Linde, Praxair reach agreement on details of merger

MOSCOW (MRC) -- Linde AG and Praxair Inc. agreed on a blueprint for their USD35 billion combination, leaving the fate of the proposed deal in the hands of a divided Linde supervisory board that derailed the plan for the merger of the industrial gas suppliers once before, said Bloomberg.

Teams from both companies put together a so-called business combination agreement, though there is no assurance the document will result in a transaction, Munich-based Linde said in a statement Wednesday. The companies announced a preliminary deal in December, and Linde’s board is scheduled to decide whether to proceed next week. Praxair’s board also needs to approve the agreement, the Danbury, Connecticut-based company said.

Having agreed on the finer points of the plan to create the world’s largest producer of industrial gases, chief dealmaker and Linde Chairman Wolfgang Reitzle now has to run the gauntlet of Linde’s 12 directors who are split over the proposal. France’s Air Liquide SA, the largest industrial-gas supplier, completed its biggest deal last year with the USD13 billion acquisition of Airgas Inc. Combining Linde and Praxair -- the world’s next-biggest providers -- would leave three major companies, including Air Products & Chemicals Inc.

Linde’s supervisory board shot down the idea of a transaction in 2016. The board remains in stalemate, split between executives who are for the deal and worker representatives worried about job losses, according to people with knowledge of the situation.

With the decisive vote a week away, Reitzle is willing to use his double voting right to overpower worker opposition, the people said. On top of worker protests, the proposal got a lukewarm reception from shareholders at the annual general meeting earlier this month, when Linde and Praxair had planned to present the merger document. Legal complexities led to the delay, the company said at the time.

At the AGM, Linde management was criticized for the way it’s going about getting a deal. A first attempt broke down in September, followed by a management shuffle and then a revival of talks in November.

The industry supplies gases such as oxygen and hydrogen used at hospitals, oil refineries, chemical plants and steel fabricators.
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Christian Kullmann appointed new CEO of Evonik

MOSCOW (MRC) -- Klaus Engel has stepped down as CEO of Evonik, with Christian Kullmann taking over the role, reported EPPM.

This changeover occurred at the end of the annual shareholders’ meeting.

Engel has been on the executive board for Evonik since 2007, and then became chairman in 2009.

Werner Muller, Chairman of the Supervisory Board, told Engel: "You successfully led the company through the global financial and economic crisis and steered the development of Evonik from a conglomerate to one of the leading specialty chemical companies. Today Evonik is excellently positioned – and the recent acquisition of Air Products specialty additives business, which you successfully managed in May 2016, contributed to that."

Aldo Belloni, Chief Executive Officer of Linde, also joined the board, after being voted in by shareholders.

Engel said: "Evonik has all the prerequisites to actively and successfully shape the future and to take advantage of attractive and sustainable growth prospects. Therefore, I can leave Evonik in the hands of my successor with confidence."

As MRC informed previously, Evonik Resource Efficiency will invest in a capacity expansion of its performance foams business at its production site in Darmstadt, Germany. The investment will increase the output of the facility by about 20% as a first step. The company will be adding production equipment to its operations complex that manufactures products marketed under the Rohacell brand. The expanded production capacity is expected to be operational by the second half of 2017. Evonik’s Darmstadt plant is currently producing foam products that are used as a core material in the construction of sandwich composites. The global market has shown steady annual growth in the use of composites.

Evonik, the creative industrial group from Germany, is one of the world leaders in specialty chemicals. Its activities focus on the key megatrends health, nutrition, resource efficiency and globalization. Evonik benefits specifically from its innovative prowess and integrated technology platforms. Evonik is active in over 100 countries around the world.
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New report shows potential for major Appalachian petchem industry

MOSCOW (MRC) — An economic report released by the American Chemistry Council (ACC) shows that the Appalachian region could become a second center of US petrochemical and plastic resin manufacturing, similar to the Gulf Coast, said Hydrocarbonprocessing.

ACC President and CEO Cal Dooley presented the findings at a Capitol Hill press event with lawmakers including Senator Shelley Moore Capito (R-W.Va.), Senator Joe Manchin (D-W.Va.) and Rep. David McKinley (R-W.Va.).
"The Appalachian region has distinct benefits that could make it a major petrochemical and plastic resin-producing zone," Dooley said. "Proximity to a world-class supply of raw materials from the Marcellus/Utica and Rogersville shale formations and to the manufacturing markets of the Midwest and East Coast has already led several companies to announce investment projects, and there is potential for a great deal more."

ACC's report presents a hypothetical scenario that includes the development of a storage hub for natural gas liquids (NGLs) and chemicals (e.g., ethylene, propylene), 500-mi pipeline distribution network and associated petrochemical, plastics and potentially other energy infrastructure and manufacturing in a quad-state area consisting of West Virginia, Pennsylvania, Ohio and Kentucky. It uses the IMPLAN model to estimate direct, indirect and payroll-induced job impacts, as well as tax revenue impacts.

By 2025, the quad-state region could see 100,000 permanent new jobs, including 25,700 new chemical and plastic products manufacturing jobs, 43,000 jobs in supplier industries and 32,000 “payroll-induced” jobs in communities where workers spend their wages, according the report. The new investment could also lead to $2.9 B in new federal, state and local tax revenue annually.

"The right policies are critical to realizing this opportunity," Dooley said. "The Appalachian Ethane Storage Hub Study Act of 2017 (S. 1075) is an important step forward. It will help inform efforts to maximize America's domestic energy and manufacturing potential." The bipartisan bill is sponsored by Senator Capito and co-sponsored by Senators Manchin and Portman.

"Uncertainty around financing is a key barrier to the development of energy infrastructure in the Appalachian region," Dooley continued. "Policymakers can help by affirming that NGL storage and distribution projects are eligible for existing private-public financing programs. As Congress and the Administration consider infrastructure modernization legislation, the Appalachian Hub should be a priority. And a timely and efficient regulatory permitting process is essential."

ACC's analysis projects a USD32.4-B investment in petrochemicals and derivatives and a USD3.4-B investment in plastic products, put toward the construction of five ethane crackers and two propane dehydrogenation (PDH) facilities. Three of the crackers would produce polyethylene and two would supply downstream petrochemical derivatives. Each PDH facility would contain a polypropylene resin plant. These capital investments are underway and will likely continue through the mid-2020s.

In the United States, chemical companies use ethane and propane, NGLs derived from shale gas, as key feedstocks. Plentiful and affordable supplies of natural gas and NGLs are enabling companies from around the world to build new US facilities or expand production capacity. Since 2010, 301 projects cumulatively valued at USD181 B have been announced, with nearly half completed or under construction.

IMPLAN is an input-output methodology—an economic model that quantifies interdependencies among industries or economic sectors. It is used by government agencies including the Army Corp of Engineers, US Department of Defense, US Environmental Protection Agency and over 20 others, and by over 250 colleges and universities, local governments, non-profits, consulting companies and other private sector companies.
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Pertamina appoints Sinopec unit for crude oil processing

MOSCOW (MRC) -- Indonesian state oil and gas company PT Pertamina has appointed a unit of China's Sinopec to process crude oil from Iraq, Daniel Purba, a senior vice president said, as per Reuters.

Unipec will process 1 MMbbl of Iraqi crude oil per month at a refinery in China from July to December, Purba said.

"They gave the best offer, better than the previous refinery in Singapore," he said.

As MRC informed earlier, Pertamina and Russia's Rosneft signed a framework deal this week on an oil refinery in Indonesia. Pertamina has been looking for a development partner for the USD12-billion Tuban refinery project.

Pertamina is an Indonesian state-owned oil and natural gas corporation based in Jakarta. It was created in August 1968 by the merger of Pertamin (established 1961) and Permina (established 1957). Pertamina is the world's largest producer and exporter of liquefied natural gas (LNG).

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group's key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
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Lanzhou Petrochemical shut down its LDPE plant in China

MOSCOW (MRC) -- Lanzhou Petrochemical, part of PetroChina, has undertaken an emergency shutdown at its low density polyethylene (LDPE) plant, as per Apic-online.

A Polymerupdate source in China informed that the company has halted operations at the on May 22, 2017 owing to mechanical issues. The exact duration of the unplanned outage could not be ascertained.

Located in Gansu province, China, the plant has a production capacity of 200,000 mt/year.

As MRC wrote previously, another subsidiary of PetroChina - Jilin Petrochemical - is in plans to its LDPE plant off-stream for a maintenance turnaround in mid-June 2017. The plant is expected to remain shut for around 15 days. Located in Jilin province, China, the plant has a production capacity of 275,000 mt/year.

Lanzhou Petrochemical Company engages in oil refining and fertilizer and ethylene production. The company was founded in 1960 and is based in Lanzhou, China. Lanzhou Petrochemical Company operates as a subsidiary of PetroChina Co. Ltd.
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