Gazprom and SIBUR joining efforts to create processing complex in Far East

MOSCOW (MRC) -- Alexey Miller, Chairman of the Gazprom Management Committee and Dmitry Konov, Chief Executive Officer of SIBUR signed today at the Gazprom headquarters a Memorandum of Cooperation while constructing a gas processing plant and a gas chemical complex in Belogorsk, Amur Region, said Yourpetrochemicalnews.

According to the document, the parties will join their efforts as part of the potential creation of a powerful complex for processing multicomponent gas from fields of the Yakutia and Irkutsk gas production centers being currently formed by Gazprom within the Eastern Gas Program.

Gazprom is planning to construct a gas processing plant in Belogorsk with the annual capacity of up to 60 billion cubic meters, where ethane and other valuable components will be stripped from natural gas. SIBUR, in its turn, intends to create a gas chemical complex technologically connected with the gas processing plant for the purpose of processing ethane, obtaining monomers and subsequent manufacturing of polymers.

The Memorandum outlines general pricing mechanisms for ethane supplies, projects synchronization and a synergetic effect assurance.

"The efficient and reasonable use of all the valuable components of natural gas from eastern fields is a priority of Gazprom's comprehensive activities in Russia's East. The partnership with SIBUR is a sample model of Gazprom's cooperation with other investors within the Eastern Gas Program: Gazprom creates a resource base and facilities for production, transmission and initial processing, while our partners construct capacities for chemical processing and manufacturing of value added products. The joint activities will result in a considerable economic effect and become an extra incentive for developing Eastern Siberia and the Far East," said Alexey Miller.

"SIBUR constantly looks into new possibilities of developing the petrochemical sector to enhance its leadership position in Russia and enter new target export markets. The cooperation with Gazprom will make it possible to unlock the potential of interaction among manufacturers and processers to create highly competitive capacities for advanced processing of hydrocarbon feedstock into valuable petrochemical products. The implementation of such large-scale projects in new gas production regions requires accurate synchronization and detailed study of all parameters," said Dmitry Konov.

As MRC wrote before, Gazprom Neft, a subsiduary of Gazprom, SIBUR will collaborate in the polymer road materials production and marketing. SIBUR will deliver styrene-butadiene-styrene (SBS) polymers to the facilities of Gazprom Neft. The materials are applied in the polymer-bitumen binders (PBB) manufacturing to improve the quality characteristics of the road surface and extend its service life. Moreover, the parties are ready to carry out a joint research to develop the utilization of road materials based on polymers, in particular, to work up SBS polymers brands.
MRC

MOSCOW (MRC) - Russian producers managed to agree November pipe high density polyethylene (HDPE) prices at the rollover from October, despite weakening demand , according to ICIS-MRC Price Report.

The negotiation for contract Russian pipe HDPE prices for November finished last week. Despite the efforts of polyethylene (PE) pipes producers, prices of Russian HDPE for November delivery remained at the level of October.

Nizhnekamskneftehim temporarily suspended the production of pipe PE in mid October, having switched to the production of linear polyethylene; Gazprom neftekhim Salavat also switched to the production of injection moulding HDPE. Both plants are expected to resume their pipe HDPE production not earlier than in early December. Kazanorgsintez has had serious debts on October contractual obligations.

However, despite all these factors, the shortage of pipe HDPE is not felt now, and is not likely to be in November because many market participants said number of orders declined back in September, the peak of the season in the pipe market.

Spot deals for black Russian PE 100 in the second half of October were done at Rb69,000-69,500/tonne CPT Moscow, including VAT. Deals for natural PE 100 were struck in the range of Rb64,500-65,500/tonne CPT Moscow, including VAT.

In general, Russian market of PE pipes goes through quite a challenging times. Since the beginning of the year, many pipe producers have been complaining of a serious fall in demand for finished products from the state - a key consumer, and as a consequence, increased competition in the market.

According to Rosstat, total production of polymer pipes in Russia was 446,200 tonnes in the first nine months of this year, down by 18.5% year on year.

The problem of weak demand was strengthened by the problem of auctions in the procurement of finished pipes.
Prices in the market of PE pipes have been falling at the auctions because of tough competition, while feedstock costs remained at a quite high level. As a result, some market participants have started to decrease the cost of production of PE pipes, which effected the quality of the products.
MRC

MOSCOW (MRC) -- Canada's Nova Chemicals remains on target for a late-2015 startup for its Polyethylene 1 expansion project in Alberta, expected to add at least 950 million lbs/year of linear low density (LLDPE) production the plant, reported Apic-online with reference to CEO Randy Woelfel's statement.

The foundation for the new reactor had been poured at the plant, in Joffre, halfway between Calgary and Edmonton, and the reactor was expected to be delivered in early 2014, Woelfel said during Nova's third quarter earnings call.

The Calgary-based company has a current annual LLDPE capacity of 1.48 billion lb/year at the Joffre plant.

Nova generated third quarter profit of CUSD120 million (USD115 million) up from CUSD104 million in Q3 2012, with the increase primarily attributed to operating profit in the polyethylene segment, Woelfel said.

Woelfel said polyethylene sales have been strong in 2013, with a 5 cents/lb increase for LLDPE and LDPE during the third quarter helping to improve profits.

"Through September, we are selling at a pace that could make polyethylene sales the strongest in our history," he said.

For the nine months ended September 30, Nova generated profit of CUSD506 million, compared to profit of USD478 million for the year-ago period, it said.

The year-over-year increase was primarily due to increased operating profit in the Corunna Olefins and Polyethylene segments, partially offset by lower operating profit in the Joffre Olefins segment, the company said.

As MRC informed previously, in early 2013 NOVA Chemicals decided build two polyethylene (PE) plants and expand its ethylene capacity. NOVA has taken several actions to secure additional ethane feedstock supply for its crackers in Corunna, Ontario, and Joffre, Alberta.

Nova Chemical is one of the largest world's petrochemical companies, a manufacturer of polyethylene, styrene polymers, monomers, and many other related products.
MRC

MOSCOW (MRC) -- Ufaorgsintez (part of Bashneft group) has announced an increase in contract prices of low density polyethylene (LDPE) and polypropylene (PP) from 1 November 2013, according to ICIS-MRC Price report.

The company increased contract prices for polyolefins by Rb450-1,000/tonne from mid-October. The price rise for LDPE and PP was caused by tight supply and strong demand.

Contract prices for LDPE 158 and 108 rose to Rb1,000/tonne, prices for shrinkable film PE remained intact.

Contract prices for homopolymer of propylene (homopolymer PP) grew by Rb450-550/tonne from mid-October. Prices for statistical copolymers of propylene (PP-random) went up by Rb550/tonne.

The annual PP and LDPE production capacity at Ufaorgsintez is 100,000 and about 90,000 tonnes, respectively.
MRC

MOSCOW (MRC) -- US supermajor Chevron has reported a 5% dip in net profit year-on-year in the third quarter to USD5 billion from USD5.3 billion this time last year, said Upstreamonline.

The San Ramon, California-headquartered giant put the slide in earnings down to lower refining margins, with downstream earnings tumbling from $689 million in the third quarter of 2012 to USD380 million this year.

Chief executive John Watson said the explorer was reaching interim milestones on its major capital projects, citing Australian liquefied natural gas project pair Gorgon and Wheatstone as well as the US Gulf’s Jack/St Malo and Big Foot, with the latter deep-water duo still on track for start-up late next year.

Overall revenues rose slightly to USD57 billion between 1 June and 30 September compared to USD56 billion during the same period of 2012.

Global production rose to 2.59 million barrels of oil equivalent from 2.52 million boe year-on-year in the third quarter, but upstream earnings slipped from USD1.12 billion to USD1.02 billion.

Chevron said that higher depreciation, exploration and operating costs had exceeded the gain from higher realised oil and gas prices.

The results match a profit warning issued by Chevron earlier this month advising that its net profit would fall despite higher output due to maintenance at various refineries.

Domestic output rose 3% thanks to production rises in the Delaware basin and Marcellus shale as well as less weather downtime, partially offset by field declines.

Internationally, production also rose 3% with project ramp-ups in Nigeria and Angola along with less downtime at Kazakhstan's Tengizchevroil, partially offset by field declines.

On a nine-month basis, net profit slid 12% to USD16.49 billion for 1 January to 30 September versus USD18.93 billion in the year-ago period.

Capital and exploratory expenditure leapt year-on-year for the nine-month period to USD28.9 billion from the year-ago period’s USD22.7 billion.

Chevron put the increase down to capital outlay on its major Australian and US Gulf projects as well as acquisitions and new opportunities in Australia, the Permian basin, Kurdistan and Canada’s Kitimat LNG.

As MRC wrote before, Chevron suspended its search for shale gas at a site in eastern Romania after opposition from local residents. The company earlier this year won approval to drill exploratory wells in the impoverished eastern county of Vaslui and also has rights to explore three blocks near the Black Sea.

Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States, and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining, marketing and transport; chemicals manufacturing and sales; and power generation. Chevron is one of the world's six "supermajor" oil companies.

MRC