Ineos talks Solvay PVC joint venture

MOSCOW (MRC) -- Two of Europe’s biggest chemical companies have agreed a joint venture that will create one of the world’s largest producers of PVC plastics by revenues, said Financial Times.

Solvay, the Franco-Belgian chemicals company, will pool its European business that creates chlorvinyls – the base materials for PVC plastics – with that of privately owned rival Ineos Group , in a move that will eventually result in the Anglo-Swiss company taking full control of the joint venture.

Ineos operates chemicals facilities across the UK and is the country’s second largest private company measured by sales behind Alliance Boots, according to data from BDO, the professional services group.

Should the deal gain regulatory approval from the European Commission, the joint venture is expected to report annual recurring earnings before interest, tax amortisation and depreciation of about EUR260m from revenues of EUR4.3bn.

The 50-50 joint venture will allow Solvay to exit the market for PVC – plastics used in the manufacture of construction products such as pipes and window frames – which has suffered during the downturn on the back of waning demand from the building industry.

Within four to six years, Ineos will buy out Solvay’s half share for 5.5 times the combined group’s average annual ebitda – equating to a price of more than EUR1bn.

Solvay will contribute its vinyl activities and its Chlor Chemicals business, comprising seven production sites in Europe, while Kerling, an Ineos subsidiary, has offered up its chlorvinyls and related businesses.

The joint venture will employ 5,650 staff across nine European countries, including the UK, Belgium, France and Italy. Should the deal gain regulatory approval, Ineos will pay Solvay EUR250m in cash as a down payment for its 50% stake.

Solvay’s exit from PVC production will allow the Franco-Belgian company to hone its focus on its more profitable businesses, such as high-tech polymers for the healthcare and oil and gas industries.

The joint venture is expected to benefit from cost savings in the groups’ head office, marketing, transport and logistics operations. However, both Solvay and Ineos did not define the amount of synergies they expected.

As MRC wrote earlier, Ineos said it has signed an agreement to secure ethane from the US that it will use as a feedstock to operate its steam crackers in Europe. It has agreed a long-term deal with Range Resources Corp. for the lifting of ethane from the Marcus Hook facility, located near Philadelphia, from 2015.
MRC

MOSCOW (MRC) -- State-owned Petrovietnam and Talisman Energy Inc. are expected to start commercial oil production from Hai Su Trang field offshore Vietnam next week, as per The Wall Street Journal.

The field in Block 15-2/01, more than 100 kilometers south of Ba Ria Vung Tau province, is operated by Thang Long Joint Operating Co., in which Talisman holds a 60% stake and Petrovietnam 40%.

Petrovietnam earlier said Hai Su Trang had an oil flow of 15,000 barrels a day.

Petrovietnam said in a statement Monday that Talisman seeks to expand its oil and gas operations in Vietnam as well as other countries to meet Vietnam's rising demand for fuels, especially natural gas.

The statement came after a meeting between Petrovietnam CEO Do Van Hau and Talisman CEO Harold N. Kvisle in Canada over the weekend.

Earlier this year, Petrovietnam has been told by the government to scrap plans to expand capacity at its Dung Quat refinery. However, the 130,000-bpd refinery will be upgraded.

We remind that, as MRC informed previously, in October last year, the compamy announced that it was going to construct the second oil refinery in the country. The refinery could cost USD8-10 billion. The petrochemical complex in Vietnam's Nghi Son Economic Zone will include a 200,000-b/d refinery, as well as the production of polypropylene (PP) and aromatics.
MRC

MOSCOW (MRC) -- Chevron Corp.'s first-quarter earnings dropped 4.5% as revenue fell short of Wall Street estimates and both the upstream and downstream segments posted lower profits, reported The Wall Street Journal.

Chevron and other oil and gas producers have seen their results pressured by a drop in oil prices brought about by tepid global economies and a surge in U.S. production.

Chevron, the second-largest U.S. oil company by market value after Exxon Mobil Corp., had warned earlier this month that its U.S. and international production declined in the first two months of the year, compared with the previous quarter, partly due to maintenance activity.

Chevron reported a profit of USD6.18 billion, or USD3.18 a share, down from USD6.47 billion, or USD3.27 a share, a year earlier. The company said the most-recent quarter included net charges of USD439 million, compared with USD504 million a year ago.

Revenue declined 6.4% to USD56.82 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of USD3.08 a share on revenue of USD67.73 billion.

Operating margin fell to 18.1% from 19.9%.

Exploration-and-production earnings fell 4.1% to USD5.92 billion. Total oil-equivalent production edged up 0.8% to 2.65 million barrels per day as project ramp-ups in the U.S. and Nigeria were largely offset by normal field declines, Chevron said.

The refining, marketing and chemical operations, known as the downstream segment, saw its profit drop 13% to USD701 million.

We remind that, as MRC wrote previously, since March Chevron has been in talks with potential buyers for Canada's first exports of liquefied natural gas, paving the way for a USD15 billion project that would open up a new route for North American gas to Asia.

Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States, and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining, marketing and transport; chemicals manufacturing and sales; and power generation. Chevron is one of the world's six "supermajor" oil companies.
MRC

MOSCOW (MRC) -- Eastman Chemical Co.'s first-quarter earnings rose 56% as the chemical and materials manufacturer was helped by a recent acquisition, according to The Wall Street Journal.

The company, which makes a variety of chemicals, plastics and synthetic fibers, has posted lower profit recently, hurt by costs related to acquisitions and restructuring. Last July, it finalized the roughly USD3.38 billion takeover of peer specialty-chemicals firm Solutia Inc., a deal aimed at expanding Eastman's global presence and stabilizing margins.

For the latest quarter, Eastman posted a profit of USD247 million, or USD1.60 a share, up from USD158 million, or USD1.12 a share a year earlier. Excluding Solutia-related costs and other impacts, earnings from continuing operations increased to USD1.62 a share, from USD1.22.

Revenue increased 27% to USD2.31 billion, helped by the Solutia acquisition.

Analysts surveyed by Thomson Reuters were expecting per-share earnings of USD1.57 a share on revenue of USD2.38 billion.

Gross margin widened to 26.7% from 23.7%.

Eastman's biggest revenue generator, the specialty fluids and intermediates segment, saw sales grow 6.7%.

Sales in the advanced materials unit doubled, benefitting from the acquired Solutia interlawyers and performance films product lines and strong demand in Asia.

We remind that, as MRC informed previously, in early October 2012, Eastman Chemical Company announced the addition of new PET polymer Aspir to its portfolio of resins.
MRC

MOSCOW (MRC) -- ExxonMobil and a union representing workers at the company's refinery in Baytown, Texas, reached a tentative agreement over contract language on safety, a dispute that the union said earlier this week could lead to a strike if not resolved, reported Hydrocarbonprocessing.

A spokesman for the United Steelworkers local at Baytown said Exxon agreed to implement a fatigue management system regulating how many days in a row someone can work and to accept a process safety representative position in the new three year contract.

"We had been at a standstill on those two items before the bargaining session," USW spokesman Lynne Hancock said in an email.

Exxon spokeswoman Patty Errico confirmed that the two sides had reached a tentative agreement, but declined to provide additional details.

"We look forward to moving ahead together and maintaining the good working relationships our employees share with us and one another," Ms. Errico said.

The 584,000 bpd refinery is the second largest in the US. The facility's 850 union employees will vote on the deal May 14 and 15, USW spokesman Richard Landry said.

If the majority of the members accept the agreement, it will avert a strike the union had said could go into effect June 15 unless Exxon agreed to new contract language on safety at the plant.

The union cited recent safety issues including a rupture in an Exxon pipeline in Arkansas and a fire at Exxon's Beaumont, Texas, refinery last month in pushing for additional safety standards. It had said similar provisions were already in place at other Exxon refineries in Torrance, California; Billings, Montana; Chalmette, Louisiana; and Beaumont.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3 percent of the world's oil and about 2 percent of the world's energy.
MRC