Saudi Aramco international bond attracts strong interest

MOSCOW (MRC) -- Demand for Saudi Aramco's inaugural international bond, seen as a gauge of potential investor interest in the oil company's eventual initial public offering, is higher than USD30 billion, reported Reuters with reference to Saudi Energy Minister Khalid al-Falih.

That would represent an oversubscription of more than three times the size of the bond, if Aramco sticks to its plan to issue around USD10 billion in the debt sale, due this week.

State-owned Saudi Aramco met investors last week in a global bond roadshow ahead of the issue. The bond is expected to attract demand from both emerging markets and investment-grade buyers as Aramco's status as the world's largest oil company would put its bonds in the same league as debt issued by independent international oil majors like Exxon and Shell.

Speaking at an event in Riyadh, Falih said the issue will close on Wednesday and that he believed demand for the bond was "north of" USD30 billion.

Aramco, which declined to comment, will open the bond books later on Monday, sources told Reuters.

Aramco has said the bonds may range from three to 30 years in maturity. Sergey Dergachev, a manager of EM corporate debt at Germany-based Union Investment, said he expected the bond to have four tranches of three, five, 10 and 30 years and to range between USD10 billion and USD15 billion in size.

He said he expects demand for the paper to reach USD45 billion-USD50 billion, as its different maturities will attract a wide range of investors from different regions.

"The short part of the curve, three and five years, will be strongly bid by locals and some Asians. The 30-year will be heavily in demand by US and Taiwanese investors."

Pension funds and insurance companies in the US and Taiwan are traditionally interested in investing in long-term securities to match the long duration of their own capital.

Lured by Aramco's vast profits - which were nearly three times those of Apple last year - a large number of investors are willing to buy the bonds even if they offers less than Saudi government debt, sources familiar with the matter told Reuters.

"The success of this bond issue will be the litmus test and a crucial precursor for the anticipated Aramco IPO within the next two years," said Salah Shamma, head of investment, MENA equities, at Franklin Templeton.

Aramco last year postponed a planned initial public offering to 2021.

The bond issue, announced last week, follows on the heels of Aramco's agreement to buy a 70 percent stake in petrochemicals firm Saudi Basic Industries from Saudi Arabia's Public Investment Fund (PIF) in a deal worth USD69.1 billion.

Al-Falih said on Monday he hopes Aramco's SABIC acquisition will be completed within six months.

In a company presentation last week, however, the company said the deal will close in 2020.

The transaction will give PIF firepower to proceed with its plans to create jobs and diversify the largest Arab economy beyond oil exports.

Falih said in addition to SABIC, there will be other assets, "non-strategic assets", that PIF may exit.

"I think the vision of the PIF goes way beyond the USD69 billion that Saudi Aramco will provide to the PIF, which is very bold, it's global and domestic at the same time," he said.

PIF has invested in ride-hailing firm Uber Technologies and in electric carmakers Lucid Motors and Tesla. "So don't be surprised, just as bold as they were in entering some of these investments, that they do exit," said Falih.

PIF will be looking globally to acquire emerging companies in emerging industries "to create value for them, but at the same time to leverage those acquisitions and investments for the benefit of the kingdom's strategy," he said.

As MRC wrote previously, in October 2018, State oil giant Saudi Aramco signed an agreement to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally. The memorandum of understanding between the company and Zhejiang province included plans to invest in a new refinery and co-operate in crude oil supply, storage and trading, according to details released by the Zhoushan government after a signing ceremony in the city south of Shanghai. Zhejiang Petrochemical, 51 percent owned by textile giant Zhejiang Rongsheng Holding Group, is building a 400,000-barrels-per-day refinery and associated petrochemical facilities that was expected to start operations by the end of last year.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC

MOSCOW (MRC) -- Kazanorgsintez (part of TAIF Group) has begun shutting down its low density polyethylene (LDPE) production for a scheduled turnaround, according to ICIS-MRC Price Report.

The plant's representatives said a gradual shutdown for the scheduled maintenance at Kazanorgsintez's 3rd LDPE line began on 10 April. The full shutdown of this line's LDPE production is planned to be carried out today. The outage will be long and will last for almost one month. The third line's production capacity is 140,000 tonnes/year.

It is also worth noting that next shutdowns for maintenance at Russian LDPE plants are scheduled for July. Thus, Angarsk Polymers Plant and Gazprom neftekhim Salavat will take off-stream their production capacities for turnarounds.

PJSC "Kazanorgsintez" (part of TAIF Group) is one of Russia's largest plants. Kazanorgsintez produces 40% of overall Russian polyethylene (PE) and is the country's largest exporter. To date, the plant produces PE, polycarbonate (PC), PE pipes, phenol, acetone, bisphenol A. Kazanorgsintez is Russia's only PC producer. It manufactures a total of 170 items of products. Kazanorgsintez's annual output is 1.6 million tonnes. The plant is Russia's largest producer of high density polyethylene (HDPE). The plant's annual HDPE production capacity is 540,000 tonnes and its annual LDPE capacity is 225,000 tonnes.
MRC

MOSCOW (MRC) - Russian producers of polyvinyl chloride (PVC) increased high capacity utilisation in the first three months of the year.
Total production of PVC reached 260,200 tonnes in January-March, up 5% year on year, according to MRC ScanPlast.

March total production of unmixed PVC grew to 90,700 tonnes from 81,700 tonnes a month earlier, Bashkir Soda Company and SayanskKhimPlast increased their capacity utilisation. Overall PVC production reached 260,200 tonnes in January-March 2019, compared to 246,800 tonnes a year earlier. All plants raised their output, except for Kaustik Volgograd.

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

RusVinyl (JV of SIBUR and SolVin) produced about 31,200 tonnes of PVC in March, with emulsion polyvinyl chloride (EPVC) accounting for 2,500 tonnes, compared to 28,600 tonnes a month earlier. Overall PVC production at RusVinyl was 89,200 tonnes in January-March 2019, up by 5% year on year.

SayanskKhimPlast produced 28,000 tonnes of suspension PVC (SPVC) last month, whereas this figure was only 25,100 tonnes in February. The Sayansk plant managed to produce about 82,100 tonnes of resin in January-March, compared to 76,700 tonnes a year earlier.

Baskhir Soda Company produced about 24,500 tonnes of SPVC in March, against 21,500 tonnes a month earlier. Total SPVC production at Baskhir Soda Company increased to 68,900 tonnes in the first three months of this year, compared to 66,800 tonnes in the same period in 2018.

Kaustik (Volgograd) produced 7,100 tonnes of SPVC in March, compared with 6,600 tonnes in February. Thus, Kaustik's overall production of SPVC reached 21,300 tonnes in the first three months of 2019 versus 23,600 tonnes a year earlier.


MRC

MOSCOW (MRC) -- Sahara Petrochemicals has announced that its current CEO, Salah Mohammed Bahmdan, will head up the new group that will be formed from its merger with Saudi International Petrochemical (Sipchem), as per Chemanager-online.

Abdullah Saif Alsaadoon, Sipchem’s CEO, will be appointed as chief operating officer of the combined company.

The companies disclosed last December that they had agreed to a merger of equals in a move they estimate to yield synergies of up to 225 million Saudi riyal, or $60 million, by the end of the third year after completion.

Synergies will be achieved by product cross-selling, an internal balancing of chemicals between co-located assets in Al Jubail, Saudi Arabia, and increased scale in common procurement spending, consolidated shipments and logistics.

The merger will be carried out via a share swap, in which all Sahara shares will be exchanged for new shares in Sipchem. The combined company will be named Sahara International Petrochemical and owned equally by both Sipchem and Sahara shareholders.

The transaction expected to be finalized by Jun. 30, 2019 will create Saudi Arabia’s second-largest non-SABIC related company, behind Petro Rabigh. The deal remains subject to regulatory and shareholder approval.

As MRC wrote before, in March 2018, Sipchem said it was planning to resume proposed merger talks with Sahara Petrochemical 2260.SE in a deal that could create a 14.7 billion riyals (USD3.9 bln) chemicals company. The two companies called off a planned merger in 2014, citing an inadequate regulatory framework in the kingdom for the collapse.

Established in 1999, Saudi International Petrochemical Company (Sipchem) manufactures and markets methanol, butanediol, tetrahydrofuran, acetic acid, acetic anhydride, vinyl acetate monomer. Besides, it has launched several down-stream projects to manufacture ethylene vinyl acetate, low density polyethylene, ethyl acetate, butyl acetate, cross linkable polyethylene, and semi conductive compound that are scheduled to start in 2013.

Sahara Petrochemical is involved in building and operating petrochemical projects, especially propylene, polypropylene, ethylene and mixed polyethylene industries.
MRC

MOSCOW (MRC) -- CNOOC and Shell Petrochemicals Co (CSPC) has taken off-stream its No. 2 polypropylene (PP) unit in Guangdong, according to Apic-online.

A Polymerupdate source in China informed that the company has halted operations at the unit on April 7, 2019 owing to technical issues. The plant is likely to remain shut for around 10 days.

Located at Huizhou in Guangdong province of China, the No. 2 PP unit has a production capacity of 400,000 mt/year.

As MRC wrote previously, a blast at CNOOC’s Huizhou refinery that killed one worker has not affected crude oil runs at the company’s biggest refinery. The blast, which also injured another worker, came during a trail start of one of the refinery’s secondary units on Feb. 18, 2019. The blast was caused by fuel gas exceeding safe limits at a steam furnace at the refinery’s partial oxidization coal-to-hydrogen plant, according to the document published on the official wechat account of China’s Chemical Safety Association.

CNOOC and Shell Petrochemicals Company Limited (CSPC) was established in late 2000. It has built and now operates a world-scale petrochemical complex in the Daya Bay Economic and Technological Development Zone, Huizhou, Guangdong Province. The joint venture partners are Shell Nanhai BV, a member of the Royal Dutch Shell Group, with a 50 per cent stake, and CNOOC Petrochemicals Investment Limited (CPIL), also with 50 per cent. CPIL is owned by China National Offshore Oil Corporation (CNOOC) (90%) and Guangdong Guangye Investment Group Company Limited(10%).

As an integrated petrochemical complex, the major facilities of the complex include 11 process units, steam and power generation and other utility provisions, storage and handling and shipping facilities, as well as environmental protection facilities. The heart of the complex is a world-scale cracker producing 950,000 tons per annum ethylene and 500,000 tons per annum propylene. In total, the complex produces some 2.7 million tons per annum of ethylene and propylene's derivative products to supply the domestic market.
MRC