Splitting Dow would be a credit negative - Moody's

MOSCOW (MRC) -- Moody's views the proposal by Third Point Capital, who has reportedly taken a roughly 2.5% equity stake in The Dow Chemical Company (Dow), as being a credit negative, according to the Moody's statement.

However, Moody's does not believe that Dow will implement this proposal and instead will accelerate its planned cost reductions and divestitures, and undertake incremental increases to shareholder remuneration. Moderate increases to shareholder remuneration would not have a negative impact on Dow's rating or outlook.

As MRC wrote previously, in December 2013, Dow Chemical unveiled its plans to separate chlorine-related assets including its epoxy business as the company focuses on higher-margin activities. The chlorine assets account for as much as USD5 billion of annual revenue and include plants at 11 sites employing almost 2,000 people.

Earlier last year, Grace had completed the acquisition of the assets of the Polypropylene Licensing and Catalysts business of The Dow Chemical Company for a cash purchase price of USD500 mln. The acquisition includes UNIPOL Polypropylene Process Technology and makes Grace the second largest polypropylene licensor in the world based on installed capacity, advancing Grace's leadership in the broader polyolefin sector.

Third Point LLC is an SEC-registered investment adviser based in New York. The firm was founded in 1995 by Daniel S. Loeb, who serves as Chief Executive Officer. Third Point focuses on event-driven, value-oriented investing.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. It is also one of the largest chemical companies in the world, with annual revenues of over USD56 billion. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
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MOSCOW (MRC) -- Total, Europe’s third-largest oil company, called on peers to revise projects that require tens of billions of dollars of investment as costs escalate, said Hydrocarbonprocessing.

"Costs are becoming too high," Christophe de Margerie, CEO of the Paris-based company, said Friday in a Bloomberg Television interview from Davos, Switzerland. “

Total has vowed to lower capital spending even as it starts projects from Norway to Angola to increase output. Royal Dutch Shell, Europe’s largest oil producer, also has pledged to rein in costs after this month issuing its first profit warning in a decade. The companies have seen expenses climb as they search for crude and gas in more remote and complex areas.

"We have to redefine how we can develop some fields without spending as much money," De Margerie said.

Expenses also have been driven up by rising construction bills and currency changes. In Australia, such costs have hurt companies including Chevron, whose USD45 billion Gorgon project is among seven liquefied natural gas (LNG) ventures being built there at a cost of more than USD180 billion.

The pressure on producers has a knock-on effect for oil-service companies that help them find and pump crude and gas. Ayman Asfari, CEO of London-based oil engineer Petrofac, said Thursday that the company and its peers will feel the impact of belt-tightening among their clients.

"Our industry is facing a huge amount of cost pressure," he said. "More is being spent to produce less. Our clients are seeing the rate of return on capital dropping and they’re being challenged by investors who want them to be more disciplined."

As MRC wrote before, Total, Europe’s third-largest oil company, intends to invest EUR160m before 2016 to adapt its petrochemical platform in Carling, in the Lorraine region of eastern France, and to restore its competitiveness. Total plans indeed to develop new activities on the platform in the growing markets for hydrocarbon resins (Cray Valley) and for polymers, while shutting down the acutely loss-making steam cracker in the second half of 2015.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.

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MOSCOW (MRC) -- The Supervisory Board of Lanxess, German specialty chemicals company, has resolved at its meeting to end, by mutual agreement, the appointment of Axel C. Heitmann as Member and Chairman of the Board of Management of Lanxess, effective the end of February 28, 2014, according to the company's press release.

The Supervisory Board has appointed as his successor Matthias Zachert, former Chief Financial Officer of Lanxess and currently Chief Financial Officer at Merck KGaA, effective not later than May 15, 2014.

Until Mr. Zachert joins the Board of Management, Lanxess Chief Financial Officer Bernhard Duettmann will perform the responsibilities of the previous Chairman of the Board of Management.

"Mr. Heitmann has played a key role in shaping the company since its creation through consistent restructuring and strategic portfolio measures. He has formed Lanxess into a leading global specialty chemicals company, achieving many noticeable successes," said Rolf Stomberg, Chairman of the Supervisory Board of Lanxess.

"LANXESS is facing significant challenges, for example in terms of market capacities and business portfolio. Therefore, the Supervisory Board believes it is the right time to hand over responsibility to a new leadership in order to overcome these challenges," said Stomberg.

As MRC reported previously, in July 2013, Lanxess celebrated the opening of its first production facility in Russia. In the new plant at the Lipetsk site, Lanxess subsidiary Rhein Chemie manufactures polymer-bound rubber additives for the markets in Russia and the Commonwealth of Independent States (CIS), primarily for the automotive and tire industries. A production facility for the bladders used in tire production is to be added in 2016.

Lanxess is a leading specialty chemicals company with sales of EUR 9.1 billion in 2012. The company is currently represented at 50 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals.
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MOSCOW (MRC) -- The OAO Novatek-led Yamal LNG project will benefit from accelerating growth in demand for liquefied natural gas on world markets, which can absorb all new production from Russia, said Hydrocarbonprocessing, citing CEO Leonid Mikhelson.

He spoke at Davos, Switzerland, where he attended the World Economic Forum.

On the LNG market: "“We are optimistic about the LNG market development. LNG demand is increasing faster than the gas market in general. A competition between fuels is under way. In the past few years, gas has been losing this competition, but I think in the future the share of gas in the total energy balance will increase."

On competition with Gazprom, Rosneft LNG projects: "It’s deeply misleading that all these projects will compete against each other. Given the growth of the LNG market, projects in Russia could be multiplied by two, and those volumes will be in demand. Within the next 10 years Russia simply must build as much as 80 million tons a year of LNG capacity."

On European energy policies: "Russia is right about trying to diversify supplies to Asian markets. There is some discomfort about the European Union’s energy policy. A recent sharp increase in coal generation in Europe shows that the EU doesn’t have a strategy for energy market development. Gazprom re-orienting flows and investments will lead to Europe losing out a lot, which in fact has already happened with crude oil."

As MRC wrote before, Novatek, which is leading the USD20 billion LNG project in the Russian Arctic region, is challenging Gazprom’s monopoly on supplies of super-chilled fuel abroad to benefit from the Asian nation’s rising energy demand. Russia plans to allow Novatek, as well as oil producer Rosneft, to export LNG from 2014. Yamal LNG at full capacity will produce 16.5 MMtpy of LNG starting from the end of 2016, according to Novatek.
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MOSCOW (MRC) -- The signing of a gas production-sharing agreement between Ukraine and an international consortium led by US major Exxon Mobil has been postponed for the second time in a row, reported Reuters with reference to Ukraine's fuel and energy minister's statement.

"We will sign it (the agreement) in February," Eduard Stavytsky told reporters in brief remarks after an official briefing. He did not give a reason for the fresh delay.

The government orginally intended to sign the deal, which is expected to bring Ukraine several billion cubic metres (bcm) of gas per year, in November but Stavytsky postponed the decision until January due to mass anti-government protests in Kiev.

In 2012, Ukraine selected a group of companies led by Exxon Mobil to explore conventional gas deposits in the southern Skifska area on the Black Sea shelf, which has a potential output of 3 bcm of gas per year.

The postponed deal would have formalised a production sharing agreement for these deposits.

Ukraine took its first major step away from dependency on Russian gas imports by signing a USD10 billion shale gas deal with Shell in early 2013 and with Chevron in late 2014.

As MRC wrote previously, in November 2013, Foster Wheeler was selected by Rosneft and ExxonMobil to undertake the initial phase of the front-end engineering design (FEED) for a proposed Russian Far East liquefied natural gas (LNG) project.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
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