Lukoil to invest USD1 billion in Samara-Nafta in next 5 years

MOSCOW (MRC) -- OAO Lukoil Holdings, Russia's No. 2 oil producer, will invest USD1 billion in the oil firm Samara-Nafta to increase production, reported The Wall Street Journal with reference to Russian news agencies.

Lukoil acquired Samara-Nafta from Hess Corp. this month for USD2 billion as part of a strategy to stabilize and increase oil production. Lukoil has for years fought declining output at its main, Soviet-era fields in Western Siberia.

The investment in Samara-Nafta will increase production by between 5% and 7% over the next five years from 2.5 million tonnes a year, Prime news agency cited the company as saying.

As MRC informed previously, Lukoil's revenue for the full year 2012 increased 4.1% to USD139.2 billion from USD133.7 billion, on the back of higher oil prices. Earnings before interest, taxation, depreciation and amortization, or EBIDTA, rose 1.7% to USD18.9 billion from USD18.6 billion. Net profit for the year was up 6.2% on 2011 at USD11.0 billion.

We remind that in early March 2013, Lukoil started construction of combined cycle gas turbine unit (CCGT) at the regional industrial park, located in the immediate vicinity of Stavrolen, which had earlier resumed production of polyethylene (PE) and polypropylene (PP) after a short outage for maintenance.

OAO Lukoil Holdings is one of the leading vertically integrated oil companies in Russia. The main activities of the company include exploration and development of oil and gas, manufacturing and marketing of petroleum products.
MRC

MOSCOW (MRC) -- China's Jiangsu Sailboat Petrochemical Co. has licensed the advanced methanol-to-olefin (MTO) process of Honeywell's UOP to convert methanol from gasified coal into olefins, according to Hydrocarbonprocessing.

It is the fourth licensing win for UOP's advanced MTO process technology. The technology allows petrochemical producers in China and elsewhere to tap cheaper coal and natural gas feedstocks, rather than liquefied petroleum gas or oil, to produce ethylene and propylene to meet growing demand for petrochemicals.

All four MTO licenses have been in China, which possesses large coal reserves but imports the bulk of its petroleum.

"Jiangsu Sailboat will be able to help meet China's growing demand for ethylene and propylene by using methanol derived from cheaper and more abundant coal, maximizing yields of high-value petrochemicals and reducing operating costs," said Pete Piotrowski, senior vice president and general manager of UOP's process technology and equipment business unit.

"UOP continues to see high interest in this breakthrough technology and expects the first licensed unit in China to enter production this year," he added.

Once built, the Jiangsu Sailboat unit is expected to be the largest single-train MTO unit in the world, producing 833,000 tpy of ethylene and propylene. The unit will also provide feedstock to downstream units producing 4 million tpy of petrochemical products. Located in Lianyungang City, Jiangsu Province, China, the unit is expected to start up in 2015.

Since 2011, UOP has announced three other MTO projects. The first project will be with Wison (Nanjing) Clean Energy. The facility is expected to start up this year, and it is projected to produce 295,000 tpy of ethylene and propylene. Shandong Yangmei Hengtong Chemicals will also produce 295,000 tpy of ethylene and propylene and it is expected to start up in 2014. Jiutai Energy (Zhungeer) Co. licensed Honeywell's UOP/Hydro MTO process, and it is expected to produce 600,000 tpy of ethylene and propylene in its facility, which is expected to start up in 2014.

The advanced MTO process, jointly developed by Honeywell's UOP and INEOS, combines Honeywell's UOP/Hydro MTO process and the Total/UOP Olefin Cracking process, which significantly increases yields and efficiency when combined with MTO. The process converts methanol from non-crude oil sources such as coal or natural gas into ethylene and propylene.
MRC

MOSCOW (MRC) -- Saudi Basic Industries Corp (SABIC), the world's biggest petrochemicals group, is reviewing its global growth outlook, especially in light of the weak economic situation in Europe, as per chief executive Mohamed al-Mady, said Reuters.

He was speaking at a news conference after SABIC said on Thursday that it planned to cut 1,050 jobs in Europe and close some operations there because lower consumer spending had hit demand.

"SABIC does not do this because it wants to lay off people or shut down any plants. It does this because the situation demands it," Mady said.

However, he described Europe as a "special case" and said the continent would remain a very important market for the company, even in bad times.

Mady said he could not predict global petrochemical prices for this year but thought 2013 would be similar to 2012, with improvement in prices occurring after 2013.

Earlier on Saturday, SABIC said it posted a 10% year-on-year fall in its first-quarter net profit.

MRC

MOSCOW (MRC) -- Saudi International Petrochemical Co (Sipchem) posted a 57.5 percent fall in first-quarter net profit on Sunday, citing shutdowns at a number of plants during the period for the decline in earnings, said Arabnews.

The firm reported a net profit of SR64.5m (USD17.2m) for the three months to March 31, it said in a bourse statement, down from SR151.6m in the corresponding period of 2012.

The profit figure missed estimates. Seven analysts polled by Reuters on average forecast a first-quarter net profit of SR118.1m.

Sipchem attributed the profit drop to shutdowns at four manufacturing plants during the quarter, which in turn reduced product sales, while some product prices also fell.

As MRC wrote earlier, three affiliates of Sipchem (Saudi International Petrochemical Company) have refinanced loan facilities worth 1.04 billion riyals (USD276 mln), which were used to fund their key projects. International Acetyl Company, International Vinyl Acetate Company and International Gas Company have converted dollar-denominated loans raised in 2008 to build respective manufacturing plants into new long-term facilities denominated in riyals. Riyad Bank was the lead arranger of the deal, which carried a "competitive variable interest rate" as well as a six-month grace period. The first instalment is due to be repaid in H2-2013, with the loan to be paid off in four years.
MRC

MOSCOW (MRC) -- Alpek, the petrochemicals arm of Mexican conglomerate Alfa (BMV: ALFA), reported a profit attributable to controlling interests of USD61mn in the first quarter, down 22% year-on-year as a result of a 23% decrease in operating income, to USD119mn, said Bnamericas.

Compared to the fourth quarter, profit increased 100% due to improving export markets outside North America after the fourth quarter and a decrease in financing expenses due to the company's 2012 debt refinancing, Alpek said in a statement.

Ebitda declined 18% to USD160mn in the first quarter from USD196mn a year earlier. Compared to 4Q12, Ebitda rose 14%.

Sales in the quarter were down 4% year-on-year but up 9% sequentially to USD1.83bn.
Capex for the quarter was USD66mn, increasing 370% year-on-year driven by the ongoing investment in the Cosoleacaque cogeneration plant and the first payment related to the IntegRex PTA license agreement and a PTA-PET sourcing agreement with Italian chemicals group M&G.

Net debt at end March amounted to USD747mn, down 38% or USD461mn from a year ago, while gross debt declined by 21% over the period.

Alfa also owns Nemak (aluminum auto components), Sigma (refrigerated foods) and Alestra (telecommunications).

As MRC wrote earlier, M&G Group signed a Licensee Agreement with Alpek, S.A.B. de C.V. (Alpek) for IntegRex PTA technology. The technology will be used in the construction of M&G's previously announced 1,200,000 MT per annum PTA plant at Corpus Christi, Texas. M&G also announces today, Alpek has purchased for a price of USD350,000,000, a multiyear sourcing agreement covering rights to 400,000 MT of PET (made with 336,000 MT of integrated PTA) per year.

Alpek is the largest petrochemical company in Mexico and the second largest in Latin America. The company operates through two business segments: Polyester chain products (PTA, PET and polyester fibers), and Plastics and Chemicals products (PP, EPS, caprolactam, polyurethanes and other specialty and industrial chemicals). Alpek is a leading producer of PTA and PET worldwide, operates the largest expandable polystyrene plant in America and one of the largest polypropylene plants in North America. It is also the only producer of caprolactam in Mexico. In 2012, Alpek reported revenues of USD7,277 million and EBITDA of U.S. USD728 million. The company operates 20 plants in Mexico, USA and Argentina, and employs 4,700 people. Alpek is a publicly traded company listed on the Mexican Stock Exchange.

MRC