Unipetrols largest minority shareholder to sell stake to PKN Orlen

MOSCOW (MRC) — Czech downstream oil group Unipetrol's largest minority shareholder Paulinino Limited will sell its stake to majority owner PKN Orlen when it opens a voluntary tender offer next week, Reuters said.

Polish group PKN Orlen, with 63% in Unipetrol, last week announced plans to try to buy up all remaining shares and de-list the Czech refiner as it seeks to reap benefits from its investments and upgrades. The buyout, set at a price of 380 crowns per share, would also end a period of uneasy relations with minority shareholders, led by 20% owner Paulinino, part of the Czech-Slovak investment group J&T, which has questioned PKN Orlen's strategy and sought higher dividends.

The shares traded at 376.20 crowns on Wednesday. Unipetrol has been making progress in the past few years thanks to rising refining and petrochemical margins that have boosted profits to the highest levels since PKN Orlen acquired the company in 2005.

Paulinino, in its decision to sell, said it expected the high performance in the sector would be hard to maintain, evidenced in margins starting to fall. "Such favorable macro conditions, as the sector enjoyed between 2015 and 2017, will be very difficult to maintain over the long term together with low oil prices," Paulinino representative Pavel Muchna said in a statement.

"We have decided to accept the offer and we will sell our shares in Unipetrol to the Offeror (PKN Orlen) under the proposed terms." Paulinino said it would use proceeds to consider other investments, using its experience in the petrochemical and energy sectors.

The offer values Unipetrol at 68.9 B crowns (USD3.2 B). It will run from Dec. 28 to Jan. 30. While Paulinio's sale alone will not get PKN Orlen to its conditional target of 90%—the legal threshold allowing a forced buyout of remaining shares—it is likely to prompt other shareholders to follow suit.

Some analysts, though, have said the offer looked low given Unipetrol's outlook once it opens a new polyethylene unit, an investment worth 8.5 B crowns. Unipetrol reported earnings before interest, tax, depreciation and amortization (EBITDA) of 11.9 B crowns in 2016, a bumper year. Analysts have said the new unit could boost core profit by 1 B crowns a year.
MRC

PE production in Russia grew by 0.5% in January-November 2017

MOSCOW (MRC) - Production of polyethylene (PE) in Russia reached about 1.547,4 tonnes in first eleven months of this year, up 0.5% year on year, compared to the same period of 2016. The linear low density polyethylene (LLDPE) segment accounted for the greatest increase in the output, according to MRC's ScanPlast report.

November PE production in Russia grew to 139,600 tonnes, whereas this figure was about 105,500 tonnes a month earlier. Low indicator of October was a result of scheduled maintenance works at two producers: Kazanorgsintez and Stavrolen. Overall PE output reached 1.547,400 tonnes in January-November 2017, compared to 1.554,700 tonnes a year earlier. Output of low density polyethylene (LDPE) and LLDPE increased, whereas HDPE production decreased.

The structure of PE output by grades looked the following way over the stated period.

November HDPE production fell to 63,700 tonnes from 46,400 tonnes a month earlier, the largest producers - Kazanorgsintez and Stavrolen - shut their production capacities for maintenance in October. Russian plants' overall HDPE output reached 823,700 tonnes in January-November 2017, down by 9% year on year.

November LDPE production in the country increased to 60,100 tonnes, compared with 59,100 tonnes in October; Kazanorgsintez increased production volumes. Overall LDPE production exceeded 600,000 tonnes over the stated period, up by 5% year on year.

Nizhnekamskneftekhim, Russia's only LLDPE producer, significantly increased its output this year, its LLDPE production was about 123,300 tonnes in the first eleven months of 2017, whereas this figure did not exceed 73,700 tonnes a year earlier.


MRC

Indian refiners turn to use dirty fuel to produce power, gas

MOSCOW (MRC) -- Indian oil refiners are drawing up plans to use petroleum coke for power generation and to produce syngas after the government banned use of the heavily polluting fuel in and around New Delhi, reported Reuters.

The country's top refiner Indian Oil Corp (IOC) and other refiners have invested billions of dollars in recent years to install delayed coker units to produce high-value added products such as gasoline and liquefied petroleum gas.

The units produce petcoke as a byproduct, equivalent to 25%-30% of a unit's capacity, which refiners sell to local industries. But after the Supreme Court imposed a ban on petcoke in New Delhi and three surrounding states from last month to fight pollution, refiners are having to rethink what they do with the fuel.

IOC supplied petcoke from some of its plants, mainly in northern India, to industries in Haryana, Rajasthan and Uttar Pradesh - the states where it is now banned. It is still producing petcoke but diverting it to regions where it is not banned, its chairman Sanjiv Singh said on Tuesday.

The oil ministry has also asked state refiners to consider setting up petcoke gasifiers, a government source said.

IOC is evaluating building a 2 MMtpy petcoke gasifier costing USD2.3 B-USD3.1 B at its 300,000-bpd Paradip refinery in eastern India, its chairman said.

Gas made from petcoke can be used internally in refineries and at petrochemical plants.

"Normally petcoke gasifiers are large and capital intensive. A possibility is that we can build one gasifier for two to three refineries," Singh said. IOC operates 11 refineries in India.

Reliance Industries, owner of the world's biggest oil refining complex, has set up petcoke gasifiers to produce gas for internal needs using 6.5 MMtpy petcoke produced at its two refineries.

As MRC wrote before, in February 2016, RIL was awarded a contract worth Rs. 100 crore to Petron Engineering Construction Ltd for its linear low density polyethylene (LLDPE) plant in Gujarat. The LLDPE plant is part of RIL's J-3 project in Jamnagar in the western Indian state of Gujarat. The J-3 project boasts of a petroleum refinery and allied petrochemical plants for the production of plastics and fibre intermediates.
MRC

PP imports to Belarus rose by 2% in first ten months of 2017

MOSCOW (MRC) -- Overall imports of polypropylene (PP) into Belarus grew in January-October 2017 by 2% year on year to 78,500 tonnes. Demand for all PP grades increased, as per MRC's DataScope report.

October PP imports to Belarus dropped to 6,400 tonnes from 8,300 tonnes a month earlier, lower shipments of propylene polymers were caused by scheduled shutdowns for maintenance at Russian plants. Overall imports of propylene polymers reached 78,500 tonnes in January-October 2017, compared to 77,000 tonnes a year earlier.

The supply structure by PP grades looked the following way over the stated period.


October imports of propylene homopolymers (homopolymer PP) to the Belarusian market dropped to 4,700 tonnes from 5,400 tonnes a month earlier, all Russian producers reduced their PP shipments because of outages at some plants. Thus, overall shipments of homopolymer PP reached 52,800 tonnes in the first ten months of 2017, compared to 51,900 tonnes a year earlier. Russian producers with the share of about 87% of the total shipments were the key suppliers.

October imports of propylene copolymers to Belarus decreased to 1,700 tonnes from 3,000 tonnes a month earlier, local companies reduced their procurement of injection moulding statistical copolymers (PP random copolymers) in Russia. Thus, overall imports of propylene copolymers reached 25,700 tonnes in January-October 2017, whereas this figure was 25,200 tonnes a year earlier.

MRC

BorsodChem to expand TDI capacity at Kazincbarcika site

MOSCOW (MRC) -- BorsodChem has announced that it will double the capacity of its TDI crystallisation unit at its Kazincbarcika plant in Hungary, as per GV.

According to the company, this capacity expansion will allow BorsodChem to meet the strong growth in global demand for T65 and T100 TDI grades and continue to provide stable supply in the coming years. Details on the annual production capacity were not disclosed.

Construction of the new unit has begun at the Kazincbarcika plant. Start-up is expected in Q3 2018. T65 and T100 grades are largely used in the polyurethane industry for flexible foam, coatings and adhesive production.

BorsodChem is part of Wanhua Group, one of the largest MDI producers in the world with more than 2,000 kt/y MDI capacity. BorsodChem is a leading producer of MDI, TDI and other speciality chemicals in Central and Eastern Europe.

As MRC reported earlier, in July 2017, Wanhua & BorsodChem announced the set-up of a new MDI bulk storage facility in the Rotterdam area. Two new tanks will be located at LBC Tank Terminals, one of the largest chemical storage service providers in the world. Wanhua said that this bulk storage facility is ideally located to serve as the company’s regional European distribution hub of Wannate MDI products imported from China for European customers. The tanks were commissioned in July 2017.
MRC