Inc., aim to establish a joint venture to develop opportunities for Yara's industrial gases business in the region. The 50:50 joint venture incorporates Yara's existing industrial gases business located in Norway, Denmark and Sweden, would be headquartered in Oslo, and should be established during Q3 2007 if the deal gets the green light from regulators. According to Praxair, one goal for the new Yara Praxair AS is to combine forces in enhanced oil recovery projects for North Sea oilfields.
Swiss gas revenues grew at a modest four percent in 2006. Demand for gases include the large pharmaceutical sector and also on environmental projects. The Messer Group recently announced that it was acquiring a 51 percent share in Switzerland's Asco Carbon Dioxide Ltd., which has expertise in CO2 production, recovery and storage.
Other important onsite projects under construction include an ASU in Ijmuiden, the Netherlands, for steel and aluminium major Corus. The â‚¬75m facility will be the biggest on-site facility run by Linde, replacing four older units, and is due on-stream mid-2009.
The Iberian Peninsular saw strong growth continue during 2006, with the market increasing by 11 percent to reach â‚¬1.4bn ($1.8bn). Messer will invest â‚¬40m in a new ASU in Tarragona, Spain. Due for completion in July 2008, the ASU will expand Messer's pipeline supplies to chemical and petrochemical customers at the Tarragona Industrial Zone, using a 90km nitrogen and oxygen pipeline network. Messer's existing on-site contract with Carburos MetÃ¡licos (Air Products) to supply 14,500m3 of gaseous oxygen and 15,000m3 of gaseous nitrogen per hour has been extended by another 15 years.
Messer pipelines also supply Terquimsa, Dow Chemical, Repsol QuÃmica and Bayer PolÃmeros. Messer's Spanish business, Messer Carburos, also won two new shipping company customers for gaseous nitrogen. Overall, Messer says pipeline sales of oxygen and nitrogen grew by around six percent compared with 2005. Praxair also operates a pipeline in Asturias, Spain, supplying oxygen, nitrogen and argon.
On the research side, Messer is involved with organic chemists at the University of Tarragona in a food technology project, looking at preserving organic and chemical quality characteristics of cold-pressed olive oil under a controlled atmosphere. The company also signed up its first major medical gases customer in Spain: the company will supply NISA Group, which uses medical oxygen in hospitals in Seville and Madrid.
Gasmedi, the independent medical gases company, is venturing into the industrial gases sector with the start up of a new ASU in Zaragoza, north east Spain. The company was sold to a Spanish private equity firm last year and will benefit from investment plans for the company.
In Portugal, Air Liquide has renewed and expanded its agreement with partners CUF and Dow Chemical in Portugal. The group plans to invest â‚¬230m expanding its Estarreja operation 50km south of Porto.
Another market that was perceived as a mature market is the UK, but 2006 saw an eight percent rise to reach â‚¬1.5bn ($1.9bn). Growth was driven by higher on-site volumes and significant rise in homecare sales as a result of the restructuring of the service in the UK that began on 1st February 2006.
While the acquisition of BOC by the Linde Group will not have any significant effect on BOC sales in the UK, Linde was required to divest of its UK business, which was sold to Air Liquide and confirmed by the regulatory authorities on 31st May this year. Linde sold its UK business for â‚¬105m (US$130m) and this acquisition will boost Air Liquide's sales in the UK to around â‚¬125m ($155m), effectively doubling its size. The deal also helps Air Liquide gain a foothold in the medical gases and homecare sector.
Air Products has its European headquarters in Hersham, UK, and received a business boost thanks to the recent strength of the Euro versus the US dollar. The UK's National Health Service also awarded Air Products 7 major regional contracts to supply medical oxygen, although the company later handed over one of these to BOC due to a miscalculation of demand on the part of the NHS.
Italy - return to higher growth
Italy has been recently affected by some businesses moving to Eastern/Central Europe, evident by the slowing Italian economy in 2005. However, 2006 was significantly more brighter for all players in the market as increased project activity and higher sales in the medical sector took hold. The Italian market was estimated to have reached â‚¬1.7bn (US$ 2.1bn) in 2006. Air Liquide holds an important position in the Italian market, with Praxair also having a significant slice of the market through its equity stakes in local suppliers SIAD and Rivoira. Air Products is also very much present via its equity affiliate - SAPIO. SOL, the largest independent gas company in Italy, produced some strong figures in its Group business in 2006, reporting growth of 14 percent to reach â‚¬397m in 2006.
According to Walth the East/West split is already beginning to soften. $quot;Economic growth in the machine construction sector is very strong, so that Europe overall reaches the edge of capacity,$quot; he says, adding that the lure of the East is lessening. $quot;Economic growth in the Balkan region and new member states is so big that the whole of Europe has to help to meet its needs: This also generates investment in Western Europe.$quot; This in turn has a knock-on effect on the economy in Italy and Germany, and Walth suggests that salary discrepancies will soon evaporate: $quot;Eastern European countries are no longer low-wage-countries.$quot;