PP imports to Ukraine grew by 3% in the first two months of 2017

MOSCOW (MRC) -- Imports of polypropylene (PP) into Ukraine rose in the fist two months of 2017 by 3% year on year, totalling 18,100 tonnes. At the same time, only shipments of propylene homopolymers (homopolymer PP) and block copolymers of propylene (PP block copolymer) increased, according to MRC's DataScope report.

February PP imports to Ukraine grew to 9,800 tonnes, despite the "low season", compared to 8,300 tonnes a month earlier. Overall imports of propylene polymers increased to 18,100 tonnes in January-February 2017, compared to 17,600 tonnes a year earlier. PP block copolymer accounted for the greatest increase in imports, whereas demand for statistical copolymers of propylene (PP random copolymer) decreased.

The supply structure by PP grades looked the following way over the stated period.


Last month's imports of homopolymer PP into the Ukrainian market grew to 7,800 tonnes, whereas this figure was 6,600 tonnes in January. Local companies increased shipments of homopolymer PP raffia grade and injection moulding homopolymer PP. Overall shipments of homopolymer PP exceeded 14,300 tonnes in the first two months of 2017 versus 13,600 tonnes a year earlier.

February imports of PP block copolymers were 900 tonnes, compared to 1,000 tonnes a month earlier. Local companies slightly decreased imports of pipe grade PP block copolymers. 1,900 tonnes of PP block copolymers were imported over the stated period, whereas last year's figure was 1,600 tonnes. Local pipes producers accounted for the greatest increase in demand.

Last month's imports of PP random copolymers into Ukraine rose to 923 tonnes from 637 tonnes in January; local companies significantly increased their shipments of pipe and film grades. Overall imports of PP random copolymers reached 1,600 tonnes in January-February, whereas this figure was slightly over 2,000 tonnes a year earlier.

Overall imports of other propylene copolymers were 376 tonnes over the stated period.

MRC

Egypt to halve arrears with oil companies in coming weeks

MOSCOW (MRC) -- Egypt expects to cut the USD3.5 billion euros it owes to international oil companies by around half in coming weeks, the Egyptian oil minister said, reported Reuters.

"We have made a lot of progress on paying off arrears," Tarek El Molla said at an oil and gas conference.

The minister also said he expected to finalize an agreement to import crude oil directly from Iraq in a month at the most.

"We will import around 1 million barrels a month," he said.

Asked when Egypt might become an exporter of oil and gas, Molla said the country would be self sufficient by the end of 2018.

"Starting from 2019 and beyond we can start talking about exporting," he said.

We remind that, asAs MRC informed before, in June 2016, Jacobs Engineering Group Inc. announced that it had received a contract to provide detailed engineering and procurement assistance services to TCI Sanmar Chemical for its PVC-2 polyvinyl chloride plant expansion project in Port Said, Egypt. When complete, the PVC-2 facility’s production capacity is expected to be 200 kilo-tonnes per annum (KTPA). Combined with its other global facilities, this takes TCI Sanmar’s total PVC production capacity to 400 KTPA, strengthening the company’s position as one of the largest PVC producers in the Middle East and North Africa.
MRC

RIL shuts Hazira cracker for maintenance

MOSCOW (MRC) -- Reliance Industries Ltd (RIL) has taken off-stream its cracker last weekend, said Apic-online.

A Polymerupdate source informed that the company has started maintenance at the cracker on March 24, 2017. The cracker is expected to remain off-line for around 1 month.

Located at Hazira near Surat in Gujarat, the cracker has a production capacity of 1.1 mmt/year.

As MRC informed earlier, Reliance Industries also planned to shut its PE and PP plants located at Hazira for the turnaround. PP plant has a production capacity of 600,000 mt/year. The PE plant has a capacity of 450,000 mt/year.

As MRC informed before, in February 2016, RIL was awarded a contract worth Rs. 100 crore to Petron Engineering Construction Ltd for its linear low density polyethylene (LLDPE) plant in Gujarat. The LLDPE plant is part of RIL's J-3 project in Jamnagar in the western Indian state of Gujarat. The J-3 project boasts of a petroleum refinery and allied petrochemical plants for the production of plastics and fibre intermediates.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
MRC

Aramco tax cut lifts company's value by USD1 trillion

MOSCOW (MRC) -- Saudi Arabia's decision to cut tax paid by national oil giant Saudi Aramco has increased its value by USD1 trillion, expected to be the world's largest, said Reuters.

The government said on Monday it was cutting the tax rate for Aramco to 50 percent from 85 percent as part of preparations for next year's IPO, which would sell as much as 5 percent of the company.

"By drastically reducing the tax rate, more cash will go to the potential owners of Saudi Aramco compared to the government," said Espen Erlingsen, vice-president for analysis at Rystad Energy, an oil and gas consulting service based in Oslo and New York.

"Assuming long-term oil prices averaging $75 per barrel, the valuation of the company increases from USD0.4 trillion to USD1.4 trillion," he said in a report.

That is good news for the Saudi government, which hopes to raise money to cover a USD79 billion budget deficit and invest in new industries as it tries to diversify the economy in an era of low oil prices.

Deputy Crown Prince Mohammed bin Salman, who leads economic reforms, has said the IPO will value Aramco at a minimum of USD2 trillion. A number much smaller than that could jeopardize the offer and damage his own political position.

Erlingsen calculated Aramco's value based on discounted free cash flow for each oil field. Under the new tax rate, much of the company's payments to the government are expected to be in the form of dividends, not tax.

"The total value of Saudi Aramco's revenue after costs is around USD3.4 trillion. With the old tax system, around 88 percent of the value went to the government through taxes and royalties, while with the new system around 60 percent of the profit goes to the government," Erlingsen said.

He predicted oil prices would reach USD75 by the time of the IPO, which would be near the long-term price needed to justify the share prices of other large global oil companies.

Global consultants Sanford C. Bernstein & Co said in a report that since Aramco had not released detailed financial information, it was impossible to make a reliable estimate of its value. But they said the size of Saudi oil reserves, larger than those of other oil companies, suggested Aramco could look cheap even at USD2 trillion - although that figure excluded factors such as political risks.

Using a different valuation method, enterprise value per flowing barrel, suggests a figure in the range of USD1 trillion to USD1.5 trillion, though the expected long life of Aramco's reserves compared with other companies means Aramco could command a premium to those numbers, Bernstein said.

Investment bank Tudor, Pickering, Holt & Co estimated a valuation of USD1.1 trillion for Aramco, assuming free cash flow of USD55 billion a year from its upstream operations.
MRC

Troubled California oil refinery puts PBF turnaround skills to the test

MOSCOW (MRC) -- An aging California refinery is testing PBF Energy Inc's reputation as a turnaround whiz, with mounting production woes and costly repairs at the 88-year-old plant throwing a wrench into efforts to quickly revive profits, said Reuters.

The refinery, acquired from ExxonMobil Corp for USD537.5 MM, has reported frequent breakdowns since the deal closed last July. On April 1, a regional air-quality regulator expects to consider the plant's frequent breakdowns and emissions, along with a plan to enhance safety with an expensive phase out of a chemical used in gasoline production.

PBF is spending USD100 MM this year to improve operations, and is budgeting another USD50 MM for upgrading its electric power to prevent outages. Phasing out the use of modified hydrofluoric acid at the plant presents a potentially larger bill that was not on the table when PBF bought the refinery last July.

This week, the company lowered its estimate of first-quarter crude throughput at Torrance by 16%. It has said the overhaul would allow the Torrance refinery to boost production and hit profitability goals. "These things will be fixed," PBF Chief Executive Tom Nimbley assured analysts on an earnings call last month.

The problems are weighing on earnings. Last year, the company missed its earnings goals due at least partly to outages at Torrance and at PBF's Delaware City, Del., refinery. It posted an operating loss of USD61.7 million in the fourth quarter compared with earnings of USD168 MM a year earlier.

"We left USD75 MM on the table in the fourth quarter and more than USD300 MM in terms of lost profit opportunities for the year," Nimbley said, discussing fourth quarter results. The push to phase out hydrofluoric acid, widely used in refining and semiconductor industries, came after a tank holding the chemical suffered a "near miss" from a 2015 explosion, according to a federal probe of the blast.

Hydrofluoric acid can form a toxic cloud at room temperature and exposure can cause severe health problems and lead to death. An estimated 330,000 people live or work near the refinery.

The South Coast Air Quality Management District may push to adopt a rule to phase out use of the acid by December. A study commissioned by the air regulator estimated switching to sulfuric acid would cost around USD100 million for each of the refineries in the region that use it.

PBF said in a statement that figure was "exceptionally low," and called a switch to sulfuric acid for gasoline output cost-prohibitive. A company executive has said the switch could worsen the plant's emissions. A refiner in Texas is building a similar unit for USD300 MM.

"I see no way they could avoid doing the upgrade if they wanted to stay in the gasoline business," said Robert Campbell, an analyst at consultancy Energy Aspects. Acquisitions made PBF the fourth largest independent refiner in the United States. It proved its skills by buying a Delaware City refinery, overhauling it and quickly cutting annual expenses by USD200 MM.

But the Torrance deal was troubled from the start. Closing was contingent on the plant running 15 days straight without a breakdown, but PBF went ahead despite an incident 10 days ahead of closing, saying it was not material and Exxon covered repair costs.
MRC