Pertamina, Saudi Aramco sign deal to upgrade Indonesia refinery

MOSCOW (MRC) -- Indonesia's state-owned PT Pertamina and Saudi Aramco, the state-owned oil company of Saudi Arabia, have signed a Heads of Agreement (HoA) to formalize key business principles for joint ownership, operation and upgrade of the Cilacap Refinery located in Central Java, Indonesia as part of Pertamina’s Refinery Development Master Plan (RDMP), said Saudi Aramco on it site.

The proposed Cilacap Refinery upgrade will enable the refinery to process more sour crudes, meet high quality product specifications (Euro IV) and produce basic petrochemicals and lubricant base oils. The capacity expansion to 370 MBD will help Indonesia meet its increasing demand of refined products, lubricant base oils and petrochemicals. The agreement includes a long-term supply agreement for Arabian crudes to Cilacap refinery.

This HoA will pave the way for the next phase of development within the scope of collaboration between the two parties. The Basic Engineering Design Study for the Cilacap refinery upgrade is expected to commence soon and be completed by 2016.

Participation in the RDMP will offer Saudi Aramco a major growth component of its global Downstream expansion portfolio aspiration, designed to make Saudi Aramco the world’s leading integrated energy and chemicals company. The investment would take place within a high growth petroleum demand in South East Asia which has been earmarked in the company’s downstream strategy.

In July 2014 Pertamina offered Saudi Aramco and other strategic partners the opportunity to participate in its RDMP to upgrade and expand five existing domestic refineries (Cilacap; Balongan; Dumai; Plaju; and Balikpapan) from 820 MBD of aggregate processing capacity to 1,680 MBD

Saudi Aramco was selected by Pertamina as a strategic partner for three of the five refineries: Cilacap and Balongan in Java; and Dumai in Sumatra.

Saudi Aramco signed a MOU on December 10, 2014 giving the company exclusivity to conduct a feasibility study jointly with Pertamina for the three refinery expansions and negotiate key business principles.

As MRC informed earlier, Saudi Aramco announced that its downstream investments would exceed USD100 billion over the next decade, as global demand for oil rises by a quarter in the next 25 years.

Pertamina is an Indonesian state-owned oil and natural gas corporation based in Jakarta. It was created in August 1968 by the merger of Pertamin (established 1961) and Permina (established 1957). Pertamina is the world's largest producer and exporter of liquefied natural gas (LNG).

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco's value has been estimated at up to USD10 trillion in the Financial Times, making it the world's most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.

BP explores sale of Alabama petrochemical facility

MOSCOW (MRC) -- BP has decided to market for sale its Decatur, Ala., petrochemicals complex as part of a broader reorganization of the company’s global petrochemicals business, said the producer on its site.

BP’s refocused petrochemicals strategy is pursuing a competitively advantaged portfolio through world-scale, low-cost facilities that utilize BP proprietary technology including the production of purified terephthalic acid, or PTA, a key raw material in the production of polyester.

"BP’s world-leading technologies and global positions allow us to compete in today’s highly competitive marketplace," said Tufan Erginbilgic, chief executive of BP’s global downstream business. "Our strategy is to significantly improve the cash breakeven performance of the business, enhancing earnings potential and making it more resilient to bottom-of-cycle conditions. We look to have a portfolio with BP’s world-leading technology resulting in highly efficient production of PTA in key markets around the world."

BP is spending USD200 million to upgrade its Cooper River, S.C., plant and its sister facility in Geel, Belgium - the largest PTA-producing sites in the Americas and Europe, respectively. The investment will enable the two facilities to lower operating costs, improve reliability and reduce emissions. Earlier this year, BP also started up its new Zhuhai 3 unit in Guangdong Province, China. Using BP’s latest technology and capable of producing up to 1.25 million tons of PTA per year, Zhuhai 3 is the world’s largest single-train PTA production unit as well as being one of the largest and most efficient PTA production units in the world.

While BP’s Decatur complex no longer fits with this strategy, the facility has been a major contributor to BP’s U.S. petrochemicals business for many years. It makes chemicals essential for the production of thousands of items, from plastic water bottles to flat-screen televisions.

Located on 1,000 acres in Northern Alabama, the complex can produce one million tons per year of PTA, as well as paraxylene (PX), a raw material for PTA production. The site also is the only commercial manufacturer of naphthalene dicarboxylate (NDC), a specialty chemical used in new-generation polyesters and resins used to make LCD flat-panel displays, ultra-thin data storage tape and other products. Of the five operating units on the Decatur site, three produce PTA, one makes PX and the other makes NDC.

"The decision to explore a sale of this facility was not taken lightly. It has been a significant part of our company and of the Decatur community for a very long time," said Rita Griffin, chief operating officer of BP Global Petrochemicals. "We believe the site - and its more than 400 employees - would be a very attractive addition to the portfolio of another operator. We’re determined to find a buyer who will recognize its value and keep it a viable and vibrant part of the region for years to come."

BP expects to complete a sale of all or part of the facility provided a buyer can be found and an acceptable deal can be reached.

BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.

Consumption of PC in Russia decreased by 4% in January-October 2015

MOSCOW (MRC) - Russia's market of polycarbonate (PC) reached 74,100 tonnes in the first ten months of the year, down 4% year on year, as per MRC ScanPlast.

PC market has gradually approached the last year's level of consumption, demonstrating a steady downward trend in negative figures. In the first three quarters of 2015 the demand dropped by 8%, while summing up the first ten months, a decline made 4%. Market players said they expect market to show a positive growth in 2016. However, this will not happen before the end of the first quarter, when seasonal demand will grow.

Russia's calculated consumption of extrusion PC granules decreased tot 62,000 tonnes in the first ten months of the year, down 7% year on year. The share of the supply into the domestic market made 47,900 tonnes (77% from the total consumption). Compared with last year, domestic supply increased by 8%.

Kazanorgsintez, the only PC maker in the CIS, more than a year has a policy of import substitution because of the rouble devaluation and decline in imports. Russia's imports of PC granules for sheet extrusion fell by 36% in the reporting period and amounted to 14,100 tonnes. Market players expect a further reduction in imports.

Calculated consumption of injection moulding polycarbonate increased to 10,900 tonnes in January-October, up 30% year on year. However, the figure is rather overestimated because of the large stocks of injection moulding goods in the producers' warehouses and traders. In fact, the monthly consumption of injection moulding PC in Russia is at the level of 700-800 tonnes. The segment is relatively stable.

In the segment of bottle grade PC granules demand fell more than twofold to 1,200 tonnes. If previously Asian material dominated the market, then now the market has shifted towards the European material. November and December in PC market are traditionally calm on the back of poor demand. However, most players believe that there will not be a sharp decline in demand this year: it will gradually decline until February and then also gradually recover in the spring.


PE production in Russia rose by 7.3% over ten months of 2015

MOSCOW (MRC) -- Production of polyethylene (PE) in Russia increased over the first ten months of 2015 by 7.3% year on year and exceeded 1.29 million tonnes. The volumes of production of all kinds of PE, according to ScanPlast MRC.

The overall October PE output in Russia rose to 128,850
tonnes from 91,700 tonnes a month earlier (Kazanorgsintez and Tomskneftekhim were shut down for scheduled maintenances in September, besides, Stavrolen was idle for a short time). The overall production of all PE grades exceeded 1.29 million tonnes from January to October 2015 versus 1.21 tonnes a year earlier. Linear low density polyethylene (LLDPE) accounted for the most significant increase in production.

The PE production structure by grades looks the following way over the stated period.

The last month's overall production of high density polyethylene (HDPE) rose to 71,400 tonnes from 60,700 tonnes a month earlier (in September, Kazanorgsintez shut down its production for a scheduled maintenance, Stavrolen also took off-stream its production for a brief turnaround). The overall HDPE output in Russia reached 731,400 tonnes over the first ten months of the year, up by 9% year on year. Stavrolen showed such a major increase in production, thus offsetting the decrease in production at Nizhnekamskneftekhim (the plant significantly increased LLDPE production in its portfolio).

The October overall output of low density polyethylene (LDPE) grew to 57,400 tonnes from 31,000 tonnes a month earlier (Kazanorgsintez and Tomskneftekhim shut down their production for scheduled maintenances in September). Russian producers produced a little over 522,500 tonnes of LDPE over the first ten months of 2015, up by only 1% year on year.

LLDPE was not produced last month. Nizhnekamskneftekhim, the only LLDPE producer in Russia, informed its customers that it would switch for LLDPE production from 23 November. The overall production of its PE grade totalled about 40,000 tonnes over the first ten months of the year. The total LLDPE output was 16,200 tonnes in 2014.


Maku FTZ to launch petchem plant with foreign partnership

MOSCOW (MRC) -- The Iranian Maku Free Trade Zone is in negotiations with firms from Germany and Turkey for investment in launching petrochemical units in northwestern Iran, managing director of the zone said, reported GV.

"A delegation from Germany will visit the Maku FTZ in coming weeks and Turkish companies are also interested to invest in the Zone," Hossein Foruzan told Shana. "Petrochemical plans have investment priority in the zone," he added, "The infrastructure is inviting the investors too."

Foruzan cited rich water resources and feedstock supply as major advantages of the zone which justify investment in launching petrochemical industry.

As MRC wrote before, Iran starts marketing for petrochemical exports to Europe, director general of the Association of Petrochemical Industry Corporations (AIPC) has referred to the talks with some European petrochemicals distributors estimating increased export in petrochemicals after the removal of sanctions.

Announcing that exports to new markets like Europe have been put on the agenda in time with the increase in production capacity of petrochemical products, he asserted that, "accordingly, negotiations with some major petrochemical and polymeric companies have been launched."

Currently number of active Iranian Petrochemical complexes are 53, with total production capacity of 59 million metric ton, producing range of polymers, chemicals, aromatics & liquid gas, located mainly at Iranian south region, next to Persian Gulf, called Assaluyeh and Mahshahr Special Economic Zones. At the moment, there are 67 developments projects in the country which are under construction, adding 61 million metric ton on total production and estimated to fully run till 2018.