Japanese refiner Idemitsu wins family backing for Showa Shell merger

MOSCOW (MRC) -- Japanese oil refiners Idemitsu Kosan and Showa Shell Sekiyu said on Tuesday they had agreed to merge on April 1 next year, after Idemitsu’s founding family dropped its long-standing opposition to the plan, reported Reuters.

The refiners will merge via a share swap, and Showa Shell will be delisted on March 29, they said in a statement, pushing the shares of the two companies up sharply in afternoon trade.

The combined firm would account for about 30 percent of Japan’s domestic gasoline sales, second only to JXTG Holdings, which controls about half the market.

Idemitsu, Japan’s No.2 oil refiner by sales, has long been keen to merge its operations with fourth-ranked Showa Shell in response to shrinking gasoline demand in the country.

But it was locked in a battle for about two years with the Idemitsu founding family, which argued the two firms were too different for any merger to work.

As part of the deal announced on Tuesday, the founding family will be able to nominate two of the eight initial directors of the merged entity.

The share swap ratio will be set in October, followed by extraordinary shareholders’ meetings in December to seek approval.

The swap will be conducted for the 68.75 percent of Showa Shell shares that Idemitsu does not own. As of Monday’s close, Idemitsu had a market capitalization of 792.5 billion yen (USD7.1 billion) and Showa a market capitalization of 578 billion yen.

Investors welcomed the deal, pushing up shares in Idemitsu by as much as 17.8 percent on the Tokyo Stock Exchange, while Showa Shell jumped as much as 13.7 percent.

Idemitsu’s Chairman Takashi Tsukioka said well known activist investor, Yoshiaki Murakami, had helped persuade a majority of the founding family, which owns just over 28 percent of the company, to back the deal.

Along with the merger, Idemitsu said it would buy back up to 55 billion yen of its own shares through December to return profits to current shareholders before the merger.

Showa Shell Chief Executive Tsuyoshi Kameoka said 15 percent shareholder Saudi Aramco was “very supportive” of the merger.

Kameoka ruled out any closures of the combined company’s seven refineries in Japan, although a sector analyst said he hoped one refinery would close within five years given declining domestic demand. He declined to be identified as he was not authorized to speak with media.

The two firms will target net profit of at least 500 billion yen for the total of three business years from 2019, and plan a payout ratio of 50 percent.

The merged firm will use Idemitsu Kosan Co as a company name but will conduct business under the trade name, Idemitsu Showa Shell.

Idemitsu Kosan is a Japanese petroleum company. It owns and operates oil platforms, refineries and produces and sells petroleum, oils and petrochemical products. The company runs two petrochemical plants in Chiba and Tokuyama. The two naphtha crackers can produce up to 997,000 tonnes of ethylene per year.
MRC

MOSCOW (MRC) -- SABIC and AECTRA Plastiques SAS have announced their arrangement concerning the distribution of the whole SABIC polyolefins portfolio in France during the occasion of the official opening of the AECTRA Plastiques’ office in Lyon, as per SABIC's press release.

With immediate effect, AECTRA Plastiques will market, sell and distribute SABIC polyethylene (PE) and polypropylene (PP) products in all industries, including automotive and pharmaceutical.

Being the 3rd largest polyolefin producer in the world SABIC is known for its innovative and large product portfolio consisting of over 500 different grades of polypropylene and polyethylene. The distribution agreement with AECTRA Plastiques SAS intends to strengthen SABIC’s market position and products accessibility in France.

Thomas Granier, managing director of SABIC France, says: "In France, SABIC supplies many global customers. We are excited to combine our strengths and expertise together with AECTRA Plastiques SAS in order to support SABIC’s growth ambition in the country. Thanks to this new relationship, we will be able to reinforce our position in the French market reaching new customers and developing new applications. We will be closer to our customers and together we will create Chemistry that Matters™ as a joint solution provider."

AECTRA Plastiques SAS is part of the Hromatka Group and has been founded earlier this year in order to serve the French polyolefin market as a distributor.

As MRC informed before, in September 2017, SABIC continued its global expansion with the inauguration of a new PP pilot plant in Geleen, the Netherlands, and the announcement of a new investment in a state-of-the-art PP extrusion facility to be built at the same location.

The Hromatka Group is one of the leading distribution groups in the European plastics market. With its local brands and strong partner, the Hromatka Group has an extensive portfolio with an international orientation and great technical expertise. Highly-qualified local experts are active in ten countries and advise customers in order to provide solutions to their challenges. The program is completed by the group’s own compounds, which are manufactured in two factories under the brand name SAX Polymers.

Saudi Basic Industries Corporation (SABIC) ranks among the world's top petrochemical companies. The company is among the worldпїЅs market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC

MOSCOW (MRC) -- Korea East-West Power Co Ltd (EWP), one of South Korea's state-run utilities, is seeking cleaner burning fuel oil for its power plants for the first time in five years to comply with stricter emissions regulations, according to two industry sources, reported Reuters.

EWP issued a tender on Tuesday seeking to import 30,000 tonnes of low-sulphur fuel oil (LSFO) with a maximum sulphur content of 0.3 percent for late July arrival, according to the utility's website.

"We are seeking to buy low sulphur fuel oil preemptively to meet the government's emission standards and would keep buying low-sulphur fuel oil," said an EWP source who declined to be identified as he was not authorized to speak to the media.

EWP plans to buy a total of 80,000 tonnes of low-sulphur fuel oil in August, the source added.

EWP typically imports high-sulphur fuel oil (HSFO) with a maximum sulphur content of 2.5 percent. It last imported LSFO cargoes in 2012 and 2013, the source said.

The utility last purchased a cargo of HSFO in early-April. The latest LSFO import requirement is occurring amid increased cooling demand during the summer.

Korea Western Power Co, which also runs a fuel oil power plant, has no plans so far to lower the specifications for their fuel oil purchases or to issue a new fuel oil tender, said a source at the utility who asked not to be named since they are not authorized to talk to the media.

South Korea mainly generates electricity with coal and nuclear power and fuel oil supplies only a small fraction of the country's total electricity needs.
MRC

MOSCOW (MRC) -- Sichuan Petrochemical (part of PetroChina) has undertaken an emergency shutdown at its naphtha cracker in Sichuan province of China, as per Apic-online.

A Polymerupdate source in China informed that the company has halted operations at the cracker on July 11, 2018 owing to a gas leak at its natural gas supply pipeline. Further details on duration of the outage could not be ascertained.

Located at Sichuan province of China, the cracker has an ethylene capacity of 800,000 mt/year.

As MRC informed before, on June 24 2018, Sichuan Petrochemical restarted its polypropylene (PP) plant in Sichuan. The plant was shut for maintenance on April 8, 2018. Located at Sichuan province of China, the PP plant has a production capacity of 450,000 mt/year.

PetroChina Company Limited, is a Chinese oil and gas company and is the listed arm of state-owned China National Petroleum Corporation, headquartered in Dongcheng District, Beijing. It is China's biggest oil producer.
MRC

MOSCOW (MRC) -- Petronas has shut its linear low density polyethylene (LLDPE) plant for a maintenance turnaround, as per Apic-online.

A Polymerupdate source in Malaysia informed that the company has undertaken a planned shutdown the plant over the weekend. The plant is slated to remain under maintenance for around 30 days.

Located at Kerteh in Terrenganu, Malaysia, the LLDPE plant comprising of two units have a production capacity of 120,000 mt/year each.

As MRC informed before, in early 2017, Malaysia's state oil firm Petroliam Nasional Berhad said its new USD27 billion refining and petrochemical complex project in the southeast Asian country is on track for start-up in 2019.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
MRC