Taiwanese refiner CPC Corp puts Johor petrochemicals project on hold

MOSCOW (MRC) -- Taiwan CPC Corp has shelved its plans for a multi-billion US dollar integrated refining and petrochemical complex in Pengerang, Johor, said Thestar.

CPC unit Kuokuang Petrochemical Technology Company’s move to scrap the project was because it was no longer competitive, Bloomberg quoted a spokesman with CPC.

The spokesman said the US shale gas boom was pushing down cost of petrochemicals production in the US and also due to an oversupply after expanding in China.

In August 2013, Kuokuang scrapped plans to set up the complex in Pengerang due to poor project economics. The original plan was to use naphtha as a feedstock to produce ethylene.

However, the rise of shale gas as an alternative would make it too expensive to compete with other projects and Kuokuang would not be able to export the products.

As MRC wrote before, Taiwan’s state-run oil refiner CPC Corp. will enter into a strategic alliance with Japan's Mitsubishi Corp. The alliance will give CPC an overseas research and development partner for the first time. CPC also hopes to be able to obtain raw materials and patented technologies through Mitsubishi's global trade network to support a plan to tap into the downstream side of the petrochemical business.

CPC Corporation is a state-owned petroleum, natural gas, and gasoline company in Taiwan and is the core of the Taiwanese petrochemicals industry.
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MOSCOW (MRC) -- European petrochemical industry will face a competitive assault as U.S. rivals emerge with cheap feedstock from the shale gas boom. It can look to the refining industry now for a taste of what is to come, said Reuters.

Refinery closures have cut an estimated 10% of European capacity since 2008, according to consultant Damian Kennaby. Those still in operation are struggling with losses or razor-thin margins as U.S. refiners flood Europe with cheap fuel made from low-cost shale oil and gas.

The same forces are expected to hammer its petrochemical plants within two to three years as new U.S. petrochemical capacity comes on line. With access to cheap natural gas and power, U.S. plants can produce low-cost ethane and ethylene, basic building blocks for a wide range of plastics and chemicals.

"The cost of ethylene in Europe is USD1,200 per tonne, while in the United States it's USD500 per tonne," Tom Crotty, director at Ineos, one of the world's largest chemical companies said. "There will be quite a shake-out, and over the next two or three years we could see three or four plants close," he estimated.

French oil major Total said in September it planned to close its last ethylene-making unit at its Carling site in eastern France from the second half of 2015.

Ineos has said it will close the naphtha, benzene and butadiene cracking facilities at its Grangemouth plant in Scotland, saying they were not competitive.

Instead it is investing heavily, both at Grangemouth and at its plant at Rafnes in Norway, to build capacity to be able to bring in ethane from U.S. shale gas for processing into ethylene and other products.

European chemical companies have directed new investments to the United States at the expense of spending at home or in Asia, Lars Hettche at German bank Metzler in Frankfurt, said. "Europe's bigger chemical companies are spending up to 25 percent of capital expenditure in North America compared with around 10 percent around four or five years ago," he said.

Lower investment will put jobs at risk in a sector that employs about 115,000 people directly and up to 460,000 indirectly, according to the European Chemical Industry Council. Based on announced projects, ethylene capacity in North America will increase by close to 13 million metric tonnes, or about 40%, between 2012 and 2018, said Oliver Schwarz, an analyst at Warburg Research in Hamburg.

Europe has the customer base but not the cheap feedstock, while the Middle East has the feedstock but a limited local market. Petrochemical plants in the United States are already reaping the benefit of cheap feedstock. European plants that produce polyethylene are the most susceptible to increased U.S. competition, because gas rather than oil is used to make them.

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MOSCOW (MRC) -- The German chemicals giant BASF has signed a contract to sell its Vinuran PVC modifier business to Kaneka Belgium N.V., a subsidiary of Kaneka Corporation, Japan, according to the company's press release.

The transaction comprises intangible assets and inventory. It does not include a transfer of the production assets or employees in Ludwigshafen.

Subject to approval by the relevant antitrust authorities, the closing of the transaction is expected to take place during the first quarter of 2014. The parties have agreed not to disclose the purchase price or any further financial details.

The acrylate-based Vinuran PVC modifier business is not a core business for BASF. The transaction allows BASF to focus on growth of its acrylate-based dispersions portfolio.

The deal represents a good strategic fit for Kaneka and will enable Kaneka to expand its services to the PVC processing industry.

Vinuran products are PVC modifiers based on acrylate that improve impact resistance and processing properties in transparent and opaque PVC applications. Vinuran-modified PVC grades are suitable for the production of dimensionally stable, weatherproof panels, films and profile sections frequently used in the construction sector.

As MRC informed before, in September 2013, SIBUR, a leading Russian gas processing and petrochemicals company, and BASF signed a Long-Term Cooperation Memorandum to supply additives used for polymer production and processing at SIBUR’s production facilities. The deal provides for supplies of additives used to produce polypropylene, polyethylene, synthetic rubbers, thermoplastic elastomers (TPE), and ABS plastics at SIBUR's production facilities, with BASF ensuring also technical support.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
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MOSCOW (MRC) -- Wang Jing, the Chinese billionaire behind a USD40 billion plan to cut a canal through Nicaragua, wants to invest USD10 billion in a deepwater port in Ukraine, said Hydrocarbonprocessing.

Wang will team up with Ukrainian partner Kievgidroinvest to work on a port and economic development zone on the Crimean peninsula, Wang’s Beijing Interoceanic Canal Investment Management Co. said.

The project’s first phase, estimated at USD3 billion, includes building a new deepwater port, reconstructing Sevastopol port and developing an economic zone that will house technology-focused companies, the company said in a statement.

The second phase will include an airport, a liquefied natural gas terminal and a shipyard, and will cost about USD7 billion, according to the statement.

Funding for phase one has been secured and includes Wang’s own money, bank loans and investments from partners, the company said. Construction will start at the end of 2014.

Wang is the chairman of closely held mobile phone technology provider Beijing Xinwei Telecom Technology and owns HKND Group, an infrastructure developer. He has a net worth of about USD1.1 billion, according to the Bloomberg Billionaires Index. He unveiled the investment plan as Ukrainian President Viktor Yanukovych was visiting China’s capital.

Wang, said in June he will spend USD40 billion to build 286 km canal in Nicaragua. Work on the waterway should start by the end of 2014 and be completed within six years, he said.

The Central American country has attempted to construct an inter-oceanic channel on several occasions since the mid-1800s without success. Wang said in June he’d successfully attracted global investors, without identifying any of them.

As MRC informed previously, Ukraine took its first major step away from dependency on Russian gas imports when it signed a USD10 billion shale gas deal with Shell in early 2013.

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MOSCOW (MRC) -- Royal Dutch Shell, halted plans to build a USD20 billion gas-to-liquids plant in Louisiana, citing the potential cost and uncertainty about future crude and natural gas prices, said Hydrocarbonprocessing.

The project would have used natural gas to produce 140,000 bpd of liquid fuels and other products normally made from oil, the company said in a statement.

Despite ample United States gas supplies from a boom in shale production, gas-to-liquids isn’t "a viable option for Shell in North America," the company said.

Shell started the first commercial gas-to-liquids plant in 1993, using a process developed in Germany and used to make fuels during World War II. The company completed the USD19 billion Pearl gas-to-liquids facility, the world’s largest, in Qatar in 2011. Sasol, the largest producer of motor fuel from coal, announced plans last year to build a USD14 billion gas-to-liquids plant in Louisiana.

"While we cannot speak to another company’s plans, we continue to view our proposed GTL facility in Louisiana as a very attractive opportunity as we advance it through the front-end engineering and design phase," Russell Johnson, a spokesman for Sasol, said in an e-mail.

The economic viability of turning natural gas into fuels depends on the relationship between oil and gas prices. For a gas-to-liquids plant to make money, a barrel of oil has to trade at a ratio of about 16 times the cost of a million British thermal units of natural gas, Sasol CEO David Constable said in an interview last year.

Royal Dutch Shell, commonly known as Shell, 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 also one of the world's most valuable companies.
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