Repsol Q1 profit down 43%

MOSCOW (MRC) -- Cost cutting helped Repsol to exceed expectations in the first quarter, a period that coincided with crude prices hitting a 12-year low, said The Financial Times.

Spain’s biggest oil producer reported adjusted net income of EUR572m in the first quarter, well ahead of estimates of EUR261.2m, although still down from EUR928m a year earlier. Those results had been boosted by an exceptional EUR500m gain related mostly to funds received for YPF, a former subsidiary that was renationalised by the Argentine government.

Repsol said measures "to increase efficiency and savings in recent months led the company to achieve positive results despite low oil prices."

At the start of the year, it announced deeper spending cuts and billions of euros in writedowns following the slump in crude prices, as it revealed it had suffered a net loss of EUR1.2bn for 2015 after one-off charges of EUR2.9bn. Last month it cut its proposed dividend to EUR0.30 per share, from an originally proposed EUR0.50.

As MRC informed earlier, during the first quarter of 2016 (Q1 2016), Repsol planned to complete the construction work of its new metallocene polyethelene plant at its Tarragona site. Repsol planned to start up the plant and begin production and marketing of this new product during Q2 2016.

Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.

MRC

Sabic targets US shale as leading chemical feedstock

MOSCOW (MRC) -- Saudi Basic Industries Corp. (Sabic), one of the world's largest petrochemicals groups, is targeting North America for the shale gas needed to fuel growth at one of the world's largest petrochemicals groups, its chief financial officer said on Tuesday, reported Hydrocarbonprocessing.

The company has said previously that a shortage of natural gas was stifling its domestic growth and forcing it to look at foreign investment opportunities.

The US shale gas industry has increased output in recent years, and Sabic signed its first deal for US shale gas last year for use at its Teesside petrochemical plant in Britain.

"In terms of industry growth, we see growth chasing where feedstock is competitive, and the US is top of the list," Mosaed al-Ohali told Reuters.

Saudi petrochemicals businesses have benefited in the past from feedstock subsidies that are being phased out as the government looks to bridge a substantial budget deficit after oil's two-year downturn.

The Saudi government raised gas prices for petrochemicals feedstock from USD0.75/MMBtu to USD1.75 for ethane and USD1.25 for methane, which some industry watchers say is not far from US natural gas prices.

US natural gas prices for April at the Henry Hub benchmark in Louisiana fell to their lowest level for the month since 1995, averaging USD1.90/MMBtu.

Sabic is also focusing on oil-to-chemicals operations, with Ohali saying that the company views its planned USD30 billion Yanbu project as a "fertile opportunity".

He added that SABIC is also looking at technologies such as coal-to-chemicals in China but gave no further detail.

Sabic will stick to its main chemicals products, Ohali said, but it will support small and medium enterprises (SME) to move further downstream through Saudi Arabian Industrial Investments Co. (SAIIC), its joint venture with Saudi Aramco and the Public Investment Fund.

As MRC informed previously, in January 2016, Sabic reported a 29.4% drop in fourth-quarter net profit due to lower prices for its products, particularly in its metals division. It was the sixth straight quarter of falling profits for the company, which has been hurt by the fall in oil prices since mid-2014. SABIC made a net profit of 3.08 billion riyals (USD821 million) in the three months to Dec. 31, down from 4.36 billion riyals in the year-earlier period.

Saudi Basic Industries Corporation (Sabic) ranks among the worldпїЅs top petrochemical companies. The company is among the worldпїЅs market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC

Shell cuts spending further after BG deal

MOSCOW (MRC) -- Royal Dutch Shell has reduced its 2016 spending plans by another 10% from the target set in February when it completed the acquisition of BG Group, and said it could cut further if needed, reported Reuters.

In its first results since the deal that transformed it into the world's top liquefied natural gas (LNG) producer, Shell trimmed spending to USD30 billion by cancelling projects such as the sour gas project in Abu Dhabi, and by slashing exploration costs.

Europe's largest oil company has been under pressure from shareholders to cut annual spending below USD30 billion to ensure it can maintain its dividend given the slow recovery in the oil prices.

"Can we go further? Yes, we can," Shell's chief financial officer, Simon Henry, told reporters on Wednesday.

Having grappled with low oil prices for almost two years, capital spending, or capex, in the industry is set to fall for a second consecutive year, something that has not happened for more than three decades.

As MRC wrote previously, in March 2016, Royal Dutch Shell Plc was lining up assets for a USD30 billion divestment program that may extend from the U.S. and Trinidad to India following its record takeover of BG Group Plc.

Raising money through divestments is crucial for Shell after the BG purchase wiped out more than USD10 billion of its cash, prompting a credit-rating cut from Fitch Ratings Ltd. as debt-to-equity levels rose. Oil’s collapse over the past 20 months has eroded balance sheets across the industry and the outlook for a sustained market rout may hinder Shell’s efforts to find buyers for the assets.

As reported earlier, Shell saw full-year earnings tumble to 3.8 billion US dollars (GBP2.6 billion) in 2015 from 19 billion US dollars (GBP13 billion) in 2014, when it reported its annual results at the beginning of February.

Royal Dutch Shell, commonly known as Shell, is an Anglo–Dutch multinational oil and gas company headquartered in the Netherlands and incorporated in the United Kingdom.Created by the merger of Royal Dutch Petroleum and UK-based Shell Transport & Trading, it is the fourth largest company in the world as of 2014, in terms of revenue, and one of the six oil and gas "supermajors".
MRC

Solvay to sell its stake in Solvay Indupa to Brazilian Unipar

MOSCOW (MRC) -- Solvay has signed a definitive agreement with Brazilian chemical group Unipar Carbocloro to sell its 70.59% stake in Solvay Indupa, said the producer on its site.

"Solvay’s divestment of Indupa follows our announced early exit of our European PVC joint venture as Solvay is transforming into a specialty chemicals group," said Vincent De Cuyper, member of Solvay’s Executive Committee. "In acquiring Solvay Indupa, Unipar will strengthen its strategic position in the caustic soda and chlorine value chain extending its chemical footprint in PVC and allowing for the further development of Indupa."

The transaction is based on a total enterprise value of USD 202.2 million, which shall be subject to customary adjustments.

Completion of the transaction is subject to the customary closing conditions, including antitrust approval.

We remind that, as MRC informed previously, in 2014, Argentina's stock regulator rejected as inadequate an offer from Brazil's Braskem, Latin America's largest petrochemical company, to buy the roughly 30% of the shares of plastic maker Solvay Indupa that are publicly traded. Solvay Indupa is the Argentine-Brazilian unit of Belgium's Solvay, which owns 70.59% of the company.

Created in 1948, PVC and caustic soda producer Solvay Indupa has 956 employees and two production sites in Brazil and Argentina. Indupa, with a manufacturing capacity of more than 500,000 tpa of PVC, runs facilities at Santo Andre, Brazil, and Bahia Blanca, Argentina.

Solvay, with a market share 27%, is the second largest PVC manufacturer in Europe, after Kerling with 29% of the market. Solvay is headquartered in Brussels with about 30,900 employees spread across 53 countries. It generated pro forma net sales of EUR12.4 bn in 2015, with 90% made from activities where it ranks among the world’s top 3 players.
MRC

Lotte Chem plans to restart naphtha cracker in South Korea

MOSCOW (MRC) -- Lotte Chemical (former Honam Petrochemical) is likely to restart its naphtha cracker following a maintenance turnaround, as per Apic-online.

A Polymerupdate source in China informed that the company is expected to resume production at its cracker on May 5, 2016. The plant was shut on April 11, 2016.

Located in Yeosu, South Korea, the cracker has an ethylene production capacity of 1 million mt/year and propylene capacity of 480,000 mt/year.

As MRC informed before, in early May 2016, Lotte Chemical finalized the takeover of Samsung Group’s chemical units. The company said that it paid for money to acquire Samsung SDI Chemical on Apr. 29 and completed the acquisition of Samsung Group’s chemical businesses in about six months after the announcement of "Big Deal" in October 2015,

Established in 1976, Lotte Chemical has been solidifyng its position by localizing cutting-edge petrochemical technologies. Among the high-quality products produced by Lotte Chemical through its efficient processes are ethylene, HDPE, LDPE, LLDPE, PP, functional resin, EG, SM, PIA, PET, etc. Lotte Chemical’s products are being distributed to 152 countries around the world. With the acquisition of Pakistan’s PTA in 2009, Artenius in the UK in 2010 and Titan Chemical Corp., Lotte Chemical is now able to efficiently supply excellent products to an increasing number of countries. The company is further accelerating its efforts to strengthen its global competitiveness by establishing overseas branches in Hong Kong, Russia, and USA, along with the sales corporation in China for active sales activities both in domestic and abroad.
MRC