Clariant suffers another setback as JV talks with SABIC collapse

MOSCOW (MRC) -- Clariant said last Thursday that joint venture talks with top shareholder Saudi Basic Industries (SABIC) had been shelved due to differences over asset prices, a further setback for the Swiss chemicals maker whose CEO abruptly quit last week, reported Reuters.

Shares in Clariant plunged 11% as the company also announced a first-half loss, hit by charges linked to a European probe over competitive practices.

Clariant and SABIC, which has a 25% stake in the Swiss group, had been working to combine Clariant's additives and specialty masterbatches businesses - including colours, additives and special effect concentrates for plastics used for products such as packaging - with parts of SABIC's specialty chemicals operation. They had hoped to create an operation with 3.1 billion Swiss francs (USD3.14 billion) in annual sales controlled by the Swiss company.

Clariant's CFO Patrick Jany told an analysts' call that the company would now have to rework its strategic plan drafted in September 2018, since it can no longer count on the joint venture with SABIC boosting growth, helping cut costs and lifting profits.

Market conditions left an agreement on how much Clariant would pay for the SABIC assets out of reach, Jany told Reuters.

"From the sellers' side, it wouldn't make sense for them, they probably would receive less proceeds than they expected," Jany told Reuters. "And for us, it doesn't make sense, because we would probably have to, in our view, pay too much for the business."

Even before the JV flopped, Clariant had been in upheaval, announcing last Wednesday that CEO Ernesto Occhiello, who joined from SABIC just 10 months ago, was resigning with immediate effect.

Shares in Clariant have now fallen 13% since Occhiello quit last Wednesday.

Clariant Chairman Hariolf Kottmann told Thursday's analysts' call that Ochiello had a "personal and private reason" for leaving the company that was unrelated to the stalled SABIC joint venture talks.

Clariant said it would now look to sell its specialty masterbatches business along with standard masterbatches that were already on the auction block.

It previously said it expected to reap 1 billion-2 billion francs from asset sales.

It now expects more, but declined to give a figure, with the cash destined for technology investments, eliminating debt and to shareholders.

"Our assessment is, there's more value-creation in selling masterbatches as a whole, rather than splitting it," Jany said.

Analysts said the about-face raised questions about Clariant's future.

"What a mess!" Baader Helvea chemicals analyst Markus Mayer said in a note, adding he sees Clariant increasingly as a takeover target.

"SABIC has an interest to fully take over Clariant. With the resignation of CEO Occhiello, who came from SABIC, and the termination of the JV negotiations, we think it is just a matter of time SABIC will come up with a takeover offer."

Jany said SABIC has not given any signals on changing its current stake.

With a market capitalisation of USD88 billion, SABIC is 13 times bigger than USD6.66 billion Clariant.

SABIC said it "looks forward to continuing the discussions with Clariant once conditions improve".

Saudi oil giant Aramco this year reached an agreement with the state-run Public Investment Fund to buy its controlling stake in SABIC for USD69.1 billion.

Mazen al-Sudairi, head of research at Al Rajhi Capital, said market conditions might be a factor for the shelving of the JV, as petrochemical prices are down globally and have hurt sector results.

"Whenever there are any concerns or changes related to the economic cycle, M&A should be put on hold," he said, adding SABIC learned that

SABIC bought its stake in Clariant in 2018, arriving on the scene as a white knight to end the Swiss company's fight with activist investors who had previously blocked the Swiss company's proposed USD20 billion merger with US-based Huntsman Corp.

Clariant last Thursday reported a first-half net loss of 101 million Swiss francs versus a profit of 211 million a year earlier. Sales were steady at 2.2 billion francs.

Profitability fell at two of the three businesses Clariant plans to keep, including soap ingredients and its catalysis business that sells chemicals that help speed up reactions.

The results were affected by a 231 million franc provision Clariant set aside for an ongoing competition law investigation by the European Commission.

"The first half-year 2019 was admittedly challenging," said Kottmann, Occhiello's predecessor as chief executive who has assumed his responsibilities until a successor is found.

Kottmann said he hoped to name a permanent replacement by the end of 2019 or early 2020.

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.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.
MRC

MOSCOW (MRC) --EthosEnergy has recently taken over operations and maintenance of the Louisiana Station power plant for ExxonMobil, a combined cycle cogeneration facility that supplies power and steam to their adjacent integrated refining and chemicals complex in Baton Rouge, Louisiana, said Bloomberg.

The five year contract includes transition services and full care, custody and control of the facility, which was transferred to EthosEnergy in early June.

Gloria Moncada, ExxonMobil Baton Rouge Refinery Manager said, “We look forward to collaborating with EthosEnergy as a valued operator ensuring safe, reliable energy to fuel our refining and chemicals operations. These cogeneration facilities provide electricity and steam to support our 2,000 acre integrated complex, with electricity equivalent to powering over 61,000 homes.”

Charlie Hoock, SVP of Operations & Maintenance from EthosEnergy said, “Our focus on a collaborative transition strategy, people, quality and physical asset strategy were key factors in ExxonMobil selecting EthosEnergy. We will employ around 80 local workers as well as provide support from our corporate offices in Alpharetta and Houston.”

The Louisiana station consists of gas turbines, heat recovery steam generators, conventional boilers, and steam turbines providing efficient power and steam generation.
MRC

MOSCOW (MRC) -- Finnish biofuel producer and oil refiner Neste is spending 1.4 billion euros (USD1.6 billion) to more than double output at its Singapore refinery to meet rising global demand for renewable energy, said Hydrocarbonprocessing.

The refinery produces renewable fuels, mainly from waste and residues such as used cooking oil, animal fat from food industry waste, fish fat from fish processing waste and residues from vegetable oil processing.

The Singapore expansion, Neste’s single biggest investment to date, will increase renewable fuel output by up to 1.3 million tonnes per year (tpy) from the current 1 million tpy, chief executive Peter Vanacker told Reuters.

“We believe that the market in renewables will quadruple at least until 2030,” he said in an interview ahead of a ceremony to kick off the expansion.

Neste is aiming to capitalize on global growth in diesel and jet fuel consumption, Vanacker added.

The expanded plant in Tuas, in the western part of the city-state, which is expected to be ready by the first half of 2022, will produce renewable versions of both products.

“The amount of sustainably-sourced palm oil is extremely small in our feedstock portfolio,” Vanacker said, adding that Neste’s renewable diesel was not comparable with biodiesel, which uses the vegetable oil as a primary raw material.

The European Union no longer considers palm oil as a green fuel.

The Singapore plant will also be able to produce up to 1 million tpy of renewable jet fuel as well as raw materials for various polymers and chemicals.

Neste, which currently makes renewable fuels from facilities in Singapore, Rotterdam and Porvoo, Finland, is also starting up a company in Shanghai to source waste residues for export to Singapore, said Vanacker.

While it ships more than 50% of its global production to Europe and the bulk of the rest to North America, Neste hopes to grow in Asia, although Vanacker said this would require tougher regulations curbing carbon dioxide emissions.

Neste has signed 15 memorandums of understanding with leading airlines and airports and is in the midst of negotiating sales contracts, he said.

It signed an agreement with Air BP, the aviation division of BP (BP.L), in April, this year to deliver sustainable aviation fuel to airline and airport customers in Sweden.

Neste, which is 44.7% owned by the state of Finland, also operates two conventional oil refineries in Finland although renewables account for 70% of group profits.

By 2030, it plans to use wastes and residues and replace some crude oil as feedstock for those refineries and is currently developing technology to realize this goal.

As MRC informed earlier, Neste Oyj and Borealis Polymers Oy, in co-operation with the energy companies Fortum Power and Heat Oy, Helen Oy, Vantaan Energia Oy and Porvoon Energia Oy - Borga Energi Ab, will conduct a preliminary study on recovering and utilizing excess heat generated at the Neste and Borealis industrial manufacturing facilities in Kilpilahti.

Neste (NESTE, Nasdaq Helsinki) creates sustainable solutions for transport, business, and consumer needs. The company's wide range of renewable products enable our customers to reduce climate emissions. The company is the world's largest producer of renewable diesel refined from waste and residues, introducing renewable solutions also to the aviation and plastics industries. It is also a technologically advanced refiner of high-quality oil products.

MRC

MOSCOW (MRC) -- Linde has announced it has started up a new gas production facility supplying methane, hydrogen and carbon dioxide to Evonik Industries' second world-scale methionine complex on Jurong Island in Singapore, as per the company's press release.

The new plant complements an existing facility which has been supplying these gases to Evonik's first methionine complex in Singapore since 2014.

The new, integrated facility incorporates Linde's advanced technologies which increase plant efficiency, reliability and environmental sustainability. This plant adds to Linde's footprint in Jurong Island, ensuring it is well-positioned to be the preferred industrial gas supplier to Singapore's dominant petrochemical hub.

Sanjiv Lamba, Executive Vice President, CEO, Linde Asia-Pacific, said, "Over the last several years, the strategic partnership between Linde and Evonik has continued to strengthen given our long-standing reliability and focus on productivity and sustainability. We are proud that Evonik chose to recognize Linde's superior technology offerings and operational capabilities by extending our existing relationship in line with their own growth."

Peter Meinshausen, President, Evonik Asia Pacific South, said, "The completion and startup of Linde's second integrated facility with Evonik in Singapore is yet another milestone in our long-term, successful collaboration. Linde already has a strong track record of delivering a reliable supply to our existing complex in Singapore, and several other facilities around the world. This, combined with Linde's technology and engineering capabilities, gives us great confidence in expanding our strategic partnership and we look forward to continuing this for years to come."

Evonik's Methionine complexes produce DL-methionine, an essential amino acid. As a feed additive, it contributes to the efficient, healthy and environmentally friendly nutrition of livestock, particularly poultry and swine. This makes it an important component of ensuring a sustainable animal protein supply for the world's growing population.

As MRC informed before, in June 2019, The Linde Group and Evonik Industries concluded an exclusive cooperation agreement on the use of membranes for natural gas processing.

Linde is a leading industrial gases and engineering company with 2018 pro forma sales of USD 28 billion (EUR 24 billion). The company employs approximately 80,000 people globally and serves customers in more than 100 countries worldwide. Linde delivers innovative and sustainable solutions to its customers and creates long-term value for all stakeholders. The company is making our world more productive by providing products, technologies and services that help customers improve their economic and environmental performance in a connected world.

Evonik, the creative industrial group from Germany, is one of the world leaders in specialty chemicals. Its activities focus on the key megatrends health, nutrition, resource efficiency and globalization. Evonik benefits specifically from its innovative prowess and integrated technology platforms. Evonik is active in over 100 countries around the world.
MRC

MOSCOW (MRC) -- Shanghai Secco, has brought on-stream, its linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) units, as per Apic-online.

A Polymerupdate source in China, informed that, the company has resumed operations at the units on July 30, 2019. The company had undertaken an unplanned shutdown at the plants on July 28, 2019.

Located at Shanghai in China, the LLDPE and HDPE units have a production capacity of 400,000 mt/year each.

As MRC informed before, in May 2017, BP announced that it had agreed to sell its 50% stake in the Shanghai SECCO Petrochemical Company Limited (SECCO) to Gaoqiao Petrochemical Co Ltd, a 100% subsidiary of China Petroleum & Chemical Corporation (Sinopec), BP’s joint venture partner, for a total consideration of USD1.68 bln.
MRC