Amec says offers to buy Foster Wheeler in USD3 bln deal

MOSCOW (MRC) - British engineering firm Amec said on Monday it had provisionally agreed to buy Foster Wheeler in a cash and share deal that values the Swiss-based engineer at 1.9 billion pounds (USD3.13 billion), said Reuters.

Amec said the deal would improve its geographical footprint by more than doubling its revenues in faster-growing regions, and would add mid and downstream capabilities to its existing upstream focus.

Under the offer terms, Amec said Foster Wheeler shareholders would receive approximately 0.9 Amec shares and USD16 in cash, representing USD32 for each Foster Wheeler share. Shares in Foster Wheeler closed at USD31.46 on Friday.

Should the deal complete, Foster Wheeler will hold shares in Amec representing 23% of the enlarged company, and Amec would seek a U.S. listing in connection with the transaction, the companies said.

Foster Wheeler said it had agreed with Amec not to solicit alternative proposals up to Feb. 22, and would pay out a one-time dividend of USD0.40 per share prior to closing should the companies close the deal. Amec said the cash component of the offer, USD1.595 billion, will be financed by its existing cash resources and new debt financing.

Amec, which has a market capitalisation of 3.21 billion pounds and provides services and equipment for the oil, gas and mining sectors, has been on the hunt for acquisitions, and media reports last year suggested that it was interested in Foster Wheeler.

As MRC wrote before, Foster Wheeler has been selected by Rosneft and ExxonMobil to undertake the initial phase of the front-end engineering design (FEED) for a proposed Russian Far East liquefied natural gas (LNG) project. Foster Wheeler is one of two companies to be awarded separate contracts for the initial FEED work prior to selection of a single contractor for the second FEED phase.
MRC

Valero Memphis said to operate at normal rates after shutdown

MOSCOW (MRC) -- Valero Energy’s Memphis refinery is operating at normal rates after a system shutdown on January 6 because of low temperatures, said Hydrocarbonprocessing.

The plant ran some equipment at lower rates after instruments froze, water lines on process units burst and units tripped off because of the weather, said the person, who asked not to be identified because the information isn’t public.

A filing dated January 6 with the National Response Center said low temperatures caused a system shutdown. The company said in a voicemail January 6 that the refinery’s flare gas recovery compressors were tripping off, Bob Rogers, manager of pollution control for the Shelby County health department, said in a phone interview on January 7.

Bill Day, a Valero spokesman in San Antonio, said in a telephone interview that he has no comment on the refinery’s status. The Memphis plant, which can process 195,000 bpd of crude and other feedstocks, uses primarily light and sweet crude oil delivered by the Capline pipeline, according to Valero’s website. Capline runs from St. James, Louisiana, to Patoka, Illinois.

As MRC wrote before, Foster Wheeler signed an evergreen agreement with Valero Energy for the provision of home office engineering and project support services to Valero’s Pembroke refinery and other facilities in the UK. Foster Wheeler will provide home office front-end engineering design and detailed engineering design services to support new development and modification projects at the Pembroke refinery and other facilities.

Valero Energy Corporation is a Fortune 500 international manufacturer and a marketer of transportation fuels, other petrochemical products, and power. It is based in San Antonio, Texas, United States. The company owns and operates 16 refineries throughout the United States, Canada, United Kingdom, and the Caribbean with a combined throughput capacity of approximately 3 million barrels (480,000 m3) per day, 10 ethanol plants with a combined production capacity of 1.2 billion US gallons (4,500,000 m3) per year,
MRC

Sinopec to pay compensation over pipeline blast

MOSCOW (MRC) -- Chinese state-owned oil giant Sinopec will pay compensation over a November pipeline explosion at its facility in the city of Qingdao that killed dozens of people and caused losses of more than USD100 million,said Channelnewsasia.

Sinopec is listed in Hong Kong and in a filing to the stock exchange there, said that an official Chinese government investigation determined that "direct economic loss" from the accident totalled 751.72 million yuan (USD124.3 million).

The company said it "will pay its share of the compensation", although it did not say how much that would be, or what proportion of it would go directly to victims of the disaster, which killed 62 people and injured 136.

Sinopec said in the statement on Sunday that its pledged compensation would come mostly from company insurance policies, adding that its "production, operation and financial position are currently stable". Citing the probe by China's State Administration of Work Safety, it said the direct cause of the explosion was vapours from oil leaking from an underground pipeline, which were ignited by sparks from a hydraulic hammer.

The investigation also found that Sinopec and its subsidiaries' failure to ensure safe operations contributed to the accident, as did local authorities' failure to properly conduct safety inspections and identify risks, Sinopec's statement said.

The huge blast ripped roads apart, turned cars over and sent thick black smoke billowing over the city. The explosion happened seven hours after an oil leak was first spotted, and questions remain as to why local residents were not ordered to evacuate in the intervening period.

According to state media, 15 people, including unspecified numbers of Sinopec employees and Qingdao city staff, have been detained in connection with the explosion.

Sinopec issued an apology for the incident but denied that it was slow to respond.

MRC

Chinese prices of bottle grade PET dropped by USD10-20/tonne

MOSCOW (MRC) -- Chinese producers have reduced prices of bottle grade polyethyleneterephthalate (PET) chips by an average of USD10-20/tonne for export markets, including the CIS countries, following lower feedstock prices, according to ICIS-MRC Price report.


To date, prices of major Chinese producers are USD1,300-1,310/tonne FOB large Chinese ports, excluding VAT.

Some buyers in the CIS countries said they expect a slight drop in prices in the future on the back of lower prices of terephthalic acid (PTA) and monoethylene glycol (MEG).

Asian traders siad they anticipate reductions in prices of bottle grade PET, citing sluggish demand, despite the upcoming Chinese New Year. At the same time, buying activity in the fibre PET markets was also weak because of low capacity utilisation.

Offer prices of Korean bottle grade PET were in the range of USD1,350-1,360/tonne FOB Korea, but buyers managed to reduce prices during negotiations to USD1,330-1,340/tonne FOB Korea.

MRC

LDPE prices in the Russian market are increasing because of disruptions in shipments

Moscow (MRC) -- Supply of low density polyethylene (LDPE) in the Russian market continues to be tight, despite the long New Year's holiday. Disruptions in LDPE shipments resulted in a price rise, according to ICIS-MRC Price report.

Long New Year's holiday did not lead to an increase in supply of LDPE in the Russian market. A slight tightness in LDPE supply remains, despite a weak buying activity. LDPE prices also increased on the back of exports growth in the first working week of January.

Kazanorgsintez, Ufaorgsintez and Gazprom Neftekhim Salavat offered LDPE of 108 grade in the range of Rb58,800-59,300/tonne FCA, including VAT in the spot market.

Price offer for LDPE Angarsk Polymer Plant production started from Rb61,500/tonne FCA Angarsk, including VAT.
Price for LDPE of 158 grade in the first week of January rose to Rb57,500-59,900/tonne FCA, including VAT.

One of the main reasons for the increase in prices was the information about the export shipments of polyethylene by Ufaorgsintez, which reduced the quotas for the domestic market.

Situation in the market of shrinkable film LDPE remained steady in the early weeks of 2014. Buying activity is very low, with spot offers heard in the range Rb61,000-61,700/tonne FCA, including VAT.
MRC