Sinopec in talks to buy stake in oil storage terminal

MOSCOW (MRC) -- Chinese state energy company Sinopec is in early-stage talks with Hin Leong Trading Pte Ltd to buy a stake in an oil storage terminal that is partly owned by the Singapore trader, reported Reuters with reference to three sources with knowledge of the matter.

The sale could provide much needed cash for family-owned Hin Leong, one of Asia’s biggest independent traders.

The company owes a total of USD3.85 billion to 23 banks and has applied to a Singapore court to delay its debt repayments, according to a Hin Leong presentation to lenders on April 14 contained in the court filing, which was reviewed by Reuters but has not been made public.

Sinopec, Asia’s largest refiner, was approached by Hin Leong earlier this month to look at investing in the Universal Terminal in Singapore, said one Beijing-based Sinopec official.

Hin Leong’s founder Lim Oon Kuin and his family own 41% of the terminal through Universal Group Holdings Pte Ltd. PetroChina holds 25% and Australian investment bank Macquarie the remaining 34%.

"Sinopec is interested, and is evaluating the quality and cost of the asset," said the official, who declined to be named as the discussions are not public.

The three sources did not know the size of the stake Sinopec might be interested in buying, or the potential price.

Hin Leong and Sinopec did not respond to requests for comment.

A previous sale of a stake in the terminal in 2016 valued the whole terminal at more than USD1.5 billion, industry sources said at the time.

Sinopec, which owns several storage facilities outside China - in Rotterdam, Antwerp and Fujairah - has long been looking for more storage sites to boost its global trading profile, the company official said.

The state oil giant, however, would be cautious about any possible investment given growing internal scrutiny over spending after a plunge in oil prices, and is closely monitoring developments around Hin Leong’s debts, the official added.

"Sinopec is aware of the good asset quality of Universal Terminal, but the question is at what price and if the terminal can come clean of creditors’ debt claims," said the official.

Of Hin Leong Group’s assets, which also include about 130 oil tankers, the stake in Universal Terminal is the most attractive to potential investors, trade sources said.

"The terminal is the prize," said Tony Quinn, chief executive of terminals advisory group Tankbank International.

"One big advantage is that it has its own integrated marine infrastructure - like having your own little port authority within Singapore," said Quinn.

He added the terminal has the only independently owned supertanker jetty on Jurong Island, which is the only access point to Singapore’s rock caverns, Southeast Asia’s first underground oil storage facility.

In an affidavit contained in the court filings reviewed by Reuters, Lim Oon Kuin, also known as O.K. Lim, said Hin Leong was in discussions with a large state-owned Chinese energy company over a potential strategic investment, without giving details.

A PetroChina executive said last week that Hin Leong had not approached his company about potentially raising its stake in the terminal.

PetroChina, in around 2006, became Hin Leong’s first partner, taking a 35% stake in the terminal while the Singapore trader held the remaining 65%.

PetroChina’s initial investment of SD750 million (USD524 million) was recouped in less than 36 months, said a separate industry official with direct knowledge of PetroChina’s investment in the terminal.

The two companies sold a combined 34% to Macquarie in 2016 in a deal that was estimated by industry sources at about USD500-USD550 million.

As MRC wrote before, Sinopec expects its full-year 2020 refining runs will be lower than in 2019 because of a contraction in Chinese fuel demand caused by the coronavirus outbreak.

We remind that Sinopec Qilu Petrochemical, a subsidiary of Sinopec Corporation, plans to shut the cracker unit in Tianjin in northeast China for scheduled repairs on 15 June, 2020. This cracking unit with a capacity of 900,000 tonnes of ethylene per year and 480,000 tonnes of propylene tons per year will be closed for scheduled repairs until 24 June, 2020.

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

According to MRC's ScanPlast report, estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

Sinopec corp. is one of the world's largest integrated energy and chemical companies. Business Sinopec Corp. includes oil and gas exploration, production and transportation of oil and gas, oil refining, petrochemical production, production of mineral fertilizers and other chemical products. In terms of refining capacity, Sinopec Corp. ranks second in the world, in terms of ethylene capacity - fourth.
MRC

MOSCOW (MRC) -- Overall imports of acrylonitrile-butadiene-styrene (ABS) to the Ukrainian market grew in the first quarter of 2020 by 57% year on year, according to MRC's DataScope report.

Thus, imports of material into Ukraine totalled 1,500 tonnes over the stated period. This figure was at 960 tonnes in January-March 2019.

However, last month's ABS imports into the country dropped by 3% to 5,100 tonnes from 5,200 tonnes in February. This figure was at 360 tonnes in March 2019.

South Korea and Austria were the largest ABS suppliers to the region this year.

The share of Korean material in the total shipments fell in January-March 2020 to 34% (5,000 tonnes) year on year from 62% a year earlier (600 tonnes), with LG Chem's shipments being at 230 tonnes and Lotte's imports - at 260 tonnes.

Deliveries of Austrian material to the region grew significantly - to 350 tonnes - with a share of 23% in the total imports.

MRC

1. Turkish Tupras cuts refinery runs due to weak demand

MOSCOW (MRC) -- Turkish refiner Tupras has cut runs at its Izmir refinery by 50% due to weak fuel demand because of the coronavirus outbreak, four trading sources familiar with the matter told Reuters. Tupras has also cut runs at its Izmit refinery by 20% and its Kirikkale refinery by 50%, the sources said.





MRC

MOSCOW (MRC) -- Austria-based petrochemical producer Borealis has lifted force majeure on operations at its Stenungsund steam cracker in Sweden, the company told S&P Global Thursday.

"The FM on operations of our steam cracker in Stenungsund, Sweden, was lifted on April 19, 2020. We also returned to normal operations on this date and informed affected customers accordingly," a Borealis spokesperson said.

The company declared FM on April 8 due to a technical incident, while before that Borealis had had lowered its steam cracker operating rates as a result of the recent slump in oil prices and the coronavirus lockdowns in Europe.

"Our steam crackers are ...operating at reduced rates due to the COVID-19 impact as overall demand is lower," Borealis said in early April, without giving further details.

Borealis' cracker in Stenungsund can produce 625,000 mt a year of ethylene. The company's other cracker in Porvoo, Finland, can produce 400,000 mt/year of ethylene. Both crackers are able to process a mix of feedstocks including liquids, LPG and ethane.

As MRC informed earlier, in early October 2019,, Austrian polyolefin supplier Borealis AG lifted a force majeure declared in the previous months at its production site in Kallo. On 2 Sep, 2019, the company declared force majeure on refinery grade propylene and propane from its production site in Kallo, Belgium, as a consequence of “unforeseen technical issues."

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
MRC

MOSCOW (MRC) -- Italy's Eni on Friday lowered its production guidance for 2020 and announced at least a 30% cut in planned capex for 2020 and 2021, in response to the collapse in oil prices and the economic impact of the coronavirus pandemic, reported S&P Global.

The Rome-based major said it expects oil and production to average between 1.75 million–1.80 million b/d of oil equivalent in 2020, down from initial forecasts of around 1.9 million boe/d for the year.
Eni said it will also cut Eur2.3 billion from 2020 capex, 30% lower than the initial targets, and anticipates further reductions of 30%-35% lower than original plans in 2021.

"(The lower production guidance) is due to capex curtailments, COVID-19 effects, a lower global gas demand also impacted by the pandemic effects and finally extension of force majeure in Libya for the entire first half of the year," Eni said in a quarter earnings statement.

The new production guidance for 2020 does not take into account the possible impacts of the recently announced OPEC+ cuts totalling 9.7 million b/d that are to be implemented on a "field-by-field basis," it said.

Eni's capex cuts will be focused in the exploration and production segment with the "re-phasing" of some projects. However, the projects are "expected to resume quickly once market fundamentals improve, thus recovering any lost production volumes," it said.

Eni is planning three oil and gas field startups in 2020 along with seven FIDs, four of which are in the UAE. Mozambique's giant Rovuma LNG development is also on the cards.

The company could also pare back drilling on the 2.5 billion boe of resources it is targeting with exploration wells over the next three years and slow its downstream projects.

Halting share buybacks - which Eni has announced - and cutting dividends are other key levers.

For the first quarter of 2020, Eni reported average production of 1.77 million boe/d, 3.6% lower than the first quarter of 2019.

The company reported adjusted net earnings of Eur59 million for the period, down from Eur992 million in the year-ago period on sharply weaker prices, lower production and the negative impacts associated with the COVID-19 crisis.

Eni reported a Eur2.93 billion net loss for the period, from a profit of Eur1.1 billion in the first quarter of 2019, reflecting major price-related writedowns of its oil and gas inventories.

As MRC informed before, Italian energy group Eni said in early April that most of its oil refineries in Italy were working at around 60% of their capacity as the coronavirus emergency continues. The pandemic has shut down large parts of economies across the globe and prompted many governments to slap tough restrictions on travel, triggering a steep fall in the demand for refined oil products. In emailed comments, Eni said its biggest refinery Sannazzaro, in northern Italy, was running at around 50% of its capacity since it was also impacted by planned maintenance work.

Earlier, in mid-March, the company said all its refineries in Italy were working normally except for two which had partially cut their volumes for maintenance work.

At the same time, operations at Italian petrochemical producer Versalis (part of Eni) have not affected by emergency quarantine measures in the country at that period. Italian Prime Minister Giuseppe Conte extended its emergency coronavirus measures in mid-March and announced the closure of "non-essential" commercial businesses. This follows the earlier announcement of a nationwide lockdown, limiting movement for around 60 million people. Under these measures people werel only allowed to leave their homes for work or health reasons. Versalis has three steam crackers in Italy, capable of producing 1.675 million mt of ethylene, 750,000 of propylene and 285,000 mt of butadiene a year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC