Conoco quits Russia after 25 years

MOSCOW (MRC) -- ConocoPhillips, one of the pioneers of foreign investment in the Russian oil and gas industry, has completed a full retreat from the country by selling out of its Polar Lights joint venture with Rosneft, said The Financial Times.

Conoco’s decision to leave Russia after more than 25 years highlights the challenges facing foreign investors in the country’s energy sector, which has been hit by political tensions and the tumble in oil prices.

The US oil and gas producer confirmed it had sold its 50 per cent stake in Polar Lights, which is focused on the far north-west of Russia. Rosneft, the Russian state oil company, also sold its stake in the asset last week, in a deal that valued the business at about USD150m-USD200m, said one person familiar with the matter.

Following the demerger of its downstream refining, marketing and chemicals businesses in 2012, Conoco has turned its focus to developed countries and North America in particular.

Conoco, before its merger with Phillips, was one of the earliest western oil groups to invest in Russia, having started negotiations before the collapse of the Soviet Union. Its Polar Lights joint venture, registered in 1992, made it the largest foreign investor in the Russian energy sector in the early 1990s.

In 2004, Conoco increased its commitment to Russia, taking an 8 per cent stake in Lukoil, one of the country’s largest oil producers, which it later raised to 20 per cent. However, the investment failed to give Conoco the access to Russia’s vast oil and gas reserves it had hoped for, and by 2011 it had sold off its stake. It also undertook a broader retreat from the region, selling a 30 per cent stake in a joint venture with Lukoil in 2012 and its stake in Kazakhstan’s Kashagan field in 2013.

Conoco first announced it would seek a buyer for its stake in Polar Lights last year. A person familiar with the deal said the joint venture had been sold to a company owned by the Khotin family. Originally, the Khotins, led by father and son, made money from real estate development in Moscow. In recent years, though, they have started to invest in oil, through the acquisition of a small company in the Irkutsk region and a 29.9 per cent stake in London-listed Exillon Energy.

ConocoPhillips Co. is an American multinational energy corporation with its headquarters located in the Energy Corridor district of Houston, Texas in the United States. It is the world's largest independent pure-play exploration and production company and is a Fortune 500 company. ConocoPhillips was created through the merger of American oil companies Conoco Inc. and Phillips Petroleum Co. on August 30, 2002. In 2012, ConocoPhillips' spun off its downstream assets as a new, and separate company, Phillips 66.
MRC

MOSCOW (MRC) -- BASF has selected Jacobs as its global engineering partner. Under a three year contract, Jacobs is providing engineering, procurement and construction management (EPCM) and integrated project management services to BASF for projects around the world, said the producer on its site.

The selection follows a rigorous process in which Jacobs demonstrated its project execution capabilities in India, Southeast Asia, North America and Europe, the company says. Jacobs’ international experience in these markets is expected to prove beneficial to BASF as it opens opportunities for further growth and expansion.

In making the announcement Jacobs President, Petroleum and Chemicals, Gary Mandel said, "Our relationship with BASF spans many years, and we are delighted to further strengthen our relationship across the globe. This selection represents a strong endorsement of our international reach and EPCM capabilities, and we look forward to working alongside BASF to support its continued growth and success."

As MRC informed earlier, Sumitomo Chemical Co., Ltd. and BASF agreed to collaborate on research into a more sustainable, in vitro system for chemical safety evaluation. Recent years have seen an increase in stringent regulations for registration of agricultural chemicals and pharmaceuticals, and the demand to increase human relevance of safety studies. For these reasons, Sumitomo Chemical and BASF aim to create a system that supports the development of safe chemicals, while reducing the need for conventional animal testing.

Jacobs is one of the world's largest and most diverse providers of technical professional and construction services.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF had sales of over EUR74 billion in 2014 and over 113,000 employees as of the end of the year.
MRC

MOSCOW (MRC) -- China Petroleum and Chemical Corp. (Sinopec), has completed its 10-percent minority investment in Russian petrochemical company Sibur to serve as a strategic investor, said the company on its site.

Sibur said in a statement that the transaction would "deepen the cooperation between the two companies and create value for both."

Sibur said the investment also could improve the market position of both companies, as well as "the strategic cooperation between China and Russia."

Sinopec will have the right to nominate a representative for Sibur’s board of directors as a strategic investor.

"Sibur’s vertically-integrated upstream and petrochemicals business model is highly complementary with Sinopec’s businesses," said Wang Yupu, chairman of Sinopec.

Wang said the transaction was in line with Sinopec’s objective to expand its petrochemical business overseas.

The two sides signed a strategic partnership agreement in September.

As a next step, said Sibur, the companies are considering Sinopec’s participation in the Amur Gas Chemical Complex project as a strategic partner with Sibur.

As MRC informed earlier, a government commission for foreign investment control approved Sinopec’s purchase of up to 20% in Russian petrochemical complex Sibur.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry.
MRC

MOSCOW (MRC) - Imports of polypropylene (PP) into Belarus slightly exceeded 68,000 tonne in first ten months of this year, down 0.5% year on year. At the same time, the market of homopolymer PP showed a positive result, according to MRC analysts.

According to the National Statistical Committee of the Republic of Belarus, October PP imports into Belarus exceeded to 8,000 tonnes, compared to 6,300 tonnes in September. Local companies actively built up additional stocks of polypropylene, with the main increase occurred for the Russian material. Total PP imports into the country exceeded 68,000 tonnes in January - October 2015, compared with 68,400 tonnes in the same time a year earlier.

Demand for propylene copolymers significantly reduced; while the volume of homopolymer PP purchases grew by 7.3%.

Structure of PP delivery over the reported period looked as follows.

October imports of homopolymer PP in Belarus increased to 6,200 tonnes, compared with 5,600 tonnes in September, with the main bulk of purchases occurred for the Russian producers. Total imports of homopolymer PP into Belarus increased to 50,100 tonnes in January-October 2015, compared with 46,700 in the same time in 2014.
The key suppliers of homopolymer PP were Russian producers, with their share in the total supply around 90%.

October imports of propylene copolymers increased to 1,800 tonnes, almost doubling the September index (729 tonnes), on the back of active loading from the local producers of injection moulding products. Total imports of propylene copolymers into Belarus decreased to 17,900 tonnes in the first ten months of the year, down 17.5% year on year.

The main suppliers of propylene copolymers to the local market over the reported period were Russian producers, with 13,400 tonnes shipped over the reported period. The second and third largest supply countries were Germany and Austria with a volume of about 1,400 tonnes.
MRC

MOSCOW (MRC) -- Lotte Chemical Louisiana LLC, a subsidiary of South Korea’s Lotte Chemical Corp., has let an additional contract to CB&I, Houston, for an associated monoethylene glycol (MEG) plant to be built next to its 1 million-tonne/year ethane cracker project with Axiall Corp., Atlanta, in Lake Charles, La. (OGJ Online, June 18, 2015), as per Ogj.

As part of the contract, valued at more than USD365 million, CB&I will provide construction services for the MEG plant, the service provider said on Dec. 21.

Lotte Chemical previously let a contract to CB&I to provide construction planning and reviews, as well as early works services, for the proposed MEG unit, which will sit adjacent to the planned cracker (OGJ Online, Oct. 30, 2015).
To be owned and operated by Lotte Chemical, the USD1.1-billion MEG plant, once completed, will be the nation’s largest and provide the company 600,000 tpy of MEG for export to Europe and Asia, said Soo Young Huh, Lotte Chemical’s president and chief executive.

As MRC informed earlier, LACC LLC, a subsidiary of Axiall and Lotte Chemical USA Corp.’s 50–50 joint venture Eagle US 2 LLC, recently announced its final investment decision to build the steam cracker and MEG plant at a total cost of USD3 billion nearby Axiall’s Lake Charles chlor-alkali manufacturing plants to take advantage of existing infrastructure, competitive US shale feedstock resources, and ethylene distribution infrastructure.

Lotte Chemical is a member of the Lotte Group in Korea, which has been listed on the Korean Stock Exchange since 1991. Lotte Chemical is a leading manufacturer of petrochemical products, such as ethylene, propylene, butadiene, polyethylene, polypropylene, ethylene oxide/glycol, compound resin, polyethylene terephthalate, polycarbonate, methyl methacrylate, ethylene oxide derivatives, benzene, toluene, mixed xylene, purified terephthalic acid and purified isophthalic acid among others. Lotte Chemical, headquartered in Seoul, South Korea, has manufacturing facilities located throughout South Korea, China, Malaysia, Indonesia, Pakistan, UK and the USA.

MRC