Construction of USD7 billion naphtha cracker to start soon in Egypt

MOSCOW (MRC) -- Construction of Carbon Holding's Tahir Petrochemicals project is to start in six weeks, said Ahram, citing company chairman Basil El-Baz at the Euromoney Egypt Conference.

The new factory will be the largest liquid naphtha cracker in the Middle East, costing USD7 billion. Sixty-five percent of the required investment will come from bank loans, while the rest will be self-funded.

Naphtha is comprised of several hydrocarbons, which are extracted by processing it in steam crackers to ultimately produce petrochemicals used by industry.

"The factory will produce its own electricity and we have our own water desalination plant," El-Baz said, adding that his company chose not to depend on any subsidised source of energy to ensure the continuity of supply and to be able to compete in the international market. "We prefer to follow international prices so we know our real capability to compete in the international market."

El-Baz said that in the first years of production they would export the majority of their production. "But our target is to sell to the local market. Our products can be used in all the products used in this building except steel, glass and marble."

The new company will produce 150 tonnes of polyethylene, 100,000 tonnes of propylene, 700,000 tonnes of benzene, 150,000 tonnes of light fuel oil and 159,000 tonnes of heavy fuel oil.

"Our hope is that Egyptian entrepreneurs start manufacturing products that are currently imported, like the simple Ramadan lanterns we currently import from China," El-Baz said.

Production will start by the last quarter of 2019.

As MRC wrote before, Egypt proposed three petrochemical projects to the UAE for a total investment of USD540 mln, according to a senior official at the Ministry of Petroleum. The projects included establishing a factory to produce bio-ethanol from molasses, the output of which would reach 100,000 tons of molasses annually, with investment in the project totaling USD250 mln. The project would be implemented in the next fiscal year (FY), according to the ministry’s plan.
MRC

MOSCOW (MRC) -- Saudi Arabian firm Advanced Petrochemical Company has decided to invest in propane dehydrogenation (PDH) plant with SK Gas in South Korea for the production of propylene, a valuable petrochemical feedstock used in plastics manufacturing, said Business-standart.

The Board of Directors of Advanced Petrochemical Company approved the equity investment of 35% in PDH plant with SK Gas, for the production of propylene in South Korea, through its subsidiary Advanced Global Investment Company (AGIC) which is owned 95% by Advanced and sources of AGIC equity participation will be announced later.

The total cost of the project is expected to be approximately USD1 billion and the project will be financed 40% equity and 60% debt. The project has commenced the construction activities and it is scheduled to start up in the first half of 2016, with a nameplate capacity of 6,00,000 metric tonnes per annum.

The financial impact of above investment is expected after the commencement of commercial operation of the project in 2016.

As MRC wrote previously, in 2012, Advanced Petrochemical Company (Advanced) and Aramco Total Refining and Petrochemical Company (Satorp) signed on a sales agreeent for the supply of 50,000 tonnes per year of propylene from Satorp Refinery to be built in Jubail Industrial City (2) to Advanced. Under this agreement, Satorp will provide Advanced with 50,000 tonnes of propylene annually for an initial period of three years and it will be renewed on an annual basis. And it was expected to commence supply starting from January 1, 2014 and Satorp will supply propylene by a pipeline from Jubail (2) to Jubail (1).
MRC

MOSCOW (MRC) -- Univar Inc., a leading global chemical distributor of industrial and specialty chemicals and related chemistry services, announced that it has reached an agreement with Evonik Corporation to become the exclusive distributor for Evonik personal care products in the Northeastern United States, said Europa.

Evonik will continue to sell their silicone-based products directly. Evonik, a world leader in specialty chemicals, specializes in ingredients and concepts for effective skin, hair, and body care products. The Evonik personal care portfolio consists of a unique and comprehensive range of organic and silicone-based specialties designed as raw materials for personal care products and active ingredients for the protection of skin and hair. This agreement strengthens the successful relationship between Univar and Evonik, and leverages t the combined strength of Univar's distribution service and Evonik's product portfolio.

Univar's personal care solutions offer a comprehensive, global perspective on market trends, formulations and best-in-class distribution alternatives. Univar connects our customers with the products, technologies and information they need to be successful in their market space.

Founded in 1924, Univar is a leading global chemical distributor of industrial and specialty chemicals and related chemistry services. Univar sources from over 8,800 producers worldwide and provides its customer base, made up of 133,000 customers, with a full portfolio of specialty products. Univar operates a network of over 700 distribution facilities throughout North America, Europe, the Asia-Pacific region, and Latin America, with additional sales offices located in Eastern Europe, the Middle East, and Africa.

As MRC reported earlier, in March 2014, Evonik opened its expanded production for precipitated silica in Rayong, Thailand. With this investment, Evonik increased its capacity for precipitated silica for the automotive industry, food and animal feed industry as well as the paints and coatings industry.

Evonik, the creative industrial group from Germany, is one of the world leaders in specialty chemicals. Profitable growth and a sustained increase in the value of the company form the heart of Evonik's corporate strategy. Its activities focus on the key megatrends health, nutrition, resource efficiency and globalization. Evonik benefits specifically from its innovative prowess and integrated technology platforms. Evonik is active in over 100 countries around the world. In fiscal 2013, more than 33,500 employees generated sales of around EUR12.7 billion and an operating profit (adjusted EBITDA) of about EUR2.0 billion.

MRC

MOSCOW (MRC) -- Occidental Petroleum Corp. (OXY)’s chemical unit agreed to pay USD190 million to cover its liability for the cleanup of the Passaic River in northern New Jersey, said Bloomberg.

Occidental Chemical is the legal successor to Diamond Shamrock Chemical Co., which was found to have intentionally dumped industrial waste in the river for decades, acting Attorney General John Hoffman said in a statement. If approved by a judge and the state Department of Environmental Protection, the Occidental payment would mean New Jersey has recovered USD355.4 million for the work, Hoffman said.

Part of the settlement will cover costs associated with a USD1.7 billion plan by the U.S. Environmental Protection Agency to remove 4.3 million cubic yards of contaminated sediment from the lower 8 miles (13 kilometers) of the Passaic, Hoffman said.

The state eight years ago sued companies associated with the former Diamond Shamrock site on Lister Avenue in Newark, the state’s largest city. Diamond Shamrock from the 1940s through 1960s made pesticides and herbicides including the defoliant Agent Orange, Hoffman said.

OxyChem will seek reimbursement from Maxus Energy Corp., a subsidiary of YPF SA, according to an e-mail from an Occidental spokesman, Eric Moses. Maxus is financially responsible for claims against OxyChem in the litigation, according to Moses. YPF is Argentina’s largest company.

OxyChem never owned the Lister Avenue site and bought the stock of Diamond Shamrock from Maxus in 1986, 17 years after the plant closed, Moses said. Before the sale, Maxus transferred ownership of the plant to its affiliate Tierra Solutions Inc., which still owns the site, he said. As part of the purchase agreement, Maxus retained liability for the plant and agreed to indemnify Houston-based OxyChem, Moses said.

A state court judge last year approved two settlements over the Passaic River cleanup that totaled USD165.4 million, according to Hoffman.

As MRC wrote before, Ingleside Ethylene, the 50/50 joint venture between Occidental Chemical (OxyChem) and Mexichem, announced that it received the necessary permits for its new ethylene cracker in Ingleside, Texas. Issuance of the permits, combined with the already completed front-end engineering and design study, will enable Ingleside Ethylene to construct the 550,000 tpy cracker and start commercial operations in the first quarter of 2017, as previously planned.

Occidental Petroleum Corporation (Oxy) is a California-based oil and gas exploration and production company with operations in the United States, the Middle East, North Africa, and South America. Oxychem is Oxy"s Texas-based subsidiary which manufacture polyvinyl chloride (PVC) resins, chlorine and caustic soda used in plastics, pharmaceuticals and water treatment chemicals.
MRC

MOSCOW (MRC) -- Moody's Investors Service today assigned a Ba2 corporate family rating (CFR) and a Ba2-PD probability of default rating (PDR) to Synthos S.A., a European synthetic rubber and styrenics producer, said the agency in its press release.

The outlook on the ratings is stable. The assigned Ba2 rating balances our assessment of Synthos's exposure to the volatile petrochemical and synthetic rubber industries, its moderate size and limited portfolio diversification against its strong operational and financial performance, as well as its solid profitability," says Sergei Grishunin, a Moody's Assistant Vice President.

Assignment of a Ba2 CFR reflects Synthos's significant exposure to historical volatile petrochemical industry as well as the cyclical nature of synthetic rubber business, the fundamental conditions of which have been deteriorating in the past two years. In the next 18-24 months, Moody's expects that synthetic rubber prices will remain under pressure owing to the addition of new capacities, for which demand is insufficient.

The rating also reflects Synthos's relatively moderate size compared with those in its peer group, including Lanxess AG (Baa3 stable) and OJSC Nizhnekamskneftekhim (Ba3 positive); (2) somewhat limited portfolio diversification, with the company's main focus on commodities or quasi-commodities products such as emulsion styrene butadiene rubber (eSBR, accounts for 75% of total synthetic rubber capacity), which exposes the company to higher competition and higher price volatility than for more higher-value added products; (3) concentration of sales in one region (e.g., 83% of its revenues were derived from Europe in 2013), though Moody's notes that management's strategy is to secure revenues in new markets; and (4) accepted dividend policy with a maximum payout ratio of 100% (if net debt/EBITDA is not to exceed 2.5), which resulted in negative retained and free cash flow.

As MRC wrote before, Polish chemicals maker Synthos aims to invest about USD170 million in its planned synthetic rubber plant in Brazil. The facility, based on French tyre maker Michelin"s licence for the production of synthetic rubber, would use raw materials supplied by Latin America's top petrochemical company - Brazil's Braskem.

Synthos S.A. is one of the largest manufacturers of chemical raw materials in Poland, as well as being EuropeпїЅs No. 1 manufacturer of emulsion rubbers and leading manufacturer of polystyrene for foaming applications.
MRC