Massive Lego plant opens in China, keeps focus on sustainability

MOSCOW (MRC) -- Danish toy moulder Lego A/S has a new 1.77 million-square-foot injection moulding plant in China that, when it’s operating at full capacity, will make 72 billion ABS bricks annually, said Plasticsnewseurope.

But the company is keeping a focus on sustainability. The most recent sign: Lego is in the process of installing 20,000 solar panels on the factory roof. The company expects the panels to reduce carbon dioxide emissions by 8.81 million pounds per year.

Tim Cook, vice president for environmental sustainability, and President and CEO Jorgen Vig Knudstorp traveled to Jiaxing for a 25 November inauguration event. The factory actually started production about a year ago.

Some 1,200 people are employed at the factory, which produces between 70% to 80% of all Lego products sold in Asia. Billund, Denmark-based Lego also owns and operates factories in Denmark, Hungary, Mexico and the Czech Republic.

Cook said the Jiaxing plant is Lego’s most sustainable.

Lego sustainability drive has achieved some measurable results. Packaging waste has been reduced, and energy efficiency has been increased so that the amount of energy used to make each Lego brick has been reduced by 16%. Lego still hopes to achieve another 2.5% reduction.

The Jiaxing factory also uses 100% LED lighting and highly efficient moulding machines. Cook said the sustainability drive extends into the local community. Lego has pledged to reduce carbon dioxide emission by 8 million pounds in surrounding Jiaxing area.

The opening of the Jiaxing factory is part of a strategic entry into China by Lego, said Amon Wang, vice president of marketing for Lego Toy (Shanghai). The factory will make it easier for Lego to supply the Asian market. Lego reported double-digit growth in the Europe and Asia in the first half of 2016. She added that the company faces a challenge in China unlike other markets: there is no parent generation of adults who fondly remember their childhood playing with Legos.
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MOSCOW (MRC) -- Kazakhstan's state security service has detained several people suspected of stealing oil and fuel from a refinery and being linked to radical Islamists, said Reuters.

The large-scale raid took place in the city of Aktobe, the National Security Committee said in a statement, the site of a deadly Islamist attack last June in which 25 people, including 18 attackers, were killed. The security service said it had seized several tanker trucks loaded with oil and oil products. Aktobe is home to a small refinery which processes about 300,000 tpy and there are several oil fields in the vicinity.

Along with the suspected thieves, security forces have detained "several members of an organised criminal group made up of followers of radical Salafism," the security service said, referring to an ultra-conservative school of Islam.

It said the detained Islamists are suspected of having provided protection to the oil thieves. The June attack targeted a national guard base and firearms shops in Aktobe. It was the deadliest incident of its kind since the country became independent of the Soviet Union in 1991.

Last month, a local court sentenced most of the surviving attackers - described by prosecutors as Islamic State sympathizers -- to life in prison.

Thousands of nationals from Central Asian nations are known to be fighting alongside Islamic State militants in Syria and Iraq, and authorities have long warned they could return and carry out attacks on home soil. Kazakhstan is mainly Muslim, but the state secular and a vast majority of Kazakhs are non-observant.
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MOSCOW (MRC) -- European oil refiners are enjoying healthy profits in the fourth quarter compared with other regions due to unplanned maintenance in the Atlantic basin that has eroded inventories, offsetting typically weaker year-end demand, said Reuters.

Refining was a lifeline for energy companies when oil prices started falling sharply in the second-half of 2014. Cheap crude spurred record demand growth for motor fuels, which refineries worldwide scrambled to produce.

While global refining margins this year have tightened from 2015, Europe's fourth-quarter margins have held strong, a boost to earnings for energy majors Total, BP and Royal Dutch Shell as the oil price languishes at less than half those of 2014 peaks.

Independent refiners such as Italy's Saras and Finland's Neste will also benefit. "Margins were supported by turnarounds worldwide but the sizeable drop in Latin American refinery runs this year was probably the decisive factor," Robert Campbell, head of oil products research at Energy Aspects, said.

The outages in Mexico, Brazil and Venezuela has led to a drop of up to 700,000 barrels per day (bpd) in refining capacity year-on-year, leading the region to significantly increase its imports from US Gulf Coast refineries, Campbell said.

They also pulled in gasoline cargoes from Europe just when demand for the fuel across the Atlantic typically fades with winter weather. As a result, global stocks of gasoline and diesel tightened far more than expected in recent months.

BP's benchmark refinery margin marker for northwest Europe, a proxy of refinery profitability, are on track to gain some 25% in the fourth quarter from the previous one even as global margins tighten, according to BP.

Last year, even amid surging profits, BP's European margins indicator fell 35% from the third quarter to the fourth as demand for Europe's exported gasoline cooled with the weather in the United States.

Traders and analysts said Europe's refineries, though smaller and older, were benefiting from serving as a swing producer, cashing in on the spurts of demand. By contrast, margins in the US Gulf Coast refining hub, with bigger and more efficient units, are down nearly one third on the quarter and the year.

Total, Europe's biggest refiner, said its margins had risen to roughly USD40 a tonne at the beginning of the quarter, from USD25.50 a tonne in the third quarter, supported by stronger gasoline prices.

But profits could be more limited next year, with a cautious global economic outlook and a continued recovery in crude oil prices following OPEC's agreement last week to cut production, will likely weigh on refining margins in 2017.

Global oil demand in 2016 is expected to rise by 1.2 MMbpd, compared with the previous year's 1.8 MMbpd rise, a five-year peak.
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MOSCOW (MRC) -- Japanese oil refiners Idemitsu Kosan and Showa Shell Sekiyu said they have not decided on a capital and business tie-up as reported by some media organizations, and that they are still working towards an eventual merger, said Reuters.

The Nikkei business daily reported earlier on Wednesday that the two companies have begun negotiating the tie-up that would exploit synergies, but not require shareholder approval.

They aim to have it operational ahead of a planned merger that has been delayed due to fierce opposition from Idemitsu's founding family, it said. "No formal decision has been made at this stage," the two refiners said in a joint statement, referring to the reported tie-up talks.

The management of Idemitsu, Japan's second-biggest refiner by sales, has argued that a merger is the best course of action in a shrinking domestic oil market, where five large and three small refiners compete.

But descendants of founder Sazo Idemitsu, including octogenarian son Shosuke Idemitsu -- a former president of the company and now honorary chairman - have said the businesses are too different for a merger to work and they see no room for compromise.

Idemitsu's management in October put a full takeover on hold indefinitely although it had planned to press ahead with a signed agreement to acquire 33.3% of Showa Shell for USD1.48 billion from Royal Dutch Shell.

The setbacks had raised questions over whether the two firms will ever be able to combine businesses, given that the Idemitsu founding family, which owns just over a third of the company, could block a full deal outright.

The Nikkei said that under the capital and business tie-up plan, Idemitsu will acquire the one-third stake in Showa Shell within several days once it gets approval from the Japan Fair Trade Commission.

It then plans to hand over ownership of a little over 8% stake to a trust bank, thereby keeping Idemitsu's voting rights in Showa Shell at just under 25%.

Showa Shell, meanwhile, is set to buy a stake of around 20% in Idemitsu, the report added. Under Japanese law, if Idemitsu's stake in Showa Shell was bigger than 25%, Showa Shell's stake in Idemitsu would become void.

Such a capital tie-up would not need a shareholders' approval and protect the independence of Showa Shell's management, Nikkei said.

The two firms will also jointly operate their seven group refineries, which is likely to lead to annual savings of around USD264 million, compared with around 50 billion yen to be achieved from the full integration, the Nikkei said.
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MOSCOW (MRC) -- McKinsey Energy Insights (MEI), the data and analytics specialist that provides distinctive insight and support to the global energy industry, forecasts that until 2020, global refining will move towards lower utilization and margins as capacity growth exceeds demand, said Hydrocarbonprocessing.

Post-2020 market conditions are expected to improve with higher demand for distillates due to marine pollution (MARPOL) regulations.

MEI’s latest Global Downstream Outlook states that the last two years have seen major shifts as a result of falling crude price, a subsequent rise in global product demand and the fuel/oil balance. This, combined with recent events such as the diesel vehicle emissions scandal and the International Maritime Organization’s cap on sulfur in bunker fuel by 2020, the report says, has led to an uncertain outlook for the global refining market.

MEI modeled a high and low growth demand case, with the high case in line with the latest industry consensus. In the high case, MEI sees light product demand growing at 1.2% annually through to 2020. Asia also will remain the leading consumer of light products and it is predicted that diesel will provide the biggest demand growth post-2020. However, this is dependent on vehicle improvements, fuel substitutions and diesel emission regulations.

The outlook also highlights that North American crude markets are likely to remain tight until 2020, when a resurgence of unconventional crude supply could push the market back to export net-back pricing conditions.

The research is based on results from McKinsey’s Global Downstream Model, a macro-based global supply and demand balances and flows tool and OilDesk, a scenarios-based price-forecasting tool.
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