Petrobras in talks to sell petrochemical assets to Alpek

MOSCOW (MRC) -- Brazil's state-run oil company Petroleo Brasileiro SA (Petrobras) is in exclusive talks for 60 days with Mexico's Alpek over the potential sale of PetroquimicaSuape and Citepe assets in Brazil's northeast, reported Reuters.

Mexico's Alpek is the petrochemicals unit of Mexican conglomerate Alfa.

Petrobras' subsidiary PetroquimicaSuape in the state of Pernambuco had revenues of 1 billion reais (USD304 million) in 2015 and posted a net loss of 65 million reais. Citepe, also in the Pernambuco, had revenues of 633 million reais and posted a loss of 817 million reais in 2015.

Petrobras, as Brazil's state oil company is known, has been trying to speed up a plan to divest USD14.4 bln in assets to cut its debt load.

In addition, to the potential sale of its petrochemical assets in Pernambuco, the company is trying to settle on a sale structure for its distribution division Petrobras Distribuidora.

It is also reported to be seeking a buyer for its stake in Latin America's largest petrochemical company, Braskem SA.

As MRC informed previously, in January 2016, Petrobras hired Brazilian bank Banco Bradesco SA as a financial adviser and started to pitch the sale to foreign investors. Petrobras owns a 36 percent stake in Braskem, Latin America's largest petrochemical producer. The sale would help Petrobras meet its target of selling USD15.1 billion worth of assets in 2015-16, a key part of its plan to cut debt as oil prices plunge to 12-year lows.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
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Lotte Chemical posts record-high operating income in Q2 2016

MOSCOW (MRC) -- South Korea’s Lotte Chemical Corp. with bigger capacity through mergers and acquisitions posted 460.3 billion won (USD409.3 million) in Q2 2016 net profit led by solid chemical sales and improved ethylene spread, reported Pulse.

The company announced in a regulatory filing that its registered 460.3 billion won in net profit for the second quarter ended June. Its operating income jumped 8.5% to 693.9 billion won from the same period last year. It is a record-high quarterly operating income and also exceeds that of its major rival LG Chem Ltd., which posted 615.8 billion won, for the third time after 2015 second quarter and first quarter this year. The sales for the April-June period recorded 3.4 trillion won, up 8.3% on year.

Lotte Chemical recently has reorganized its business structure through mergers and acquisitions to concentrate on chemical business. The company’s average ethylene spread that is used as the barometer to forecast a chemical firm’s business outlook improved to USD723 per ton in June-quarter from USD640 per ton in the previous quarter. The ethylene spread refers to the price difference between ethylene and its raw material naphtha, and chemical producer’s profit goes up when price gap widens.

The company has the largest production capacity in the country with annual output capacity of 2.82 million tons including 720,000 tons from its Malaysian subsidiary Lotte Chemical Titan. The Malaysian subsidiary posted 152.5 billion won in operating income in the second quarter, up 52% from 100.2 billion won during the same period last year.

The sales by Lotte Advanced Materials Co. also boosted Lotte Chemical’s second-quarter performance by adding 88.6 billion won in operating income. Lotte Chemical earlier this year acquired a chemical division from Samsung SDI and changed the nameplate to Lotte Advanced Materials.

As MRC wrote previously, in early May 2016, Lotte Chemical Corp. 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. Samsung Fine Chemicals, which was completely taken over by Lotte in Feb., changed its name to Lotte Fine Chemical, while SDI Chemical, which completed the acquisition process on the 29th, changed its name to Lotte Advanced Materials through the general meeting of stockholders.

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.
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Alpek to pay up to USD700 million for Petrobras petchem assets

MOSCOW (MRC) -- Mexico's Alpek SA de CV is expected to offer up to USD700 M for Brazilian state-run oil company Petroleo Brasileiro SA's (Petrobras) petrochemicals units in the northeastern state of Pernambuco, a source with direct knowledge of the matter told Reuters.

Petrobras announced on Thursday exclusive talks with the Mexican group over the sale of PetroquimicaSuape and Citepe. The Brazilian company and Alpek will negotiate the deal for 60 days.

Petrobras' petrochemical units have accumulated USD1.7 B in losses over the last two years, which included impairment charges related to the largest-ever corruption probe in Brazil.

The plants in Pernambuco produce PTA, raw material for PET resin, and polyester fiber. The sale will reduce Petrobras' debt, as well as the need to inject more cash into the plants, which have not been profitable yet, the source added.

Beyond the sale of its petrochemical assets in Pernambuco, Petrobras has tried to sell its 36% stake in Latin America's largest petrochemical company, Braskem SA.

The deal has stalled as investors fret about the involvement of Grupo Odebrecht SA, Braskem's controlling shareholder, in the Car Wash probe.

Odebrecht has put its 38% stake in Braskem as collateral to banks in a debt renegotiation concluded in July.

As MRC informed previously, in January 2016, Petrobras hired Brazilian bank Banco Bradesco SA as a financial adviser and started to pitch the sale to foreign investors. Petrobras owns a 36 percent stake in Braskem, Latin America's largest petrochemical producer. The sale would help Petrobras meet its target of selling USD15.1 billion worth of assets in 2015-16, a key part of its plan to cut debt as oil prices plunge to 12-year lows.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

Sabic wants to grow its way out of earnings slump

MOSCOW (MRC) -- Saudi Basic Industries Corp. (Sabic), one of the world's largest petrochemicals groups, aims to grow its way out of an extended earnings slump brought on by the impact of lower oil prices on the petrochemicals sector, its acting chief executive told Reuters.

However, cost-cutting through greater efficiencies and the sale of subsidiaries outside of the kingdom was also important in turning round the performance of one of the world's largest petrochemicals groups, Yousef Abdullah al-Benyan said.

The company's performance is closely tied to oil prices and global economic growth because its products - plastics, fertilizers and metals - are used extensively in construction, agriculture, industry and the manufacture of consumer goods.

Since global oil prices started to fall in mid-2014, Sabic has reported eight successive quarters of declining earnings, including a 23.2% slump in second-quarter profit on Wednesday.

Sabic has recently set out a number of initiatives, including an oil-to-chemicals joint venture with Saudi Aramco and a coal-to-chemicals project in China, both creating refined chemicals direct from raw materials instead of going through the costly traditional refinery process.

It said on Monday it was studying a potential petrochemicals complex with an ExxonMobil affiliate on the US Gulf Coast. The final decision on the project is due by mid-2017.

Sabic is also studying possibilities to grow its specialties unit, which produces resins and composite materials, and is seen as less vulnerable to market conditions.

The specialties unit is currently around 5% of its total business, but Benyan said it could increase to around 15% to 20%, although a decision was unlikely before the Q4.

The firm also has designs on new feedstock sources, such as US shale gas, to counter a gas supply shortage in the kingdom which is restricting domestic growth.

Sabic reduced costs by 18% and increased production by 3% between the Q1 and Q2 of 2016, Benyan said, as it sought to improve the efficiency with which it produces petrochemicals. The company also benefited from the falling price of key feedstock naphtha in Europe and China.

As part of its cost-cutting plan, SABIC was reviewing the sale of assets which weren't performing well, Benyan said, pointing to businesses outside Saudi as prime candidates.

Year-end would also see more clarity on its efforts to turn around its Ibn Rushd plastics and aromatics unit.

As MRC reported earlier, Sabic reported a 29.4% drop in Q4 2015 net profit due to lower prices for its products, particularly in its metals division.

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

LyondellBasell to build HDPE plant on US Gulf Coast

MOSCOW (MRC) -- LyondellBasell, one of the world's largest plastics, chemical and refining companies, has made the final investment decision to build a high density polyethylene (HDPE) plant on the US Gulf Coast, as per the company's press release.

The plant will have an annual capacity of 1.1 billion pounds (500,000 metric tons) and will be the first commercial plant to employ LyondellBasell's new proprietary Hyperzone PE technology.

The start-up of the new plant is scheduled for 2019.

"Innovation is key to our future success. This new proprietary technology will have the capability to produce a wide range of HDPE products with enhanced properties, many of which have the potential to exceed industry benchmarks," said Bob Patel, LyondellBasell's CEO.

HDPE is used in numerous applications such as pipe, bottles, containers, toys, film, healthcare articles, plastic fuel tanks and industrial packaging. LyondellBasell's Hyperzone PE enhanced properties include improved stress crack resistance and enhanced balance between stiffness and impact strength.

The Hyperzone PE technology is a cascade gas phase process based on LyondellBasell's unique Multizone circulating reactor technology and was developed at LyondellBasell's European research and development centers located in Frankfurt, Germany, and Ferrara, Italy. The new proprietary technology will have the capability to produce a wide range of high-performance multi-modal HDPE products. In certain applications, Hyperzone PE resins allow customers to use less PE resin per unit produced, resulting in improved resource efficiency and savings for customers. While the Hyperzone PE plant will be located on the U.S. Gulf Coast, the products produced will serve markets across the globe.

LyondellBasell currently produces a total of 7.8 billion pounds (3.5 million metric tons) of HDPE annually, including capacity of its joint venture facilities. The company is a leading worldwide producer of all forms of PE with an annual capacity of 13.2 billion pounds (6 million metric tons).

As MRC reported earlier, in August 2014, CEO Bob Patel told the Chronicle that LyondellBasell plans to spend up to USD4 billion in capital along the Gulf Coast through 2020. The plan is to take advantage of cheaper gas feedstocks available in the US.

LyondellBasell is one of the world's largest plastics, chemical and refining companies. The company manufactures products at 57 sites in 18 countries. LyondellBasell products and technologies are used to make items that improve the quality of life for people around the world including packaging, electronics, automotive parts, home furnishings, construction materials and biofuels.
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