BP wins approval to reduce potential fine by USD3.4 Billion

MOSCOW (MRC) -- UK-listed oil and gas giant BP Plc won approval of an agreement for the U.S. government to not count 810,000 barrels of oil captured before they became part of the 2010 Gulf of Mexico spill, reducing the potential maximum fine under the Clean Water Act by USD3.4 billion, according to Bloomberg.

The company said it believes the US government's estimate that 4.9 million bbl of oil were spilled in the Gulf of Mexico during the incident is overstated by at least 20% and includes another 810,000 bbl of oil that BP captured from the leaking well, thus never making contact with the environment.

The collected oil "never came into contact with any ambient seawater and was not released into the environment," U.S. District Judge Carl Barbier in New Orleans said in an order yesterday, less than a week before trial over the spill begins.

Bob Dudley, chief executive officer of BP Plc, discusses the outlook for its civil trial related to the 2010 Gulf of Mexico oil spill scheduled to start Feb. 25 in New Orleans, the hostage attack at its natural-gas facility in Algeria, dividend policy and acquisition strategy. He speaks in London with Bloomberg Television's Ryan Chilcote.

Under the U.S. Clean Water Act, polluters face a penalty ranging from USD1,100 to USD4,300 for each barrel spilled, depending on a variety of factors, including whether the polluter acted in a grossly negligent or reckless manner in causing the spill.

Yesterday’s agreement reduces BP’s potential maximum civil pollution fine from about USD21 billion to about USD17.6 billion, depending on whether the company is found at the trial beginning next week to have been grossly negligent.

"We firmly believe we were not grossly negligent," BP said.

We remind that, as MRC wrote previously, in late 2013 the US government temporarily blocked BP from obtaining new contracts on a "lack of business integrity" that resulted in the Deepwater Horizon oil spill. 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.

BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.
MRC

MOSCOW (MRC) -- Saudi International Petrochemical Company (Sipchem) is expected to launch production at its upcoming ethyl acetate (etac) facility in Jubail on 15 April, reported Saudi Gazette.

The etac /butyl acetate (butac) swing plant with a nameplate capacity of 100,000 tpa is located in Jubail Industrial City.

The etac and butac produced from the plant will be used as solvents in manufacture of inks, industrial solvents and as granules in surface coatings, market sources said.

The acetic acid feedstock for the plant will be obtained from Sipchem’s affiliate, the International Acetyl Company, while ethanol will be imported from international markets, according to a press release on the company’s website.

The ethyl acetate (etac) market in the Middle East is expected to see a dynamic shift with the start-up of Sipchem’s facility.

We remind that, as MRC informed previously, in December, 2012, Sipchem launched the construction of its ethylene vinyl acetate (EVA) films project in Hail Industrial City. The SR 120 million project will manufacture 4,000 tpa of EVA films. The project will be financed by the company and other local backers and is expected to be operational by Q3-2013.
MRC

MOSCOW (MRC) -- SIBUR and Tosol-Sintez have signed an agreement on the sale of coolants and brake fluids facilities located on the former Kaprolaktam plant site in Dzerzhinsk, according to SIBUR's press release.

The projected annual capacity of the facilities is 46,000 tonnes of coolants and 22,800 tonnes of brake fluids.

SIBUR has worked with Tosol-Sintez in the technical fluids segment since 2001, in particular, by selling it monoethylene glycol, which is used in the production of coolants and brake fluids. System fluids are the core products marketed by Tosol-Sintez.

As agreed between SIBUR and the new owner of the former Kaprolaktam facilities, after their shutdown the staff will be transferred to Tosol-Sintez, the latter becoming a resident of the Oka-Polymer industrial park as a system fluid production facility.

Previously, Kaprolaktam's ethylene chlorohydrin units were sold to another strategic investor – Kazan Synthetic Rubber Plant. SIBUR is transferring the assets to their new owners as part of the phased process of the Kaprolaktam chlorine production shutdown and conversion of the site into an industrial park.

The Oka-Polymer industrial park is a subsidiary of SIBUR established to facilitate the transformation of the former Kaprolaktam site into a technology park.

Tosol-Sintez is a leader in the domestic market of internal combustion engine coolants (antifreezes) and other system fluids. The company's dealer chain covers several regions of Russia and foreign countries.

SIBUR is a vertically integrated gas processing and petrochemical company with a business model focused on two key segments. The company holds and manages Russia's largest associated petroleum gas (APG) assets (according to IHS CERA), dominating the Russian petrochemical market.
MRC

MOSCOW (MRC) -- Russian petrochemical concern SANORS from Novokuybyshevsk in Samara region and Volga TGK ,a territorial generating company in the IES Holding group, signed an agreement February 15 on sale of the Novokuybyshevsk-2 Combined Heat and Power Plant, said Cospp.

The station will supply electricity for a planned expansion of SANORS capacity. "The petrochemical holding plans to invest internal funds in a program a technical reequipment and increase in capacity of Novokuybyshevsk-2," the company said in a press release.

SANORS may invest more than 1 billion rubles in the power plant over five years.Novokuybyshevsk-2 currently has no contracts to delivery capacity on file with the government.

The purchase agreement obligates SANORS to uphold social insurance guarantees to power station employees. IES will use the sale proceeds to invest in the development of Volga TGK's other enterprises in Samara.
SANORS will gradually modernize and bring mothballed capacity on-line at Novokuybyshevsk-2, increasing capacity from the plant's current working capacity of 295 megawatts.

SANORS expects to close the purchase in April 2013.
IES Holding is the controlling shareholder in TGK-5, -6, -7 and -9 with 15,000 MW of combined capacity.

As MRC wrote earlier, SamaraNefteOrgSintez (SANORS), one of Russia's largest petrochemical holdings, based in Samara (Russia's Volga region) announced plans to start large-scale production of petrochemical products by 2015. At the initial stage, the company will buid a new pyrolysis unit with a capacity of 500,000 tonnes of ethylene per year. It will be able to process about 2m tonnes of raw materials per annum.

SANORS was founded in the spring of 2011 from the merger of Novokuybyshev Petrochemicals Company, Neftekhimiya and SamaraOrgSintez LLC, all located in Novokuybyshevsk. The group's consolidated revenue for 2011 came to around 11.5 billion rubles, which surpassed the three individual companies' revenue for 2010 by 82%.

MRC

MOSCOW (MRC) -- Middle Eastern producers have been revealing the production status of their PP, PE plants in recent days one after another, said Apic-online.

As MRC wrote earlier, Middle Eastern suppliers have been talking about their limited allocations for polypropylene (PP) and polyethylene (PE) in global markets yet from December 2012. Some have restarted their plants while there are more planning shutdowns or keeping plants shut, according to market players.

Early this week, Saudi Arabia's National Petrochemical Industrial Company (Natpet) reported delaying the restart at its 400,000 tons/year PP plant at Yanbu for two weeks due to the extended repair works. The producer shut the plant on January 26 for maintenance, which was originally planned to last until February 16.

Saudi Al-Waha was also forced to shut all production units at its plant located in Jubail. The company blamed sudden technical problems for the unexpected shutdown. Al-Waha owns a 450,000 tons/year PP plant as well as a 460,000 tons/year propane dehydrogenation unit. The shutdown is expected to last around a week, according to a company statement. Al-Waha is a joint venture between Sahara Petrochemicals holding 75% and LyondellBasell 25%.

On Tuesday, Borouge from United Arab Emirates also announced that they restarted their Borouge 2 site following a scheduled maintenance that started in early January. The company operates a 45 million tons/year steam cracker, a 540,000 tons/year LDPE plant and two PP plants, each with a capacity of 400,000 tons/year at the Borouge 2 site. Borouge is a joint venture between Austria-based Borealis and the state-owned Abu Dhabi National Oil Co.

Market players also reported that Sabic is planning to shut its PP lines at its Al-Jubail site this weekend for 20-30 days of maintenance. The producer’s production lines of around 600,000 tons/year are expected to be affected by the planned turnaround, reported players.

PetroRabigh is also said to be running its 1,300,000 tons/year cracker at full rates after having resumed operations in late January following a maintenance shutdown. However, sources close to the company said that the producer’s PE plants restarted only in the past week while PP plants were yet to be back in production.

MRC