Shell signs USD11 billion deal to build petrochemicals plant in Iraq

MOSCOW (MRC) -- Royal Dutch Shell has signed a deal with Iraq worth USD11 billion to build a petrochemicals plant in the southern oil hub of Basra, boosting the country's aim to become a major regional energy player and diversify its income, reported Reuters.

Industry Minister Nasser al-Esawi told a news conference the Nibras complex, which is expected to come online within five to six years, would make his country the largest petrochemical producer in the Middle East.

Iraq, which relies on oil for more than 90% of its revenue, has been hit hard by the steep fall in global oil prices since June, with Brent crude now hovering around USD50 a barrel.

"The Nibras complex will be one of the largest (foreign) investments (in Iraq) and the most important in the petrochemical sector in the Middle East," Esawi said.

He said the factory would produce 1.8 million tonnes of petrochemical products per year.

A Shell spokesman told Reuters Iraq's cabinet had authorised the project on Jan 13. Company officials declined to confirm the size or types of output expected from the facility.

We remind that, as MRC wrote before, Shell restarted its ethylene cracker in Bukom, Singapore, last week following a three-month maintenance and expansion works to raise the unit's capacity. Shell said the expansion work would increase the capacity of the cracker by 20%. The cracker originally had a capacity of 800,000 tonnes per year (tpy) of ethylene. The cracker uses a range of feedstock including naphtha and liquefied petroleum gas (LPG) to produce ethylene, a building block for plastics.

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) -- Energy group Royal Dutch Shell has announced an eight-per cent drop in annual net profits owing to a slump in global oil prices and said it would accelerate spending cuts, said Digitalook.

Profit after tax dropped to US15.05 billion (A18.99 billion) in 2014 compared with the Anglo-Dutch company's performance one year earlier, dragged down by plunging earnings in the fourth quarter as the cost of crude tumbled.

"Compared with the fourth quarter 2013, earnings... were impacted by the significant decline in (the price of) oil," Shell said in a statement.

Fourth-quarter net profit plunged 57 per cent to US773 million compared with the final three months of 2013.

Shell said it would slash spending by more than US15.0 billion over the next three years.

"The agenda we set out in early 2014 to balance growth and returns has positioned us well for the current oil market downturn," said Shell chief executive Ben van Beurden.

"We are taking a prudent approach here and we must be careful not to over-react to the recent fall in oil prices. Shell is taking structured decisions to balance growth and returns," he added in the results statement.

Shell noted that lower prices created opportunities for the group to cut costs.

It added that deferring spending in many areas and driving costs down in the supply chain "should result in reduction of potential capital investment for 2015-17 of over US15 billion".

As MRC wrote before, Shell restarted its ethylene cracker in Bukom, Singapore, this week following a three-month maintenance and expansion works to raise the unit's capacity. Shell said the expansion work would increase the capacity of the cracker by 20%. The cracker originally had a capacity of 800,000 tonnes per year (tpy) of ethylene.

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) -- Last year's imports of high density polyethylene (HDPE) to the Russian market grew by 6%. September - a month of shutdowns at Tatar producers - accounted for the peak of imports, whereas the extrusion moulding sector accounted for the largest increase, according to MRC DataScope report.

December HDPE imports to Russia rose to 25,400 tonnes from 21,000 tonnes in November. The overall imports of this polyethylene (PE) grade into Russia increased to 300,600 tonnes in 2014 versus 284,600 tonnes a year earlier. September - the period of outages for maintenance at Kazanorgsintez and Nizhnekamskneftekhim - accounted for the peak imports. Extrusion grade HDPE for blow moulding accounted for the largest increase in imports.

The supply structure by consumption sectors looks the following way over the said period.

Last month's imports of pipe grade HDPE fell below 4,000 tonnes under the pressure of seasonal factors from 5,200 tonnes in November. The overall imports of pipe grade PE to Russia totalled 83,900 tonnes, up by 24% year on year.

December imports of HDPE for extrusion coating of large-diameter steel pipes rose to 9,600 tonnes (5,500 tonnes in November). PE shipments to this processing sector dropped by 13% over the stated period and reached 64,000 tonnes. Lower imports of this HDPE grade was caused, among other, by the increased domestic production (Metakley launched a similar PE production in the middle of the year). Nizhnekamskneftekhim also intends to enter this segment

Last month's imports of blow moulding HDPE grew to 3,700 tonnes from 3,300 tonnes in November. Last year's imports of this PE grade surged by 40% and came close to 53,000 tonnes.

December imports of injection moulding HDPE rose to 4,900 tonnes (3,600 tonnes in November). The overall imports of this HDPE grade to Russia grew by 9% to 47,900 tonnes.

September accounted for the peak imports of film grade HDPE - 7,800 tonnes, after which they began to rapidly decline. Last month's figure was 2,600 tonnes (2,000 tonnes in November). Last year's imports of film grade PE totalled 38,100 tonnes, down by 15% year on year.

HDPE imports to other consumption sectors (cable extrusion, rotational moulding, etc.) fell to 13,700 tonnes in 2014 versus 16,300 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Last year's shipments of Russian polycarbonate (PC) to foreign markets fell by 64% year on year and totalled almost 7,000 tonnes, according to MRC DataScope report.

At the same time, almost 6,000 tonnes of injection moulding grades of Russian PC were exported, down by 64% year on year, whereas shipments of sheet extrusion grades to foreign markets totalled 1,000 tonnes, down by 60% year on year.

Kazanorgsintez, the only PC producer in the CIS countries, headed for imports substitution last year to support domestic converters. Primarily, this was caused by to an increase in domestic prices of imported polymer and a decrease of its competitiveness compared with Russian material. With the deterioration of macroeconomic situation and the rouble devaluation, many converters were forced to revise their procurement structure and refuse to import PC in favor of the domestic material. This was especially true for the extrusion sector, which is the main sector in the Russian market.

Therefore, in order to meet domestic demand, Kazanorgsintez changed its production structure, increasing the output of PC granules for sheet extrusion. Production of injection moulding grades was reduced to the needs of the domestic market. Exports of PC granules (earlier, mainly represented by injection moulding grades) were suspended in April. Thus, Kazanorgsintez managed to supply sufficient quantities of material at affordable prices during the seasonal peaks in demand (early May and September).

Kazanorgsintez's PC production capacity is nearly 6,000 tonnes. Kazanorgsintez shut down its production for maintenance several times during last year - in May, August and October. The overall production of PC granules was 62,000 tonnes in 2014. The share of exports in production was 11%. In view of the current economic situation in Russia, Kazanorgsintez's PC production can be expected to remain focused on the needs of the domestic market this year.

In late 2014, Kazanorgsintez's representatives announced the beginning of a strategic cooperation with BASF to supply additives for the PC in order to expand the plant's product range and to use the most advanced solutions in the field of polymer stabilization.

MRC

MOSCOW (MRC) - Russia's production of polycarbonate (PC) for sheet extrusion grew to 79,500 tonnes in 2014, up 9% year on year, as per MRC ScanPlast.

Despite the reduction in injection and bottle sectors of the Russian PC market and 3% drop in PC granules consumption, extrusion segment in 2014 showed steady growth. Russia's imports of PC for sheet extrusion increased by 4% to 26,300 tonnes, while the total PC imports in the country fell by 8% in 2014. Production of PC for sheet extrusion in Russia increased by 8% in 2014 to 54,200 tonnes. Taking into consideration all above said we can speak about the trend of import substitution in the Russian PC market with the expansion of the segment.

The only PC maker in the CIS countries, Kazanorgsintez (KOS), over the past year has increased its market share from 65% to 67% in the extrusion sector on the back of the rouble devaluation and increase in the price for imported material. That is why converters have switched to the purchases of Russian PC granules.
Average monthly consumption of PC for sheet extrusion was 6,600 tonnes in 2014, while in 2013 in was 6,100 tonnes. In the high season (May and September), the monthly consumption exceeded 8,000 tonnes. Monthly capacity of Kazanorgsintez is almost 6,000 tonnes of PC.

The share of extrusion grades in total producer's PC production last year was 88%. The production rates at the company last year was 95%. The producer is unable to fully meet the demand even if the company refrains from the exports to foreign markets and will work at the full capacity.
Given the general deterioration of macroeconomic indicators in the Russian Federation, the producer will continue to be focused on the domestic market, as many converters will not afford to work with imported PC. Some market players said about the significant weakening of demand from the agricultural and construction sectors. It resulted from the cuts of the budget for the modernization in the agricultural sector, the weaker investments in the country, and the suspension of large-scale construction projects.


MRC