Rosneft signs deal to take a 49% stake in Essar Oil

MOSCOW (MRC) -- Russian oil major Rosneft has signed a preliminary agreement with the Essar group, controlled by the Ruias, to buy a 49% stake in Essar Oil’s Vadinar refinery and supply 100 million tonnes of oil to the latter for the next 10 years, said Business-standard.

Refining accounts for over 95% of Essar Oil’s overall business. The deal is subject to regulatory approvals.

According to the deal contours, Rosneft will supply five million tonnes of crude oil to Essar Oil in 2015. Rosneft and Essar Oil had last December signed a preliminary contract for supply of 10 million tonnes of oil a year for 10 years. Commenting on the signing of the agreement, Rosneft Chairman Igor Sechin said: “The performance of the terms of the signed documents will have a substantial impact on the scale of economic cooperation between Russia and India. The goods trade between the two countries will grow by more than 50 per cent."

Rosneft and Essar also plan to boost refinery output from 20 million tonnes a year to 45 million tonnes by 2020. The deal also includes a retail chain of 1,600 stations located in India; the parties plan to increase the total quantity of retail sites to 5,000 within the next two years.

Before the announcement of the agreement, the Essar Oil stock was trading 3.74% higher than its previous BSE close, at Rs 188.6 a share. At Wednesday’s closing price, Essar Oil’s market capitalisation stands at Rs 27,337 crore.

Sources had earlier told Business Standard that the deal would fetch Essar Oil over Rs 10,500 crore, which might help the company reduce its debt burden. As of June this year, it had a debt of Rs 17,000 crore on its books.

To complete its debt-dollarisation programme, the company is in the process of availing of long-term export advance facility of USD1.6 billion, backed by export performance bank guarantee/standby letter of credit, to repay the high-cost rupee loans.

Last April, Essar Oil had received the Reserve Bank’s approval to raise external commercial borrowings to the extent of USD2.27 billion, to replace its rupee debt with low-cost dollar loans.

The company has already refinanced an equivalent amount of its rupee loan with a foreign-currency debt of USD1 billion through use of ECBs and by swapping rupee loans with dollar ones. Essar Oil owns and operates a refinery in Gujarat’s Jamnagar. Among its other assets are a few exploration and production blocks and coal-bed methane blocks. The company reported a profit of Rs 1,521 crore on a revenue of Rs 83,206 crore in 2014-15, mainly on account of higher gross refining margins of USD10 a barrel.

Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.
MRC

Perstorp buys pentaerythritol business of Japan's Koei Chemical

MOSCOW (MRC) -- Swedish specialty chemicals maker Perstorp on July 2, 2015 announced the acquisition of the pentaerythritol, di-penta and sodium formate businesses, related technology and certain assets from Japan’s Koei Chemical Company Ltd., as per Business-standard.

As part of the business transfer, Koei Chemical Company Ltd will act as Perstorp’s agent in Japan, which will secure continuous high service and reliable partnership with its highly valued customers in the Japanese market.

The transaction is fully in line with both companies’ strategies going forward. For Perstorp, this is an important part of an ambitious plan to strengthen the position in the Asian market and to add a platform for investment in order to long term expand the pentaerythritol business.

"Penta is a core business area within Perstorp and these products have been instrumental in the development of Perstorp as an international company. The acquisition is line with Perstorp's strategy to drive growth and in particular in the Asia Pacific region. It demonstrates our commitment and ability to add high quality businesses to an already strong portfolio," said Jan Secher, president and CEO, Perstorp.

“This action empowers Perstorp’s ambitious investment plan to increase penta and di-penta capacity supporting our customers’ long-term growth. There has been significant planning to ensure sufficient capacity to supply both current and new customers. Perstorp has already successfully incorporated the TMP business from Koei in the past and we are very confident that this transaction will follow the same level of high customer satisfaction,” added Ulrika Andersson, vice president business unit penta.

Pentaerythritol is used to enhance the properties in applications such as alkyd resins, PVC stabilisers, synthetic lubricants and varnishes. Perstorp is now producing penta in three different production plants in Germany, the US and Sweden.

As MRC informed earlier, Perstorp plastics and surface materials, this year is celebrating the 40th anniversary of its broad Capa portfolio, which comprises grades with varying molecular weights and levels of functionality. Thus, Perstorp's Capa caprolactone polyols range continues to mature and grow.

Perstorp is one of the world leaders in various sectors of the specialty chemicals market, it's pioneer in formalin chemistry, plastics and surface materials. Perstorp was founded in 1881 and is controlled by PAI partners,a major European private equity company. The company has around 1,500 employees in with 22 production plants in Europe, Asia and North America.
MRC

Asahi Kasei to mothball cracker in Japan

MOSCOW (MRC) -- Asahi Kasei is likely to shut a naphtha cracker permanently, according to Apic-online.

A Polymerupdate source in Japan informed that the plant is likely to be mothballed by April 2016. The permanent shutdown has been attributed to sluggish demand in the domestic markets and cheap product imports from China.

Located in Mizushima, Japan, the cracker has an ethylene capacity of 470,000 mt/year and propylene capacity of 300,000 mt/year.

As MRC wrote previously, Asahi Kasei’s (Tokyo, Japan) Fibers division will expand production capacity for polypropylene spunbond nonwovens in Thailand at its subsidiary Asahi Kasei Spunbond (Thailand) Co. AKST will add a new production line of 20,000 metric tons per year capacity which, combined with its existing production line, will double its capacity for spunbond nonwovens to 40,000 m.t/yr. The investment for the capacity expansion is approximately USD5 billion, with a scheduled startup of November 2015.
MRC

Daqing Petrochemical to restart PP plant planned to be restarted by

MOSCOW (MRC) -- Daqing Petrochemical is in plans to restart a polypropylene (PP) plant following maintenance turnaround, as per Apic-online.

A Polymerupdate source in China informed that the plant is planned to be restarted in end-July 2015. It was shut on June 22, 2015.

Located in Heilongjiang province of China, the plant has a production capacity of 100,000 mt/year.

As MRC wrote previously, Daqing Petrochemical took off-stream a high density polyethylene/linear low density polyethylene (HDPE/LLDPE) swing plant for maintenance turnaround on June 20, 2015. It is likely to remain off-stream for around one month. Located in Daqing city, China, the plant has a production capacity of 310,000 mt/year.

Daqing Petrochemical Company is a regional branch company of Petro-China Company Limited. It is a giant-scale petrochemical complex producing oil products, chemicals, fertilizers and chemical fiber with the major raw materials of crude oil, light hydrocarbon and natural gas from Daqing oilfield.
MRC

Braskem sued in New York court over involvement in a graft scandal

MOSCOW (MRC) -- A Braskem SA shareholder sued the Brazilian petrochemical producer on Wednesday, accusing it of involvement in a graft scandal that has engulfed key stakeholders Odebrecht and Petrobras and led to a selloff in Braskem's U.S.-traded stock, said Reuters.

Plaintiff Douglas W. Peters is seeking class action status for the lawsuit, filed in a Manhattan federal court on behalf of individuals or institutions that purchased Braskem's American depositary receipts between June 1, 2010 and March 11, 2015, according to court documents.

Braskem and four executives working for or linked with the company are accused in the suit of making "materially false and misleading statements regarding the company's business, operational, and compliance policies." Such allegations do not require proof that misstatements were made knowingly.

Braskem said in a statement it had not been notified of any legal proceedings in the United States and therefore could not comment.

The list of defendants include Braskem Chief Executive Officer Carlos Fadigas and his predecessor, Bernardo Gradin. Marcela Drehmer, the chief financial officer of Odebrecht SA, Brazil's largest engineering firm and Braskem's controlling shareholder, was also named in the lawsuit.

Braskem has long-term contracts to buy naphtha from Petrobras, the state-run oil firm at the center of a sweeping corruption scandal. The other defendants could not immediately be reached for comment.

More than 100 people have been indicted on charges including corruption, money laundering and racketeering in the investigation of an alleged cartel of engineering firms fixing prices on contracts with the oil company formally known as Petroleo Brasileiro SA.

Odebrecht's chief executive was arrested last month and accused by prosecutors of playing a leading role in the scandal.

As MRC informed earlier, Brazilian petrochemical producer Braskem lifted the investment forecast for its flagship Etileno XXI complex in Mexico by 13% amid rising construction costs. The overall outlay for the project in the Coatzacoalcos region of Veracruz state has been revised to USD5.2bn, according to a Braskem securities filing.

Braskem is Brazilian main producer of polyethylene and polypropylene. In addition with ongoing plants located in both petrochemical complexes, in April 2008 Braskem opened a 300,000 metric ton polypropylene plant in the city of Paulinia (Sao Paulo).
MRC