Lukoil to build USD30 billion cash pot after debt freeze

MOSCOW (MRC) -- OAO Lukoil will cut spending to reduce its dependence on international debt markets, billionaire shareholder Leonid Fedun said in an interview. It also plans to build a cash reserve of USD30 billion over the next five years to guard against the risk of further disruption to capital markets and to finance future acquisitions, Fedun said before the company’s annual meeting, reported Bloomberg.

"Entering capital markets right now is tough - for bonds or credit,” Fedun said in Moscow. “ Banks are scared, compliance is very strict, there is the threat from sanctions. There was a specific pressure put on banks by Washington."

To boost cash, the company will offer at least USD1 billion in shares in Hong Kong as early as next year and reduce capital spending by a quarter, he said.

Lukoil’s new tack shows the impact the collapse in relations with the US and EU is having on Russia’s largest companies after President Vladimir Putin’s decision to annex Crimea from Ukraine. The Moscow-based oil producer, which pumps about 20% of the country’s crude, postponed plans to sell USD1.5 billion of Eurobonds this month.

As MRC informed before, Lukoil is set to drill deep for unconventional gas in Saudi Arabia's challenging "Empty Quarter" desert region early next year after a decade-long hunt for conventional deposits that has proved futile. Lukoil Overseas official said the joint venture will drill the first well in the first quarter of 2015 and the second during the last six months.

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.
MRC

MOSCOW (MRC) - Russia's production of polycarbonate (PC) was 31,200 tonnes in the first five months of 2014, up 4% in the same period a year earlier, according to MRC ScanPlast.

The only Russian PC producer Kazanorgsintez (KOS) produced about 25,000 tonnes of extrusion grades PC over the reported period. These volumes were mainly supplied into the domestic market, the company's exports were only 873 tonnes over the reported period.

The rest volumes of the producer's PC material - more than 6,000 tonnes occurred for injection moulding grades. The producer exported 3,500 tonnes of injection moulding grades PC.

Russia traditionally exports injection moulding grades in the foreign markets, about 80% from the total export deliveries. Almost all extrusion grade PC is shipped into the domestic market, because of an increasingly expanding domestic processing sector.

Price offers for imported PC are often too high for local converter. Asian PC is not in demand because of its poor quality. In this situation Russian PC has become more popular in the local market.

Because of downtrend in the Russian economy, the depreciation of the rouble, reduced crediting and therefore rising price for imported material more and more converters are preferring PC by Kazanorgsintez's production. That is why the company delivers more material to the domestic market, reducing the exports volumes.

A source at the company said Kazanorgsintez will shut its PC capacities for a scheduled maintenance works from 21, July to 17, August.

MRC

MOSCOW (MRC) -- Slovnaft AS said construction of the logistics plant for a new polyethylene production unit plant, LDPE 4, at its existing 220,000-tonnes/year (tpy) ethylene production site in Bratislava, Slovakia, is nearing completion, said Ogj.

In early June, Talke Group, general contractor on the project, completed the installation of 28 silos for low-density polyethylene storage, according to a recent release from Slovnaft.

The silos will have a total storage capacity of 13,500 tonnes and will be directly linked to a polyethylene production line with an annual capacity of 220,000-tpy, the company said.

Construction of the logistics infrastructure is continuing according to plan and is scheduled to be commissioned along with the new LDPE 4 production plant in second-quarter 2015, the company said.

At a cost of about USD30 million, the logistics plant is part of Slovnaft’s more than USD400 million investment in its long-term strategy to revitalize its petrochemicals business, which includes reconstructing ethylene production units and building the LDPE 4 production unit designed to gradually replace three obsolete units, according to the company’s yearend 2013 report to investors.

Slovnaft said it expects its final investment for LDPE 4 alone will exceed USD270 million, with the remaining USD130 million allotted for reconstruction of the ethylene unit, an ethylene storage tank, and associated installations, including the logistics plant.

Slovnaft Petrochemicals SRO, which was dissolved and integrated into Slovnaft AS on Jan. 1, 2013, began construction on the LDPE 4 project in 2012, the company said in its yearend 2013 report.

MRC

MOSCOW (MRC) -- A. Schulman, Inc. has announced that its Board of Directors has named Bernard Rzepka as President and Chief Executive Officer of the Company, effective January 1, 2015, as per the company's press release.

In addition, the Board has nominated Joseph M. Gingo, the Company's current Chairman, President and Chief Executive Officer, to continue as Chairman of the Board after his retirement as President and Chief Executive Officer on December 31, 2014.

The changes are part of the company's succession planning process, and the nomination of Gingo as Board Chairman is subject to his re-election as a director by shareholders at the Company's annual meeting this December.

In addition, the company has successfully completed eight acquisitions and three joint ventures and recently announced an agreement to acquire Ferro Corporation's Specialty Plastics business. The company has successfully implemented continuous improvement in its global operations and intensified its focus on high-margin products and growth markets.

As MRC reported earlier, last September, A. Schulman, Inc. purchased the Perrite Group, a thermoplastics manufacturing business with operations in Malaysia, the United Kingdom and France, for approximately USD52 million. Perrite was part of the Vita Group portfolio of companies. The acquisition was expected to increase revenues in A. Schulman's Asia Pacific (APAC) segment by 35% and doubled the size of the company's existing Engineered Plastics business in the region.

Perrite has manufactured and distributed thermoplastic compounds for the electrical, automotive and industrial markets for more than 35 years, offering a broad portfolio of standard and custom compounded polymer products. Perrite's product lines include the high-performance Ronfalin ABS brand and prime-quality polyamide Vitamide range. Other key brands include Percom polypropylene, Perlex polycarbonate, Styralin polystyrene and Pertal POM. Perrite employs approximately 220 people and recorded revenues of USD140 million in fiscal 2012.

A. Schulman is a global plastics supplier, headquartered in Akron, Ohio, and a leading international supplier of high-performance plastic compounds and resins, which are used as raw materials in a variety of markets. The company employs approximately 3,500 people and has 38 manufacturing facilities globally. A. Schulman reported net sales of USD2.1 billion for the fiscal year ended August 31, 2013.
MRC

MOSCOW (MRC) -- Imports of polyethylene terephthalate (PET) into the Russian domestic market rose from January to May 2014 by 42% year on year, according to MRC ScanPlast.

PET imports to Russia reached 107,400 tonnes over the first five months of 2014. China remained the main PET chips supplier to the Russian domestic market. Chinese grades accounted for 77.5% of the total imports into Russia.

The most popular market grades remained HY-W01 of Shanghai Hengyi Polyester (imports from January to February totalled 25,500 tonnes). The second place occupied WK801 grade of Zhejiang Wankai (imports from January to February were 21,600 tonnes) and the third place - Jade CZ-302 grade of Jiangsu Sanfangxiang (imports from January to February totalled 21,200 tonnes).
This year's stronger demand for imported PET has led to a drop in consumer activity in the Russian domestic market. In addition, Polief increased its production capacity this year (from 120,000 tonnes per year - up to 210,000 tonnes per year), leading to stiffer competition in the domestic market. June buying activity fell sharply in the spot market. Carryover stocks of imported material resulted in weaker demand.

MRC