Shell CEO eyes top spot with post-BG deal refocus

MOSCOW (MRC) -- Royal Dutch Shell plans to increase cost savings to USD4.5 billion (GBP3.9 billion) following its USD54 billion acquisition of BG Group which Chief Executive Officer Ben van Beurden said will make it the best oil company investment, ahead of Exxon Mobil, reported Reuters.

In its first long-term strategy presentation since February's deal, Shell unveiled plans to limit spending and exit countries in order to focus on the most profitable operations such as liquefied natural gas (LNG), deepwater oil production and chemicals.

The company also detailed longer-term plans to grow its shale oil and gas production and green energy as it switches to cleaner resources.

The combination of BG catapulted Shell to the world's second biggest international oil company behind Exxon by market capitalisation and production. Shell became the top liquefied natural gas trader and a major deepwater oil producer by increasing its position in Australia and Brazil.

Van Beurden hopes the new strategy to generate double digit returns will boost investor confidence and lift Shell's share price which has underperformed rivals since the BG deal was announced in April last year. The deal also doubled its debt-to-equity ratio to 26 percent, leading to credit rating downgrades.

Shell targets a 10 percent return in capital employed by the end of the decade, assuming an oil price of around USD60 a barrel, up from around 8 percent between 2013 and 2015.

The Anglo-Dutch company has been the only one among the group of 'oil majors' to make a large acquisition in the current downturn, as rivals focused on cutting spending.

A key element of van Beurden's plan will include narrowing its global activity. Shell said on Tuesday it will exit oil and gas operations in up to 10 countries and sell 10 percent of its production as part of a USD30 billion asset sale plan by 2018.

The company is active in more than 70 countries but wants to focus on 13 nations, including Brazil, Australia and the United States. It did not say which countries it might exit. Reuters has reported that Shell plans to sell its assets in Gabon.

Shell lowered its planned 2016 capex to USD29 billion, with exploration set at USD2.5 billion, in a third cut from an initial USD35 billion. Cost savings will come from 12,500 job cuts in 2015 and this year and overlaps in operations in areas including Australia, Brazil and the North Sea.

The company said its medium-term growth priorities were deepwater projects in Brazil and the Gulf of Mexico and its chemicals division, particularly in the United States and China. Deepwater production could double to some 900,000 barrels of oil equivalent per day in 2020.

It also gave the go-ahead for investing in a new cracker and polyethylene plant in the United States, one of a handful of investment decisions this year as it grapples with the sharp drop in oil prices over the past two years.

Shell will slow new investment in its integrated gas business, which includes LNG, which it said has "reached critical mass following the BG acquisition".

As MRC wrote previously, in December 2015, Shell Chemicals has asked the Texas Commission on Environmental Quality (TCEQ) for permission to expand ethylene production capacity at its Deer Park, TX, facility. The company noted that several steps remain before it would make a final investment decision, ranging from concluding preparatory engineering and design work and seeking permits from Texas regulators, to evaluating downstream product support and any other potential global investments.

Besides, in late June 2015, Shell Chemical received the air emissions permit for its proposed ethane cracker in Beaver County, Pennsylvania. The proposed USD4 billion ethane cracker would be the first of its kind in the US Northeast. The cracker, expected to be completed in 2019, would feed production of 1.5 million mt/year of ethylene, 500,000 mt/year of gas-phased high density polyethylene, 500,000 mt/year of slurry HDPE, and 500,000 mt/year of linear low density polyethylene.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- BASF is extending its existing production facilities for Laromer UV/EB acrylates, which are part of BASF’s C3-Verbund system, at its Ludwigshafen site in Germany, as per the company's press release.

By significantly increasing its production capacities, BASF is responding to the rising demand for high-quality UV/EB acrylates and strengthening its position as one of the world’s leading manufacturers of UV/EB resins used as binders for energy-curable coatings and inks. The additional capacities will be available as of the 3rd quarter of 2016.

"We have experienced a considerable increase in global demand for our high-quality UV/EB acrylates over the last few years. This investment is our response to rising demand. The additional capacities will help us increase our supply reliability and show our commitment to provide customers with high-quality UV/EB acrylates," says Ulf Neidlein, Vice President, who is responsible for BASF’s resin and additive business in Europe.

UV/EB-curable acrylates are one of BASF's pillars of growth. In response to the demand, BASF began setting up additional capacities at its site in Meaux, France early in 2014.

Customers use Laromer resins as binders to formulate coatings for furniture and flooring, inks and overprint varnishes as well as coatings for plastics and metal substrates. In addition, BASF offers a broad portfolio of complementary resins such as polyisocyanates, dispersions and additives.

As MRC wrote previously, in April 2016, BASF celebrated the inauguration of its new PU flooring facilities for the production of Ucrete in Bukit Raja, Klang/Malaysia. It is the first manufacturing hub in Asia Pacific to produce all components of Ucrete.

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 generated sales of more than EUR70 billion in 2015.
MRC

MOSCOW (MRC) -- Total Lindsey Oil Refinery Ltd. has awarded AESSEAL a five-year managed reliability contract for their mechanical seals at Lindsey Oil Refinery, reported Hydrocarbonprocessing.

The contract, which was negotiated over a two-year period, will include the supply and repair of the mechanicals seals used on over 600 rotating equipment assets.

Working closely with the Total rotating equipment and operations teams, AESSEAL is tasked with improving reliability and reducing total cost of ownership by extending the meantime between failures on the assets.

Total is the world’s fourth-largest independent oil and gas company, with operations in 130 countries and more than 100,000 employees. The Lindsey Oil Refinery is situated in Killingholme, North Lincolnshire, UK and is one of the six UK oil refineries.

As MRC informed before, Total's proposed new ethane cracker near its refinery in Port Arthur, Texas, is being designed to have a capacity of 1 million tpy, the company said in a permit application to the Texas Commission on Environmental Quality (TCEQ), in April 2015. Construction on the cracker could start in June 2016, the company said, with operations starting three years later. The project would include seven ethane-cracking heaters.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
MRC

MOSCOW (MRC) -- Shenhua Ningxia Coal Industry has restarted its No. 1 polyproplyene (PP) line following a maintenance turnaround, as per Apic-online.

A Polymerupdate source in China informed that the No. 1 line resumed production early this week. The line was taken off-stream on May 15, 2016. The other three PP lines are likely to be restarted before June 15, 2016.

Located at Ningxia province of China, the PP plant comprises of four lines have a combined production capacity of 1 mln mt/year.

As MRC informed previously, in early June 2016, Sinopec Yangzi Petrochemical took off-stream its PP plant for a brief maintenance. It is likely to remain off-line for period of around 1 week. Located in Jiangsu province, China, the plant has a production capacity of 200,000 mt/year.

Shenhua Ningxia Coal Industry Group Co., Ltd. engages in coal mining and washing, coal deep processing, coal chemical industry, electric power, real estate, and other businesses.
MRC

MOSCOW (MRC) -- AkzoNobel said on 9 June that it is adding marine and protective coatings capacity at its existing performance coatings site at Lipetsk, south of Moscow, said Chemweek.

The new capacity is expected to be operational in the third quarter of this year. It will enable AkzoNobel to supply protective coatings for the regional oil and gas, mining, power and infrastructure markets, as well as marine coatings for ship building, maintenance and repair. The investment represents a further expansion for the multi-business site at Lipetsk.

As MRC informed earlier, AkzoNobel said it is in discussions with BASF to acquire BASF’s industrial coatings business. BASF confirmed that it is in discussions with AkzoNobel on the potential sale, but also declined to give further information. BASF is relatively small in industrial coatings.

Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people.
MRC