Moody confirms Sibur Ba1 rating; assigned negative outlook

MOSCOW (MRC) -- Moody's Investors Service has today confirmed the Ba1 corporate family rating (CFR) and the Ba1-PD probability of default rating (PDR) of Sibur Holding, PJSC (Sibur), a Russian vertically integrated gas processing and petrochemicals company, said Moody's.

At the same time, Moody's confirmed the Ba1 rating of USD1 billion notes issued by Sibur Securities Limited, a wholly owned subsidiary of Sibur. The rating agency assigned a negative outlook to all the ratings.

The action concludes the review for downgrade of Sibur's and its notes' rating, which was part of the review for downgrade of ratings of 45 Russian non-financial corporates launched by Moody's on 23 December 2014. The review was prompted by the severe and rapid deterioration in the operating environment in Russia and the heightened risk of a more prolonged and acute economic downturn than originally expected.

The confirmation of Sibur's rating reflects Moody's view that Sibur's business is sufficiently resilient to the weakening of Russia's economic and financial environment, as captured by Moody's downgrade of Russia's sovereign rating and country ceiling to Ba1 from Baa3 with negative outlook on 20 February 2015.

At the same time, Sibur's rating remains constrained by (1) its exposure to the weakening of Russia's credit profile; (2) potentially reduced capex flexibility at later stages of ZapSibNeftekhim project implementation leading to growth in negative free cash flow and debt funding needs; (3) exposure to the risks inherent to the petrochemicals industry, such as price volatility and cyclicality of demand; (4) moderate size compared to that of global chemicals businesses.

The outlook on Sibur's rating is negative, reflecting Sibur's exposure to the deteriorating Russian operating environment, which is also captured by the negative outlook on Russia's government bond rating. The negative outlook also takes into account potential erosion of Sibur's capex flexibility as the company progresses with ZapSibNeftekhim investment project implementation. Moody's will also be monitoring the company's ability to address increasing country and foreign exchange risks.

As MRC informed earlier, Russian petrochemical firm Sibur said on Wednesday it had agreed a credit line for EUR 1.6 bln (USD1.7 bln) with a consortium of European banks. The agreement was signed in December 2014, it added in its financial report for last year. The long-term financing will be used to cover part of capital expenditures related to Sibur's ZapSib-2 investment project. SIBUR launched construction of ZapSibNeftekhim,a facility for deep hydrocarbon to polyolefin processing, on 17 February 2015.

SIBUR is a vertically integrated gas processing and petrochemicals company. SIBUR owns and operates Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and is a leader in the Russian petrochemicals industry. SIBUR operates 26 production sites in various regions of Russia. The Group employs 26,000 people. The Company sells its products to over 1,400 major customers engaged in the energy, automotive, construction, fast moving consumer goods (FMCG), chemical and other industries in approximately 70 countries worldwide.

MRC

MOSCOW (MRC) -- Russian mid-sized oil company Bashneft plans a small increase in output in 2016 and is on track to meet this year's production target, Bashneft President Alexander Korsik told business daily Vedomosti, reported Reuters.

"With a high probability we will extract 19 million tonnes this year," Korsik was cited as saying in an interview published on Tuesday. "Next year, we are planning a slight increase."

In October, the state won court approval to seize shares held by billionaire Vladimir Yevtushenkov in Bashneft over what it called an "improper privatisation" in the early 2000s.

Korsik, Bashneft's president since 2011, also said that the company had based its budget this year on an average oil price of USD60 per barrel and later on a slightly higher price.

"But I will not forecast the oil price," Korsik said. "For now we should live in the situation that we are in."

As MRC said before, Bashneft started pilot operations at a new hydrogen production unit at the Bashneft-Novoil Branch on 8 October 2014. The commissioning of the hydrogen production unit marks the completion of an important stage in Bashneft’s Ufa refinery upgrade programme aimed at meeting the requirements of Russia’s Technical Regulations on engine fuel quality. Presently, the new unit is the largest in Russia, with its rated capacity of 420 tpd.

Bashneft is a Russian oil company. It is one of the largest producer of oil products in the country. The company operates 140 oil and natural gas fields in Russia and has an annual oil production of 16 million tonnes. Bashneft owns three oil refineries located in Ufa with a combined capacity of 820,000 bbl/d (130,000 m3/d) and 100 petrol stations. Besides, as of January 22, 2010, Ufaorgsintez OAO operates as a subsidiary of Bashneft Joint Stock Oil Company. Among other products, Ufaorgsintez produces polyethylene and polypropylene.
MRC

MOSCOW (MRC) -- Samsung Total Petrochemical is likely to take off-stream a high density polyethylene (HDPE) plant for maintenance turnaround, reported Apic-online.

A Polymerupdate source in South Korea informed that the plant is likely to be shut in April 2015. It is likely to remain off-stream for around one month.

Located in South Korea, the plant has a production capacity of 175,000 mt/year.

As MRC informed before, Samsung Total Petrochemical is in plans to shut its polypropylene (PP) plant in South Korea for maintenance turnaround in mid-April 2015 for maintenance turnaround. It is likely to remain off-stream for around one month. Located in Daesan, South Korea, the plant comprises of three line with a combined production capacity of 250,000 mt/year.
MRC

MOSCOW (MRC) -- PPG Industries announced that it has completed the acquisition of certain assets of Flood® Australia, which manufactures and distributes specialty wood stain and paint additive solutions for consumer, commercial and industrial applications, said the company on its site.

Financial terms were not disclosed.

"The acquisition of Flood Australia allows PPG to further expand its architectural paint and coatings offering and establish a position in wood care in Australia," said Michael McGarry, PPG president and chief operating officer. "We look forward to providing customers with the same quality products for which the Flood brand has become known in Australia."

Flood products in Australia are distributed at home improvement stores, including Bunnings, Masters, Mitre 10, Danks, and independent paint dealers. No manufacturing assets or facilities were included in the acquisition.

PPG currently manufactures and distributes Flood wood care products in North America.

As MRC informed before, U.S. chemicals maker PPG Industries Inc had formally finalized its acquisition of Mexican paints maker Consorcio Comex for USD2.3 billion. The Pittsburgh-based PPG Industries said it had received a favorable ruling from Mexico's competition watchdog to complete the purchase, which came after the Mexican company's deal to sell to U.S. rival Sherwin-Williams Co fell through.

Flood Australia manufactures and distributes specialty wood stain and paint additive solutions for consumer, commercial and industrial applications.

PPG already manufactures and distributes Flood wood care products in North America.

PPG Industries, Inc. (PPG) is a global supplier of protective and decorative coatings. Performance Coatings, Industrial Coatings and Architectural Coatings- EMEA segments supply protective and decorative finishes for customers in a range of end use markets, including industrial equipment, appliances and packaging; factory-finished aluminum extrusions and steel and aluminum
MRC

MOSCOW (MRC) -- Thailand’s PTT Global Chemical (PTTGC) is likely to take off-stream its butadiene (BD) unit owing to technical issues at an upstream naphtha cracker, as per Apic-online.

A Polymerupdate source in Thailand informed that the unit is likely to be shut in April 2015. The shutdown of the BD unit has been attributed to the planned shutdown of an upstream cracker at the same site.

Located in Map Ta Phut, Thailand, the unit has a production capacity of 75,000 mt/year.

As MRC reported earlier, in 2013, Indonesian state-owned energy company Pertamina signed an agreement to purchase petrochemical products from PTT Global Chemical. The agreement serves as a pre-marketing strategy for Pertamina and PTT’s joint Indonesian petrochemical business. Under the agreement, PTT will deliver at least 5,000 tonnes of polyethylene (PE) and polypropylene (PP) products each month to Pertamina for sale in Indonesia.

Besides, Pertamina and PTTGC were to start joint shipments of PE to the Indonesian market from 1 July 2014, but they were posponed till September 2014.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC