Rosneft may back out of Morgan Stanley oil unit deal - sources

MOSCOW (MRC) -- Rosneft, Russia's biggest crude oil producer, may back out of a deal to buy Morgan Stanley's oil trading unit because Western sanctions make it virtually impossible to finance day-to-day operations, reported Reuters with reference to three sources close to the state-controlled company.

The people said the chances of the deal going through range from "possible" to "highly unlikely."

The business in question trades actual barrels of oil instead of just contracts linked to the price of crude. Morgan Stanley is under US pressure to sell the unit because regulators regard physical oil trading as too risky for a major bank to own because unpredictable events like oil tanker leaks could expose it to billions of dollars in liability.

A spokesman for Morgan Stanley declined to comment. Ruth Porat, the bank's chief financial officer, said in July she expected the deal to close later this year. Rosneft declined official comment.

Rosneft agreed to buy the unit in December. Since then, the United States and the European Union have slapped wide-ranging sanctions on Russia's energy and military sectors to punish Moscow for its incursion into Ukraine. Rosneft's chief Igor Sechin, a close ally of Russian President Vladimir Putin, has been on the US sanctions list since April. Rosneft itself was added to the list in July.

Rosneft has enough cash to buy the Morgan Stanley unit, which sources said carries a price tag of between USD300 million to USD400 million. But to operate day-to-day, the business requires billions of dollars of bank lines of credit, funding that's difficult to secure given the sanctions.

"This deal just cannot go through. It is not an issue of finding USD300 million to buy the business. Rosneft has the money. But it won't be able to operate it," one Russian-based source with direct knowledge of the matter said.

One remaining obstacle for the deal is approval from the Committee on Foreign Investment in the United States, a regulatory group that vets mergers and acquisitions that may affect US security. CFIUS has asked Rosneft and Morgan Stanley for more information about the deal, without approving it or rejecting it, a step that lawyers said is not unusual for a transaction under review.

As MRC wrote before, in early September 2014, the European Commission approved the acquisition of parts of Morgan Stanley's Global Oil Merchanting Unit by OJSC Oil Company Rosneft of Russia.

Rosneft became the world's biggest listed oil producer in March after the USD55 billion acquisition of Anglo-Russian oil firm TNK-BP. Its oil output accounts for over 40% of the total in Russia, the global leader in crude production.

Rosneft has amassed assets abroad in the past few years, including refineries in Germany and Italy, but has bought no significant assets in the United States. Rosneft has an oil trading division in Geneva, which helps supply its refining assets in Europe.
MRC

MOSCOW (MRC) -- DuPont Packaging & Industrial Polymers announced its intent to continue to increase production capacity of its ethylene copolymers assets at its Texas manufacturing facilities to meet growing market demand, said Plastemart.

Plans include a series of investments totalling over USD100 mln to be completed over the next 3 to 4 years. More than one-third of the investment is expected to be installed by the end of 2015. The balance of the investment is expected to be completed over the following 3 years. Specifically, this investment will support growth in DuPont specialty resins including: DuPontSurlyn ionomer resin, DuPont Nucrel ethylene acid copolymer resin, DuPont Elvaloy ethylene copolymer resins, DuPont Vamac ethylene acrylic elastomers, and special grades of DuPontElvax EVA copolymers.

"Market demand for these products is growing. Our differentiated and high-value products are being used in a diverse range of growth markets. This includes packaging that helps reduce food waste and offers consumer convenience, and materials to enable more efficient vehicles, new roads that stand up to tough environments, more durable roofing solutions, and higher-performing architectural glass solutions," said William J. Harvey, president, DuPont Packaging & Industrial Polymers. "Our customers count on DuPont strengths in application development and new product development to innovate their product offerings. We are pleased to add new capacity of our high-performance polymers to support growth for our customers."

As MRC wrote before, Borealis AG is buying out DuPont Co.’s two-thirds share in their Specialty Polymers Antwerp NV joint venture. No purchase price was disclosedl. Wilmington, Del.-based DuPont will continue to sell ethylene vinyl acetate (EVA) and acrylate compolymers made at the JV’s plant, which is in Zwijndrecht, Belgium.

DuPont is an American chemical company that was founded in July, 1802. The company manufactures a wide range of chemical products, leading extensive innovative research in this field. The company is the inventor of many unique plastics and other materials, including neoprene, nylon, Teflon, Kevlar, Mylar, Tyvek, etc. DuPont was the developer and main producer of Freon used in the production of refrigeration equipment.
MRC

MOSCOW (MRC) -- The overall polyethylene (PE) imports to the Republic of Belarus decreased by 7.8% over the first seven months of 2014. The high density polyethylene (HDPE) market demonstrated negative results, whereas demand for other PE grades increased, reported MRC analysts.

July PE imports into Belarus totalled 9,600 tonnes versus 9,700 tonnes a month earlier. The overall PE imports dropped from January to July 2014 to 58,200 tonnes from 63,200 tonnes over the same period a year earlier.

The structure of PE imports into the Republic of Belarus by grades looks the following way over the stated period.

July imports of low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) slightly dropped from June (5,200 tonnes) and totalled 4,900 tonnes. The overall imports of these PE grades reached 28,600 tonnes from January to July 2014 versus 26,400 tonnes a year earlier. Russian and Saudi Arabian producers are the main PE suppliers to the local market.

July HDPE imports rose to 4,700 tonnes from 4,500 tonnes in June. A slump in PE shipments from Russia was offset by higher imports of material of Middle Eastern producers. The overall HDPE imports to Belarus fell to 29,600 tonnes from January to July 2014, down by 19.6% year on year.
MRC

MOSCOW (MRC) -- France’s Total has said its joint venture with Russia’s Lukoil, to explore shale oil in western Siberia, had ground to a halt as a result of western sanctions, reported Financial Times.

The comments by, Total’s chief executive, are the clearest sign that the latest round of sanctions against Russia over Ukraine will put a brake on the Kremlin’s plans to develop the country’s shale oil resources - which had been envisaged as a key driver of new production in the next five to 10 years.

"The Lukoil joint venture is definitely stopped," said Mr de Margerie. "But it hadn’t started so it doesn’t have any impact (on Total)."

The latest set of sanctions announced two weeks ago by the US and EU restrict western financing and technology to various Russian energy projects, including shale. Russia’s shale reserves are enormous, estimated by the US Department of Energy at 75bn barrels.

Total is also developing the USD27bn Yamal liquefied natural gas project with Russian natural gas producer Novatek, and China’s CNPC.

In spite of Novatek being subject to US sanctions, Mr de Margerie said he hoped Yamal could raise financing from western banks "but not in dollars". He added that the Chinese had committed to cover 60% of Yamal’s financing needs.

Mr de Margerie’s comments came as Total used an investor day to announce plans to sell USD10bn worth of assets between 2015 and 2017.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
MRC

MOSCOW (MRC) -- Borealis and Borouge, leading providers of innovative, value-creating plastics solutions, have announced the introduction of several new and upgraded material solutions engineered to enable the automotive industry to achieve greater cost efficiency, higher performance and improved sustainability in vehicle components, reported Borealis on its site.

The new lightweight grades Fibremod WE380HP and Daplen EE058AI are representative of Borealis and Borouge's commitment to offering new and multi-faceted solutions to automotive OEMS around the globe.

In so-called hybrid grades, reinforcing polypropylene (PP) with a combination of glass fibre and mineral filler yields a special performance grade. As one such grade, Fibremod WE380HP is a new hybrid PP compound comprised of 20% glass fibre reinforcement and 10% mineral filler. It is intended for use in both structural and visible automotive parts, such as under-the-bonnet (engine covers, gear housings) and high-end interior applications (window frames, arm rests). As a replacement for other materials, Fibremod WE380HP is a lightweight solution that contributes to lower fuel consumption and reduced CO2 emissions without compromising on visual aesthetics or performance. The grade can bear a high mechanical load, offers excellent processability, outstanding dimensional stability, low warpage, good heat resistance and allows for self-colouring. In addition to this multi-talented new material, other lightweight grades being highlighted at the IZB include the pioneering PP natural fibre grades NJ200AI and NJ201AI, both of which allow for 9% weight savings when compared to a PP-T20.

The recently-launched thermoplastic olefin (TPO) compound Daplen EE058AI is not only lightweight, but also offers tiger stripe-free technology, as does the upgraded Daplen EE189HP. Automotive OEMs continue to seek out materials that help reduce overall vehicle weight in order to improve fuel consumption and fulfil stringent CO2 emissions standards, while still meeting requirements in terms of efficient processing and surface aesthetics. The phenomenon of tiger stripes - the visually recognisable periodic change of surface gloss – is caused by converting processes and is a general problem of all thermoplastic materials, including polyolefins. The newly-developed, tiger stripe-free TPO compound Daplen EE058AI boasts an excellent property profile and is a fitting replacement for conventional T15 and T20 interior materials.

"Borealis and Borouge are attuned to the needs and demands of the automotive industry," says Harald Hammer, Borealis Vice President of Engineering Applications. "We will continue to develop lightweight PP solutions for automotive compounds that not only help our customers and partners achieve broader, long-term sustainability objectives, but also enhance automotive surface aesthetics."

As MRC informed previously, the South American operations of global automotive manufacturers and OEMs are being even better served thanks to increased Borealis activity in the region, principally through the expansion of the plant in Itatiba, near Sao Paulo, Brazil. This EUR45 mln project involves the construction of an additional production building, two state-of-the-art PP compounding extruders, blending and raw material silos, warehouse facilities and a bagging line. In addition, extensive upgrading of utility and water systems is being carried out. With nearly 80% of the construction project concluded, the commissioning and start-up plan has already commenced.

Vienna-based Borealis is a leading producer of polyolefins, base chemicals and fertilizers. The firm posted sales of more than USD10 billion in 2013. Borealis is majority-owned by state-owned International Petroleum Investment Co. of Abu Dhabi. IPIC also owns North American ethylene and polyethylene producer Nova Chemicals and Middle Eastern petrochemicals firm Borouge.
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