Deal for new Sri Lanka oil refinery will take at least a year to finalize

MOSCOW (MRC) -- An agreement to build a proposed USD3.85 billion oil refinery in Sri Lanka will take at least a year to be finalized as its main investor, India’s Accord Group, says it is yet to recruit partners and conduct an assessment of the plan’s viability, reported Reuters.

The comments add to confusion about the project, which was announced last week by the Sri Lankan government as the nation’s largest single foreign direct investment ever, but has since been the subject of conflicting statements by various parties.

Accord’s Chairman S Jagatrakshakan, a former Indian government minister, said he has submitted a preliminary proposal to the Sri Lankan government to invest in the project but has not finalized any terms of the deal.

"The project assessment and financial viability assessment will take at least a year. We have not sorted out any of the equity partners for the projects, but are in talks with investors from many countries," he told Reuters over the phone from the southern Indian state of Tamil Nadu.

The 68-year old politician is campaigning in Tamil Nadu for a seat in the current general election. He was an MP and minister in the last Congress-led government in 2009-2014.

When the Sri Lankan government made the announcement on March 19, it said the oil refinery would be a joint venture between Oman’s oil ministry and Accord and cost USD3.85 billion.

A day later, Omani officials denied involvement in the project, but the middle eastern country’s oil minister arrived in Sri Lanka three days later and said he was “excited” to inaugurate the project though there was no indication of a firm deal in place.

India and China have been vying for political influence in Sri Lanka in recent years, with investment a key part of the battleground.

The refinery’s proposed site is 585 acres of land near the site of the new Humbantota International port and a related industrial zone - both run by Chinese entities - on Sri Lanka’s southern coast.

A Sri Lankan government document seen by Reuters showed the previously proposed deal would have a debt to equity ratio of 51:49, and said the Accord Group’s Singapore entity, Silver Park

However, Jagatrakshakan said he expected 70 percent of the project to be bankrolled by debt from financial institutions, adding that Silver Park would get more investors to fund the equity stake.

"We are looking at getting 20-30 investors on board for the 30 percent equity investment in the project. We expect 70 percent of the project to be bankrolled by debt from financial institutions," he said.

A senior official at Sri Lanka’s Strategic Development and International Trade ministry, speaking on the condition of anonymity, said he was confident of the terms of the deal as originally announced by the government.

He said Jagatrakshakan’s son Sandeep was also present when the deal was signed. Sandeep Jagatrakshakan did not respond to repeated calls seeking comment.

China is the biggest buyer of Omani oil, importing about 80 percent of the Middle Eastern nation’s overall crude exports in January, according to Oman government data.
MRC

MOSCOW (MRC) -- PBF Energy plans to restart the 50,000 bpd coking unit at its Delaware City, Delaware, refinery in mid-April after roughly six weeks of planned work, reported Reuters with reference to two sources familiar with the plant’s operations.

The unit, which helps make gasoline and diesel, was shut around March 3 for planned work.

As MRC wrote previously, PBF Energy Inc said a fire occurred around noon Sunda, 3 February, 2019, at its 175,000 barrel-per-day crude unit at its Delaware City, Delaware refinery. There were no injuries, a PBF spokesman said then. The company did not say what caused the fire or the extent of the damage.
MRC

MOSCOW (MRC) -- Saudi Aramco will begin meeting bond investors this week in an effort to persuade them to buy its debut international bond, which will help the world’s largest oil producer fund the USD69.1 billion purchase of a stake in Saudi Basic Industries Corp (SABIC), reported Hydrocarbonprocessing with reference to sources.

The Saudi oil giant, which declined to comment, said on Wednesday it had agreed to buy a 70 percent stake in SABIC from Saudi Arabia’s Public Investment Fund (PIF) in one of the largest deals in the global chemicals industry.

The deal could inject billions of dollars into the PIF, giving it the firepower to proceed with its plans to create jobs and diversify the largest Arab economy beyond oil exports.

Aramco has issued local currency bonds in the past, but the planned deal would be its first in the international markets.

International demand for Aramco’s bonds is expected to be hefty, given improved conditions across emerging markets, the recent inclusion of Saudi Arabia in key market indexes, and the sheer size of the company, which outweighs peers like Exxon and Shell.

Saudi Arabia gets almost 70 percent of its revenues from oil, and Aramco is the sole holder of Saudi oil concessions.

One of the sources said there was a minor sell-off across the Saudi debt curve on Thursday, as some investors prepared to switch Saudi sovereign paper for the upcoming Aramco securities.

Aramco is expected to meet international bond investors next week in a so-called "roadshow" ahead of the debt sale, which the Saudi energy minister previously said would be around USD10 billion in size.

Aramco’s acquisition of a stake in SABIC has come after months of talks between Aramco and the PIF, which contributed to the delay of Aramco’s planned multi-billion dollar initial public offering.
The international bond sale will almost certainly require the company to obtain a credit rating and disclose financial information in a prospectus.

The oil giant has so far been reluctant to disclose many details of its finances.

JPMorgan, Morgan Stanley, HSBC, Citi , Goldman Sachs and National Commercial Bank have been chosen to arrange the bond issue, sources previously told Reuters.

As MRC reported earlier, in July 2016, Saudi Aramco and SABIC signed a heads of agreement to conduct a feasibility study on the development of a fully integrated crude oil-to-chemicals complex to be located in Saudi Arabia. The heads of agreement contains key principles of cooperation that will form the basis for the companies to establish a joint venture, if the joint study reaches a positive conclusion.

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.

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) -- Mitsubishi Chemical Corp. (MCC) has completed its acquisition of the PVC compound business of Welset Plast Extrusions Private Ltd, said Canplastics.

First announced in June 2018, the acquisition will allow MCC to enter the medical PVC compound business. Furthermore, MCC will strengthen its existing PVC and thermoplastic elastomers businesses in India – where Welset is headquartered – and Association of Southeast Asian Nations (ASEAN) markets by utilizing Welset’s marketing channels and infrastructure.

Plans now call for construction a new facility to manufacture thermoplastic elastomer for automotive interior components and other applications at subsidiary MCPP India Private Ltd. Production is scheduled to begin by the end of March 2020.

MCC acquired Arparn Plast Compound Private Ltd. (representing the PVC compound business of Welset) after a demerger from Welset Plast Extrusions, and changed its name to MCPP India Private Ltd. after the acquisition was formally completed.

MCC currently outsources the manufacturing of thermoplastic elastomers in India. The acquisition of Welset Plast Extrusions’ PVC compound business, and the construction of the new production facility, will allow MCC to upgrade its performance polymer supply system to meet the increasing demand.
MRC

MOSCOW (MRC) - Production of polypropylene (PP) in Russia decreased to 212,700 tonne in first two months of this year, down 13,2% year on year, compared to the same period of 2018. Four producers out of seven reduced the capacity utilisation, according to MRC ScanPlast.

February PP production in the country grew to 111,800 tonnes, compared with 100,900 tonnes in January; SIBUR Tobolsk increased its capacity utilisation. Russia's overall PP production reached 212,700 tonnes in the first two months of 2019, compared to 245,100 tonnes a year earlier. Four producers out of seven reduced the operating time, with the largest reduction was seen at SIBUR Tobolsk.

The structure of PP production by plants looked the following way over the stated period.

SIBUR Tobolsk solved its technical problems in production by February, the total production rate rose to 39,800 tonnes against 18,600 tonnes a month earlier. The Tobolsk plant's total PP production reached 58,300 tonnes in the first two months of 2019, down by 28% year on year.

Poliom (Titan Group) last month produced about 14,600 tonnes of polypropylene, compared with 19,300 tonnes in January. Total PP production at the plant over the reported period was about 33,900 tonnes, down 4% year on year.

Nizhnekamskneftekhim produced 16,900 tonnes of propylene polymers in February versus 18,400 tonnes a month earlier. The producer's PP output decreased to 35,300 tonnes in January-February 2019 compared with 35,700 tonnes year on year.

Tomskneftekhim last month produced about 11,600 tonnes against 12,600 tonnes a month earlier. Total PP production by the producer increased to 21,200 tonnes in January-February 2019, up 4% year on year.

February PP production at Ufaorgsintez reached about 10,600 tonnes from 11,700 tonnes a month earlier. Overall output of polymer at the Ufa plant rose to 22,300 tonnes in January-February 2019, compared to 21,500 tonnes a year earlier.

Neftekhimiya (Kapotnya) last month produced about 11,100 tonnes of PP, compared with 12,500 tonnes in January. The plant's overall PP output reached 23,600 tonnes over the stated period, up 2% year on year.

Stavrolen (LUKOIL) shut its facilities for short-term repairs in January-February, as a result, produced polymers of 7,800 tonnes and 7,300 tonnes respectively in each of the months. In general, the total production of polymers of propylene in the first two months of this year at the Budenovsk enterprise reduced to 15,100 tonnes against 19,600 tonnes a year earlier.

MRC