SIBUR and Tatneft sign letter of intent on petrochemical facilities in Togliatti

MOSCOW (MRC) -- SIBUR and Tatneft has signed a letter of intent with respect to Togliatti-based petrochemical facilities, as per SIBUR's press release.

Under the deal, SIBUR plans to sell and Tatneft plans to acquire certain production and other assets that are currently registered in the name of SIBUR Togliatti and Togliattisintez legal entities.

The assets include production facilities for various types of synthetic rubber used by Russia's and the world's leading tire manufacturers, for MTBE (high-octane fuel component), butadiene, isoprene, and other intermediates, as well as infrastructure of the industrial park accommodating a number of chemical and other technological companies.

For Tatneft, the acquisition is an opportunity to strengthen the vertical integration of its KAMA TYRES business and increase its value. After the acquisition, Tatneft intends to further develop the assets in line with its gas and petrochemical strategy. SIBUR - with its focus on establishing and developing global scale production of basic polymers, high-potential medium-tonnage products and premium special chemicals – will continue to cooperate with the Togliatti-based companies as partners.

The deal is expected to be closed by the end of 2019, including all corporate procedures, antitrust approvals, and other statutory formalities.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. Meanwhile, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.
MRC

MOSCOW (MRC) -- South Korean oil refining companies imported more crude oil from the United States than from Kuwait in July, as per BusinessKorea.

South Korean oil refining companies imported 14.78 million barrels of crude oil from the United States and 11.03 million barrels of crude oil from Kuwait last month, when the former exceeded the latter for the first time in history. Their crude oil imports from Saudi Arabia added up to 24.7 million barrels during the same period.

Korea's crude oil imports from the United States almost tripled in one year from 5.37 million barrels. In addition, the value of the imports reached an all-time high of USD982.9 million.

This can be attributed to a decrease in the price of American crude oil led by shale oil development. As of July 1, the per-barrel WTI and Dubai crude oil prices were USD59.09 and USD65.06, respectively. This difference has been maintained last month as well.

American crude oil has a low sulfur content, which means its added value is high. Also, it can add to the companies’ profitability when mixed with cheaper Latin American crude oil, which is mainly heavy crude oil. Moreover, the ongoing trade disputes between the United States and China has led to a decrease in China’s American crude oil imports and a continuous oversupply.

Tax benefits applied to American crude oil are another reason for the increase. At present, a 3 percent tariff is applied to crude oil from the Middle East whereas no tariff is imposed on American crude oil in accordance with the KORUS FTA. In addition, the South Korean government gives a refund of 16 won per liter to non-Middle East crude oil importers in the interest of import source diversification.

SK Innovation is relatively more aggressive in importing crude oil from the United States. The company is using very large crude carriers (VLCCs) to import the oil via the Cape of Good Hope sea route. This means it is enjoying a stable supply with tensions between the United States and Iran escalating in the Strait of Hormuz region, through which Middle East crude oil is transported.

On the other hand, S-Oil and Hyundai Oilbank are more passive in that Saudi Aramco is the largest shareholder in the former and the second-largest shareholder in the latter. "The United States is currently building oil pipelines between the inland and the western coast for shale oil export and direct import via the Pacific Ocean is expected to become possible next year," said an industry executive.

As MRC informed earlier, SK Innovation, owner of South Korea’s top refiner SK Energy, said in February 2019, it saw a rebound in refining margins in 2019 supported by firm diesel demand in the second half of the year.
MRC

MOSCOW (MRC) -- Zhong An United Coal Chemical Co has restarted its polypropylene (PP) unit following an unplanned outage, as per Apic-online.

A Polymerupdate source in China informed that the company has resumed operations at the unit on August 24, 2019. The plant was shut owing to technical issues on August 10, 2019.

Located at Huainan, Anhui province, China, the PP unit has a production capacity of 145,000 mt/year.

As MRC reported earlier, the company also restarted its linear low-density polyethylene (LLDPE) unit, which was also shut on 10 August, because of the same reasonon 24 August, 2019.

According to MRC's ScanPlast report, Russia's estimated PP consumption was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Zhongan United Coal Industry Chemical Co. Ltd. mines, processes, manufactures, and distributes coal products. The сompany produces brown coal products, bituminous coal products, hard coal products, coking coal products, and other related products. Zhongan United Coal Industry Chemical markets its products throughout China.
MRC

MOSCOW (MRC) -- Zhong An United Coal Chemical Co has restarted its linear low-density polyethylene (LLDPE) unit following an unplanned outage, according to Apic-online.

A Polymerupdate source in China informed that the company has resumed operations at the unit on August 24, 2019. The plant were shut owing to technical issues on August 10, 2019.

Located at Huainan, Anhui province, China, the LLDPE unit has a production capacity of 145,000 mt/year.

According to MRC's ScanPlast report, LLDPE shipments to the Russian market increased in the first seven months of 2019 by 8% year on year to 234,130 tonnes. Local producers increased their production by 24%.

Zhongan United Coal Industry Chemical Co. Ltd. mines, processes, manufactures, and distributes coal products. The сompany produces brown coal products, bituminous coal products, hard coal products, coking coal products, and other related products. Zhongan United Coal Industry Chemical markets its products throughout China.
MRC

MOSCOW (MRC) -- SIBUR, the largest petrochemical comples in Russia and Eastern Europe, and BASF, Geman petrochemical major, have agreed to closely cooperate on sustainable development to share their best practices, as per SIBUR's press release.

SIBUR held a design session on sustainable development in the petrochemical industry. At the event, BASF shared details on its new sustainability strategy and its integration into the company's overall strategy. The participants were also presented with the company's methods of environmental impact assessment and approach to the circular economy, which embraces opportunities for chemical recycling of plastics, such as the ChemCycling project. With chemical recycling, fossil resources for chemical production can be replaced with recycled material from plastic waste.

Maxim Remchukov, Sustainable Development Director at SIBUR: "Today's event is strategically important for SIBUR. First, we have defined the model to cooperate with BASF on sustainable development. Second, we have discussed possible joint recycling projects and the transformation of the waste management industry in Russia with our partners and customers. Setting priorities, developing practical measures to ensure further growth, and stable partnership with international companies are significant for sustainable development as a recently established function."

Pavel Skrylev, Head of BASF Plastic Additives in Russia and CIS: "As one of the global industry leaders, BASF strives to contribute to the development of the Russian market of polymeric materials and share its best practices, including those relating to sustainable development. The responsible use of plastics is crucial for addressing the problem of environmental pollution. Our ChemCycling project unlocks new opportunities for the transition to the circular economy."

One of the petrochemical companies' sustainability priorities is to contribute to the development of the circular economy, namely, to promote polymer recycling: currently, only 16% of plastic waste is recycled. Global FMCG players and polymer producers have already committed to the circular economy transition on a voluntary basis giving an impetus to the development of plastics recycling. The event participants noted that in order to achieve the national goals and voluntary commitments of the FMCG players as regards the circular economy, it is necessary to completely transform the waste management industry to create synergies between waste management operators, manufacturers, waste procesing companies and households.

Apart from BASF, SIBUR’s design session was attended by representatives of Unilever, Boston Consulting Group, Renaissance Capital, as well as Razdelniy Sbor, the association for ecology and environmental protection.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. Meanwhile, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.
MRC