Azerbaijan polypropylene plant to be commissioned in 2016

MOSCOW (MRC) -- Azerbaijan's polypropylene plant will be commissioned in the third-fourth quarter of 2016, said Azernews, citing Head of the Azerkimya Production Association of Azerbaijan's state energy company SOCAR Mukhtar Babayev.

The plant will be constructed in Sumgayit Chemical Technology Park, and SOCAR Polimer takes part in the construction project. Touching on the construction of the plant for the production of low pressure polyethylene, Babayev said this facility will be commissioned after launching the polypropylene plant.

The SOCAR Polimer enterprise with authorized capital of USD51 million has been established for the implementation of these projects. The state energy company plans to keep its share in the project at 51% and the rest will be offered to privately owned companies.

Babayev went on to add that the construction of a carbamide plant will be completed in Azerbaijan in late 2016-early 2017. He noted the construction works will be completed in the fourth quarter of 2016, and the rest will take commissioning and personnel training.

Touching on SOCAR's plans to construct a similar plant in neighboring Georgia, Babayev said currently, this project is under development. Earlier it was reported that the facility in Georgia will be similar to the facility to be constructed in Azerbaijan for its parameters.

However, Babaev said, some adjustments were made to this project, and currently, related works are underway over it. Babaev said if it was previously assumed that all the ammonia will be processed into carbamide at this plant, now other options are being considered as well, in particular selling ammonia as a product.

The general contractor of the project is South Korea's Samsung Engineering Co., Ltd. Approximately 40-45 percent of the plant's products are expected to be sold in the domestic market, which will fully meet the demand for nitrogen fertilizers in the country. The rest of the 400,000 tons per year volume will be exported.

The new plant will be located in Azerkimya production association's industrial site in Sumgayit. The designed annual capacity of the plant will be about 600,000 tons of carbamide (2,000 tons per day) and 1,200 tons of ammonia per day.Around 500 million euros (excluding taxes) will be allocated from the state budget to build the plant.

As MRC wrote before, SOCAR in 2012 signed a contract to build a plant for the production of polypropylene and polyethylene of high density with an annual capacity of 200,000 and 100,000 tons respectively. Construction of these facilities is planned in the Sumgait Chemical Technology Park.

SOCAR, which is keen on expanding operations in the retail oil products market abroad, is involved in exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, marketing petroleum and petrochemical products in the domestic and international markets, and supplying natural gas to industry and the public in Azerbaijan.

Total to cut costs, sell assets after lowering output

MOSCOW (MRC) -- Total plans to cut costs and sell more assets after Europe’s second-biggest oil company lowered its forecasts for growth in production, as per Hydrocarbonprocessing.

Output may be 2.3 million bpd of oil equivalent in 2015, short of the prior 2.6 million-bbl target, and 2.8 million in 2017, down from 3 million, it said in a statement.

"We are more confident" in reaching these production goals because most new projects are operated by the company, chief financial officer Patrick de La Chevardiere told reporters in London at the company’s annual investor day.

Investment will be cut to USD25 B in 2017 from USD26 B this year and a peak of USD28 B in 2013, Total said.

The French company maintained a target of generating USD15 B of free cash flow in 2017, even as next year’s figure was cut to USD7 B from USD10 B, the CFO said.

Total plans to sell another USD10 B of assets by 2017, adding to the USD15 B to USD20 B targeted from 2012 to 2014. It has achieved USD16 B so far under that plan, with USD4 B under way, including sales of a stake in Nigeria’s Usan field and the Bostik chemicals business, the CFO said.

"It is obvious that in Europe there is overcapacity in refining and that we will adapt our production to the market," de La Chevardiere said. There isn’t a plan to reduce the size of the workforce in France. No decision has been made on whether capacity will be adapted or assets sold, the CFO said.

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.

Merck KGaA to buy Sigma-Aldrich to add chemicals

MOSCOW (MRC) -- German specialty chemicals and pharmaceuticals firm Merck KGaA has entered into a definitive agreement to buy US-headquartered fine chemicals life science and technology company Sigma-Aldrich for USD17.0bn, said Bloomberg.

Merck will acquire all of the outstanding shares of Sigma-Aldrich for USD140 per share in cash. The agreed price represents a 37% premium to the latest closing price of USD102.37 and a 36% premium to the one-month average closing price.

Merck expects the transaction to be immediately accretive to its earnings per share (EPS) pre and earnings before interest, tax, depreciation and amortisation (EBITDA) margin. It also expects to achieve annual savings of approximately USD340m, which should be fully realised within three years after closing the deal. Closing is expected in mid-year 2015, subject to regulatory approvals.

The transaction has been unanimously approved by Sigma-Aldrich’s board of directors and a merger agreement will be presented to the company’s shareholders for approval. The deal has the full support of Merck’s executive board and a shareholder vote will not be required.

Rakesh Sachdev, president and CEO of Sigma-Aldrich, said: "The combined company will be well-positioned to deliver significant customer benefits, including a broader, complementary range of products and capabilities, greater investment in breakthrough innovations, enhanced customer service, and a leading e-commerce and distribution platform in the industry."

Merck plans to maintain a significant presence in St Louis, and in Billerica, the US, following completion of the transaction, as well as in Merck Millipore sites such as Darmstadt, Germany and Molsheim, France.

The two companies said, based on fiscal year 2013 financials, the combined life science business would have had sales of USD6.1bn, an increase of 79%, and combined EBITDA before one-time items of USD2.0bn, which is 139% higher.

As MRC wrote before, by acquiring a majority stake in InnovationLab GmbH, Merck and BASF, the world's largest petrochemical producer, are increasing their involvement in order to continue the successful scientific work of the Heidelberg-based research and transfer platform for organic electronics in the Rhine-Neckar metropolitan region.

PP imports in Belarus remained steady in January - July 2014

MOSCOW (MRC) - Imports of polypropylene (PP) in Belarus remained practically steady in the first seven months of this year, compared with the same time a year earlier, reaching 46,800 tonnes, according MRC DataScope report.

July PP imports in the country increased to 7,200 tonnes, compared with 6,200 tonnes in June. Total PP imports in Belarus were 46,800 tonnes in the first seven months of this year, which was practically equal to the same level of 2013. Growing demand for propylene copolymers from local converters offset reduced requirements in homopolymer PP.

Structure of PP consumption over the reported period was as follows. July homopolymer PP imports to Belarus increased to 5,100 tonnes, compared with 4,000 in June. Total imports of homopolymer PP in the country decreased to 31,700 tonnes in January - July 2014, compared with 34,400 year on year. Key suppliers of homopolymer PP in Belarus were Russian producers, their share for the period increased to 70%.

July imports of propylene copolymers were kept at the level of June and reached 2,200 tonnes. Propylene copolymers imports in the country grew to 15,100 tonnes in the first eight months of the year, up 20,9% year on year. The main suppliers of propylene copolymers in the local market were producers from Germany with a share of about 61%, the share of Russian producers in this segment did not exceed 8%.

As it was reported earlier, import duties for all PP grades was reduced to 6.5% from 1, September 2014, from former 9.1% for homopolymer PP and 8.3% for propylene copolymers. Imports of all PP grades from the CIS countries are not subject to import duty.

Rosneft and SIBUR sign cooperation agreement for supply of oil products

MOSCOW (MRC) -- Rosneft and SIBUR have signed a long-term partnership agreement for the development, testing and implementation of lubricants and other oil products, said the producer in its press release.

In accordance with the agreement, the parties will assess SIBUR's need for lubricants and other oil products and will work together to develop new lubricating materials suitable for the Company's equipment.

The parties also plan to pursue joint projects designed to replace imports of oil products. In addition, Rosneft and SIBUR will cooperate on training and technical consulting to improve personell expertise through an innovative approach to the supply of lubricants and other oil products.

The agreement will be in effect for five years and may be extended if the parties so agree.

As MRC wrote before, Governor of the Amur Region, and Pavel Lyakhovich, Member of the SIBUR Management Board and Managing Director, have signed a cooperation agreement between the Government of the Amur Region and the petrochemical holding. According to the agreement, both parties share a common interest in SIBUR's investment and its other programmes in the Amur Region, most notably the prospective construction of a gas chemical complex. The agreement provides that when investing in the Amur Region SIBUR will build on the local potential of the region, particularly with regards to its technical infrastructure, labour sourcing and liaison with educational institutions.