Dow divests North American rail assets for USD310 million

MOSCOW (MRC) -- Dow has agreed to sell the rail infrastructure assets and related equipment at six major sites in North America to Watco Companies (Pittsburg, Kansas), a transportation services company operating in North America and Australia, reported Chemweek.

Dow expects the deal, which is slated to close in the fourth quarter, to yield over USD310 million in cash. Watco will provide Dow with rail services from the assets under a long-term agreement.

“Today’s announcement is part of an on-going review of our ownership of non-product producing assets and is driven by our commitment to apply a best-owner mindset to everything we do,” says Jim Fitterling, chairman and CEO of Dow. “The transaction will liberate cash from our balance sheet that we will use to pay down debt and invest in our core value-generating businesses.”

The assets are located at Dow’s sites in Plaquemine and St. Charles, Louisiana; Freeport and Seadrift, Texas; and Ft. Saskatchewan and Prentiss, Alberta, Canada. Fourteen Dow employees and the management of about 400 contract workers are expected to transition to Watco upon close of the transaction, says Dow.

As MRC informed earlier, Dow Chemical will restart three idled polyethylene (PE) plants in Texas and Argentina and two elastomers plants in Louisiana as demand begins to rebound. And the company expects economic recovery to take hold in the second half of 2020 as gradual emergence from coronavirus pandemic-related shutdowns continues.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

MOSCOW (MRC) -- Khimprom (Cheboksarsk, Russia) says it has decided to expand calcium hypochlorite capacity, citing strong domestic demand, said Chemweek.

Khimprom started up its calcium hypochlorite production line at Cheboksarsk at the end of 2018, the first plant to make the product in Russia. The facility originally had a capacity of 15,000 metric tons/year but Khimprom says that technical adjustments have enabled it to run the plant at a rate of 18,000 metric tons/year. The planned capacity for the latest expansion has not been disclosed.

The company says it produces inorganic and organic chemicals, including organochlorine, organophosphorus, and organosilicon products, as well as rubber chemicals, surfactants, and reagents. Khimprom says it is also Russia’s biggest producer of hydrogen peroxide. Its other products include chlorine and caustic soda, as well as isopropyl alcohol.

As MRC informed earlier, May production of sodium hydroxide (caustic soda) in Russia was 112,000 tonnes (100% of the basic substance) versus 101,000 tonnes a month earlier. Overall output of caustic soda totalled 543,000 tonnes in the first five months of 2020, up by 1.4% year on year.
MRC

MOSCOW (MRC) -- Oil major Royal Dutch Shell is in talks to withdraw from Indonesia's Masela block and is looking for a buyer, which could either be Japan's Inpex which is the operator of the development with a majority interest, or another interested party, Indonesian upstream regulator SKK Migas' operations deputy Julius Wiratno told S&P Global Platts on July 6.

Shell's potential exit from the Masela block, which includes an offshore gas development and the Abadi LNG terminal, would follow several international oil companies like BP and Chevron which have pulled out of some of Indonesia's largest upstream projects in recent years due to resource nationalism or poor project economics, or both.

"The company (Shell) is in the process of finding a partner to take over its participating interest in the block," Wiratno said. "They are currently in discussions on a B2B (business to business) basis with Inpex and potential partners," he added.

Wiratno said Inpex will likely continue to control the Masela project, either by itself or along with other partners. "It depends on the negotiations," he added.

Inpex is the operator of the Masela block with a 65% interest and Shell holds the remaining 35%. A Shell spokeswoman said the company does not comment on portfolio activity. Inpex did not immediately respond to queries that were sent out of office hours on July 6.

On June 30, Shell said it would take a post-tax impairment charge of between USD15 billion and USD22 billion in the second quarter. Out of this USD8 billion to USD9 billion would be in its integrated gas business, mainly in its Queensland and Prelude projects in Australia, and USD4 billion to USD6 billion in the upstream segment largely in Brazil and North American shale.

As oil majors cut the value of their oil and gas assets, reshuffle global portfolios and slash capital expenditure to ride through the pandemic, analysts said they are unlikely to commit to big-ticket, long-gestation projects in a significant way.

Additionally, regions like Indonesia are also unlikely to sustain international E&P investment unless their production sharing contracts are extremely attractive and project approvals are less bureaucratic.

The Masela block, for which the latest plan was to produce 9.5 million mt/year of LNG and 35,000 b/d condensate, has been the subject of disagreements between the government and project owners for several years.

The initial project plan involved a floating LNG plant scaled up from 2.5 million mt/year to 7.5 million mt/year, but the Indonesian government then insisted on an onshore LNG terminal that would provide more local employment, although the project partners opposed a more expensive and time-consuming onshore project.

Eventually, the companies agreed to an onshore terminal and the Indonesian government approved the revised development plan for Abadi LNG. Indonesia also approved a 20-year extension to the production sharing contract for Masela to make it more attractive with other incentives.

This may be jeopardized if there is a change of hands, although Inpex is likely to have first right of refusal for a change in ownership.

The Abadi LNG terminal was listed by Indonesia as a national strategic project in June 2017 and as a priority infrastructure project in September 2017. It would be key to plugging the country's falling gas production and boost its position as an LNG exporter.

As MRC wrote before, in May 2020, CNOOC Oil & Petrochemicals Co. Ltd (CNOOC), Shell Nanhai B.V (Shell) and the Huizhou Government have announced a strategic cooperation agreement to further expand the CNOOC and Shell Petrochemical Company (CSPC) 50:50 joint venture in Huizhou, Guangdong Province, China.

The expansion is planned to serve the growing number of intermediate and performance chemicals customers in the key market of China, supplying products including SMPO, polyols, ethylene glycol, polyethylene (PE) and polypropylene (PP). These chemicals are used in a wide range of end products, in healthcare, construction, fabrics, packaging, transport and electronics. For the first time in Asia, Shell would apply its advanced technology for linear alpha olefins. The project is intended to include construction of a new 1.5 million-tonnes-per-year ethylene cracker, with the mega-site bringing economies of scale and enhanced competitiveness.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- South Africa's Sasol said July 6 it has decided to relinquish two licenses offshore Mozambique to the government in a new setback for the southeast African country's upstream sector, reported S&P Global.

Sasol held licenses for offshore blocks 16 and 19 since 2005, but has now opted to hand back the licenses.

"Following an evaluation of the exploration potential of the blocks and an assessment of the report of the pre-feasibility phase of the Environmental Impact Assessment, Sasol has decided to relinquish its exploration license in Blocks 16 and 19 offshore Mozambique," it said.

Sasol carried out some deepwater exploration activities in the license areas, but relinquished the deepwater part of the license in 2013.

It kept the shallow water area of the license with a view to assessing the remaining hydrocarbon potential.

"Sasol will relinquish Blocks 16 and 19 in their entirety to the government of Mozambique and a withdrawal notification has been issued to the relevant Mozambican authorities," it said.

Sasol remains a key player in Mozambique with a stake in Eni's A5-A offshore block.

It also processes gas from the Pande and Temane gas fields at its Central Processing Facility and transports the gas to markets in Mozambique and South Africa.

Mozambique is best known for its huge offshore gas discoveries, which are set to transform the country into a major LNG exporter.

Over 30 million mt/year of LNG production capacity is in development, but the industry is under threat from an increasing Islamist insurgency, very low LNG prices and swingeing cuts in company spending.

ExxonMobil has said it is delaying final investment decision on the 15.2 million mt/year Rovuma LNG project, the biggest of three LNG projects under development in Mozambique.

It had been expected to begin operations in 2025, though that start date is now almost certain to be pushed back.

The two others are the Total-operated, 12.9 million mt/year capacity Mozambique LNG project - expected to start up in 2024 - and the Eni-operated, 3.4 million mt/year capacity floating Coral LNG project.

First LNG at Coral is expected in 2022.

As MRC wrote previously, Sasol"s world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. SasolпїЅs new cracker, the heart of LCCP, is the third and most significant of the seven LCCP facilities to come online and will provide feedstock to our six new derivative units at the company"s Lake Charles multi-asset site.

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

According to MRC"s ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

1. Mitsui Chemicals expands mask component production in Japan

MOSCOW (MRC) -- Mitsui Chemicals, Inc. (Tokyo) announced the decision to have wholly owned subsidiary Sunrex Industry Co. Ltd. (President: KAWAHITO Koichiro) expand its production facilities for TEKNOROTE™ mask nose clamps, said the company. This comes amid increased demand with mask-wearing now having become more common in the effort to contain novel coronavirus infections. Through this move, the Mitsui Chemicals Group’s production capacity of mask nose clamps will rise by around 150 percent, reaching a level sufficient to supply 3 billion masks per year. Depending on mask demand trends going forward, Mitsui Chemicals will also consider making further expansions to its production facilities for mask nose clamps.

MRC