Unipetrol profits jump after cracker restarted, impairment reversed

MOSCOW (MRC) -- Czech oil refiner Unipetrol's fourth-quarter net profit jumped to 4.17 billion crowns (USD166.15 million) after the restart of some facilities and the reversal of an impairment allowance, said Reuters.

The net profit was above the average estimate of 2.71 billion crowns in a Reuters poll, helped by Unipetrol reversing the impairment of 1.9 billion crowns for downstream assets.

The company had posted a 182 million crown quarterly profit the previous year after a blast at a steam cracker knocked the unit out of service in 2015. It came back online last quarter after more than a year-long shutdown.

With production back at full strength, revenue in the fourth quarter increased 15 percent to 26.47 billion crowns while operating profit (EBIT) surged to 5.13 billion crowns.

The company, majority owned by Poland's PKN Orlen, said it had booked 7.9 billion crowns in its 2016 financial statements related to the steam cracker's insurance claim.

It said the final amount would depend on an insurer agreement but it expected to recover in total 3.9 billion crowns for repairs and 10.1 billion crowns for lost profit.

Unipetrol also expected to receive 1.2 billion crowns in an insurance claim for an accident at a different cracking unit that put it out of service between May and October last year.

Unipetrol is also benefiting from stronger refining and petrochemical margins. The company, even with shutdowns last year, posted record full-year net profit of 7.98 billion crowns. It ended 2016 with net cash of 2.8 billion crowns.

The company paid its first dividend in eight years from 2015 profits and has said it wants to make shareholder payouts in the future but was unsure about a 2016 payment.

As MRC informed earlier, repair works on the steam cracker in Chempark Zaluzi, which has been out of the operation since 13 August 2015, were completed in August 2016.

Unipetrol , a.s. is a group of companies operating in the petrochemical industry in the Czech Republic. In 2005 Unipetrol became a part of the PKN ORLEN Group, the largest oil processor in Central Europe. The UNIPETROL Group is oriented mostly towards oil processing, fuel distribution and petrochemical production. In all of these business areas the Unipetrol Group is among the key players both in the Czech Republic and on the Central European market. The Group ranks among the leading firms in the Czech Republic in terms of its revenues, and employs almost 4,000 people.

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BP Energy Outlook: Global energy demand on the rise

MOSCOW (MRC) -- Global demand for energy is expected to increase by around 30% between 2015 and 2035, an average growth of 1.3% per year, according to the 2017 edition of the BP Energy Outlook, said Hydrocarbonprocessing.

However, this growth in energy demand is lower than the 3.4% per year rise expected in global GDP, reflecting improved energy efficiency driven by technology improvements and environmental concerns. The Outlook looks at long-term energy trends and develops projections for world energy markets over the next two decades. The 2017 edition was launched today in London by Spencer Dale, BP’s group chief economist, and Bob Dudley, group chief executive.

Oil demand grows at an average rate of 0.7% a year, although this is expected to slow gradually over the period. The transport sector continues to consume most of the world’s oil with its share of global demand remaining close to 60% in 2035. However, non-combusted use of oil, particularly in petrochemicals, takes over as the main source of growth for oil demand by the early 2030s. "The possibility that the most important source of growth in oil demand in the 2030s won’t be to power cars or trucks or planes, but rather used as an input into other products, such as plastics and fabrics, is quite a change from the past," said Spencer Dale.

Gas grows more quickly than either oil or coal over the Outlook, with demand growing an average 1.6% a year. Its share of primary energy overtakes coal to be the second-largest fuel source by 2035. Shale gas production accounts for two-thirds of the increase in gas supplies, led by growth in the US. LNG growth, driven by increasing supplies in Australia and the US, is expected to lead to a globally integrated gas market anchored by US gas prices.

Coal consumption is projected to peak in the mid-2020s, largely driven by China’s move towards cleaner, lower carbon fuels. India is the largest growth market for coal, with its share of world coal demand doubling from around 10% in 2015 to 20% in 2035.

Renewables are projected to be the fastest-growing fuel source, growing at an average rate of 7.6% per year, quadrupling over the Outlook, driven by increasing competitiveness of both solar and wind. China is the largest source of growth for renewables over the next 20 years, adding more renewable power than the EU and US combined.
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Dow Chemical profit beats estimates as consumer focus pays off

MOSCOW (MRC) -- Dow Chemical reported a better-than-expected quarterly adjusted profit, helped by its focus on consumer markets such as agriculture and automotive, and a move to take full control of its Dow Corning venture, said Reuters.

Excluding the Dow Corning transaction, Dow's sales rose 2.5 percent to USD11.75 billion in the fourth quarter ended Dec. 31, with sales increasing in four of its five businesses.

"We are seeing early signs of positive economic momentum, with the United States in expansionary mode, driven by the ongoing strength of the consumer and the tailwind of a new incoming administration promising structural reforms," Chief Executive Andrew Liveris said in a statement.

Liveris was appointed by U.S. President Donald Trump to lead a private-sector group on manufacturing that will advise the U.S. secretary of commerce.

Dow Corning, previously a joint venture between Dow and Gorilla glass maker Corning Inc, makes silicone that are used in the manufacturing a host of products.

Dow, which is merging with DuPont, has continued to benefit from its strategy to focus on consumer markets by divesting billions of dollars of volatile, commodity assets over the years, including the USD5 billion divestiture of most of its chlorine business.

Net loss attributable to Dow's shareholders was USD33 million, or 3 cents per share, in the fourth quarter, compared with a profit of USD3.53 billion, or USD2.94 per share, a year earlier.

Excluding a one-time USD1.1 billion charge, reflecting a change in the way the it accounts for legal costs associated with defending against asbestos claims, Dow's operating profit rose 6.5 percent to 99 cents per share.

The company's net sales, including the Dow Corning deal, rose to USD13.02 billion from USD11.46 billion, beating analysts' average estimate of USD12.38 billion.

The USD130 billion merger between Dow and DuPont has drawn scrutiny from regulators, particularly in the European Union, with concerns stemming from the overlap in the two chemical companies' seeds and crop protection businesses.

DuPont said that the merger, announced in December 2015, may not close in the first quarter as planned and will now likely close in the first half of the year.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber. In 2014, Dow had annual sales of more than USD58 billion and employed approximately 53,000 people worldwide.
MRC

Court rules villagers cannot sue Shell in London over Nigerian oil spill

MOSCOW (MRC) -- Oil major Royal Dutch Shell cannot be sued in London courts over Nigerian oil spill allegations, the High Court ruled on Thursday, dealing a setback to attempts to hold multinationals liable at home for subsidiaries' activities, reported Reuters.

If the High Court had ruled in favor of the two groups, other claimants against British-based multinationals could have been emboldened to pursue legal action through the British courts, some legal experts had said.

Villagers from the Bille and Ogale communities in Nigeria's oil-rich Delta region were trying to pursue oil spill allegations against the company's Nigerian subsidiary Shell Petroleum Development Company of Nigeria (SPDC) in British courts.

The court ruled that the suit did not establish that Shell, the parent company, had legal responsibility for SPDC's actions.

"The claimants have failed to demonstrate that the first threshold requirement - is there a 'real issue' between the claimant and the anchor defendants - is met," the ruling stated.

Leigh Day, a law firm representing the villagers, said it would appeal the ruling.

Igo Weli, SPDC's general manager for external relations, said the firm hoped "the strong message sent by the English court today ensures that any future claims by Nigerian communities concerning operations conducted in Nigeria will be heard in the proper local courts".

The Nigerian villagers argued domestic courts were unfit to hear their case, while Shell said the matter was a uniquely Nigerian issue and should be heard there.

Shell also denies responsibility for the spills, which it says were due to sabotage and illegal refining.

"It is our view that the judgment failed to consider critical evidence which shows the decisive direction and control Royal Dutch Shell exercises over its Nigerian subsidiary," said Dan Leader, partner at Leigh Day who also represented Nigeria's Bodo community in another oil spill claim against Shell that ended in a $55 million settlement in 2015.

Last year, the High Court ruled that a case brought by Zambian villagers against miner Vedanta Resources over environmental pollution could be heard in England.

As MRC wrote before, The town council of Potter, Pennsylvania has unanimously approved a conditional use permit last week allowing a unit of Royal Dutch Shell PLC to move forward with construction of a multibillion-dollar petrochemical complex near Pittsburgh. The facility will use low-cost ethane from shale gas producers in the Marcellus and Utica basins in Pennsylvania, Ohio and West Virginia to produce 1.6 MMt of polyethylene per year.

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

Sumitomo Chemical buys Trinseo out of polycarbonate joint venture in Japan

MOSCOW (MRC) -- Trinseo Holding B.V., a wholly owned subsidiary of Trinseo S.A., and Sumitomo Chemical Co., Ltd, have signed a definitive agreement for Trinseo to sell all of its 50 percent share in their Sumika Styron Polycarbonate (SSPC) joint venture to Sumitomo Chemical for an undisclosed price, said the two companies in a joint statement.

"Sumitomo Chemical is a natural owner for this Japan-based polycarbonate plant, and as an industry leader in the region, Sumitomo Chemical is better positioned to manage and deliver value from this asset in the future"

Sumika Styron Polycarbonate currently produces polycarbonate resins at production facilities in Niihama City, Ehime, Japan, and serves customers and markets throughout Asia. In addition to the sale of Trinseo’s ownership in the joint venture, the parties have agreed to continue long-term supply of polycarbonate resin to Trinseo’s Performance Plastics businesses and as such will maintain the strategic relationship between SSPC and Trinseo.

"Sumitomo Chemical is a natural owner for this Japan-based polycarbonate plant, and as an industry leader in the region, Sumitomo Chemical is better positioned to manage and deliver value from this asset in the future," said Tim Stedman, Senior Vice President and Business President for Basic Plastics and Feedstocks, Trinseo. “At the same time, Asia Pacific continues to be an important growth region for Trinseo, and the company is strongly committed to growing our Performance businesses in the region."

"We highly appreciate the long-term relationship with Trinseo and respect the decision by them. We will explore opportunities of further expanding polycarbonate business by leveraging technical capabilities we have developed long time, as Petrochemicals & Plastics Sector has a broad product portfolio," said Tomohisa Ohno, Director and Senior Managing Executive Officer of Sumitomo Chemical.

The transaction is expected to close on January 31, 2017. Terms of the agreement are not disclosed. Following the close, it is expected that SSPC will operate as a wholly owned subsidiary of Sumitomo Chemical. SSPC will continue to operate and will be renamed Sumika Polycarbonate Limited after a transitional period.

SSPC was originally formed as Sumitomo Dow Limited in 1996 as a 50:50 joint venture between Sumitomo Chemical Co., Ltd. and The Dow Chemical Company. After Styron (Trinseo) became an independent company in 2010, it assumed Dow’s ownership share in the joint venture, which was renamed Sumika Styron Polycarbonate (SSPC) at that time.

Trinseo is a global materials solutions provider and manufacturer of plastics, latex binders, and synthetic rubber. We are focused on delivering innovative and sustainable solution to help our customers create products that touch lives every day — products that are intrinsic to how we live our lives — across a wide range of end-markets, including automotive, consumer electronics, appliances, medical devices, lighting, electrical, carpet, paper and board, building and construction, and tires. Trinseo had approximately USD4.0 billion in revenue in 2015, with 15 manufacturing sites around the world, and more than 2,200 employees.

Headquartered in Tokyo, Japan, Sumitomo Chemical is one of Japan’s leading chemical companies, offering a diverse range of products globally in the fields of petrochemicals, energy and functional materials, IT-related chemicals and materials, health and crop science products, and pharmaceuticals. The company’s consolidated net sales for fiscal 2015 were approximately 2.1 trillion yen, and it has around 31,000 employees.
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