Temasek and Sinopec bid for Repsol stake in Gas Natural

MOSCOW (MRC) -- Temasek and Sinopec have both approached Repsol over buying its EUR4.7bn stake in Gas Natural as the Spanish oil company seeks to raise cash to increase its investment in oil exploration, said Financial Times.

Repsol, which is working with Deutsche Bank and Citigroup to find a buyer for the domestic gas distributor, has received separate expressions of interest from Temasek, Singapore’s sovereign wealth fund, and the Chinese state-controlled Sinopec after the summer, people close to the process said.

Repsol’s management, which is aiming to sell 25% of its 30%, views both Temasek and Sinopec’s interest favourably due to their existing ties to the Spanish oil group. Temasek holds 6.3% of Repsol’s shares, having raised its stake earlier this year, while Sinopec has been its partner in its Brazilian oilfields since 2010.

Both potential investors are also viewed favourably by the Spanish government as stable, long-term investors in Gas Natural, while Caixabank, the utility’s biggest shareholder with a 34% stake, has also approved.

However, people close to the deal said that no final decision had been made over a sale; that Repsol had also received interest from other parties; and cautioned that since the company was in no hurry to sell, it would come down to an attractive price being offered. Repsol declined to comment, as did Temasek.

Repsol has been exploring the possibility of selling its Gas Natural holding since it sold its liquefied natural gas unit to Royal Dutch Shell in February.That deal removed the synergies it had previously used to justify the holding in Gas Natural.

The sale of the bulk of the holding would release further funds to invest in exploration assets, with Repsol’s management currently looking to buy assets in politically stable countries. Repsol has earmarked EUR19.1bn of investment between 2012 and 2016 as part of its strategic plan, with 80% of these funds allocated to exploration and production. It aims to increase output by at least 7% a year up to 2016, and to achieve a "reserve replacement ratio" of 120% – meaning that for every five barrels extracted the company will find a further six.

While Repsol has sought to move a greater part of its operations into politically stable jurisdictions, in part due to the traumatic expropriation of its YPF division by the Argentine government, it has also continued to explore in Libya. Initial results from a current exploration programme there are expected as soon as this week.

MRC

MOSCOW (MRC) -- Chevron Phillips Chemical has secured approval to construct the US Gulf Coast (USGC) petrochemicals project, said Refiningandpetrochemicals.

The project includes construction of an ethane cracker at Chevron's Cedar Bayou plant in Baytown and two polyethylene units at a site in Old Ocean, near the company's Sweeny plant.

Chevron has awarded an engineering, procurement and construction (EPC) contract to a joint venture between JGC (USA) and Fluor Enterprises to implement the 1.5 million metric tonnes per year ethane cracker portion of the project.

Gulf Coast Partners, a partnership between Technip USA and Zachry Industrial, have secured the EPC contract to construct the polyethylene facilities.

Each polyethylene facility will have a production capacity of 500,000 metric tonnes per year. The polyethylene units will produce a variety of high and linear low density polyethylene products including bimodal and metallocene-based polyethylene polymers.

The facilities will incorporate Chevron's metallocene technology and Advanced Dual Loop bimodal technology.

In August 2013, Chevron secured the cracker's Environmental Protection Agency (EPA) greenhouse gas permit and the Texas Commission on Environmental Quality (TCEQ) air permits necessary to commence construction of both facilities. Construction is anticipated to commence in early 2014 with startup scheduled for 2017.

Chevron Phillips is a chemical producer jointly owned by Chevron Corporation and Phillips 66. The company was formed July 1, 2000 by merging the chemicals operations of both Chevron Corporation and Phillips Petroleum Company. A 50/50 venture, the company continues to be governed by a board of directors composed of two members from each of the parent companies. Chevron Phillips is headquartered at The Woodlands, Texas (a northern suburb of Houston), and is a major producer of ethylene, propylene, polyethylene, polypropylene, K-Resin(r) SBC, ryton polyphenylene sulfide (PPS), alpha-olefins, polyalphaolefins, aromatic compounds and a range of specialty chemicals.
MRC

MOSCOW (MRC) -- LUKOIL, Russia's largest private oil company, began commissioning works to resume production of suspension polyvinyl chloride (SPVC) at Karpatneftekhim, the largest Ukrainian polymers producer, as per the company's press release.

LUKOIL intends to begin SPVC production on 1 November, 2013.

As MRC reported previously, Karpatneftekhim resumed production of high density polyethylene (HDPE) on 10 September 2013 after a long outage. The production started on imported ethylene supplied by TVK, Hungary. The plant planned to produce about 4,500 tonnes of HDPE in September, while in October the output is expected to grow up to 6,000 tonnes.

Thus, the resumption of PE and PVC production will fully meet the needs of the Ukrainian market in these products.

As informed earlier, Karpatneftekhim's outage last September was caused by inefficient economic management. Thus, the state owned to the Kalush plant more than USD 1 billion of VAT. To improve operations, Karpatneftekhim was forced to seek support from the government, which resulted in a memorandum signed in April 2013.

LUKOIL, on the other hand, has fulfilled all its obligations, including the increased output and preservation of jobs. Ukraine has also assumed a number of obligations that could contribute to the company's profitable level of production.

However, in case of continued negative trends in the petrochemical market and to maintain the profitability of the plant, LUKOIL will reduce operating costs, including optimization of the company's personnel number, as per the statement.

As MRC wrote previously, according to the memorandum, Ukraine should introduce an anti-dumping duty of 6.5% to reduce SPVC imports from the United States and to support Karpatneftekhim. The decision on this issue should have been made already on 5 October 2013. However, the Interdepartmental Commission on International Trade postponed the dates of the anti-dumping investigation for 16 months starting from 3 October 2013 because of a need for more detailed investigation of certain factors.

LUKOIL is one of the world's biggest vertically integrated companies for production of crude oil & gas, and their refining into petroleum products and petrochemicals. The company is a leader on Russian and international markets in its core business, which accounts for over 20% of Russian oil production and 18% of the total Russian oil refining. LUKOIL also controls two of the largest petrochemical plants in Russia and Ukraine: Stavrolen and Karpatneftekhim.

Karpatneftekhim (Kalush, Ivano-Frankovsk region) is a subsidiary of LUKOIL, the largest polymers producer in Ukraine. Its capacities allow to produce 300,000 tonnes of ethylene, 100,000 tonnes of HDPE, 180,000 tonnes of caustic and 300,000 tonnes of PVC annually.
MRC

MOSCOW (MRC) - "Plant of New Polymers Senege", one of the Russian producers of polyethylene terephthalate (PET) chips, shut down its production for unscheduled maintenance works on 4 October, said MRC analysts.

According to preliminary data, the maintenance works will last more than three weeks, and may be dragged to November.

Sources said that the same technical problems also occurred in August, which led to a twenty-days outage of the plant.

Senege is one of the four Russian plants producing PET for food packaging. The plant is part of a group of companies Evroplast. The capacities of PET production of Senege is 100,000 tonnes/year.

MRC

MOSCOW (MRC) -- European producers have significantly reduced October export polyvinyl chloride (PVC) prices for the CIS markets following falling ethylene prices. Deals were concluded by an average of EUR10-15/tonne below the September level, according to ICIS-MRC Price report.

October contract ethylene prices in Europe were agreed by EUR35/tonne lower from September. However, European PVC producers did not reduce PVC prices proportionally, citing strong demand and a need to improve production margins. Deals for October PVC shipments to the CIS countries are being negotiated by an average of EUR10-15/tonne lower than in September.

Many market participants said they were forced to accept a slight price drop of European PVC. Deals for October shipments of resin are being made in the range of EUR810-845/tonne FCA.

Some market participants said they managed to agree on European October PVC prices at EUR780-790/tonne FCA back in the second half of September, but such cases were the exception.

At the same time, the current cuts in European PVC prices offset the increased exchange rate of the euro against other currencies.
MRC