Chevron unveils large spending cuts in 2016

MOSCOW (MRC) -- Chevron, the US oil and gas group, has announced steep cuts in its spending on production and exploration, as it set out a plan to cut capital expenditure in 2016 by 24%, as per Financial Times.

The cuts are the latest sign of how the slump in oil and gas prices since the summer of last year is forcing companies to rein back development of new reserves, reducing the supply that will be available in future years.

John Watson, Chevron chief executive, said on CNBC television that "our number one priority" was to pay the dividend.

Other large international oil companies, including Royal Dutch Shell and BP, have been the subject of mounting concern about their ability to maintain their dividends, and Eni of Italy announced a cut in March.

However, Mr Watson told CNBC that Chevron would "get balanced financially in the short run by using spending discretion", not by cutting the dividend.

In a statement on Wednesday evening, Chevron said it planned to invest USD26.6bn in 2016, down from an expected USD35bn this year.

That includes a sharp cut in its budget for exploration for new oil and gas reserves, which will drop from USD3bn this year to just USD1bn next year.

At the same time, Chevron is cutting its spending on production in the US, including shale oil and gas, by 34%, from USD8.2bn to USD5.4bn.

In 2017-18 the company expects capital expenditure of USD20bn-USD24bn per year, meaning that it could commit just a little more than half the USD39.8bn it spent in 2014.

As MRC wrote before, in December 2014, Chevron Phillips Chemical announced plans to build a state-of-the-art polyethylene (PE) pilot plant at its research and technology facility in Bartlesville, Oklahoma.

Chevron is the second-largest US oil group by production and market capitalisation, after ExxonMobil. Chevron Phillips Chemical (part of Chevron), headquartered in The Woodlands, Texas (north of Houston), US,l is one of the world’s top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping, and proprietary plastics. Chevron and Phillips 66 each own 50% of Chevron Phillips Chemical.
MRC

MOSCOW (MRC) -- Dow Chemical has announced that it will become the 100% owner of Dow Corning, which is currently a 50-50 joint venture with Corning, said Chemweek.

Dow and Corning will maintain their current equity stake in Hemlock Semiconductor Group, Dow says. "This transaction is another milestone aligned to Dow's strategic agenda to provide clarity on our joint ventures and demonstrates our ongoing and relentless focus on creating shareholder value," says Andrew Liveris, Dow's chairman and CEO.

"Today represents the transition of a very successful 72-year partnership between Dow and Corning and our strong relationship with Corning will continue through Hemlock Semiconductor. Dow is the natural owner of Dow Corning," Liveris says. "The addition of a silicones position will expand our product offerings across multiple businesses while driving innovative solutions that will enable us to go deeper into key end markets by leveraging Dow's existing, strong science and engineering competences across key chemistries," he adds.

The transaction is expected to yield more than USD1 billion in additional annual Ebitda at full run-rate synergies, and is expected to be accretive to operating earnings per share, cash flow from operations, and free cash flow in the first full year after closure of the transaction, Dow says. The company also says it is positioned to capture USD400 million in run rate annual cost and growth synergies from the restructured ownership of Dow Corning.

The transaction is expected to close in the first half of 2016, and is subject to the customary closing conditions, including relevant tax options and regulatory approvals, Dow says. Dow Corning's corporate headquarters will remain in Auburn, MI.

As MRC informed earlier, Dow Chemical Company plans to complete a debottlenecking project at its Freeport, Texas facility to increase capacity for glycidyl methacrylate (GMA) in the second quarter of 2016. The wide use of GMA, a versatile monomer for specialty coatings and resins, has placed increased demand on the product, tightening the market.

The Dow Chemical Company is an American multinational chemical corporation. As of 2007, it is the second-largest chemical manufacturer in the world by revenue (after BASF) and as of February 2009, the third-largest chemical company in the world by market capitalization (after BASF and DuPont). Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

MOSCOW (MRC) -- The overall imports of polypropylene (PP) into Ukraine decreased by 16% over the eleven months of 2015 and totalled 85,700 tonnes. Propylene homopolymer (homopolymer PP) accounted for the greatest fall in demand, according to MRC DataScope report.

November PP imports to Ukraine remained at the level of October and totalled 9,300 tonnes. The overall imports of propylene polymers to the local market fell to 85,700 tonnes from January to November 2015 versus 102,500 tonnes a year earlier. The largest drop occurred in the supply PP-homo, the smallest decline in demand occurred in a stat-propylene copolymers (PP-random).

The supply structure by PP grades looks the following way over the stated period.

November imports of homopolymer PP to the Ukrainian market were 7,100 tonnes, virtually same as in October. Thus, imports of homopolymer PP fell over the first eleven months of 2015 by 18% year on year and totalled 65,600 tonnes. Homopolymer PP of raffia grade accounted for the main decrease in demand (-20%), whereas demand, on the contrary, increased by 11% in the injection moulding sector.

The last month's imports of propylene block copolymer (PP-impact) also remained at the level of October and were a little more than 1,000 tonnes. Imports of PP-impact to Ukraine decreased to 9,200 tonnes over the stated period from 10,500 tonnes a year earlier. The pipe grade extrusion and sheet sector accounted for the greatest fall in demand - over 21%, whereas demand in the injection moulding sector dropped by 13%.

November imports of statistical propylene copolymers into Ukraine totalled 871 tonnes versus 882 tonnes a month earlier. The overall imports of this type of copolymers of propylene totalled 8,400 tonnes from January to November 2015 versus 8,700 tonnes a year earlier. Demand for statistical propylene copolymer subsided in all consumption sectors, local producers of injection moulding products being the exception - demand grew by 5%.

The overall imports of other copolymers of propylene totalled 2,500 tonnes over the first eleven months of the year versus 3,200 tonnes a year earlier.

MRC

MOSCOW (MRC) - Total imports of high density polyethylene (HDPE) into Ukraine decreased to 83,400 tonnes in the first eleven months of 2015, down 12% compared to the same period of 2014. The greatest reduction in demand occurred for the sector of extrusion blowmoulding, according to MRC DataScope.

November imports of HDPE into the country increased to 9,600 tonnes, compared with 5,600 tonnes on the back of an increase in the supply of film HDPE from Russia. Total HDPE imports fell to 83,400 tonnes from January to November 2015 from 94,500 tonnes a year earlier. The largest drop in demand occurred in polyethylene for extrusion blow molding (EBM), the segment of film HDPE, on the contrary, showed the smallest decline.

Structure of HDPE imports in the country over the reported period looked as follows.

November imports of film HDPE in the Ukrainian market increased to 4,400 tonnes against 2,800 tonnes in October, with the main increase in deliveries occurred for the Russian producers. Ukraine's film HDPE imports in January-November decreased to 40,700 tonnes in the first eleven months of the year, down 2% year on year.

November imports of injection moulding HDPE into Ukraine increased 700 tonnes compared to 400 tonnes a month earlier because of the stronger demand from local producers of caps for PET containers. Demand for injection moulding HDPE from local converters fell by 14% to 13,800 tonnes in January - November 2015.


November imports of extrusion blowmoulding HDPE into Ukraine grew to 1,900 tonnes, compared with 1,200 tonnes in October. Total imports of extrusion blow moulding HDPE into Ukraine were about 13,100 tonnes in the first eleven months of the year, down 29% year on year.

November imports of pipe HDPE into the country (including natural HDPE grades) increased to 2,000 tonnes against 1,000 tonnes a month earlier because of the reduction of deliveries from Europe and Russia. Total imports of this type of polyethylene into the Ukrainian market declined by 11% to 13,000 tonnes in January-November 2015.

HDPE imports into the other sectors of consumption in January - November 2015 were about 2,800 tonnes, compared with 4,000 tonnes year on year.


MRC

MOSCOW (MRC) -- Clariant, a world leader in specialty chemicals, has announced that Dr. Mathias Lutgendorf, member of the Executive Committee of Clariant, will step down from the company's Executive Committee, said the producer on its site.

He will leave Clariant by best mutual agreement as of December 31, 2015. His successor will be announced shortly.

"I want to sincerely thank Mathias Lutgendorf for his strong commitment and dedication during his more than six years with our company, in particular for his valuable contributions to the successful development of Clariant into a leading specialty chemicals company in recent years. To be emphasized are his achievements during the restructuring phase, as well as the divestment of the businesses Textile, Leather and Paper Chemicals," said Hariolf Kottmann, CEO. "I wish him all the best for his future."

Mathias Lutgendorf (60) was appointed member of the Executive Committee in April 2009. His responsibilities include the Business Units Additives, Pigments, Masterbatches, Functional Minerals, as well as Group Procurement and Operational Excellence. In addition, he is responsible for the regions Europe, Middle East & Africa and Japan.

As MRC informed before, last year, CB&I and Clariant announced that their new Ziegler-Natta (ZN) polypropylene catalyst plant in Louisville, Kentucky, is on schedule to begin production in 2015.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.
MRC