Asia naphtha/gasoline-gasoline crack stays under pressure

MOSCOW (MRC) - Asia's gasoline crack was at a discount of 32 cents a barrel to Brent crude on Wednesday, 1 cent higher than the previous session which was near a one-week low on the back of an unyielding glut, as per Hydrocarbonprocessing.

The bearish fundamentals have dragged the average gasoline profit margin for the first-half of January to about 45 cents a barrel, the lowest for the period since 2009. The situation could get worse as new refineries are coming up this year in Malaysia and China and these could add some 235,000 barrels per day of gasoline to the market although not all of it would be exported. "We have large volumes of refining capacity geared towards gasoline or naphtha production coming online in the East of Suez this year," said Michael Dei-Michei, head of research at consultancy JBC Energy. "For that reason we expect gasoline supply growth to outpace demand growth to the tune of about 200,000 bpd on average in 2019," said Dei-Michei.

NAPHTHA: Asia's naphtha crack climbed 3.6 percent to a two-week high of $44.85 a tonne. South Korea's LG Chem emerged to buy naphtha for first-half March delivery, making this the first tender in South Korea for the purchase of March cargoes. The petrochemical maker could have paid premiums of more than USD1 but below USD2 a tonne to Japan quotes on a cost-and-freight (C&F) basis, traders said. This was a sharp jump when compared to a discount of USD5 LG Chem had paid on Dec. 2 for cargoes scheduled for first-half January delivery.

Japanese refiner Fuji Oil Co is likely to shut all the refining units at its sole 143,000 barrels-per-day (bpd) Sodegaura oil refinery in mid- or late May for a scheduled maintenance which could last until mid-June.
MRC

McDermott awarded EPC contract for CB&I storage tanks in Saudi Arabia

MOSCOW (MRC) -- McDermott International, Inc. has announced it has been awarded a sizeable contract from Daelim Saudi Arabia Company Ltd. for engineering, procurement and construction (EPC) of CB&I Storage Tanks for the Ma'aden Ammonia Plant at Ras Al-Khair, Kingdom of Saudi Arabia, as per PRNewsWire.

McDermott defines a sizeable contract as between USD1 million and USD50 million.

The fixed lump sum contract encompasses the engineering, procurement and fabrication of four Ammonia Tanks and nine CB&I storage tanks. Work on the project will predominantly be executed from Saudi Arabia utilizing McDermott's local capabilities and facilities.

"CB&I Storage Tanks consistently deliver innovative storage solutions for clients such as Daelim," said Linh Austin, Senior Vice President, Middle East and North Africa. "CB&I Storage Tanks' unparalleled technical competency combined with our extensive experience in Saudi Arabia uniquely positions us to deliver this project."

Work on the contract is expected to begin immediately and will be reflected in McDermott's fourth quarter 2018 backlog.

As MRC reported previously, in December 2018, McDermott International, Inc. announced that it had been awarded a sizeable technology contract by HPCL Rajasthan Refinery Ltd. (HRRL) for the license and basic engineering design of two 490 KTA polypropylene plants in Pachpadra Tehsil, Barmer District, Rajasthan, India. The plants will use Lummus' proprietary NOVOLEN process reactors and proprietary NHP catalyst to produce a full range of leading polypropylene products for the Indian and regional markets.

McDermott is a premier, fully integrated provider of technology, engineering and construction solutions to the energy industry. For more than a century, customers have trusted McDermott to design and build end-to-end infrastructure and technology solutions to transport and transform oil and gas into the products the world needs today. Operating in over 54 countries, McDermott's locally focused and globally-integrated resources include approximately 40,000 employees, a diversified fleet of specialty marine construction vessels and fabrication facilities around the world. As used in this press release, McDermott includes McDermott International, Inc. and its subsidiaries and affiliates.
MRC

EU Commission clears BASF acquisition of Solvay polyamide business

MOSCOW (MRC) -- The EU Commission has granted conditional clearance for BASF to acquire Solvay’s polyamide business, as per BASF's press release.

This approval is an important milestone for the transaction. Closing is expected in the second half of 2019 after all remaining closing conditions have been fulfilled, including the sale of a remedy package to a third party.

During the approval process in Europe BASF made commitments to address the competition concerns of the EU Commission. They require divesting parts of the original transaction scope to a third-party buyer, namely manufacturing assets and innovation capabilities of Solvay’s polyamide business in Europe. The divestment process started in Q4 2018.

The polyamide businesses to be acquired in the Americas and in Asia are not affected by the commitments.

As MRC informed before, in September 2017, BASF and Solvay signed an agreement related to the sale of Solvay’s integrated polyamide business to BASF. The purchase price on a cash and debt-free basis would be EUR1.6 billion. The acquisition would complement BASF’s engineering plastics portfolio and expand the company’s position as a solution provider for the transportation, construction, industrial applications and consumer industries. Regionally, the transaction would enhance access to key growth markets in Asia and South America. At the same time, the purchase would strengthen BASF’s polyamide 6.6 value chain through increased polymerization capacities and the backward integration into the key raw material ADN (adipodinitrile).

Solvay is a multi-specialty chemical company, committed to developing chemistry that addresses key societal challenges. Solvay innovates and partners with customers in diverse global end markets. Its products and solutions are used in planes, cars, smart and medical devices, batteries, in mineral and oil extraction, among many other applications promoting sustainability. Its lightweighting materials enhance cleaner mobility, its formulations optimize the use of resources and its performance chemicals improve air and water quality. Solvay is headquartered in Brussels with around 27,000 employees in 58 countries. Net sales were EUR10.9 billion in 2016, with 90% from activities where Solvay ranks among the world’s top 3 leaders.

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 more than EUR60 billion in 2017. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (BAS).
MRC

Saudi Aramco eyes multi-billion-dollar US gas acquisitions

MOSCOW (MRC) - Saudi Aramco, the world's top oil producer, is looking to acquire natural gas assets in the United States and is willing to spend "billions of dollars" there as it aims to become a global gas player, the company's CEO said Reuters.

Amin Nasser told Reuters in an interview that his company wants to increase its US investments. It already owns Motiva, the biggest US oil refinery. "We have agreed to bring an additional USD10 B in the Motiva refining complex," said the chief executive, attending the World Economic Forum in Davos, Switzerland.

"We do have appetite for additional investments in the United States. Aramco’s international gas team has been given an open platform to look at gas acquisitions along the whole supply chain. They have been given significant financial firepower – in the billions of dollars." Aramco’s gas expansion strategy needs USD150 B of investment over the next decade as the company plans to increase output and later become a gas exporter, Nasser said in November.

Aramco is pushing ahead with its conventional and unconventional gas exploration and production program to feed its fast-growing industries, freeing up more crude oil to export or turn into chemicals. Investing in the US gas and petrochemical sector has become "very lucrative" due to the large availability of ethane resources, Nasser said. "In gas we will be one of the main global players," he added.

Aramco is a major gas player but much of its production is used domestically. The firm plans to boost its gas production to 23 billion standard cubic feet (scf) per day over the next decade, from 14 billion scf now.

Saudi Arabia, the world's largest crude oil exporter, wants to diversify its energy mix and increase the share of its gas capacity to 70% in the coming decade from around 50% now.

Aramco also aims to become a global leader in chemicals with plans to expand its refining operations and petrochemical output. The company is considering acquiring a strategic stake - up to 70% - in Saudi Arabia’s SABIC, the world’s fourth-largest petrochemicals maker. Aramco plans to issue bonds in the second quarter of 2019, likely worth about USD10 B, Saudi Energy Minister Khalid al-Falih said this month. The bond issuance could help finance the SABIC acquisition.

Nasser said banks were being considered for the bond issuance but declined to identify them. "Since 2018, we have been preparing quarterly results. We will publish our financial results as part of the bond issuance process," he said.

"I can tell you that investors will like our results; 2017 was a good year and 2018 was even better. We are trying to close the transaction with SABIC soon." Aramco is working with JP Morgan and Morgan Stanley on the SABIC acquisition, sources previously told Reuters.

The two banks, along with others, were working on the planned stock market listing of Aramco before the move was put on hold. Aramco's new planned listing date is 2021, Saudi officials have said.
MRC

PP imports into Ukraine rose by 8% in 2018

MOSCOW (MRC) -- Overall polypropylene (PP) imports to the Ukrainian market totalled about 132,400 tonnes last year, up by 8% year on year. Demand for all PP grades increased, as per MRC's DataScope report.

December PP imports into Ukraine dropped to 9,600 tonnes from 11,600 tonnes a month earlier, with propylene homopolymers (homopolymer PP) accounting for the main decrease in shipments. Overall PP imports reached 132,400 tonnes in 2018 versus 123,100 tonnes a year earlier. Demand for all PP grades increased, with statistical copolymers of propylene (PP random copolymers) accounting for the greatest growth.

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


December imports of homopolymer PP to the Ukrainian market decreased to 7,400 tonnes from 9,000 tonnes a month earlier, local companies reduced their purchasing of homopolymer PP raffia in Saudi Arabia. Overall shipments of homopolymer PP reached 100,600 tonnes last year versus 94,300 tonnes a year earlier.

Last month's imports of block propylene copolymers (PP block copolymers) were 1,200 tonnes, compared to 1,100 tonnes in November. Demand for injection moulding propylene copolymers grew slightly from local companies. 13,300 tonnes of PP block copolymers were imported over the stated period, whereas this figure was 12,900 tonnes a year earlier.

December imports of PP random copolymers did not exceed 800 tonnes versus 1,300 tonnes a month earlier, demand for PP subsided from producers of pipes and injection moulding products. Overall imports of PP random copolymers exceeded 16,000 tonnes in 2018, whereas this figure was 13,800 tonnes a year earlier.

Total imports of other propylene copolymers were 2,400 tonnes over the stated period.

MRC