Occidental Petroleum suffers biggest loss in 25 years on oil slump

MOSCOW (MRC) -- Occidental Petroleum Corp. posted its deepest quarterly loss in at least a quarter century as plummeting crude prices destroyed the value of oil fields, said Bloomberg.

The fourth-quarter net loss widened to USD5.18 billion, or USD6.78 cents a share, from USD3.4 billion, or USD4.41, a year earlier, the Houston-based company said in a statement on Thursday. The three-month loss was the largest since at least 1990. Excluding one-time items, the company lost 17 cents a share, 4 cents worse than the average estimate among 24 analysts in a Bloomberg survey.

The results included USD5.4 billion in charges, mostly for the writedown of values on its oil and natural gas assets. Occidental said it will slash its 2016 drilling budget by 46 percent to USD3 billion.

Occidental’s top priorities for spending this year will be safety precautions at its oil and gas installations and maintaining dividend payouts to shareholders, according to the statement.

U.S. crude lost 42 percent of its value during the October-December period, averaging USD42.16 a barrel, according to data compiled by Bloomberg.

Occidental has been shrinking through asset sales to focus on its most profitable ventures, such as oil production in Texas’ Permian Basin. The company in October signaled it will lower spending on new wells and other capital projects this year after those expenses topped USD5 billion in 2015.

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.

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) -- Europe's February contract price of propylene was agreed by EUR60/tonne lower from January. Many European producers announced a more significant reduction in their export polypropylene (PP) prices for the CIS markets than the fall in monomer prices, according to ICIS-MRC Price report.

Negotiations over February prices of European PP began on Monday. Many market participants said most local producers reduced their export PP prices by EUR100-120/tonne, which was substantially greater than the decrease in monomer prices. A producer cut its prices by EUR290/tonne from the level as of early January.

This week's deals for February shipments of propylene homopolymer (homopolymer PP) were negotiated in the range of EUR940-980/tonne FCA, while a month earlier deals were discussed in the range of EUR1,050-1,100/tonne FCA. A producer reduced its prices to EUR880/tonne FCA. Some market participants said some producers had temporary restrictions in delivery dates. But, in general, there were no problems with the PP supply.

Deals for block copolymers of propylene (PP-block) were negotiated in the range of EUR1,000-1,050/tonne FCA. Negotiations over January shipments of statistical propylene copolymer (PP-random) were held between EUR1, 100-1,150/tonne FCA.

Some market participants reported the similarity of the present situation with the last year's one. In February 2015, European producers also significantly cut their export PP prices, in some cases, prices reached EUR800/tonne FCA. And since March 2015, a dynamic growth of prices began, the PP prices rose by EUR100/tonne per month, and the price increase stopped only in June (EUR1,390-1,440/tonne FCA).

In 2015, the dynamic growth of prices in March-June was caused by a shortage of PP, which, in its turn, was caused by scheduled and unscheduled shutdowns at European plants and was also enhanced by outages at some Middle Eastern plants.
MRC

MOSCOW (MRC) - Some Russian producers increased prices for low density polyethylene (LDPE) for shipments in February, despite the excess supply and weak demand. The price increase was roubles (Rb) 1,500-2,000/tonne, according to ICIS-MRC Price Report.

Demand for LDPE in January is traditionally weak because of several factors, including the long New Year holidays.
The first month of 2016 was no exception, but the problem of low demand for finished products was weighted by the shortage of working capital.

PE supply was excessive in the market during the month, however, this factor did not prevent some producers to raise prices in February by Rb1,500-2,000/tonne.

Tomskneftekhim and Ufaorgsintez raised LDPE prices. Ufaorgsintez gradually increased LDPE prices during the second half of January.

Belarusian LDPE producer Polymir also raised the prices for the Russian market by Rb1,200-3,000/tonne.

Kazanorgsintez and Gazprom neftekhim Salavat have rolled over January LDPE prices for February delivery, although it did not rule out the possibility of increasing them later.

The price rise was reluctantly accepted by converters. At the same time it is a high probability of a severe deficit of LDPE in the next 3-4 months on the back of Kazanorgsintez's turnaround in mid-April - early May, which was seen last year, when LDPE prices grew by more than 20%. In the current year, the period of LDPE shortage in the market can last even longer.

According to preliminary data, Tomskneftekhim, Russia's largest LDPE producer, is to shut down its production for a one-month turnaround in June.
MRC

MOSCOW (MRC) -- Expanding on its global footprint and expertise in thermoplastic elastomer (TPE) innovation and design, PolyOne Corporation has announced it has acquired certain technologies and assets from Kraton Performance Polymers, Inc., said the producer on its site.

The two companies also entered into a supply agreement, whereby Kraton will provide PolyOne certain raw materials used in production for the acquired business.

The end markets utilizing the acquired technologies span new and fast growing applications in adhesive and removable protective films, as well as existing applications served by PolyOne, such as packaging, medical devices and personal care products. The purchase price of USD72 million represents a multiple of 9x EBITDA.

"Since our highly successful TPE acquisition of GLS in 2008, we've continually invested in, globalized and grown in TPE innovation and its broad value-added uses," said Robert M. Patterson, president and chief executive officer, PolyOne Corporation. "We are very pleased to have made this investment for our customers and their product design, development and performance goals."

As MRC informed earlier, in February 2014, PolyOne Corporation announced the addition of new capabilities to its OnColor HC Plus portfolio. These expanded offerings add medical-grade LDPE, nylon, PEBA, PS and PVC to the globally available palette of specialty healthcare colorants, and are pre-certified to meet or exceed biocompatibility requirements for ISO 10993 and/or USP Class VI protocols.

PolyOne Corporation, with 2014 revenues of USD3.8 billion, is a premier provider of specialized polymer materials, services and solutions with operations in specialty polymer formulations, color and additive systems, polymer distribution and specialty vinyl resins.
MRC

MOSCOW (MRC) -- Germany-based Linde, a leading industrial gases company, and Japan’s Mitsui Chemicals plan to invest USD4 billion into petrochemical projects in Iran, said a senior official in a report, according to TradeArabia.

Linde is considering investment in several Iranian projects, including Damavand Petrochemicals, in cooperation with Japan’s Mitsui, Marzieh Shah-Daei projects director at the National Petrochemical Company (NPC), was quoted as saying in a Press TV report.

She added that the projects to benefit from the investment have not been finalised yet.

Germany’s BASF, the world’s largest chemical producer, also plans USD6 billion of investment in Iran’s petrochemical sector, NPC's director of planning Hamid Reza Rostami said in December. He added that the company will make the investment in Asaluyeh where Iran is carrying out its largest gas development project by tapping gas from the giant South Pars field in the Gulf.

Minister of Petroleum Bijan Zangeneh has said the lifting of sanctions would enable Iran to fulfill its 20-year vision plan, including its target to produce $70 billion of petrochemicals a year at current prices, it added.

Meanwhile, another report said that two leading German chemical companies have signalled their readiness to invest around EUR4 billion to EUR8 billion (USD4.34 billion to USD8.68 billion)) towards the development of petrochemical projects in Iran, said a senior official.

The two firms are yet to finalise the amount of investments in Iran but are currently conducting studies on investment potentials in Iran's petrochemical sector, Abbas Shari-Moqaddam, head of Iran’s National Petrochemical Company (NPC), was quoted as saying in The Iran Project.

The names of the firms were not released.

As MRC informed previously, as of early 2015, number of active Iranian Petrochemical complexes were 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.

Besides, 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.
MRC