BASF and LetterOne sign letter of intent to merge their oil and gas subsidiaries Wintershall and DEA

MOSCOW (MRC) -- BASF and LetterOne has signed a letter of intent to merge their respective oil and gas businesses in a joint venture, which would operate under the name Wintershall DEA, said BASF on its site.

The oil and gas business of BASF is bundled in the Wintershall Group consisting of Wintershall Holding GmbH and its subsidiaries, including the gas transportation business. The oil and gas business of LetterOne comprises DEA Deutsche Erdol AG and its subsidiaries. By combining these two German-based entities, their parent companies strive to create a basis for further profitable growth, optimize the portfolio footprint of the combined business and realize synergies. Wintershall DEA would have significant growth potential and be one of the largest independent European exploration and production companies. In the medium term, BASF and LetterOne envisage to list Wintershall DEA through an initial public offering.

In the coming months, BASF and LetterOne will prepare and conduct a confirmatory due diligence and negotiate definitive transaction agreements. Closing could be expected in the second half of 2018, subject to customary regulatory approvals. Until the closing, Wintershall and DEA will continue to operate as independent companies. There is no assurance that BASF and LetterOne will enter into definitive transaction agreements or that the intended transaction will be consummated.

It is intended to form Wintershall DEA by LetterOne contributing all its shares in DEA Deutsche Erdol AG into Wintershall against issuance of new shares to LetterOne. Based on the valuation of the exploration and production businesses, BASF shall initially hold 67% and LetterOne shall hold 33% in Wintershall DEA. In this shareholding ratio, Wintershall’s gas transportation business is not accounted for. As of closing, Wintershall DEA shall issue a mandatory convertible bond to BASF reflecting the value of Wintershall’s gas transportation business. No later than 36 months after closing, this bond shall be converted into new shares in Wintershall DEA, resulting in a higher shareholding ratio for BASF.

In 2016, the combined business had pro-forma sales of €4.3 billion, EBITDA of €2.2 billion and net income of €326 million. Overall, production volumes of Wintershall and DEA amounted to 215 million barrels of oil equivalent (BOE) in 2016, this equals a production of around 590,000 BOE per day. Based on proven reserves (1P) of 2.1 billion BOE at the end of 2016, the reserve to production ratio of the combined business would be around 10 years.

BASF would determine the chief executive officer and LetterOne the deputy chief executive officer of Wintershall DEA. The company would be headquartered in Kassel and Hamburg, Germany.
Following the closing of the transaction, BASF expects to account for its stake in the joint venture under the equity method in BASF’s consolidated financial statements.

As MRC informed earlier, within the next five years, BASF SE plans to invest globally more than EUR200 million in its plastic additives business, approximately half of which in Asia, focusing on capacity expansions and operational excellence. Plastic additives improve product properties such as scratch resistance or light stability, and optimize plastics manufacturing processes. As the leading global supplier of plastic additives with manufacturing assets in all regions, BASF is a major partner to the plastics industry.

DEA is operating in the field of exploration and production of crude oil and natural gas and is headquartered in Hamburg, Germany. The company has long-standing experience along the entire value chain of the upstream business. In March 2015, DEA - formerly part of RWE AG - was acquired by LetterOne. With its workforce of around 1,150 employees, DEA has stakes in production facilities and concessions in Germany, Norway, Denmark, Egypt, Algeria and Mexico. For the full year 2016, net sales of the oil and gas activities bundled in the DEA Group amounted to around EUR1.5 billion, EBITDA was EUR614 million and EBIT EUR44 million. For 2016, DEA reported a production of 50 million BOE and proven crude oil and natural gas 1P reserves of 483 million BOE at the end of the year.

Wintershall, headquartered in Kassel, Germany, focuses on exploration and production in oil and gas-rich regions in Europe, Russia, South America, North Africa, and the Middle East. Together with Gazprom, Wintershall is also active in the transportation of natural gas in Europe. The company has about 2,000 employees worldwide and is Germany’s largest, internationally active crude oil and natural gas producer. For the full year 2016, net sales of the Oil & Gas segment of the BASF Group amounted to around EUR2.8 billion, EBITDA was around EUR1.6 billion and EBIT around EUR500 million. Crude oil and natural gas production of Wintershall amounted to 165 million BOE in 2016; the 1P reserves were 1.6 billion BOE at the end of 2016.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of about EUR58 billion in 2016.
MRC

MOSCOW (MRC) -- A major fire broke out at Paradip refinery of Indian Oil Corporation Limited (IOCL) on December 12, 2017, as per Apic-online.

A domestic source informed Polymerupdate team member that a pipeline inside the INDMAX Unit of Paradip Refinery caught fire following a leakage at about 12 noon yesterday, destroying properties worth crores. As the heavy smoke was emanating from the unit and was clearly visible from a distance, panic gripped the workers and residents of nearby Trilochanpur, Mahal and other villages.

However, no casualties were reported. Nine fire tenders took more than half-an-hour to douse the fire. The INDMAX Unit having the capacity of 4.17 MMTPA is a major landmark for Indian Petroleum Industry. It is used for the production of high yield LPG, light olefins and high octane gasoline from various petroleum fractions.

When asked to comment on the operational status of the refinery, the source added, ?the company has shut the fluidic catalytic cracking unit (FCCU) on precautionary measures after a fire broke out at a nearby INDMAX unit. It remains unclear when the unit will resume operations.

Located at Paradip in Odisha, the east coast refinery has a processing capacity of 300,000 barrels per day.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.
MRC

MOSCOW (MRC) -- INEOS has confirmed it has signed a contract to partner with Imperial Logistics to design and build the largest butane river barges ever used in Europe, said Imperial Logistics.

These barges will link the world’s largest butane tank being constructed at the Oiltanking Antwerp Gas Terminal (OTAGT) in the Port of Antwerp, Belgium, with the INEOS site in Koln to enable one of the largest crackers in Europe to be supplied with large volumes of butane as well as naphtha as a source of feedstock.

Hugh Carmichael, Director INEOS Trading & Shipping, says: "This agreement represents a further step in a strategic investment in the future of our naphtha crackers in Koln. The new butane tank in Antwerp and the Imperial butane river barges will provide INEOS with increased flexibility and security of supply that will significantly improve our competitiveness in Europe. It also positions INEOS as a major player in global LPG markets. We are pleased to work together with Imperial Logistics as a major barge operator in this unique project. Our joint expertise and experience will help make this a successful project."

Steffen Bauer, Chief Operating Officer (COO) at Imperial’s Business Unit Shipping says: "We are very delighted to be awarded as project partner from INEOS.” He adds: “To design and build the largest butane river barges ever used in Europe, is an extraordinary challenge."

INEOS continues to invest in supply chain flexibility of its European facilities. Today’s announcement builds on its commitment to invest more than 1 billion USD into the supply of ethane from the USA, securing the competitiveness of its gas crackers in Europe, located at Grangemouth, UK, and Rafnes, Norway.

These new state of the art barges will move about 3,000 tons butane each, which is about three times as much as the current barges move on the Rhine system. The shipyards to build these new barges will be selected in the near future and the barges will be operational in 2019.

INEOS is a global manufacturer of petrochemicals, speciality chemicals and oil products. It comprises 25 businesses each with a major chemical company heritage. Its production network spans 105 manufacturing facilities in 22 countries throughout the world, employing 18,500 people. INEOS products make a significant contribution to saving life, improving health and enhancing standards of living for people around the world. Its businesses produce the raw materials that are essential in the manufacture of a wide variety of goods: from paints to plastics, textiles to technology, medicines to mobile phones – chemicals manufactured by INEOS enhance almost every aspect of modern life. www.ineos.com

As a wholly owned subsidiary of the South African company Imperial Holdings Limited, Imperial Logistics International is responsible for coordinating and managing all the international logistics business of Imperial Holdings Limited outside Africa.
MRC

MOSCOW (MRC) -- Overall imports of high impact polystyrene (HIPS) and general purpose polystyrene (GPPS) into Russia increased by 2% in the first eleven months of the year to 43,900 tonnes cjmpared with 42,900 tonnes, according to MRC's DataScope report.

Higher HIPS imports boosted the overall shipments, whereas GPPS imports have slightly decreased. November imports of general purpose polystyrene (GPPS) into Russia increased by 6% to 1,980 tonnes, compared with 1,870 tonnes in October, and down 5% year on year.

The imports of Styrolution production material sharply increased to 970 tonnes against 320 tonnes in October, accounting for 49% from overall GPPS imports into the country in November, while in October it was 17%. November GPPS imports from China were 400 tonnes, compared to 230 tonnes in October. Imports of general purpose polystyrene (GPPS) to the Russian domestic market decreased in the first eleven months of 2017 by 4% year on year to 23,200 tonnes from 24,000 tonnes in a year earlier.

Supplies from Styrolution reached 11,400 tonnes or 49% from the total imports of GPPS from the beginning of the year against 15,200 tonnes and a share of 63% in January-November of last year. About half of the total import of GPPS accounted for the material for the production of XPS boards.

November imports of HIPS into Russia increased by 18% to 1,610 tonnes, compared with 1,3600 tonnes in October. In terms of producers last month, it is worth noting the increase in shipments from South Korea to 420 tonnes from 200 tonnes a month earlier. The rest of the volume of imports was supplied by European producers. Overall HIPS imports rose by 10% year on year in the first eleven months of 2017 to 20,700 tonnes from 18,800 tonnes a year earlier.
As a result of eleven months, the volume of imports from all major suppliers of HIPS increased to Russia. Styrolution's shipments grew by 9% to 7,900 tonnes, compared to 7,300 tonnes a year earlier. Shipments of Hungarian Polimeri Europa material increased by 14% to 5,700 tonnes against 5,000 tonnes in the same period last year. Converters directly purchased 17,200 tonnes or 83% of the total GPPS imports in January-November 2017.


MRC

MOSCOW (MRC) -- Russia's overall production of unmixed polyvinyl chloride (PVC) grew in the first eleven months of 2017 by 17% year on year, totalling 820,500 tonnes. Only two producers have grown resin production: SayanskKhimPlast and RusVinyl, according to MRC ScanPlast.

November production of unmixed PVC in Russia rose to 85,200 tonnes from 82,900 tonnes a month earlier, Kaustik Volgograd increased capacity utilisation. Overall PVC production reached 820,500 tonnes in January-November 2017, compared to 701,200 tonnes a year earlier.
Only two plants out of four have increased output, and such a high level of output growth this year was a result of the low stocks of 2016.

The structure of PVC production by plants looked the following way over the stated period.

RusVinyl (JV SIBUR and SolVin) last month reduced the capacity utilisation, the enterprise produced about 28,500 tonnes of polyvinyl chloride in November, of which about 2,300 tonnes of emulsion polyvinyl chloride (EPVC), against 29,800 tonnes a month earlier. Thus, RusVinyl's overall production of resin reached 283,000 tonnes in the first eleven months of 2017, up by 3% year on year.

SayanskKhimPlast decreased capacity utilisation in November, having produced about 26,200 tonnes of suspension PVC (SPVC) compared to 27,800 tonnes a month earlier. SayanskKhimPlast managed to manufacture 238,700 tonnes of resin in January-November 2017, compared to 119,800 tonnes a year earlier (last year's low production was caused by a forced long outage from mid-February to July 2016).

Bashkir Soda Company produced 22,600 tonnes of SPVC last month versus 21,700 tonnes in October. The plant's output of resin totalled about 219,900 tonnes in the first eleven months of 2017, compared to 226,000 tonnes a year earlier. The plant's lower output was largely caused by the forced shutdown in August because of problems with the supply of ethylene.

Kaustik (Volgograd) produced about 8,000 tonnes of suspension PVC in November versus 3,500 tonnes a month earlier (the enterprise from 25 September to 18 October stopped its capacity for preventive maintenance). The plant's overall production of resin reached 79,000 tonnes over the stated period versus 80,400 tonnes a year earlier.


MRC