Partner of Rosneft in Essar deal says may sell stake within 5 years

MOSCOW (MRC) -- Russian private investment group United Capital Partners (UCP), which is teaming up with oil giant Rosneft to buy India's Essar Oil in a USD12.9-B deal, said it may sell its stake within five years, reported Hydrocarbonprocessing.

The purchase of Essar Oil, by Russia's state-owned Rosneft and a consortium of UCP and global oil trader Trafigura, will be the biggest foreign acquisition ever in India and Russia's largest overseas deal. The takeover is expected to be completed in the next few months.

The chief executive of Russian lender VTB, which advised on the deal, has said it was specially structured to ensure it was not affected by Western sanctions imposed on Rosneft and its boss Igor Sechin, an ally of Russian leader Vladimir Putin.

Since Rosneft will control only 49% of Essar under the deal, with Trafigura and UCP jointly holding another 49%, the sanctions risk is mitigated.

But the structure has raised questions about whether UCP and Trafigura will cede their shares to Rosneft once sanctions are lifted or eased, giving Sechin full control over the acquisition.

The sanctions were imposed over Moscow's annexation of Crimea and support for separatist rebels in eastern Ukraine.

"We do not plan to sell our stake to anyone in the near future," Irina Lanina, a director of UCP, said in a written response to Reuters' questions.

"We plan to make this investment in a consortium with our partner Trafigura and are likely to exit together with them as well. As of now, we are looking at (remaining in Essar) for 3-5 years but time will tell," Lanina said.

Lanina said that UCP plans to use its own funds and credit facilities to finance the acquisition of its stake but did not say how much it would cost.

As MRC informed previously, last week, it became known that Russian oil major Rosneft, along with European trader Trafigura and Russian fund UCP, would acquire 98% in India's Essar Oil for about USD12 B - USD13 B including debt. Rosneft will get 49% and the two investors - Trafigura and UCP - will hold the remaining 49% in equal parts, the sources said, adding that the valuation included about USD4.5 B in assumed debt. Essar Oil operates a 400 Mbpd oil refinery on India's west coast and sells fuels through its 2,470 filling stations in India.

Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time. Apart from other assets, Rosneft owns Angarsk Polymer Plant and Ufaorgsintez in Russia and Lisichansky refinery in Ukraine.

Evonik and kalwar present innovative solutions

MOSCOW (MRC) -- The combined expertise resulting from the cooperation between Evonik and kalwar opens up entirely new opportunities for film pretreatment and coatings technology. The innovative calvasol functionalization technology provides the consumer with a clear view of the food item thanks to antifog packaging film, as per Evonik's press release.

Dynasylan SILFIN 50 was developed especially for the use in the drinking water sector and has been successfully implemented in the market. The very long lifetime of inhouse systems for the drinking and hot water supply becomes possible by linking the pipes using the Monosil process - and reliably at high continuous service temperatures of up to 90 degrees Celsius. Silane-crosslinked pipes are resistant to corrosion and expansion, are crackproof, have a reduced weight, and save laying costs. Other crucial advantages are improved wear resistance and greater resistance to fast crack propagation. Crosslinking with organofunctional silanes has also proven to be environmentally friendly and economical. Even small quantities of silane result in excellent characteristics.

Bright, fresh fruits are more appetizing than those behind fogged films. Kalwar’s innovative calvasol functionalization systems are the systematic further development of their calvatron surface technology. Apart from ensuring long-term adhesion as required, they also provide a solution for the antifog issue. What you see determines what you buy, and bright, fresh fruits - as the exhibit shows - are simply a better argument. The highly effective and economical coating process is environmental-friendly, significantly reduces production costs, and enables a great variety of interesting functionalities. The calvasol technology does not only replace established production methods but, by using smart combinations, allows for producing entirely new products. In cooperation with customers, calvasol is also used to develop release and antiblock effects in films.

As MRC informed before, Essen-based Evonik Industries, a leading specialty chemicals manufacturer, invested over EUR400 mln in its plants in Germany in 2015. Evonik is planning further large-scale projects in Germany. One of these is the construction of a new plant for production of specialty copolyesters in Witten by 2018 with an investment in the double-digit million euro range. As part of the global production initiative for specialty silicones, Evonik intends to invest in production for these products in Essen once again. A new silane research center is currently being built in Rheinfelden that is slated to be completed in 2016.

Evonik, the creative industrial group from Germany, is one of the world leaders in specialty chemicals. Its activities focus on the key megatrends health, nutrition, resource efficiency and globalization. Evonik benefits specifically from its innovative prowess and integrated technology platforms. In 2015 more than 33,500 employees generated sales of around EUR13.5 billion and an operating profit (adjusted EBITDA) of about EUR2.47 billion.

Tasnee swings to Q3 net profit on volumes, feedstock costs

MOSCOW (MRC) -- Saudi Arabia's National Industrialization Co (Tasnee) made a profit for the second consecutive quarter as a reduction in feedstock costs and higher sales offset the sustained impact of depressed product prices, said Reuters.

Petrochemical firms in the kingdom have been struggling for the last two years as lower oil prices have weighed on product prices in their industry. Tasnee posted losses in every quarter in 2015 as well as the first three months of this year.

A concerted restructuring effort by the company, which focused on improving efficiencies and cost cutting which resulted in it shedding more than 25 percent of its global workforce, had already helped Tasnee return to profit in the second quarter.

The improvement extended into the third quarter as Tasnee recorded a profit of 122.2 million riyals (USD32.6 million), according to a bourse filing.

Shares in Tasnee, which has interests in petrochemicals, metals and chemicals and is one of the world's largest producers of titanium dioxide through its Cristal subsidiary, ended Tuesday down 10 percent despite the profit.

Chief Executive Mutlaq al-Morished denied a Bloomberg report that the company had stopped making payments on a USD1 billion loan.

In an interview with Al Arabiya television he said Tasnee had begun informal talks with local banks to refinance the loan at better terms, as it had done with a 7 billion riyal facility for Cristal earlier this year, with negotiations set to last at least six months.

The profit compared to a loss of 296.3 million riyals in the prior-year period, while the average forecast of three analysts polled by Reuters was 114.9 million riyals. The company is moving forward with projects in Jizan and Hail, despite delays, Morished told Reuters on the sidelines of a company event.

He attributed the hold-up of an ilmenite smelting plant in Jizan industrial city to technology issues, requiring a re-engineering of the design. "When you start a new technology, you run into teething problems. We're going through teething problems," said Morished. The first furnace is expected to start production in the first half of 2017, while the second would begin in the third quarter.

In Hail, he said delays were due to complications associated with the projects' remote location. There are plans for some of the six or seven Tasnee plants in Hail to start commercial production in the first quarter of 2017, he said. The rest will start throughout 2017.

As MRC informed earlier, in 2014, Tasnee entered into an agreement to increase its stake in titanium dioxide (TiO2) producer Cristal.

Headquartered in Riyadh, Tasnee is primarily engaged in petrochemical, chemical and industrial projects. The
company produces petrochemical products, including polypropylene, polyethylene and acrylic acid, as well as other downstream petrochemical products.

SIBUR licenses Conser technology for maleic anhydride production

MOSCOW (MRC) -- SIBUR has signed an agreement with Conser, an Italian engineering company, to acquire a license for maleic anhydride (MAN) production technology for its Tobolsk facility, as per Hydrocarbonprocessing.

Maleic anhydride is used in the construction, agriculture, automotive, paint and varnish, furniture, pharmaceutical and other industries. It serves as feedstock for films, synthetic fibers, pharmaceuticals, detergents, fuel components and oils. The use of MAN allows achieve high strength of the material as well as its resistance to moisture, extreme temperature and mechanical stress.

Russia currently does not produce maleic anhydride, with the domestic consumption of 4.5 ktpy fully covered by imports. The estimated output of the new Tobolsk facility will be 45 ktpy. Production of a high-margin product using own feedstock (butane) will enable SIBUR to improve the hydrocarbon processing rate in Russia, fully substitute MAN imports, and export it to Europe and the Middle East. In addition, a state-of-the-art Russian MAN production facility will provide new development opportunities for many domestic industries.

SIBUR has also engaged NIPIgaspererabotka, a leading Russian center for facility design, supply, logistics and construction.

As MRC reported earlier, Russian petrochemical company Sibur is in talks with shareholder Sinopec about investing in a planned gas chemical plant in Russia's Far East. Sibur plans to buy gas from fields which Russia's Gazprom will develop in Eastern Siberia. Sinopec Engineering Group, may also take part in constructing the plant.
In December, Sinopec paid USD1.338 billion for a 10% stake in Sibur and said it planned to acquire an additional 10% within three years.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.

Kuwait KNPC aims to finalize USD5 B loan by Q1

MOSCOW (MRC) -- Kuwait National Petroleum Co. (KNPC) expects to finalize a loan of well over USD5 billion to finance its Clean Fuels project by the end of Q1 of next year, said Reuters.

The state-owned refiner had originally said it planned to complete the fundraising, one of the world's largest-ever loans backed by export credit agencies, this year.

KNPC’s chief executive Mohammad Ghazi al-Mutairi, contacted by Reuters, said talks were progressing on the loan, which could close in Q4 of this year or Q1 of 2017.

He also said NBK Capital was acting as exclusive financial adviser for the facility, which would have backing from the South Korean, Dutch, British and Italian export credit agencies.

HSBC is coordinating the transaction, banking sources said. "It’s one of the major loan deals to expect in the region - it’s going to be huge," said one source.

The Clean Fuels Project will upgrade and expand two of Kuwait's largest existing refineries with a focus on producing higher-value products such as diesel and kerosene for export. KNPC obtained a first tranche of financing in April, a USD4-B loan led by National Bank of Kuwait and Kuwait Finance House, which saw the participation of 11 banks, including Islamic lenders.

“There's an aggressive timeline on this - whether it will be Q4 or Q1 2017 is uncertain still," said one banker.

As MRC informed earlier, Kuwait Petroleum Corp. (KPC) plans to sell loss-making assets to cut costs as low oil prices pressure its finances. As part of the exercise, KPC plans to set up a company to manage the integration of its new refinery at Al-Zour and a petrochemical complex and liquefied natural gas (LNG) facilities.