Bapco gets bids for USD5-B refinery expansion in Bahrain

MOSCOW (MRC) -- State-run Bahrain Petroleum Company (Bapco) has received bids from international construction companies to expand its Sitra oil refinery, industry sources said, reported Hydrocarbonprocessing.

Companies that submitted bids and that have formed consortia are: Japan's JGC Corp and South Korea's GS
Technip, Tecnicas Reunidas and Samsung Engineering, Fluor, Hyundai Engineering and Construction and Daewoo Engineering and Construction, CB&I, Petrofac and Japan's Mitsui and Co.

Bidding had been expected to close in October, however it was extended due to the scale of the project.

The contract is expected to be awarded by the first quarter of 2017, sources have said.

Bapco did not immediately respond to an emailed request for comment.

A Mitsui spokesman in Tokyo confirmed that the Japanese trading house, together with CB&I and Petrofac, submitted a bid for the expansion project on Dec. 7.

GS said it submitted a bid as part of a consortium.

Samsung Engineering also said it bid in a JV with Technip and Tecnicas Reunidas, while Hyundai E&C and Daewoo E&C told Reuters separately they had bid in a JV with Fluor.

As MRC informed before, in early December 2015, the provincial development and reform commission in Fujian Province, China approved Sinochem’s plan to add 60,000 bbl/day capacity at its recently commissioned 240,000 bbl/day Quanzhou refinery and build a new petrochemical complex by 2018. The project was given the go ahead by Fujian’s environmental protection department in October 2015. Quanzhou, Sinochem’s only wholly-owned refinery, started operations in July 2014 and mainly processes Saudi Arabian light, Arab heavy and Iraq’s Basrah light crudes, as well as some Angolan and Omani grades.
MRC

Rosneft says it has enough oil as Glencore raises stakes in Russia

MOSCOW (MRC) -- Russia's Rosneft said on Friday it has enough oil to fulfill new contracts with Swiss trader Glencore as markets gear up for a fierce battle between some of the world's largest merchants for supplies from the Russian company, reported Reuters.

Moscow said this week that a consortium of Glencore and Qatar would buy a 19.5% stake in Rosneft for over 10 billion euros in one of the biggest energy deals of 2016.

Glencore said it would inject only 300 million euros of its own equity into the deal while getting a contract for an extra 220,000 barrels per day of supply from Rosneft.

Most analysts saw the deal as a cheap way for Glencore into getting ahead of rivals - Trafigura and Vitol - in securing lucrative Russian barrels.

However, traders said it was unclear where Rosneft would get the oil volumes for Glencore before 2018 unless it decided to scrap some of its existing deals with rivals.

"The volumes of the new contract (with Glencore) have been calculated based the already existing contracts and production plans," Rosneft said in written comments to Reuters.

"Rosneft has enough resources to fulfil the obligations."

Glencore, the world's second largest oil trader after Vitol, has long been a core partner with Russia, trading commodities from aluminum to grain and held minority stake in aluminum producer Rusal and mid-sized oil firm Russneft.

In 2013, Glencore and Vitol joined forces to loan Rosneft USD10 billion and help it buy rival oil firm TNK-BP - in exchange for huge oil supplies of 67 MMt over 5 years.

But then Russia came under U.S. and European sanctions for its actions in Ukraine which made it much more difficult to lend more money to Rosneft.

However, rival Trafigura, the world's third largest oil trader, found a way to provide Rosneft with short-term funding, not covered by sanctions. As a result, Trafigura now handles the biggest volumes from Rosneft.

"I really don't know where Rosneft can get new volumes for Glencore. They either have to cancel existing contracts or have a deal to start supplies only from 2018," said a Russian crude trader familiar with Rosneft's oil flows.

Prior to the new agreement, Glencore was buying 8.5 MMtpy and Vitol 5 million under contracts that do not expire before 2018.

The remaining volumes are either committed to European and Asian refiners PKN Orlen, Lotos, Total, Shell and Eni, Ruhr Oel, Chemchina and JX Nippon or sold under short-term contracts to various trading houses until March.

Traders said in theory from March, Rosneft could stop holding short-term tenders for oil from the Baltic and the Black Sea to free up volumes for Glencore. But such a strategy could be risky as Rosneft needs tenders to guarantee attractive pricing for much bigger long-term deals.

Rosneft has also acquired smaller rival Bashneft but most of its exports have been also pre-sold to Vitol until 2021.

"What is clear is that competition is heating up and someone is set to lose if Glencore was to obtain full volumes," one of the traders said.

We remind that, as MRC wrote previously, Rosneft and China Petrochemical Corporation (Sinopec Group) have signed a Framework Agreement on joint pre-feasibility study of the project related to the construction and operation of a gas processing and petrochemical complex in East Siberia

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.
MRC

PPG Industries says initiates global restructuring, targets USD125 mln in annual savings


MOSCOW (MRC) -- PPG announced that its board of directors approved significant and broad restructuring actions to reduce its global cost structure, said the company on its site.

The actions are focused on certain regions and end-use markets where business conditions are weakest, and they are targeting structural reductions in operating, functional and administrative costs.

"Because of continued slow overall growth in global demand, we are taking decisive action to adjust our cost structure," said Michael H. McGarry, PPG chairman and chief executive officer. “These measures will better align our resources with anticipated ongoing business conditions and will keep PPG competitive in the end-markets in which we participate. Even with this broad effort to reduce our total costs, we remain committed to continued investment in growth-related initiatives and in geographies with continued growth potential."

PPG will record a pretax restructuring charge of USD190 million to USD200 million, or 53-58 cents per diluted share, in the fourth quarter 2016, of which approximately USD140 million represents cash costs and USD50 million to USD60 million is related to the write-down of certain assets and other non-cash costs. Of the approximately USD140 million total cash outlay, about USD110 million is expected in 2017, with the balance to occur in 2018.

In addition to the aforementioned pretax charge and cash costs, approximately USD15 million of incremental restructuring-related cash costs are expected during 2017, for certain items that are required to be expensed on an as-incurred basis.

When completed, the company expects the restructuring actions to generate USD120 million to USD130 million in annual savings, with USD40 million to USD50 million of savings projected to be realized in 2017 and the remainder of the expected annual savings to be substantially realized by year-end 2018.

As MRC informed earlier, in June 2016, PPG Industries agreed to acquire US-based IVC Industrial Coatings for an undisclosed amount.

PPG Industries, Inc. (PPG) is a global supplier of protective and decorative coatings. Performance Coatings, Industrial Coatings and Architectural Coatings- EMEA segments supply protective and decorative finishes for customers in a range of end use markets, including industrial equipment, appliances and packaging; factory-finished aluminum extrusions and steel and aluminum. Founded in 1883, PPG has global headquarters in Pittsburgh and operates in nearly 70 countries around the world. Reported net sales in 2014 were USD15.4 billion.


MRC

Polychim restarts production of polypropylene from France


MOSCOW (MRC) -- Supply of polypropylene from Polychim's plant in Dunkirk, France, has resumed, said Pastemart, citing Platts.

"Production is running but force majeure has not yet been lifted," the source said.

Polychim, which operates a single 230,000 mt/year polypropylene plant, declared force majeure mid-November following technical difficulties that emerged restarting from maintenance.

Scheduled maintenance at the Dunkirk PP plant began in September and had been planned for completion within two months.

The company source declined to comment on when the force majeure may be lifted.

Polychim is supplied feedstock propylene from the neighboring Versalis cracker which has a propylene capacity of 180,000 mt/year.
MRC

AkzoNobel and Atul to set up Indian MCA partnership


MOSCOW (MRC) -- AkzoNobel and Atul have announced their intention to jointly invest in the production of monochloroacetic acid (MCA) in India, which will include setting up a world class MCA plant at Atul’s facility in Gujarat, said the producer on its site.

Each partner will hold a 50 percent stake. The partnership will build on Atul’s status as a leading global supplier of the herbicide 2,4-D (which uses MCA as a key raw material), and AkzoNobel’s leading global position in MCA market, with plants in the Netherlands, China, Japan and the US. The investment is subject to regulatory approvals and signing of final agreements.

"AkzoNobel is committed to organic growth and this cooperation will contribute to our vision of driving profitable growth in emerging markets, with a strong and established local partner in Atul," said Knut Schwalenberg, Managing Director of AkzoNobel’s Industrial Chemicals business.

Added Sunil Lalbhai, Chairman and Managing Director of Atul: "We are extremely passionate about the ‘Make in India’ initiative led by our Honourable Prime Minister, Shri Narendra Modi, and are delighted to partner with AkzoNobel to bring state-of-the-art, eco-friendly technology for MCA to India from a world class company."

The partnership will use chlorine and hydrogen manufactured by Atul to produce the MCA, taking advantage of both Atul’s existing infrastructure and the leading eco-friendly hydrogenation technology supplied by AkzoNobel. From an initial annual capacity of 32 kilotons at start-up, the plant has been designed for future expansion to 60 kilotons. The plant will produce enough MCA to meet the captive requirement of Atul; AkzoNobel will market the rest of it, primarily in India.

MCA is an essential building block in the chemical industry and is used in a wide variety of chemicals. For example, AkzoNobel customers use MCA to produce thickening agents for the food, oil, mining, personal care and detergent industries. The product is also used in agrochemicals, adhesives, pharmaceuticals, thermo-stabilizers, surfactants and cosmetics.

As MRC informed earlier, 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.

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.
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