ADNOC forms joint venture, creating new global nitrogen fertilizer leader

MOSCOW (MRC) -- The Abu Dhabi National Oil Company (ADNOC) announced a new strategic partnership with OCI N.V. (OCI). OCI is a global producer and distributor of natural gas-based fertilizers and industrial chemicals, headquartered in the Netherlands, according to Hydrocarbonprocessing.

The partnership will see ADNOC combine its fertilizer business, ADNOC Fertilizers, into OCI’s Middle East and North Africa (MENA) nitrogen fertilizer platform to form a new joint venture (JV).

The JV will become the largest export-focused nitrogen fertilizer platform globally and the largest producer in the MENA region with a production capacity of 5 million tons of urea and 1.5 million tons of sellable ammonia. Annual revenues for the combined entity are USD1.74 billion, based on 2018 pro forma figures. ADNOC and OCI will own a 42% and 58% stake in the JV respectively.

This combination brings greater geographic diversity to the platform's MENA production channels, enabling greater combined market access to strengthen market share and better serve its customers around the world. It will have a centralized commercial team, supported by a robust storage and distribution infrastructure with access to key ports on the Mediterranean, Red Sea and Arabian Gulf.

The JV will operate a young, state-of-the-art asset base with low maintenance costs and strong free cash flow generation. As a result, the company will be well-positioned to pay its shareholders attractive dividends and to fund future organic and inorganic growth opportunities.

In conjunction with this joint venture, ADNOC Fertilizers has also signed a new long-term gas supply agreement with ADNOC, which will provide its facilities in Ruwais with the required feedstock for its operations based on a competitive pricing formula.

The JV will be based in Abu Dhabi and registered in the Emirate’s international financial center, Abu Dhabi Global Market (ADGM), furthering the development of fertilizer expertise and trading in Abu Dhabi. The board of the new entity will consist of 6 members nominated by OCI and 4 nominated by ADNOC. H.E. Dr Sultan Ahmed Al Jaber, UAE Minister of State and Chief Executive Officer (CEO) of the ADNOC Group, will be Chairman of the Board.

Nassef Sawiris will assume the role of CEO of the JV, alongside his current role as CEO of OCI. His leadership will be supported by a joint management team of experienced key executives from OCI and ADNOC, which will drive value creation through the unlocking of substantial operational, supply chain, marketing and trading synergies across the combined platform.

H.E. Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, said: "We are extremely pleased to have created this new joint venture with OCI who are a world leader in nitrogen fertilizers and share our ambition and vision to grow our new combined fertilizer business. Pooling our assets and capabilities is a value enhancing step for both companies, allowing us to leapfrog competitors to become the top nitrogen export platform globally. It will also enable us to access new markets, benefitting both existing and new customers."

He added, "This unique business combination is in line with ADNOC’s approach to value-added partnerships and will improve the profitability and cash flow of our fertilizer portfolio. It also supports ADNOC’s objectives to attract investors to Ruwais by leveraging its strategic location, world-class logistics and the UAE’s abundant gas resources at commercially attractive terms. It is another milestone in the delivery of ADNOC’s 2030 strategy and our ambitions to expand ADNOC’s Downstream portfolio."

Nassef Sawiris, CEO of OCI N.V. commented: "I am very pleased to start a long-term strategic partnership with ADNOC, a company which has a clear downstream strategy and drive to unlock value. This partnership creates a first-of-its-kind export platform with best-in-class cash conversion metrics. I believe that this platform has significant potential for future growth and value creation, with the support and under the guidance of its two key shareholders".

This new partnership marks another step in ADNOC’s group-wide transformation and value creation program that addresses the evolving energy and petrochemicals landscape and ensures ADNOC remains a resilient and flexible company able to take full advantage of emerging market opportunities and trends. The Group’s transformation is driven by an expanded approach to strategic partnerships and co-investments as well as the more proactive management of ADNOC’s portfolio of businesses, assets and capital. ADNOC is delivering on its ability to package and structure smart transactions with its partners.

This transaction continues this strategy and follows on from several other recent value creation initiatives, including ADNOC’s debut capital markets transaction, the issuance of the Abu Dhabi Crude Oil Pipeline (ADCOP) bond, the IPO of ADNOC Distribution, the recent strategic equity and commercial partnerships between ADNOC Drilling and Baker Hughes as well as ADNOC Refining and Eni and OMV.

Central to ADNOC’s 2030 strategy is the significant expansion of ADNOC’s Downstream business. In May 2018, ADNOC announced its new Downstream strategy that includes an AED 165 billion (USD 45 billion) investment program that will see the Ruwais Industrial Complex upgraded to significantly increase its flexibility and capabilities to produce greater volumes of higher-value refined and petrochemical products.

The transaction is expected to close in the third quarter of 2019, subject to legal and regulatory conditions.

As MRC reported earlier, in May 2018, ADNOC unveiled plans to invest AED 165 billion (USD45 billion) alongside partners, over the next five years, to become a leading global downstream player, enabling it to further stretch the value of every barrel it produces to the benefit of ADNOC, its partners and the UAE.
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MOSCOW (MRC) -- Mexican President Andres Manuel Lopez Obrador’s push to build a new oil refinery involves high risks of flooding and other environmental issues, according to government document, but is described as otherwise viable, reported Reuters.

The documents cover environmental impacts declared by state energy company Pemex and were made public by the oil industry environmental regulator known as ASEA. They conclude that while the development of the Dos Bocas refinery will moderately affect the environment, those impacts "will be controlled, mitigated or compensated."

The assessment by Pemex, which has been directed by Lopez Obrador to oversee the construction of the refinery, also asserts that the facility’s operations "will totally comply" with all existing environmental laws and is economically viable.

ASEA has 60 days to evaluate the assessment.

Lopez Obrador has pitched the USD8 billion project, which if completed would be Mexico’s biggest refinery, as needed to reduce a growing dependence on imported fuels.

The refinery is expected to process 340,000 barrels per day (bpd) of Mexico’s flagship grade, Maya heavy crude, mainly to produce gasoline and ultra-low-sulfur diesel (ULSD), a type of motor fuel that is set to become a standard in the country.

The president personally attended the ceremonial groundbreaking for the project at the construction site in the Gulf Coast port of Dos Bocas, in his home state of Tabasco, on June 2.

In May, Lopez Obrador ordered Pemex to supervise construction after he dismissed would-be private builders as unable to meet his budget or aggressive three-year timeframe.

Parts of Pemex’s environmental assessment of the project are blacked out, including details such as estimated emissions and damages to nearby beaches, which the government argues should be treated as confidential.

ASEA is part of the environment ministry and its executive director is a presidential appointee who does not need to be approved by the Congress.

Major credit ratings agencies have called out the refinery as an ill-conceived project for both the government as well as state-owned Pemex, the world’s most indebted oil company, arguing it is unnecessary and would divert money away from more profitable exploration and production activities.

Fitch Ratings has already stripped Pemex debt of its investment-grade status, and if another ratings agency does the same, it would trigger billions of dollars in forced selling and likely lead to a spike in the company’s financing costs.

As MRC informed previously, Mexican national oil company Pemex is currently processing about 9 percent more crude oil at its domestic refineries than it did in 2017, said Chief Executive Officer Carlos Trevino in April 2018.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).
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MOSCOW (MRC) -- India’s Maharashtra state has identified a new site for the planned USD44 billion oil refinery that state-run firms are building with Saudi Aramco and Abu Dhabi National Oil Co (ADNOC), reported Reuters with reference to Chief Minister Devendra Fadnavis.

The new sit in western Maharashtra would be at Raigad district, about 100 kms (62 miles) south of the country’s financial capital Mumbai.

The refinery was initially proposed to be built at Nanar, a village in Ratnagiri district, some 400 kms (250 miles) south of Mumbai.

But thousands of farmers refused to surrender land, fearing it could damage a region famed for its Alphonso mangoes, vast cashew plantations and fishing hamlets that boast bountiful catches of seafood.

The protests forced the Maharashtra government to suspend the land acquisition process for a refinery in Nanar.

The 1.2 million barrels per day refinery and associated petrochemical project is seen as a game changer - offering India steady fuel supplies and meeting Saudi Arabia and ADNOC’s need to secure regular buyers for their oil.

In Raigad, the state-run City and Industrial Development Corporation plans to acquire land from 40 villages for the refinery, Fadnavis said in a written reply to state lawmakers.

State run companies - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum - own 50% of the Ratnagiri Refinery & Petrochemicals Ltd (RRPCL), the company that is building the project. Saudi Aramco and ADNOC hold the remainder.

As MRC informed previously, in December 2018, India delayed the commissioning of a giant refinery that state-owned firms are building in tie-up with Saudi Aramco and Abu Dhabi National Oil Co (ADNOC) by two year to 2025.
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MOSCOW (MRC) -- ELIX Polymers, a leading specialist in high-performance ABS materials, has added two new grades to the Ultimaker Marketplace for 3D printing equipment FDM applications, as per the company's press release.

The move was made together with three partner companies producing filament from ELIX ABS: 3R3D, based in Spain; Filoalfa brand owner Ciceri de Mondel (Italy); and Print-me (Poland). The companies in the partnership cooperated within the Ultimaker Material Alliance Program.

The two new ABS grades are ELIX 3D-FC and ELIX ABS 3D-HI. ELIX 3D-FC is certified for medical and food contact applications, complying with the ISO 10993-1 and USP Class VI standards determining biocompatibility. Certification covers the whole material recipe, including color pigments (the material is available in different colors).

The second grade, ELIX 3D-HI, is a high-impact ABS grade with lower density than other ABS grades and offering very high impact resistance, even at very low temperatures. Impact performance is comparable with ABS/PC, which has a higher density, making the new grade particularly suitable for automotive applications where weight-saving is an issue.

Both new ELIX grades offer superior layer adhesion and 3D printing results. Possible applications include functional prints of prototype parts (assembly tests in automotive, for example), industrial/medical tooling (jigs and fixtures), and short series of personalized parts.

"We are very excited to make these new ABS materials available via the Ultimaker Material Alliance Program," said Luca Chiochia, ELIX Business development Manager, "particularly as some of our traditional injection moulding customers are now starting to adopt Ultimaker 3D printers." At Ultimaker, Bart van As, Product Manager Materials, added: "I am very happy that these specialty materials are added to the expanding range of materials available in the Ultimaker Marketplace. Together with our partners, we are opening up new applications for 3D printing with our printers."

"We are really proud to cooperate with ELIX and be part of the Ultimaker Alliance Program," said Antonio Berera, research and development manager at Ciceri de Mondel. "Our company has innovation and research to develop better 3D printing materials in its DNA. We believe the results we have achieved together are very interesting in the panorama of ABS for 3D printing."

At Print-me, Mateusz Kasprowiak said: "We are able to make such good quality filaments thanks to the excellent raw materials from ELIX Polymers optimized for 3D printing. We are proud of having the opportunity to participate in the Ultimaker Material Alliance Program, and that our material works with Ultimaker hardware."

"Our customers demand more and more warranty of performance of our filaments in 3D printers, and require accurate and clear print profiles," said Josu Aseguinolaza at 3R3D. "Our company is participating with its wide range of eco-sustainable and high-performance filaments in open programs involving several brands of 3D FDM printers, with ELIX Polymers materials, and with other compounders."

During the Hannover Messe in April, Ultimaker - the global leader in desktop 3D printing - announced that its Ultimaker Material Alliance Program had already influenced over 80 companies worldwide to develop material print profiles for FFF 3D printing. The program was launched a year earlier to meet the growing demand for industrial-grade engineering 3D printing materials.

Today, many leading material manufacturers and filament producers use Ultimaker’s Print Profile Assistant to more rapidly bring a wide variety of high-performance FFF 3D printing materials to the professional market. These material print profiles become available for download in the Marketplace in Ultimaker Cloud.

As MRC reported earlier, in April 2019, ELIX Polymers presented its portfolio of products and innovations in materials for several key markets. These innovations are the result of the company’s strong emphasis on product differentiation and its significant investments in R&D, thereby allowing it to stand out among manufacturers of basic ABS products.
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MOSCOW (MRC) -- After years of largely banking on low-cost Russia for growth, OMV is shifting attention towards the Middle East as its chemist chief executive chases his vision of making the Austrian oil and gas group a major supplier of plastics, reported Reuters.

OMV boss Rainer Seele has spent more than 4 billion euros (USD4.5 billion) - 40% of the group’s M&A budget until 2025 - for oil and gas concessions in the region, a 15% stake in Abu Dhabi National Oil Co’s (ADNOC) refining business and a to-be-formed trading joint venture with ADNOC and Italy’s Eni.

"We want to have a fully integrated business model in Abu Dhabi - from the well via the refinery and the petrochemicals all the way to marketing and trade in international markets," the chief of Austria’s second-largest listed company told shareholders last month.

OMV traditionally earns its money from producing, distributing and refining oil and gas in Europe. A focus on low-cost oil and gas fields in Russia - a source of investor concern due to US and EU sanctions - helped the group get back on its feet financially in recent years and become one of the best cash-flow generators in the sector.

After fixing a price this month for the purchase of Siberian gas assets from Gazprom, OMV has largely achieved its Russian expansion plans.

The Russia-led Nord Stream 2 gas pipeline, of which OMV is a financing partner, could face delays. However, OMV’s downside risks are limited to the 950 million euros it has committed, of which it has paid 644 million euros so far.

"This is already captured by its discounted valuation relative to its peers," analysts at Berenberg said in a note.

Seele’s new, Middle East-focused strategy stems from a shift in the environment surrounding OMV’s business model, with challenges created by the politically promoted rise of renewable energy and increased use of electric vehicles.

Consultancy Wood Mackenzie forecasts that demand for oil in developed countries will revert to structural decline next year and drop by about 4 million barrels per day (bpd) by 2035. In contrast, it expects demand in developing economies, mainly in Asia, to increase by nearly 16 million bpd in the same period.

The rise in developing-country demand is seen largely driven by the petrochemicals industry, which uses oil to make the plastics needed for fertilisers, packaging, detergents and clothes, as well as for electric-car parts, solar panels and wind turbines.

This is where Seele gets excited. Refraining from expanding into renewables like BP and Royal Dutch Shell, the CEO plans to monetize his oil with the expected surge in demand for plastics and also jet fuel, especially in China.

For Seele, the new focus is a journey back to his roots. The 58-year-old German holds a PhD in chemistry and started his career as a chemical research scientist.

He has chosen the United Arab Emirates as a base from which to secure a big piece of the Asian petchem pie, aiming to maximize profit via the entire value chain.

"What I am always preaching is, hey guys, try to think integrated," he told Reuters when asked why he did not simply buy into China. "I cannot come up with an integrated business model in Asia if I buy into a petchem unit there. It would be an isolated investment."

The UAE, a strategic investor in OMV since 1994, has aggressive energy ambitions for the coming decade. It is cooperating with international groups including Shell, Germany’s Wintershall DEA and US investment firms KKR and BlackRock to pioneer approaches and technologies.

Last year, the UAE launched a USD132 billion capex program to become self-sufficient in gas by 2030 and establish itself as an exporter of petrochemical products. It plans to invest USD45 billion alone into the Ruwais complex, which is located 240 km (150 miles) west of Abu Dhabi, to make it the largest integrated refinery/petrochemicals facility in the world.

As MRC wrote before, in October 2018, OMV and Gazprom signed a "Basic Sale Agreement" which foresees a potential acquisition of a 24.98% interest in the Achimov IV and V phase development in the Urengoy gas and condensate field by OMV for a purchase price to be negotiated in good faith.

OMV is producing and marketing oil and gas, innovative energy and high-end petrochemical solutions – in a responsible way. With Group sales of EUR 20 bn and a workforce of around 20,700 employees in 2017, OMV Aktiengesellschaft is one of Austria’s largest listed industrial companies. In Upstream, OMV has a strong base in Romania and Austria and a balanced international portfolio, with the North Sea, the Middle East & Africa and Russia as further core regions. 2017 daily production stood at approximately 348,000 boe/d. In Downstream, OMV operates three refineries with a total annual processing capacity of 17.8 mn tons and more than 2,000 filling stations in ten countries as of year-end 2017. OMV runs gas storage facilities in Austria as well as in Germany; its subsidiary Gas Connect Austria GmbH operates a gas pipeline network in Austria. In 2017, gas sales volumes amounted to 113 TWh.
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