Bharat Petroleum plans USD3B petchem plant near Mumbai

MOSCOW (MRC) -- India's Bharat Petroleum Corporation Ltd (BPCL) plans to build a USD3 billion petrochemical unit to serve the Mumbai region, a company official said, to profit from the country's expected surge in demand for petrochemicals as its economy expands, as per Rigzone.

BPCL's expansion is part of a national plan to spend USD35 billion on petrochemical production in order to meet the expected increase in consumption of the chemicals for products including plastics, paints and adhesives. India currently only produces about 20 million tonnes a year of petrochemicals, less than the 40 million tonnes of demand expected for the 2017/18 financial year.

Demand is expected to almost double again within a decade, according to a report from the Ministry of Petroleum and Natural Gas.

BPCL earlier this month bought 500 acres (202 hectares) of land from a fertiliser unit of Hindustan Organic Chemicals Ltd , Hindustan Organic said in a notice to the Bombay Stock Exchange on March 17.

The land will allow BPCL to build a petrochemical complex that will use feedstocks from its Mumbai refinery, which processes 240,000 barrels per day (bpd) of crude, R. Ramachandran, head of refineries at BPCL told Reuters this week. The site is about 60 km (37 miles) from the refinery.

"This (land deal) is fundamental to enhancing our petrochemical portfolio," said Ramachandran. "Going forward, petchem consumption is likely to be higher than the conventional fuels so it is better if we start thinking in that direction now."

To transport feedstock to the new petrochemical complex, Ramachandran said there was a plan to build a pipeline from the refinery to a nearby port and tankers would then deliver the feedstock to the facility.

Alternatively, he said a direct pipeline between the Mumbai refinery and the petrochemical facility could be built.

He said the facility would focus on producing propylene, but also produce polyethylene at lower quantities.

Ramachandran told Reuters the company had not been able to expand the Mumbai refinery for the petrochemical site because of limited land availability in the city.

The petrochemical complex will be ready by 2023, he said.

BPCL plans to pump feedstocks from the Mumbai refinery by pipeline to a nearby port to load onto tankers that will then carry it to the petrochemical complex, said a source familiar with the matter.

BPCL already produces petrochemicals at its 310,000 bpd Kochi refinery in southern India.

BPCL is also constructing a 52 billion rupees (USD799.26 million) project at Kochi to produce chemicals like acryl, oxo-alcohols, and acrylic acid used in products like paints, adhesives or textiles, which Ramachandran said would be commissioned next year.

BPCL also plans to build a petrochemical plant at its 120,000 bpd Bina refinery in central India.

"We are targeting petrochemical production equivalent to 10 to 15 percent of our crude processing in the long run," he said.

As MRC informed before, in early November 2017, BPCL ramped up the operating rate of its Kochi oil refinery after completing an expansion at the plant in southern India, reported Reuters then with reference to two sources with direct knowledge of the matter. The refinery was running then at about 13 MMtpy, or about 260,000 bpd, up from its original capacity of 9.5 MMtpy, one of the sources said. BPCL planed to gradually ramp up Kochi to its new capacity of 15.5 MMtpy, he added, without giving a timeline.
MRC

Saudi Aramco ready for IPO in second half of 2018

MOSCOW (MRC) -- Saudi Aramco will be ready for an initial public offering in the second half of 2018 and the work is ongoing, Amin Nasser, the chief executive officer of the state oil company, said in a Bloomberg television interview on Monday, reported Reuters.

"We are doing a lot of work to prepare the company for listing," he said.

The venue and the timing will depend on the government, Nasser said. "Don't forget this is a very complex process. Aramco's size and complexities is something that requires time."

Saudi Arabia is planning to list up to 5 percent of Saudi Aramco in the offering. A successful IPO could give the company a total valuation of up to USD2 trillion, making it the world’s biggest oil company by market capitalization.

The company could be floated either domestically or internationally late this year, Saudi Energy Minister Khalid al-Falih told Reuters last week.

As MRC wrote before, Saudi Arabia wants to complete talks with strategic investors such as China, Japan and South Korea before deciding where to list shares in state oil company Saudi Aramco. The decision shows the initial public offering (IPO), which could be the biggest in history, is becoming an increasingly difficult balancing act for Riyadh.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
MRC

US refiners switch to summer gasoline, eyeing better margins

MOSCOW (MRC) -- US refiners have switched to making summer-grade gasoline earlier than usual as profit margins to make the fuel have improved compared with those for the spring months, reported Reuters with reference to market sources.

Summer-grade gasoline is more expensive to make than gasoline for the spring, but stronger margins for contracts expiring in June and July promoted refiners to switch to the summer grade a few weeks earlier than usual.

Refiners briefly produce a transition-grade fuel during the spring but usually shift to summer-grade gasoline by late March ahead of the required May 1 date.

This year, the switch has already happened, traders said.

Refiners are operating at nearly 92 percent of capacity, a 20-year high for this time of year, according to US Energy Department data. Gasoline inventories in the Gulf Coast are near their highest in more than a year.
MRC

AkzoNobel to sell Specialty Chemicals to The Carlyle Group and GIC


MOSCOW (MRC) -- AkzoNobel announces the sale of 100% of its Specialty Chemicals business to The Carlyle Group and GIC for an enterprise value of EUR10.1 billion, as per company's press release.

This transaction creates two focused and high performing businesses – Paints and Coatings, and Specialty Chemicals – as part of its strategy announced in April 2017. The transaction is expected to be completed before the end of 2018.

The Board of Management and the Supervisory Board concluded that a private sale to The Carlyle Group and GIC is in the best interests of AkzoNobel, Specialty Chemicals and its respective stakeholders, including employees, shareholders and customers. This is the outcome of a thorough dual-track process during which the Boards of AkzoNobel carefully considered both a legal demerger and a private sale.

The Carlyle Group has a global presence and the financial capacity to enable the Specialty Chemicals business achieve its full potential. Carlyle has extensive experience investing in chemicals, unlocking long-term potential and creating value in its portfolio companies. As a responsible investor Carlyle is focused on driving growth, job creation and long-term financial success. The firm also has a strong focus on Environmental, Social and Governance (ESG) aspects and building positive working relationships with wider stakeholders (employees, unions and local communities).

Thierry Vanlancker, CEO AkzoNobel, said: “Today is a key milestone in creating two focused, high performing businesses, to generate value for all stakeholders. We delivered on our commitment to separate the Specialty Chemicals business and did so ahead of schedule. “We are very pleased to announce the sale of Specialty Chemicals to The Carlyle Group and GIC. We believe the business is well positioned to capture growth opportunities and further improve performance. Carlyle has significant experience in the chemicals industry and a proven track record when it comes to health, safety, innovation and sustainability.”

Martin Sumner and Zeina Bain, Managing Directors at The Carlyle Group, added: “We are pleased to invest in the Specialty Chemicals business and proud to support a business with such a strong heritage. We are committed to growing the business, and building upon its innovation capability, high quality work force and asset base, as well as its world-class sustainability and environmental practices. We look forward to working with the management team to transition the business to a successful independent company.”

Werner Fuhrmann, CEO of AkzoNobel Specialty Chemicals, said: “Specialty Chemicals is a strong and profitable business with highly skilled and motivated employees serving our customers every day with essential chemistry. As a focused chemicals company we will concentrate our efforts and resources to accelerate profitable growth.“With this transaction, our business has an opportunity to achieve its full potential and we will continue to fulfil the current and future needs of our customers throughout the world.”

The transaction is subject to customary closing conditions including the relevant regulatory approvals and consultation with the relevant employee representative bodies. AkzoNobel obtained shareholder approval for the separation at an Extraordinary General Meeting held on November 30, 2017.

This transaction values Specialty Chemicals at EUR10.1 billion (Enterprise Value). On the basis of the year-end balance sheet, AkzoNobel expects to receive a cash payment of EUR8.9 billion. Following deduction of deal and separation related costs, as well as other previously announced liabilities, the net proceeds are expected to be around EUR7.5 billion. The vast majority of net proceeds will be distributed to shareholders. Further details will be announced in due course.

Equity for this investment will come from Carlyle Partners VII, Carlyle Europe Partners IV, Carlyle’s longstanding investment partner GIC (which manages Singapore’s foreign reserves) and co-investors.


MRC

Mexichem agrees to pay USD28.6 mln in Brazil antitrust settlement

MOSCOW (MRC) - Mexican industrial group Mexichem said on Tuesday its Brazilian unit has reached a cease and desist agreement with Brazil’s antitrust agency, Cade, over alleged breaches of competition rules, and will pay 95.1 million reais (USD28.6 million) in compensation, as per Reuters.

In a statement, the Mexican group said Cade notified Mexichem in 2016 of the suspected violations, which concerned former employees during the 2003-09 period.

By way of the agreement, Mexichem’s Brazil unit undertook to pay compensation of 95.1 million reais within a 240-day window, it said. Cade also imposed penalties on former staff who worked at the company in the period under investigation.

Mexichem did not give details of the latter sums.
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