Gazprom Neft to increase its share in HIP Petrohemija

MOSCOW (MRC) -- Gazprom Neft will increase the share of its Serbian subsidiary Naftna Industrija Srbije (NIS) in the Serbia's largest petrochemical company - HIP Petrohemija, reports Neft Rossiji.

The decision was made by Gazprom Neft's Board of Directors. The increase could be just over EUR67.4 million to 34% of the legal capital of HIP-Petrohemija by converting Petrohemija's debt to NIS into the legal capital according to the agreement on strategic cooperation with NIS signed in November 2011. Thus, the present agreement is aimed at stabilizing the financial situation of Petrohemija and increasing its performance. NIS currently owns 12.72% of Petrohemija. The largest shareholder is the Republic of Serbia - 68.52%.

We remind that, as MRC reported previously, HIP-Petrohemija had approved the investment project in late August to increase the production capacity of HDPE, for the financing of which the company will allocate EUR2.4 million from its own resources. Investment activities on the project began on 1 September and should last till the end of December.

NIS is one of the largest integrated oil and gas companies in South-Eastern Europe, engaged in exploration, production and refining of oil and gas, and marketing petroleum products. Major shareholders are Gazprom Neft (56.15%) and the Government of the Republic of Serbia. (29.88%). The rest of the shares are owned by minority shareholders.

HIP Petrohemija owns petrochemical complexes located in Pancevo, Elemir and Crepaja. The core business is the production of HDPE, LDPE and other petrochemical products. The annual production capacity of the company is 700,000 tonnes.
MRC

(hydrocarbonprossesing) -- The US government has temporarily blocked BP from obtaining new contracts on a "lack of business integrity" that resulted in the Deepwater Horizon oil spill.

According to the Environmental Protection Agency (EPA), the suspension will prevent the company from buying new oil-drilling leases or other government contracts until the company can provide sufficient evidence that it meets federal business standards. The move has an immediate impact on BP.

The government "takes these actions to ensure the integrity of federal programs by conducting business only with responsible individuals or companies," the EPA said. The suspension does not affect existing contracts BP has with the government.

Being kicked out of Wednesday's sale is a big hit for the biggest producer of oil and gas in the US Gulf of Mexico, and also one of its most active oil prospectors. The region remains a big priority for BP, and the company has said it intends to spend USD4 billion there this year and at least that amount annually during the next decade.

We remind that at present BP is in talks with Rosneft that may result in the British oil major acquiring at least 12.5% of the Russian state oil firm. BP's acquisition of Rosneft shares would take place as part of a recently concluded deal to sell BP's 50% stake in Anglo-Russian oil venture TNK-BP, Russia's No.3 oil firm, as MRC reported earlier.
MRC

MOSCOW (MRC) -- MRC news digest as of 04.12.12.

1. Russian producers increased PVC production by 75% in October.

In October, Russian makers increased PVC output to 57,600 tonnes, up 75% from September. Over the past ten months, the growth of PVC output in Russia made about 500,000 tonnes, according to MRC ScanPlast. Such a low index in September was due to a scheduled outage for maintenance at Sayanskkhimplast in September and the forced reduction of capacity utilization following the limited supply of ethylene from Kaustic (Sterlitamak). Last month, Sayanskkhimplast and Kaustic (Sterlitamak) showed record production volumes. In October, Sayanskkhimplast produced record 27,000 tonnes of suspension PVC. Kaustic (Sterlitamak) also increased its capacity utilization after September restrictions of ethylene supply. The plant produced over 19,000 tonnes of the resin, which is two times higher compared to September. In general, over the past ten months, the total production volume of PVC in Russia made about 500,000 tonnes, up 8% year-on-year. The output of suspension PVC grew to the level of 482,900 tonnes, up 8% year-on-year.

2. In October, PP production in Russia grew by 8%.

In October, the Russian producers increased the production of polypropylene (PP) to 54,800 tonnes, up 8% from September. The ten months’ production of PP in Russia made about 541,800 tonnes, according to MRC SkanPlast report. So low September figures resulted from several factors. Firstly, Tomskneftekhim and Neftekhimiya (Kapotnya) in September stopped their capacities for a scheduled maintenance. Secondly, in September also Nizhnekamskneftekhim and Stavrolen reduced their PP production due to the maintenance work on the pyrolysis furnaces. Last month, all Russian producers increased their PP production, with the exception of Neftekhimiya (Kapotnya) and Ufaorgsintez. The output of polymers of propylene at these enterprises amounted to about 4,000 tonnes and 10,900 tonnes respectively. Nizhnekamskneftekhim increased production to 18,000 tonnes, Tomskneftekhim to 12,800 tonnes and Stavrolen to 9,200 tonnes.

3. Low demand is putting pressure on pipe HDPE prices in Russia.

A significant reduction of buying activity in the market of pipe HDPE in the second half of November made Russian makers decrease their prices, according to MRC Price report. The second half of November turned out to be quite difficult for the Russian market of pipe PE. Demand for polyethylene has declined considerably over the past two weeks and, despite the absence of pipe HDPE output from some Russian producers, the prices keep falling. Last week, Kazanorgsintez, Nizhnekamskneftekhim and Gazprom neftekhim Salavat announced price reduction for pipe HDPE on the back of sluggish demand from Russian PE pipes makers. The prices dropped by Rb1,000-4,000/tonne depending of the PE grade and the maker. In the foreign markets the situation is controversial. Asian producers kept the November level of export prices for shipments in December: on average USD1,650-1,700/tonne, FOB, while European makers reduced their export prices in November on average by EUR40/tonne from October to the level of EUR1,310-1,350/tonne, FCA.

4. October supplies of PVC to Russia exceeded 105,000 tonnes.

In October, the domestic and import supplies of PVC to the Russian market reached a record volume for one and a half year and made more than 105,000 tonnes. Despite a record level of supply, ther was not excess in the market, PVC prices continued to increase, according to MRC ScanPlast. Russian producers increased their production of suspension to a record 56,440 tonnes, imports increased to 48,850 tonnes. Deficit of PVC, which began in September 2012 (total shipments amounted to about 71,500 tonnes), also came over to October. Many converters amid tight supply of PVC and high demand for manufactured goods in September, had to "clean up" their inventories. In October, the delivery of resin to the market increased by 47% compared to September, but due to the high demand for finished products and critical inventories of most converters ther was still felt a little lack of resin in the market. As a result, prices of PVC in Russia in October 2012 continued to grow. In November, the situation in the market has stabilized. Despite the approach of winter, the demand for PVC from local converters is stable, many convertes do not create inventories of feedstock.

5. October imports of polymers to Ukraine grew by 36%.

In October the imports of large volume polymers to Ukraine’s domestic market made about 85,000 tonnes, which was the largest figure ever recorded over the last few years. Month on month increase made about 36%, according to MRC DataScope report. Consumption of polymers is traditionally, falling in the autumn, but in October the situation was exactly the opposite. The reasons for this unusual converters’ behavior resulted from the the current economic situation in the country. The stoppages on the turnaround of domestic producers of polymers and disruptions in delivery led to a record growth of imports. The increase in imports was seen in all large volume polymers with the biggest increase of the unmixed PVC imports, suspension. The imports of SPVC in October to the domestic market made about 16,800 tonnes, almost two times more than in September. Imports of PE increased by 44.8%, compared to the previous month and reached 32,640 tonnes. The total volume of imports of PS made more than 8,000 tonnes, up 32%. The imports of PET to Ukraine made about 12,500 tonnes of material, up 22% from September. PP market made no exception. But the growth in imports here was relatevily moderate in October with increase by 14%. The total imports of PP in October made 11,770 tonnes.

6. EPS output in Russia rose by 87% from early 2012.

In January-October, 2012, EPS output in Russia made 70,650 tonnes of the material, report MRC analysts. In October, 2012, EPS production volume in Russia increased to 10,540 tonnes of the material, which is a record. Russian producers have produced 70,560 tonnes of EPS since the beginning of the year, up 87% year-on-year. Several factors contributed to the increased production volumes. Angarsk polymer plant resumed operations after an outage for maintenance in September, 2012. In October, 1,360 tonnes of the material were produced in Angarsk. Plastik (Uzlovaya) also increased its capacity utilization to the maximum level which resulted in production of 860 tonnes of EPS in October. SIBUR-Khimprom keeps increasing production volumes almost reaching its maximum capacity utilization. In October, 8,320 tonnes of EPS (Alphapor) were manufactured in Perm. More detained information can be seen in MRC ScanPlast.

7. Russian PVC makers are ready to reduce prices.

This week, negotiations on contract prices of Russian PVC for shipment in December have begun. Some converters have already managed to get a price reduction by Rb2,000/tonne from early November, according to ICIS-MRC Price report. In November, demand for PVC dropped significantly in Russia, many converters have been shutting their units for maintenance in late November. Also, Russian producers of PVC are reducing their prices on the back of lower demand. This December will not make an exception. Many converters report a reduction of PVC purchases next month and their plans to shut their production for maintenance in the third decade of December. Still in mid-November, some Russian PVC producers started to voice their price offers for shipment in December. The prices for December deliveries were voiced on average by Rb2,000/tonne lower than in November on falling demand and slashing of export prices in the USA. Many converters refused to make early purchases hoping to get lower prices.

8. PVC imports to China rose by 3% in October.

In October, imports of PVC to China grew to 79,300 tonnes, while in September this index made 76,800 tonnes. Conversely, exports slashed by 27% to 45,700 tonnes, report MRC analysts. After the August upsurge, imports of PVC to the Chinese market remained at a low level. Last month, the total import volume of PVC to China increased by 3% from September and made 79,300 tonnes. In October, imports of PVC were reduced from all markets with the exception of producers from the USA. In October, imports of PVC to the Chinese market from the USA grew by 37% from September and made 33,800 tonnes, while imports from Japan dropped by 16% to 16,500 tonnes and those from Taiwan - by 5% to 22,200 tonnes. In general, the year-to-month imports of PVC to China made 809,200 tonnes, down 5% year-on-year.

9. December EPS price of Alfapor for Ukrainian companies to decrease by USD70/tonne.

The price of Permian Alfapor for December export shipments to be cut by USD70/tonne to USD1,900/tonne, FCA Perm, according to MRC analysts. The price of EPS by Alfapor brand will be decreased by USD70/tonne for Ukrainian consumers in December 2012. The current price of the material is at USD1,970/tonne, FCA Perm. The price of Permian EPS in December is expected to be at USD1,900-1,910/tonne, FCA Perm. Russian producer is forced to reduce the cost of material on the sharp drop in demand in November. Back in early November, the Ukrainian market of EPS underwent shortages of material, and therefore the price of polystyrene reached its maximum. However, in mid-November, converters have reported a significant decrease in demand for insulation materials, which led to a decrease in purchases.

10. October PET production in Russia increased by 31%.

In October, production of bottle PET by Russian companies increased by 31%, compared with the same period a year earlier. In absolute terms the production volumes increased by 9,000 tonnes, according to MRC SkanPlast. In October production of Russian PET made about 39,000 tonnes. Production growth in the reporting month resulted from the stability of the production by domestic plants and the absence of stoppage on the turnarounds. Thus, in October 2011, total production of PET in Russia decreased to 30,000 tonnes due to the stoppage of Senezh, Solnechnogorsk. The company was completely halted on the maintenance and the granulate had not been produced over October. In general, the total loading of domestic capacities currently makes almost 90%. With the exception of Alco-Naphtha, Kaliningrad, which facilities are loaded by 60-65%. The company still works at the reduced loading as demand in the export market is weak, and the plant do not plan to increase the production.
MRC

(petroworld) -- OMV has divested its refining and marketing operation in Bosnia- Herzegovina, selling to Serbian firm NIS. The assets changing hands include 28 fuel service stations, a fuel terminal, and the local head office of OMV BH d.o.o in Sarajevo.

OMV has been active in Bosnia-Herzegovina's fuel market since 2001, and has an estimate 8% market share. The deal is part of a defined divestment program that to reduce the weighting of the Refining and Marketing division in the overall OMV portfolio. It follows the sale by OMV Petrol Ofisi, OMV’s Turkish subsidiary, of its stake in Cypriot retail company Kibris Turk Petrolleri Limited Sirketi at the end of November 2011, and OMV Petrom's sale of subsidiary Petrom LPG SA in June of this year.

"With this move, we have completed another important step in implementing the OMV strategy which aims at optimising our Refining and Marketing portfolio by divesting noncore marketing assets," remarked Manfred Leitner, OMV's Executive Board Member responsible for Refining and Marketing.

OMV is an integrated international oil and gas company, headquartered in Vienna. OMV's main business is in Exploration & Production (E&P), Gas & Power (G&P) and Refining & Marketing (R&M). With group sales of more than EUR34 billion (2011) and a global workforce of around 30,000 (2011), OMV is the largest listed manufacturing company in Austria.

MRC

(petroworld) -- Tatneft has been named as the top downstream firm in Eastern Europe for 2012 by World Finance Magazine. The award from World Finance, published by UK-based World News Media, has been celebrated by the Russian firm in a statement.

"This award is another recent recognition of Tatneft's achievements in the downstream segment related to the launch of the new refinery TANECO in City of Nizhnekamsk," said the company. The award was accepted on behalf of Tatnegy by by V.A. Voskoboinikov, the Head of Consolidated Financial Reporting and a member of Tatneft's Management Council, along with V.A. Mozgovoi, Assistant to the General Director on Corporate Finance and member of the Board of Directors of TANECO.

Tatneft is a Russian vertically-integrated oil and gas company with headquarters in the city of Almetyevsk, in the Republic of Tatarstan. It is the sixth largest oil company in Russia.

MRC