South Korean Lotte Group aims to list Malaysian petrochemical unit in Q3 2017

MOSCOW (MRC) -- South Korean conglomerate Lotte Group plans to list its Malaysian petrochemical unit in the third quarter, company filings show, in an initial public offering that sources say could raise as much as USD1.5 billion, reported Reuters.

The listing could be one of the biggest IPOs in years in Malaysia, which has not seen any listing of USD1 billion and above since the USD1.5 billion IPO of Astro Malaysia Holdings in 2012.

In a filing on the Korea Exchange on Tuesday, the conglomerate's unit, Lotte Chemical Corp, said it plans to list subsidiary Lotte Chemical Titan Holding on the Bursa Malaysia stock exchange.

Lotte Chemical said it plans to offer up to 740.48 million shares in its Malaysian unit, with an over-allotment option for up to 55.54 million shares.

It listed the target IPO date as the third quarter of 2017 and said proceeds will be used to build a naphtha cracker in Indonesia and a polypropylene plant in Malaysia, as well as to expand its cracker facility in Malaysia.

The IPO was originally planned for last year but was shelved following revelations of South Korea's investigations into alleged fraud at Lotte Group.

Maybank Investment Bank Bhd, Credit Suisse and J.P. Morgan are joint global coordinators on the deal, while CIMB Investment Bank, HSBC and Nomura are joint bookrunners.

Lotte Chemical said the size and pricing of IPO is yet to be determined.

Two sources familiar with the matter said the company is looking to raise USD1-USD1.5 billion in the IPO. The sources did not want to be identified as the talks are private.

One source said the IPO prospectus will likely be listed on the Malaysian securities regulator's website for review within days.

Lotte Chemical Titan did not immediately respond to requests for comment.

As MRC informed earlier, in May 2016, Lotte Chemical Corp. finalized the takeover of Samsung Group’s chemical units.The company said that it paid for money to acquire Samsung SDI Chemical on Apr. 29 and completed the acquisition of Samsung Group’s chemical businesses in about six months after the announcement of "Big Deal" in October 2015. Samsung Fine Chemicals, which was completely taken over by Lotte in Feb., changed its name to Lotte Fine Chemical, while SDI Chemical, which completed the acquisition process on the 29th, changed its name to Lotte Advanced Materials through the general meeting of stockholders.

Established in 1976, Lotte Chemical has been solidifyng its position by localizing cutting-edge petrochemical technologies. Among the high-quality products produced by Lotte Chemical through its efficient processes are ethylene, HDPE, LDPE, LLDPE, PP, functional resin, EG, SM, PIA, PET, etc. Lotte Chemical’s products are being distributed to 152 countries around the world. With the acquisition of Pakistan’s PTA in 2009, Artenius in the UK in 2010 and Titan Chemical Corp., Lotte Chemical is now able to efficiently supply excellent products to an increasing number of countries. The company is further accelerating its efforts to strengthen its global competitiveness by establishing overseas branches in Hong Kong, Russia, and USA, along with the sales corporation in China for active sales activities both in domestic and abroad.
MRC

MOSCOW (MRC) -- Top Asian refiner Sinopec Corp exported its first refined fuel cargo under so-called general trade terms in 13 yr, the company said on Friday, as China's state-owned refiners adapt to tighter government export quotas, said Reuters.

Sinopec exported a diesel cargo on April 1 from its Qingdao plant in east China for delivery to Singapore under the rules, it said. Chinese refiners mainly export refined oil products under processing trade terms and the government has set an annual quota on how much each refiner can ship.

The government slashed the second round of export quotas under processing trade rules for 2017 by 73% versus the first batch. Under the processing scheme, refiners are exempted from taxes on both the crude oil imported and the oil products exported, while under the general trade category plants get tax refunds after exports are completed, said four traders familiar with the rules.

Both require quotas, but general trade offers much greater flexibility as refiners have the full authority to decide when and how much refined fuel to export. "For large refiners like Sinopec and PetroChina, the flexibility to market refined barrels in domestic or overseas market as they see fit means good profitability," said a former state oil trading executive.

It was not immediately clear how many quotas Beijing is considering or may have issued to state refiners under the general trade rules. The shipments like Sinopec's cargo could be a supplement to the prevailing exports under processing trade, said two Beijing-based oil traders.

Under the processing, or so-called "tolling" schemes, refiners have a fixed volume and time slots to export, both under tight scrutiny of Chinese customs, the Beijing-based oil traders said.

Beijing has suspended the grant of export quotas under processing trade rules to independent refiners for this year, ending a year-old policy allowing some independents to sell diesel, gasoline and naphtha abroad and dealing a blow to the group.

General trade exports are totally off-limits to these independents, executives at these smaller firms have said.
MRC

MOSCOW (MRC) -- The April contract price of ethylene was settled at the level of March in Europe. Therefore, European polyethylene (PE) producers were forced to roll over March prices for April shipments, according to ICIS-MRC Price report.

Negotiations over export prices of European PE to be shipped to the CIS markets began on Monday. Many negotiators said all European producers had rolled over their export PE prices. Some producers, on the contrary, had to reduce their prices because of fairly high prices in March.

April deals for high density polyethylene (HDPE) were discussed in the range EUR1,170-1,225/tonne FCA, whereas last month's deals were done in the range of EUR1,180-1,240/tonne FCA. Negotiations over black pipe grade PE 100 were held in the range of EUR1,300- 1,360/tonne FCA.

Most European producers still had serious restrictions on exports.

Deals for April shipments of low density polyethylene (LDPE) were negotiated in the range of EUR1,300 - 1,350/tonne FCA, which virtually corresponds to last month's prices. As in the case with HDPE, some producers still had restrictions on PE shipments.
MRC

MOSCOW (MRC) -- Air Liquide and Oman Oil Refineries and Petroleum Industries Company (Orpic), Oman’s national refining company, recently signed a long-term agreement for the supply of nitrogen to the Liwa Plastics Industries Complex (LPIC), a new plastics production complex including the country’s first steam cracker Orpic is adding to its existing production facilities, in Sohar industrial port area in Oman, said Air Liquide on its site.

Investing around EUR20 MM to build a state-of-the-art nitrogen production unit with a total capacity of 500 t of nitrogen per day, Air Liquide will strengthen its leadership position in a key industrial area to support the growth of its customer Orpic.

Expected to start operations in the first quarter of 2019, the new nitrogen plant, along with the expansion of Air Liquide’s existing pipeline network, will supply nitrogen for the customer’s plastics production complex expanding to a capacity of polyethylene and polypropylene of 1.4 MMtpy. Those plastics components are needed for many applications in derived products from petroleum, such as packaging industries as well as other industrial applications.

The nitrogen production unit will be designed and built by Air Liquide’s Engineering and Construction teams, and will be owned and operated by Air Liquide Sohar Industrial Gases Company.

"We are pleased to strengthen our relationship with a strategic petrochemical player such as Orpic," said Francois Jackow, member of the Air Liquide Group’s Executive Committee, supervising Africa, Middle East and India. "Air Liquide demonstrates its ability to continue capitalizing on its existing assets, such as its pipeline network located in the most dynamic industrial basin of Sohar. With this new nitrogen supply contract, Air Liquide will support the development of the petrochemical industry in Oman."
MRC

MOSCOW (MRC) -- PKN ORLEN will supply up to 100,000 t of propylene annually to Basell Orlen Polyolefins. The contract covers the production volume of the Metathesis Unit, currently constructed in Plock and scheduled for commissioning in the second half of 2018, as per Hydrocarbonprocessing.

The annual value of the propylene supply contract is approximately PLN 350m. The contract will remain in effect throughout the term of the JV agreement under which Basell Orlen Polyolefins Sp. z o.o. (BOP) was established in 2002. PKN ORLEN holds a 50% equity interest in BOP.

"We have already secured a contract to sell the entire output of the Metathesis Unit, to guarantee full utilization of its future capacities. Thanks to the contract, Basell Orlen Polyolefins will be able to plan increased production of polypropylene. The contract is a part of PKN ORLEN’s strategy to grow its petrochemical business through synergies with BOP," said Piotr Chelminski, Member of the PKN ORLEN Management Board, responsible for Power Generation, and Chairman of the Supervisory Board of Basell Orlen Polyolefins.

The Metathesis Unit, currently being built at the Plock Production Plant, will deliver polymer grade propylene. The Plant’s current nominal capacity of 450,000 t of propylene will be raised to 550,000 tpy. The project will cost approximately PLN 400m.

As MRC informed before, in December 2016, PKN Orlen signed an annex with Tatneft Europe AG to the agreement for crude oil supplies to Czech refinery in Litvinov that provides the extension of contractual period and increases the possible maximum volume of the crude oil delivered. According to the annex, Tatneft will deliver to Litvinov refinery a crude oil in the quantity from 1,620 MMt to maximum 3,960 MMt. The contract will be valid from Jan. 1, 2017 until Dec. 31, 2019.

PKN Orlen is a major Polish oil refiner and petrol retailer. The company is a significant European publicly traded firm with major operations in Poland, Czech Republic, Germany, and the Baltic States. It currently (2015) ranks 353, with a revenue of over USD33.8 billion.
MRC