SOCAR plans IPO of Turkish subsidiary in 2021

MOSCOW (MRC) -- Azerbaijan’s state energy company SOCAR plans to list its Turkish subsidiary on the London, Hong Kong and Istanbul stock exchanges in 2021, reported Reuters with reference to a SOCAR official.

"We believe that we have a good asset that we can monetize and IPO is a profit for shareholders," Zaur Gakhramanov, head of SOCAR Turkey Enerji, told Reuters at the annual Caspian Oil and Gas conference in Azerbaijan’s capital Baku.

He did not specify the volume of shares in SOCAR Turkey Enerji that SOCAR planned to offer to investors, but said that shareholders and SOCAR’s management would decide how to use proceeds from the initial public offering (IPO).

Citigroup and JP Morgan will be listing consultants, while McKinsey will help with "technical and financial optimization".

Gakhramanov said that SOCAR’s STAR oil refinery in Turkey had reached its full processing capacity of 10 million tonnes of oil per year in May and was expected to process 7 million tonnes of crude by the end of 2019.

"The plant is currently processing 28,500–29,000 tonnes of crude oil daily," he said, adding that the same volumes would be processed in June and July.

Oil products from the refinery are sent to the Turkish domestic market as well as for export.

Gakhramanov said that STAR would export 300,000 tonnes of reformate and 50,000 tonnes of jet fuel this year, while exports next year were expected to rise to 600,000 tonnes of reformate and 200,000-250,000 tonnes of jet fuel.

Gakhramanov said that reaching its full capacity enabled STAR to add other grades of crude oil to Urals, the only grade that it had been refining so far.

ЭWe plan to purchase 600,000 barrels of Siberian light crude and oil from Iraq Basra in June for processing purposes as it is possible to refine all crude oil grades at our plant,Э he said, adding that Saudi oil was not commercially profitable for the company at the moment.

Gakhramanov said that SOCAR had been given final permissions for the acquisition of natural gas distributing networks in the Turkish industrial cities of Kayseri and Bursa from Germany’s EWE Turkey Holding on May 27 and would finalize the deal by mid-June.

The company expects to be distributing 4 billion cubic meters (bcm) of gas to consumers in Turkey from 2020.

Gakhramanov said that gas supplies from Azerbaijan’s giant Shah Deniz field to Turkey through the Trans-Anatolian Pipeline (TANAP) would reach 3 bcm in 2019 and would double from 2020.

As MRC informed previously, in October 2018, Azeri state energy company SOCAR started up its new oil refinery in Turkey. The USD6.3 billion Star refinery, the first in Turkey built in 30 years, will supply feedstock to Turkish petrochemicals firm Petkim to help to cut Turkey’s dependence on imported refined oil products. It will boost Turkish refining capacity by 30 percent.

SOCAR, which is keen on expanding operations in the retail oil products market abroad, is involved in exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, marketing petroleum and petrochemical products in the domestic and international markets, and supplying natural gas to industry and the public in Azerbaijan.
MRC

Polish, German refineries reach preliminary deal to process dirty oil - sources

MOSCOW (MRC) -- Polish and German refineries have reached a preliminary agreement to process contaminated oil sent from Russia last month, which still sits in pipelines from Belarus, reported Reuters with reference to sources familiar with the situation.

The northern route of the Druzhba pipeline that supplies Russian crude to Polish and German refiners has been shut for more than a month after oil flows were found to be contaminated with high levels of organic chloride.

Since then, industry officials have held several meetings to discuss how to remove the dirty oil and split the related costs.

Four sources said that during the latest talks in Warsaw last week, four European refineries - Total’s Leuna, PKN Orlen’s Plock, Lotos’ Gdansk plants, and PCK, which is part-owned by Rosneft’s German unit - have reached a preliminary deal to share the contaminated oil.

The companies will remove the crude, most of which is currently in Poland, from the pipeline by blending it with clean oil they receive via sea routes. It can then be processed through their refining units.

"The refineries initially agreed on the dirty oil division," said one source speaking on condition of anonymity. "Each will take a portion of it."

Three other sources confirmed the information and said details will be worked out and confirmed at the next talks scheduled for Monday in Moscow, when the key issue of financial compensation will also be discussed.

One source said that each refiner is expected to take the quantity it initially ordered.

Poland’s Lotos and France’s Total declined to comment, while PKN and PCK were not immediately available for comment.

Russia agreed last week to pump the dirty crude back from Belarus, cleaning up the link all the way through to Belarus’ border with Poland. However, that does not cover flows onwards into Poland and Germany.

Poland’s pipeline operator PERN said it had neutralized 30 percent of the contamination. Sources said that to date only PKN Orlen has been refining the dirty crude, blending it with clean oil to an extent that is safe for the refinery.

PERN expects clean oil supplies from Russia to be restored on June 9 and that Poland’s pipelines will be fully cleaned in the next five months.

As MRC informed earlier, Belarus state oil firm Belneftekhim said in a statement in early May that not enough clean oil is available for the Novopolotsk refinery to work at its optimal capacity, after contaminated oil was received via the Russian Druzhba pipeline.
MRC

Arkema to acquire ArrMaz, a US-based leader in specialty surfactants

MOSCOW (MRC) -- Arkema reaches another milestone in its journey of growth in specialties with the planned acquisition of ArrMaz, a US-based leader in specialty surfactants for crop nutrition, mining and infrastructure, as per the company's press release.

With USD290 million sales, 18% EBITDA margin and around 2.5% of capex to sales, ArrMaz is a US-based leader in specialty surfactants for crop nutrition, mining and infrastructure.

The acquisition of this profitable, resilient and low capital intensive business is fully in line with Arkema’s long-term ambition to achieve over 80% of sales in specialties by 2023.

ArrMaz will be integrated in Performance Additives, one of the three strong pillars which will drive growth of the High Performance Materials division, along with Adhesives and Technical Polymers.

ArrMaz offers tailored and sustainable solutions for the specific and ever-changing needs of its customers in a variety of industrial markets. Thanks to its formulation expertise and well-established leadership positions, ArrMaz has forged long-term relationships with major industrial customers, leaders in their own fields, to support their development.

Leader in several attractive niche markets, ArrMaz’s growth is driven by sustainable trends such as limited natural resources, a growing world population, and development of new energy sources.

In the crop nutrition market, ArrMaz offers innovative additives that enhance the efficiency and quality of fertilizer production and distribution while promoting responsible farming.

In the mining market, it offers a wide range of additives to help optimize grade recovery and process performance in mining operations, thereby enabling the most environmentally sound practices.

Moreover, in the infrastructure market, ArrMaz supplies additives that help improve road longevity, quality and recyclability.

ArrMaz has built an extensive commercial presence in North America, South America, Asia and in the fast growing regions of the Middle East and Africa, where it recently opened state-of-the-art facilities. It employs 400 employees and operates 9 manufacturing sites around the world.

Combined with Arkema’s strong expertise in formulation and specialty surfactants, this acquisition will join two organizations that are highly complementary in terms of geography as well as commercial and technological capabilities. Arkema will thus be well positioned to accelerate its growth in legacy markets and to enter new segments (additives for nutrients, lithium extraction and oil & gas process aids), with an expectation of delivering above-GDP growth.

Beyond ArrMaz’s favorable organic growth profile, significant and well-identified synergies, which are expected to amount to approximately US$15 million by 2023, support the attractive economics of the acquisition. They will pertain mostly to purchasing and commercial complementarities between Arkema and ArrMaz. Including these synergies and ArrMaz’s organic growth, the enterprise value/EBITDA multiple after 4 years is expected to stand at around 7 times.

Finally, the acquisition is expected to have an accretive impact on cash and earnings per share from the first year of integration, and will contribute to the Group’s 2020 and 2023 objectives.

Completion of the transaction is expected in the summer of 2019, subject to approval by relevant antitrust authorities.

As MRC reported before, in late January 2017, Arkema announced a project for the sale to INEOS of its 50% stake in Oxochimie. Arkema produced oxo alcohols on the Lavera site (France) in a 50/50 manufacturing joint venture with INEOS. These products were used in part for the production of the group’s acrylic esters in Europe. And in early March 2017, Arkema completed the sale to INEOS of its 50% stake in Oxochimie, their oxo alcohols manufacturing joint venture, and of the associated business.

Arkema is a leading European supplier of chlorochemicals and PVC. Kynar and Kynar Flex are registered trademarks of Arkema Inc.
MRC

KRAIBURG TPE meets railway standards

MOSCOW (MRC) -- KRAIBURG TPE is expanding its flame-retardant product portfolio with innovative materials which, in addition to UL 94 V0, meet DIN 45545-2 for railway applications, as per the company's press release.

KRAIBURG TPE has extensive experience in the development of TPEs with halogen-free flame-retardant properties. A second product series with a V-0 nonflammability classification at wall thicknesses of 1.5mm in accordance with UL standard 94 V-0 has recently been introduced for multi-component applications with polypropylene.

This series is the only TPE material on the market that meets DIN EN 45545-2 for railway applications. The specially developed materials meet the requirements of R22 and R23 for hazard levels HL1-3 with a wall thickness of up to 3 mm.

In particular, makes it possible to implement sealing applications in the interior and exterior of trains, regardless of their design and operating class.

UL94 V-0 listed materials are self-extinguishing in case of fire and do not form into burning droplets. The materials meet this requirement without the use of halogen-containing flame retardants. KRAIBURG TPE flame-retardant compounds comply with the IEC 61249-2-21 standard’s definition of halogen-free.

If a fire breaks out, this means more safety for people involved, as less disorientating smoke develops and the flue gas is less toxic. In addition, flame retardants that are free of chlorine and bromine minimize the potential risk of damage to furniture and the building fabric caused by corrosive flue gases that develop when halogenated substances are burnt. Furthermore, their corrosiveness can even have a negative impact on maintaining the properties of old materials and their commercial usability, for example when recycling disused railways. The specialized THERMOLAST K materials meet these requirements even without halogenated flame-retardants being used.

The first railway applications have already been implemented: TPE compounds from the FR2 series are being used as sealing materials in cable glands and bushings. The materials of this flame-retardant series are produced at all three KRAIBURG TPE production sites in Germany, Malaysia and the USA.

As MRC informed earlier, in October 2018, the company presented two advanced new material series that provide excellent properties for automotive interior and consumer applications.

Kraiburg Rubber (Suzhou) Co. Ltd. was established in 2005 and is part of the Waldkraiburg-based German company Kraiburg Holding GmbH & Co. KG. The company produces a wide range of standard rubber compounds (based on NR, EPDM, CR, AEM, SBR, FKM, etc.) for automotive, building and construction applications, and other industrial markets as well as highly customised products for all kinds of industries at its Suzhou site. The compounds are produced on highly automated and fully process-controlled mixing lines, based on state-of-the-art technology. The company has 130 employees.
MRC

Petrobras distributor looks at buying parent refineries

MOSCOW (MRC) -- Petrobras Distribuidora SA, the fuel distribution unit of Brazilian state-run oil firm Petroleo Brasileiro SA, will study a possible purchase of refineries being sold by its parent company, reported Reuters with reference to an executive.

Petrobras, as the oil firm is widely known, announced in April a plan to sell eight refineries in a move it said could fetch some USD15 billion. Also in April, the firm confirmed plans to dilute its stake in Petrobras Distribuidora via a follow-on offering in a process that is expected to privatize the unit.

The newly privatized unit will then examine a purchase of the refineries, Petrobras Distribuidora Chief Executive Rafael Grisolia said on a call with analysts following first quarter results on Tuesday.

"It’s clear that, as a distributor, we have to look at this from various angles," Grisolia said.

Among the other possible buyers of the refineries, analysts say, are competing fuel distribution firms such as Raizen and Ipiranga, a unit of Ultrapar Participacoes SA. Trading firms with operations in Brazil’s downstream segment, such as Glencore PLC and Vitol SA, are also seen as candidates, as well as international oil companies with production activities in Brazil.

Brazil-listed shares in Petrobras Distribuidora were up 2.8 percent in afternoon trade after the firm posted a 93 percent rise in first-quarter net income on Monday night.

As MRC wrote previously, in October 2017, Petrobras’s minority stakes in Braskem and Deten Quimica was excluded from Petrobras’s divestment program, according to a government decree published in Brazil’s Official Gazette. The decree prevented Petrobras from immediately selling its minority stake in Braskem, which had been announced last year. A new decree will be required to release the stock sale.

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.
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