Reliance details assets to be included in spun-off refining, petchems business

MOSCOW (MRC) -- Reliance Industries Ltd (RIL) released a detailed plan to carve out its oil-to-chemicals business into a separate entity for a potential stake sale, said Chemweek.

As per the scheme, RIL’s oil-to-chemicals (O2C) assets, including its refining, petrochemicals, fuel retail (majority interest only) and bulk wholesale marketing businesses, along with its assets and liabilities, will be transferred to a new unit. The new unit will include the refining and petrochemical plants and manufacturing assets at RIL’s Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki and Hosiarpur locations.

It will also include all assets relating to RIL’s ongoing refinery and petrochemical projects that are being commissioned or near completion, the company said. RIL had officially announced its proposal to transfer its oil-to-chemicals (O2C) business to a separate entity in April.

“The nature of risk and returns involved in the O2C business are distinct from those of the other businesses of RIL and the O2C business attracts a distinct set of investors and strategic partners,” it said in the statement detailing its plan to create the new subsidiary. "RIL being a listed company cannot issue shares with differential rights (i.e. equity shares with interest linked only to O2C business) therefore, the O2C undertaking has to be transferred into a wholly-owned subsidiary of RIL in which the investors will invest,” it added.

Accordingly this scheme is being proposed for transfer of the O2C business to the subsidiary on a slump sale basis. In a slump sale, assets are transferred or sold without considering the values of the individual assets or liabilities contained within the undertaking.

"The scheme will become effective from the appointed date…means opening business hours of 1 January 2021 or such other dates as may be approved by board of the parties,” the company said on its website. The separation of the assets was planned as part of RIL’s target to sell 20% in its refining and chemicals business to Saudi Aramco.

The USD15bn deal with Aramco was initially scheduled to be completed by March 2020, but has been delayed/ At the company’s Annual General Meeting in July, RIL chairman Mukesh Ambani had said that the company expected to complete the deal with Aramco by early 2021.

As MRC informed earlier, in August last year, RIL announced initial agreements to sell a 20% stake in the oil-to-chemical business to Saudi Aramco for an asking of USD15 billion. The deal covers all of Reliance’s refining and petrochemicals assets as well as the remainder of stake the firm has in fuel retailing business after selling 49% to BP Plc of UK for Rs 7,000 crore (USD924.2 million).

And in late April 2020, it became known that Saudi Aramco’s plan to buy USD15-billion stake in Reliance Industries hydrocarbon business may not go through due to the rising risk of collapsing oil prices, US-based brokerage Bernstein has warned. The unique combination of excess crude oil global supply, 30% drop in demand due to coronavirus crisis and continuous price fall weighed heavily on Aramco’s investment plans.

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
MRC

MOSCOW (MRC) -- More than a fifth of U.S. offshore oil production was shut and key exporting ports were closed on Tuesday ahead of Hurricane Sally’s landfall on the U.S. Gulf Coast, the second significant hurricane to shutter oil and gas activity over the last month, said Hydrocarbonprocessing.

Slow-moving Sally weakened to a Category 1 hurricane on Tuesday and is expected to maintain that strength with sustained winds of 85 mph (140 km/h)d until making landfall late on Tuesday, the U.S. National Hurricane Center said. The storm’s trajectory has shifted east toward western Alabama, sparing some Gulf Coast refineries from high winds.

The U.S. government said 21%, or nearly 396,000 barrels per day (bpd), of offshore crude oil production and 25%, or 685 MM cubic feet per day (mmcfd), of natural gas output were shut in the U.S. Gulf of Mexico.

The nation’s sole offshore terminal, the Louisiana Offshore Oil Port (LOOP), stopped loading tanker ships on Sunday, while the port of New Orleans closed on Monday. That will cut off roughly 307,000 bpd of crude and 411,000 bpd of refined products, according to Kpler data.

As of 7 a.m. CDT on Tuesday, Sally was about 65 miles (110 km) east of the mouth of the Mississippi River, and moving to the northwest at 2 mph (3 km/h). Offshore facilities operated by Chevron Corp and BP Plc have been shut, less than one month after Hurricane Laura forced roughly 1.5 MM barrels per day of output to close temporarily.

Refiners in the region have wound down operations. The Phillips 66 Alliance oil refinery, which processes 255,600 bpd at a site along the Mississippi River on the coast of Louisiana, shut on Monday, said operator Phillips 66. Shell cut production to minimum rates on Monday at its 227,400-bpd Norco, Louisiana, refinery.

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

1. Thermo Fisher investing USD140 million to boost laboratory plastic production for COVID-19 testing

MOSCOW (MRC) -- Scientific instrumentation equipment maker Thermo Fisher Scientific Inc. is investing USD140 million to expand its existing laboratory plastics production to support global demand for COVID-19 testing and the development of therapies and vaccines, said Canplastics. "Early in the pandemic, we quickly joined forces with governments, public health agencies and industry to increase capacity across our laboratory plastics production facilities and address the growing COVID-19 threat,” said Fred Lowery, senior vice president and president of Life Sciences Solutions and Laboratory Products at Thermo Fisher. “However, demand quickly exceeded those early expansion projects, so we began a series of additional expansions to meet the growing needs of our customers. These investments, along with many others across the company, will ensure that our customers have the supplies they need to continue meeting the unprecedented demands of the COVID-19 response."


MRC

MOSCOW (MRC) -- US oil output, from seven major shale formations, is expected to decline by about 68,000 barrels per day (bpd) in October to 7.64 MM bpd, reported Reuters with reference to the US Energy Information Administration (EIA) said in its monthly productivity report.

That would be the first decline in production since May, according to revised data from the agency.

Output at every formation is expected to fall in October, except the Permian basin of Texas and New Mexico, where production is expected to rise by about 23,000 bpd to 4.17 MM bpd, the data showed. That would be the smallest increase since production declined in May, the data showed.

The biggest decline is expected to come from the Eagle Ford basin in South Texas, where output is expected to fall by nearly 28,000 bpd to 1.13 MM bpd.

US oil prices are still down about 40% from the peak at the start of the year, due to coronavirus demand destruction.

However, US crude futures have gained almost 100% over the past five months to around USD37 a barrel, mostly on hopes global economies and energy demand will snap back as governments lift lockdowns.

Analysts said those higher oil prices have encouraged some energy firms to start adding rigs, an early indicator of future output, in recent weeks.

Separately, the EIA projected US natural gas output would decline for a second month in a row to 80.6 billion cubic feet per day (bcfd) in October.

That would be down over 0.4 bcfd from its forecast for September. Output from the big shale fields hit a monthly all-time high of 86.8 bcfd in November.

Output in Appalachia, the biggest US shale gas formation, was set to slip for a third month in a row in October to 32.8 bcfd, down about 0.2 bcfd from September.

As MRC wrote beofre, global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels. Demand for oil will be the biggest casualty over lower energy demand in the coming three decades as weaker economic growth and a faster shift to renewable energy accelerates the demise of oil-based transport fuels, BP said its Energy Outlook 2020 published Sept. 14.

We remind that six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

MOSCOW (MRC) -- Celanese Corporation, a global technology and specialty materials company, and a global leader in vinyl acetate ethylene (EVA) emulsions, has announced an increase in its September prices of vinyl acetate-based emulsions sold in Asia outside China (AOC), as per the company's press release.

Thus, the company's prices of EVA emulsions rose by USD50/mt for this region, effective September 15, 2020, or as contracts otherwise allow.

The price increases above are for orders shipped immediately, or as contracts otherwise allow, and are incremental to any previously announced rises.

As MRC reported earlier, Celanese also raised its September prices of EVA emulsions for China by CNY300/mt.

According to MRC's DataScope report, June EVA imports to Russia fell by 22,5% year on year to 2,940 tonnes from 3,800 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-June 2020 by 8,16% year on year to 17,440 tonnes (18,980 tonnes a year earlier).

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC