MOSCOW (MRC) -- OMV (Vienna, Austria) has announced plans to split and expand its integrated refining and petrochemicals business into two new divisions. A new chemicals and materials division will be established that will include OMV’s existing petchems business, while a new refining division will also be created, reported Chemweek.
The changes will take effect as of 1 April 2021, it says.
Alfred Stern, the CEO of Borealis, has been appointed by OMV’s supervisory board as executive board member for chemicals and materials, it says. Borealis is majority owned by OMV with a 75% stake.
The structural change “facilitates the forward integration in the chemicals sector that has been underway ever since OMV acquired a majority stake in Borealis,” it says. “With this change, OMV is consistently positioned across the entirety of its expanded value chain and can bundle all relevant responsibilities for petrochemicals and chemicals in a single board division.”
The new corporate structure “will significantly expedite the integration of Borealis into the OMV group and the expansion of the chemicals business,” says Mark Garrett, chairman of OMV’s supervisory board.
OMV also reported a 22% rise year on year (YOY) in its fourth-quarter petchem earnings to EUR43 million (USD51 million), driven mainly by lower customer discounts due to decreased price levels, it says. The company’s ethylene/propylene net margin increased slightly by 2% YOY to EUR369/metric ton, while benzene and butadiene spreads “experienced a sharp decline,” it says. “While the butadiene net margin weakened considerably, benzene net margin decreased to a lesser extent,” it notes. Petchem product sales volumes totaled 590,000 metric tons, flat YOY and up slightly on the third quarter.
The contribution from Borealis rose EUR112 million YOY to EUR162 million, due mainly to the full consolidation of the Borealis result following OMV's USD4.68-billion acquisition of an additional 39% stake in Borealis on 29 October 2020, taking its total share to 75%. Borealis also released its fourth quarter results today.
In an outlook for 2021 for its new chemicals and materials division, OMV says the European ethylene and propylene indicator margins are both expected to be similar to 2020 at EUR435/metric ton and EUR364/metric ton, respectively. The European polyethylene (PE) and polypropylene (PP) indicator margins in 2021 are both forecast to be above their 2020 levels of EUR350/metric ton and EUR413/metric ton, respectively.
PE sales volumes for Borealis are projected to be slightly above last year’s level of 1.76 million metric tons, while PP sales volumes are expected to be in line with 2020 at 2.12 million metric tons. Planned organic capital expenditure for its chemicals and materials division in 2021 is expected to total around EUR900 million.
For the full-year 2020, petchem earnings fell 7% YOY to EUR224 million, due mainly to lower petchem margins, OMV says. The average ethylene/propylene net margin for the year was €400/metric ton, down 8% YOY. OMV calculates the net margin based on West European contract prices with naphtha as feedstock. Total petchem volumes sold totaled 2.36 million metric tons, slightly higher than in 2019.
As MRC informed earlier, OMV (Vienna, Austria) says it is investing EUR40 million (USD48 million) to expand and modernize a steam cracker and associated units at its refining and petrochemicals complex at Burghausen, Germany. The upgrade will increase the site’s ethylene and propylene production capacity by 50,000 metric tons/year. Following a planned turnaround of the refinery, the revamped cracker and petchem units are expected to start operations in the third quarter of 2022. Initial groundwork is already underway ahead of the upgrade.
Ethylene and propylene are feedstocks for producing PE and PP.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).
MRC