Ineos mulls expansion of US plants to tap cheap gas

MOSCOW (MRC) -- Ineos Group Ltd. is considering expansion of its plants in USA to take advantage of low-cost natural-gas liquids as feedstock for ethylene production, reported Bloomberg.

The company is likely to add 250 mln-1 bln lbs of annual ethylene production at its Chocolate Bayou site south of Houston, Dennis Seith, chief executive officer of the company’s U.S. olefins and polymers unit, said. Additional polypropylene and alpha-olefins capacity may be added at the site. Decisions on all three investments will be made within a year, with the expanded ethylene output available early next decade, he said in an interview.

Abundant shale gas has made the U.S. among the least expensive places to produce ethylene, the most used petrochemical, and derivative products, such as polyethylene plastic, which is used in bags and food packaging. The advantage has "diminished somewhat," however, as crude’s decline has cut prices for naphtha, an alternative raw material for making ethylene, Seith said. Low oil prices are causing delays in investment decisions that could lead to "a very tight market" for ethylene at decade’s end, he said.

"It’s not a predictable environment for investments," he said. Cheap oil could spur more mergers and acquisitions, particularly if state-owned oil companies in the Middle East decide to shed some of their chemical units, Seith said. Ineos may consider purchasing those assets, as well as any that may become available from the pending combination of Dow Chemical Co. and DuPont Co., the chemical industry’s largest merger ever, he said.

Ineos is weighing acquiring its own shale-gas fields in the U.S., complementing its activities in the U.K., he said. The company is working with the British government and local communities to begin extracting gas from shale formations to supply its Grangemouth ethylene plant in Scotland, he said.

Ineos this month began shipping U.S. ethane to Grangemouth, becoming the first European chemical maker to tap U.S. gas. A 1bln lb expansion of polyethylene plastics production at a joint-venture site on the Houston Ship Channel is scheduled to start production in Q4, Seith said.

As MRC informed previously, Ineos is expected to deliver its first US shale gas shipment into Rafnes, Norway on March 23. Ineos said this is the first US shale gas to be shipped to Europe and represents the culmination of a long-term investment by Ineos. To receive the gas, Ineos has built the largest two ethane gas storage tanks in Europe at Rafnes in Norway and Grangemouth in Scotland. Ineos will use the ethane from US shale gas in its two gas crackers at Rafnes and Grangemouth, both as a fuel and as a feedstock.

At Rafnes, Ineos operates the Noretyl cracker with a capacity to produce 570,000 mt/year ethylene and around 80,000 mt/year of propylene, which are used as feedstock for the company’s polypropylene (PP), low density polyethylene (LDPE) and high density polyethylene (HDPE) plants at Bamble.

At Grangemouth, Ineos operates a 1 million mt/year Kinneil Gas (KG) gas cracker using mainly ethane and propane to feed its 330,000 mt/year linear low density polyethylene (LLDPE) plant and 235,000 mt/year PP plant.

INEOS Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.

Saudi Aramco looks to expand Asian downstream investments

MOSCOW (MRC) -- Saudi Aramco CEO Amin Nasser said his company will continue to invest in upstream and downstream sectors, expecting an upwards adjustment in oil prices to begin by the end of 2016, said Hydrocarbonprocessing.

Nasser said the Saudi oil giant is looking to expand its downstream investments in China, Malaysia, India, Vietnam and Indonesia. He was speaking at the China Development Forum in Beijing.

"The gap between supply and demand is shrinking," Nasser said. "It is our estimate that by the end of the year, the price will start to adjust upward."

Nasser said, however, he doubted prices would reach the higher levels of 2014 and 2013.

As MRC informed earlier, Royal Dutch Shell plans to maintain control of two refineries that can run more domestic crude, leaving a plant that runs massive volumes of Saudi Arabian oil to Saudi Aramco as the companies end their Motiva Enterprises joint venture.


Braskem Idesa starts operations at Etilino XXI

MOSCOW (MRC) -- Braskem Idesa, the 75-25 joint venture between Braskem and Grupo Idesa, started injecting ethane today at their Etileno XXI cracker project at Coatzacoalcos, Mexico, said Vidalatinasd.

The jv expects to have ethylene production by next week. By the end of March, the company aims to have the cracker running at 60% capacity with the first polyethylene (PE) line up and running, according to Cleantho de Paiva Leite Filho, commercial director, Braskem, speaking at the IHS Chemical Latin American Petrochemical Summit, part of the World Petrochemical Conference in Houston, TX.

The Etileno XXI complex, to which EFE was granted exclusive access, looks from a distance like a city skyline and features two towers measuring 120 meters (393 feet) and 102 meters (334 feet) in height that dominate this municipality's jungle landscape.

Occupying a 200hectare (493acre) parcel of land along one of the banks of the Coatzacoalcos River, the complex has already begun producing ethylene, a raw material that is transformed through a lengthy process into plastic pellets, whitish plastic balls measuring around three centimeters (1.2 inches) in diameter.

Once the complex is fully operational, high and lowdensity polyethylene (plastic) production will amount to more than 1 million metric tons annually and allow Mexico to substitute 70 percent of its imports of those materials.

The complex will have the capacity to process 66,000 barrels per day of ethane, a feedstock for ethylene production that the complex will purchase from Mexican stateowned oil company Petroleos Mexicanos, or Pemex, and which previously had gone to waste.

The ethane brought from Villahermosa, in the neighboring state of Tabasco, via a 200kilometer (125mile) pipeline will be used to produce 750,000 metric tons a year of highdensity polyethylene for production of objects such as cellphone or tablet cases and medical prostheses and 300,000 metric tons of lowdensity polyethylene used to make plastic bags.

The engineering, procurement and construction contractor for the Etileno XXI project was a consortium led by Odebrecht and also including Technip and ICA Fluor.

The complex now is being operated by Braskem Idesa, a Mexican company made up of Brazil's Braskem (the petrochemical arm of Odebrecht and the largest producer of thermoplastic resins in the Americas) and Grupo Idesa, a leading group in Mexico's petrochemical sector.

As MRC wrote before, in 2012, Braskem Idesa announced the approval of a line of credit in the amount of USD700 million by the Brazlian National Economic and Social Development Bank - BNDES to finance the construction of the largest petrochemical complex being developed in the Americas: Braskem Idesa- Etileno XXI Project. The group of financial institutions also included Mexico's development banks, Bancomext and Nafinsa- Nacional Financiera.

Braskem is Brazilian main producer of polyethylene and polypropylene. In addition with ongoing plants located in both petrochemical complexes, in April 2008 Braskem opened a 300,000 metric ton polypropylene plant in the city of Paulinia (Sao Paulo).

Air Products in talks to sell unit to Evonik

MOSCOW (MRC) -- Air Products is in advanced talks to sell its performance materials operations to Evonik Industries, according to Reuters reports.

The business, which makes chemicals used in sun lotion and paint, could be valued at more than USD3.5 billion. Air Products had previously announced plans to spin off both its performance materials and electronic materials units into a new company called Versum Materials in order to focus on industrial gases.

Evonik has been on the lookout for larger acquisitions but has so far failed to clinch a deal that could bolster its growth and make it less dependent on its animal feed business.

Air Products and Chemicals Inc, based in Pennsylvania, said last year that it planned to spin off its materials technologies business into a publicly traded company.

According to German weekly Wirtschaftswoche, the group is also interested in the speciality chemicals business of Akzo Nobel (AKZO.AS), a division with annual sales of 1.19 billion euros (USD1.35 billion).

The magazine said that Evonik aimed to strike a deal by its annual shareholders' meeting on May 18. "Evonik is looking for less cyclical, asset light chemistry targets and Versum Performance Materials would fit this picture," UBS analyst Patrick Rafaisz said in a note.

Chinese refiners help boost crude imports from Saudi Arabia, Russia

MOSCOW (MRC) -- China's monthly oil imports from Saudi Arabia hit their second highest level on record in February, while arrivals from Russia also surged, as weak crude prices prompted the world's top energy consumer to bring in record high volumes last month, as per Reuters.

China's total oil imports rose about 20% on year to the highest ever on a daily basis in February, when near 10-year low global oil prices drove buying from a group of new importers and for state and commercial stockpiling.

Saudi Arabia was China's top supplier in February with shipments of 1.38 MMbpd, customs data showed on Monday, slightly below a record 1.39 MMbpd in February 2012. Russia came in third, behind Angola, with shipments of 1.03 MMbpd, up almost 48% on a daily basis from a year ago.

While historically Saudi Arabia has been China's top supplier, its position has increasingly been challenged by Russia. Monthly Russian imports have surpassed those from Saudi Arabia six times since November 2014, most recently in December.

Russia could further narrow the gap with the Saudis in 2016 if it is able to tap into a growing demand from teapot refineries in China, which have together applied for crude import quotas of 1.8 MMbpd, equivalent to roughly 20% of the country's total imports.

Meanwhile, shipments from Iran, which has emerged from years of economic isolation over its nuclear programme, were up about 1% on a daily basis from the same month last year, reaching 538,000 bpd in February.

Iran's total crude oil and gas condensate sales will reach 2 MMbpd "in the coming days", Iranian President Hassan Rouhani said last week, according to Iranian media.

One regular Chinese buyer of Iranian condensate, Dragon Aromatics, was forced to shut its plant after a fire last April, contributing to a small decline in imports from Iran last year.

China's Sinopec, Asia's top refiner, and Chinese state trader Zhuhai Zhenrong are together contracted to lift around 505,000 bpd of Iranian crude in 2016.