Sibur in agreement with Rosneft to acquire 49% interest in Yugragazpererabotka gas processing JV

MOSCOW (MRC) -- SIBUR, the giant Russian petrochemicals company, 57.5% controlled by Russian billionaire Leonid Mikhelson, has reached an agreement with state owned Russian oil company Rosneft to acquire its’ 49% interest in their Yugragazpererabotka gas processing joint venture, reported the company on its site.

The interest has been held by Rosneft-owned RN-Holding, formerly TNK-BP.

The terms for the purchase of the Rosneft stake were not disclosed but analysts estimate the price may be in the range of between USD1-2 bln.

After the deal closes SIBUR will own 100% of the venture, and will continue to have access to guaranteed gas supply from Rosneft of up to 10 billion cubic metres/year of gas as feedstock for their plants under a new supply agreement now extending to 2032. The sale of the plant, which processes gas co-produced at some of Rosneft’s oil fields, known as APG, which stands for associated petroleum gas, will be among the first sale by Rosneft of assets it picked up in the USD55 billion acquisition of the TNK-BP joint venture last year.

Dmitry Konov responded: "By signing the agreement with Rosneft to increase associated petroleum gas supplies, SIBUR reaffirms its commitment to the corporate strategy of securing long-term access to feedstock. The extended tenor of the APG contracts highlights the strong ties between Sibur and Rosneft, which remains the key APG supplier for Sibur’s gas processing facilities."

As MRC informed before, SIBUR has recently sold its 100% stake in OJSC Plastik (Uzlovaya, Tula Region, Russia) to the group of private investors. The deal value totalled RUB 575 million. Production of geosynthetics (geogrids and nonwoven geotextiles), spinned off as OOO Plastik-Geosintetika (a joint venture between SIBUR and Leader Innovations Closed-End Venture Capital Fund) in 2010, was not included in the transaction and continues to operate as part of SIBUR Group.

SIBUR is a vertically integrated gas processing and petrochemicals company, which operate Russia's largest gas processing business in terms of associated petroleum gas processing volumes and are the leader in the Russian petrochemicals industry.
MRC

MOSCOW (MRC) -- BASF, the global petrochemical giant, has increased sales and earnings in 2013 compared with the previous year, said the company in its report.

"2013 was again a demanding year, with a lot of headwind for our industry. Nevertheless, we achieved our goal: We sold more, worked more closely together with our customers and enhanced our portfolio," said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE at the Annual Press Conference in Ludwigshafen.

Sales of BASF Group in the fourth quarter of 2013 were EUR18.1 billion, slightly above the same period of the previous year. Volumes increased in all segments. Sales prices were slightly lower overall in the fourth quarter; negative currency effects lowered sales in all divisions.

For the full year, sales rose by just under 3% to reach EUR74.0 billion. A considerable, mainly volumes-driven sales increase in the Oil & Gas and Agricultural Solutions segments was largely responsible for this development. Sales slightly declined in the chemicals business, which includes the Chemicals, Performance Products and Functional Materials & Solutions segments, despite higher sales volumes. This was mainly on account of negative currency effects. EBIT before special items in 2013 rose by EUR543 million to EUR7.2 billion. In addition to the successful business with crop protection products and a higher contribution from the Functional Materials & Solutions segment, this increase was also due in large part to the earnings improvement in Other.

Net income amounted to EUR4.8 billion, slightly above the previous year’s level.

"At EUR7.9 billion, operating cash flow reached a record level," said Dr. Hans-Ulrich Engel, Chief Financial Officer of BASF.

"We do not expect strong tailwinds this year either. Nevertheless, we are cautiously optimistic with regards to global economic development. The world economy is expected to grow slightly faster in 2014 than in 2013, despite continuing volatility," said Bock. For the global chemical industry, the company anticipates growth rates comparable with the previous year’s level and forecasts somewhat higher growth in key customer industries such as the transportation, consumer goods and electronics industries. This will likely have a positive effect on BASF’s business.

For 2014, BASF assumes the following economic conditions (previous year figures in parentheses): global economic growth: +2.8% (+2.3%); growth in global chemical production (without pharmaceuticals): +4.4% (+4.6%).

We remind that, as MRC wrote previously, BASF has recently signed a contract to divest its liquid masterbatch business in Clermont de l’Oise, France, to Audia International, a large global supplier of polyolefins and color masterbatches. The transaction is expected to close in mid 2014. The parties have agreed not to disclose financial details of the agreement.

BASF is the world’s leading chemical company. Its portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas.
MRC

MOSCOW (MRC) -- Shenhua Ningxia Coal Industry Group has restarted two polypropylene (PP) lines following maintenance turnaround, reported Apic-online.

A Polymerupdate source in China informed that the two plants restarted on February 24, 2014.

Located in Ningxia Hui autonomous region, the plants have production capacities of 200,000 mt/year and 300,000 mt/year respectively.

As MRC informed previously, Shenhua Ningxia Coal Industry Group shut its PP plant for a maintainence turnaround. The plant was taken off-stream on October 27, 2013 for around 10 days. Located at Yinchuan city, Ningxia in China, the PP plant has a production capacity of 500,000 mt/year.

Another Chinese petrochemical producer - Daqing Refining & Chemical restarted its PP plant last weekend. It was shut for a maintenance turnaround. Located in Heilongjiang province, China, the plant has a production capacity of 300,000 mt/year.
MRC

MOSCOW (MRC) -- BP dropped plans to invest in a refinery in China and “dismantled” a team assigned to the project late last month, said the International Energy Agency, said Hydrocarbonprocessing.

BP had considered investing in the 200,000 bpd Qinzhou plant operated by PetroChina, according to the IEA, an energy adviser to developed nations. The refinery in the southern province of Guangxi started operations in 2010 and is currently being upgraded to handle a wider range of feedstock, it said in its monthly Oil Market Report.

David Nicholas, a BP spokesman in London, declined to comment on the report.

Chinese and international oil companies are reconsidering their refinery-investment plans as the Asian nation’s oil consumption expanded at the slowest pace in six years in 2013, according to the IEA. About 4.3 million bpd of primary distillation capacity was scheduled for completion by 2018, "by far exceeding" demand projections, it said.

"Growing concerns over the risks of oversupply in the Chinese fuels market have led at least four projects to be canceled in recent months," according to the report.

PetroChina’s plans to build a refinery and petrochemical complex in east China with Royal Dutch Shell and Qatar Petroleum stalled last year amid land issues.

China’s biggest oil producer also delayed two new refineries originally scheduled to start operations this year, data from CNPC, the parent company, showed on Dec. 12. The Kunming plant, with a crude-processing capacity of 10 million tpy, will begin operations in 2016 while the Jieyang facility, a joint venture with Venezuelan state oil company Petroleos de Venezuela (PdVSA), has been postponed to 2017.
MRC

MOSCOW (MRC) -- German chemical giant BASF said it has begun to replace the Mazmid line of polyamides, produced by a Brazilian business it acquired in 2012, with production of its own Ultramid line, said Bnamericas.

BASF acquired the polyamide polymer business of the Mazzaferro Group for an undisclosed sum. The transaction included the site and production facilities for polyamides, as well as engineering plastics compounds at Sao Bernardo do Campo in the metropolitan area of Sao Paulo. The polymerization plant has a capacity of roughly 20,000t per year.

BASF's director for performance polymers in South America, Katrin Freitag, said in a press release Thursday, "We can now supply our clients with high performance Ultramid with confidence from our production plant in Brazil."

The engineering plastic Ultramid is compounded polyamide, derived from base polyamide. The materials are used mainly in automotive and electrical applications, but also in many other industries.

As MRC informed before, BASF will increase the prices for all Polyamide 6 base polymer grades and the Polyamide Intermediates Caprolactam and Adipic Acid in Europe by EUR110 per metric ton for each product. The price increase is necessary due to the steep raw material price increases in the last months.
MRC