Lanxess gets out of rubber with Saudi Aramco sale

MOSCOW (MRC) -- Germany's Lanxess is selling its 50 percent stake in synthetic-rubber maker Arlanxeo to partner Saudi Aramco for around 1.4 billion euros (USD1.6 billion) in cash in a deal it said will give it more flexibility to grow, reported Reuters.

The deal marks an early exit for Lanxess from the world's largest provider of synthetic rubber for tyres, while the Saudi state oil giant said it would "accelerate the development of growth opportunities in the kingdom, leveraging the strong feedstock position of Saudi Aramco".

Aramco, which is planning to go public and looking to buy a stake in petrochemicals maker SABIC, plays a key role in Crown Prince Mohammed bin Salman's ambitions to diversify Saudi Arabia's economy beyond oil.

"The proposed purchase underscores Saudi Aramco’s strategy to further diversify our downstream portfolio and strengthen our capabilities across the entire petroleum and chemicals value chain," Aramco's Senior Vice President of Downstream, Abdulaziz al-Judaimi said in a statement on Wednesday.

For Lanxess chief executive Matthias Zachert the sale will allow him to focus on more deals to strengthen its specialty chemicals activities. Lanxess has previously said it would keep the remaining half of Arlanxeo until at least 2021.

The German chemicals group expects to receive about 1.4 billion euros in cash from the deal, which is expected to complete by end of 2018, valuing all of Arlanxeo at 3.0 billion euros including debt and liabilities.

Aramco plans to boost investments in refining and petrochemicals to secure new markets and sees growth in chemicals as central to cut the risk of an oil demand slowdown.

The sale in 2015 of the first 50 percent of Arlanxeo to Saudi Aramco had valued the business at 2.75 billion euros, and was pushed by Zachert at the time to make the company less volatile amid signs of increasing global rubber oversupply.

"We increase the resilience of our business, strengthen our financial basis and gain additional strategic flexibility for further growth," Zachert said in a statement.

Zachert has pursued deals to grow in smaller but more profitable specialty markets and vowed last year he would change the company further.

Sources familiar with the company have said the CEO could consider another takeover the size of Chemtura. Lanxess bought the U.S. maker of additives for lubricants and flame retardants for 2.4 billion euros including debt last year.

As MRC wrote before, in July 2018, Lanxess announced plans to open a new applications development and technical services (AD&TS) laboratory for polyurethane dispersions (PUDs) in Latina, Italy.

Lanxess is a leading specialty chemicals company with about 19,200 employees in 25 countries. The company is currently represented at 74 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. Through Arlanxeo, the joint venture with Saudi Aramco, Lanxess is also a leading supplier of synthetic rubber.

Arlanxeo was established in April 2016 as a joint venture of Lanxess - a world-leading specialty chemicals company based in Cologne, Germany - and Saudi Aramco - a major global energy and chemicals enterprise headquartered in Dhahran, Saudi Arabia. The two partners each hold a 50-percent interest in the joint venture. The business operations of ARLANXEO are assigned to the High Performance Elastomers and Tire & Specialty Rubbers business units.
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MOSCOW (MRC) - Saudi Aramco and Malaysia's Petronas have approached banks to replace a short-term USD8 billion loan raised earlier this year for a joint venture with long-term financing of approximately the same size, banking sources familiar with the matter said, as per Reuters.

The two state energy companies borrowed $8 billion from a large consortium of international banks in March for a refinery and petrochemical joint venture in the southern Malaysian state of Johor.

The project, Refinery and Petrochemical Integrated Development (RAPID), is a USD27 billion complex located between the Malacca Strait and the South China Sea, conduits for Middle East oil and gas bound for China, Japan and South Korea.

The two firms issued a request for proposals to banks last month and are now in preliminary discussions for a self-arranged loan with a maturity of more than 10 years which would replace the existing bridge borrowing, said the sources.

A group of 19 banks participated in the bridge loan, including Asian lenders and BNP Paribas, HSBC, JPMorgan, Standard Chartered, Citibank, First Abu Dhabi Bank and ING Bank.

That loan, which had a 364-day tenor and an extension option of six months, offered a margin interest rate of around 40 basis points over the London interbank offered rate (Libor), Thomson Reuters’ LPC reported in March.

Aramco and Petronas finalised the deal to invest in the project in March saying at the time that Aramco would supply 50 percent of the refinery’s crude oil with an option of increasing it to 70 percent.

Refinery operations are set to begin in 2019, with petrochemical operations to follow 6-12 months afterwards.

Aramco plans to boost investments in refining and petrochemicals to secure new markets and sees growth in chemicals as central to its downstream strategy to cut the risk of an oil demand slowdown.

Aramco is also expected to tap banks for a huge financing that would back the potential acquisition of a controlling stake in petrochemical maker SABIC, banking sources said separately.

Aramco could possibly take the entire 70 percent holding owned by Saudi Arabia's sovereign wealth fund in SABIC, sources told Reuters last month.

Bankers are weighing a number of options for the potential deal, which could go up to USD70 billion, but there has been so far no formal request from Aramco, several sources familiar with the matter said.

As MRC wrote before, in March 2018, Wood was selected to develop the world's largest fully integrated crude oil to chemicals (COTC) complex in the Kingdom of Saudi Arabia, on behalf of Saudi Aramco and SABIC as the first PMC contractor.

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.
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MOSCOW (MRC) - Indonesia plans to require all diesel fuel used in the country contain biodiesel starting next month to boost palm oil consumption, slash fuel imports, and narrow a yawning current account gap, as per Hydrocarbonprocessing.

While the proposal has been welcomed by the palm oil industry and government, it has raised concerns among the automobile industry the fuel could impact engine performance.

Environmentalists fear the boost to local palm oil consumption will hasten Indonesia's already fast spreading deforestation.

The following explains some of the issues surrounding the drive to increase biodiesel usage.

Indonesia currently imports around 400,000 barrels per day of crude oil and a roughly similar amount of refined products, which makes Southeast Asia's largest economy vulnerable to the sort of increases in global crude prices seen over the past year.

With the current account deficit estimated to grow by USD8 billion in 2018, the plan is to cut diesel imports by mandating that all diesel consumers, including power plants and railways, use biodiesel that contains 20 percent bio-content (B20), typically palm oil. Officials estimate this will save Indonesia around USD6 billion per year.

The programme will increase domestic consumption of palm oil in the world's largest producer of the edible oil, providing a market for output that has climbed by 35 percent over the past five years.

In Indonesia, the biocomponent in biodiesel consists of fatty acid methyl esters (FAME) made from palm oil.

Indonesia has 26 FAME producers, including units of palm oil giants like Sinar Mas Group, Wilmar, and Musim Mas, according to the Indonesian Biofuels Producers Association (APROBI). FAME is supplied to fuel distributors including Pertamina, blended with petroleum-based diesel and sold to end-users.

Currently, only around one-quarter of Indonesia's FAME production capacity is utilized, and the new programme could raise this to up to 50 percent, said Togar Sitanggang, a senior official at the Indonesia Palm Oil Association (GAPKI).

The government has said it will provide incentives to biodiesel producers but has not provided details.
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MOSCOW (MRC) -- Schneider Electric, the leader in the digital transformation of energy management and automation, released EcoStruxure Field Device Expert, an application that improves how engineers commission, configure and maintain field devices throughout the lifecycle of the plant, as per Hydrocarbonprocessing.

Field Device Expert’s Intelligent Commissioning Wizard completely automates detection, configuration, commissioning and testing of HART field instrumentation connected to an EcoStruxure Foxboro distributed control system (DCS). Automatic binding and configuration of HART devices has been shown to reduce commissioning schedules by more than 75 percent, leading to faster time to profit.

Traditional, manual device commissioning methodology is manpower intensive, making it error-prone, time-consuming and expertise dependent. By automating the configuration and commissioning process, Field Device Expert drastically changes automation project execution by minimizing hardware dependencies and custom engineering and offers more flexibility in the design, timing and sequence of activities. For example, with traditional commissioning methods, it can take up to 50 minutes to configure each asset. Field Device Expert’s Intelligent Commissioning Wizard shortens that time to 15 minutes, which is a 70 percent reduction. Once the plant is operating, Field Device Expert continues to ease field device configuration and condition monitoring throughout the plant lifecycle which means restarts?like those that occur after a maintenance turnaround or any shutdown?are also faster and easier.

As part of Schneider Electric’s EcoStruxure architecture and platform, Field Device Expert improves efficiency, safety, productivity and profitability. EcoStruxure is Schneider Electric’s open, interoperable, IoT-enabled system architecture and platform and delivers enhanced value around safety, reliability, efficiency, sustainability and connectivity.
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MOSCOW (MRC) - Mexican conglomerate Alfa said that its net profit more than doubled in the second quarter compared to the year-earlier period, helped by a record quarter at its petrochemicals unit Alpek, as per Reuters.

Alfa, which has units in industries such as food packaging and car parts, said net profit was 3.59 billion pesos (USD180 million) between April and June, compared to 1.37 billion pesos last year. Revenue rose 19 percent to 93.7 billion pesos.

The results were helped by petrochemicals unit Alpek, which benefited from higher oil and raw materials prices, as well as the consolidation of Brazil’s Petroquimica Suape and Citepe, the company said.

Alpek’s earnings before interest, tax, depreciation and amortization (EBITDA) hit a record high, according to the company.

Earlier this year, the company said it had teamed up with Thailand’s Indorama Ventures (IVL.BK) and Taiwan’s Far Eastern to buy a chemical plant in Corpus Christi, Texas, as well as other assets.

Alfa said it was in the process of getting government approvals for the operation.

As MRC informed before, in late December 2016m, Petrobras said its board had approved the sale of two petrochemical companies, Petroquimica Suape and Citepe, to Mexico's Alpek SAB de CV for USD385 million.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.

Alpek is the petrochemicals unit of Mexican conglomerate Alfa.
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