BP mulling IPO of US Midwest and Gulf Coast pipeline assets

MOSCOW (MRC) -- BP Plc is considering an initial public offering of its vast US Midwest and Gulf Coast pipeline assets, the company said on Tuesday, a move that would raise cash, reported Reuters.

The proposed spinoff, which would be called BP Midstream Partners, revives a plan first broached internally about five years ago before slumping crude oil prices caused the company to put the idea on hold, a person familiar with the proposal said.

BP's plan would spin off crude oil, natural gas and fuel pipelines in a master-limited partnership (MLP), a tax-advantaged structure often used by pipeline and other capital intensive companies. If it decides to go ahead with the idea, BP said it would register the subsidiary by year-end.

The company and its underwriters have retained advisors to explore the sale, the source said.

A spinoff likely would be one of the larger initial public offerings of the year, the person said, speaking on the condition of anonymity as the talks were private.

BP did not comment on the details or potential valuation of a possible transaction beyond the press release. It would own the MLP's general partner and receive all of its distribution rights, the statement said.

Several other energy companies have spun off their pipeline assets to generate capital. They include rival Royal Dutch Shell Plc, which in 2014 raised nearly USD1 B in the largest MLP IPO to date, along with refiners like Valero Energy Corp, Tesoro Corp, and Marathon Petroleum Corp.

Shell was the first oil major to use this structure to generate cash from its assets. Shell's partnership has a market value of about USD5.38 B. BP's pipeline network is slightly smaller than Shell's.

Previous efforts by BP to sell pipeline assets have not materialized. Last year, BP approached Enbridge Inc to sell some of BP's offshore Gulf of Mexico pipeline network, but the deal fell through, according to a person familiar with that transaction.

BP's US pipeline business includes a network of 3,500 mi of pipelines and terminal facilities that transport and store more than 1.3 MMbpd of oil, refined products and natural gas. In addition to the Gulf Coast and Midwest assets, BP operates pipelines in the Pacific Northwest. Under US tax codes, MLPs are partnerships that do not pay corporate income tax on distributions, or earnings, to partners. The partners, or owners, are responsible for paying taxes on the distributions.

BP's potential IPO of its midstream assets comes at a rough time for the US pipeline sector.

While pipeline operators derive profit from long-term contracts not linked to commodity price gyrations, the dip in oil prices in recent years has nonetheless weighed on the sector, said Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions.

"There's this perception in the market that the midstream sector is meant to be insulated from the volatility of the commodity price movement," said Essner. "But retail investors have gotten spooked by oil markets."

The price of crude oil has fallen sharply in recent months, with oil overall down nearly 14% this year. The Alerian MLP exchange-traded fund, which tracks the performance of more than two dozen midstream companies, has lost more than 4% in 2017, according to Thomson Reuters data.

BP is still paying down costs from the deadly 2010 Deepwater Horizon rig explosion at its Macondo well in the Gulf of Mexico in 2010. The company is set to pay up to USD5.5 B in cash payments to US authorities this year as part of one settlement.

BP has sharply reduced its capital spending over the past three years in the face of a drop in oil prices, but it still requires an oil price of around USD60/bbl in order to cover its costs, dividends and penalties.

The lesson for BP from Shell's experience is a master limited partnership drawing on existing assets can allow it to get cash and continuing income from its capital-intensive operations while still working closely with the asset owners.

"We prioritize our assets and maintain strategic control," said John Hollowell, chief executive of Shell Midstream Partners in an interview last month referring only to Shell's decision-making. "The key part for us is allows to have the best of both worlds. We can monetize and maintain control of the asset."

As MRC informed before, in 2013, UK-listed oil and gas giant BP Plc won approval of an agreement for the U.S. government to not count 810,000 barrels of oil captured before they became part of the 2010 Gulf of Mexico spill, reducing the potential maximum fine under the Clean Water Act by USD3.4 billion.

BP is one of the world"s leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.
MRC

MOSCOW (MRC) -- AkzoNobel’s Specialty Chemicals business has finalized the first application agreement for bio-based polymers to result from its collaboration with specialty polymers company Itaconix, as per the company's press release.

Announced earlier this year, the joint development agreement involves AkzoNobel’s Performance Additives unit developing applications for Itaconix polymers to be used in the coatings and construction industries.

"We are pleased to be announcing the first in a series of agreements to develop these polymers for commercial use," said Peter Nieuwenhuizen, RD&I Director for AkzoNobel’s Specialty Chemicals business. Nieuwenhuizen detailed the development during a presentation today at the BIO World Congress on Industrial Biotechnology in Montreal.

"Being able to incorporate polymers made from renewable bio-based raw materials will give a significant sustainability advantage for our customers and also fits closely with our own Planet Possible sustainability agenda of doing more with less," he said.

Under the agreement, Itaconix will contribute its proprietary polymers from itaconic acid, which are obtained from sugars through fermentation. Continued Nieuwenhuizen: "In addition to applications in coatings and construction materials, bio-based polymers have the potential to be used in a range of other everyday essentials, ranging from improving water quality to cleaning and hygiene products."

Dr. Kevin Matthews, CEO of Itaconix, added: "This is the first commercial step in our joint development agreement to collaborate on delivering valuable solutions to AkzoNobel customers with the novel performance of our polymers. We are excited to further strengthen our relationship with AkzoNobel and look forward to combining their deep application knowledge with our unique chemistries to build key product positions in these large and important markets."

Nieuwenhuizen also pointed out that the collaboration with Itaconix is another example of AkzoNobel’s approach to embracing open innovation to help find more sustainable solutions. The company recently announced the winners of its Imagine Chemistry open innovation challenge, which included start-ups working in fermentation and with bio-based raw materials.

As MRC informed before, in December 2016, AkzoNobel finalized the acquisition of BASF’s global Industrial Coatings business, which supplies a range of products for industries including construction, domestic appliances, wind energy and commercial transport, strengthening its position as the global number one supplier in coil coatings. The transaction includes relevant technologies, patents and trademarks, as well as two manufacturing plants in the United Kingdom and South Africa. Completing this transaction also positions AkzoNobel as a full service coatings provider for the protection and maintenance of wind turbines, providing essential protection to wind power stations around the globe.

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.
MRC

MOSCOW (MRC) -- Celanese Corporation, a global technology and specialty materials company, has declared a quarterly dividend of USD0.46 per share on its Series A common stock, payable on August 7, 2017, as per the company's press release.

The dividend is payable to stockholders of record as of July 28, 2017.

As MRC informed before, Celanese Corporation raised the price for emulsions sold in Europe. Effective July 1, 2017, or as contracts otherwise allow, the following price increases applied:

- EVA - EUR75/tonne;
- VAM Homopolymers (PVAC) - EUR75/tonne;
- VAM Copolymers - EUR75/tonne;
- Pure Acrylics - EUR180/tonne.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,300 employees worldwide and had 2016 net sales of USD5.4 billion.
MRC

MOSCOW (MRC) -- Europe must be prepared to respond in kind if the United States' proposed new sanctions against Russia end up hurting its companies, an influential German industry association said on Thursday, reported Reuters.

US lawmakers reached an agreement on Wednesday paving the way for the US Senate to pass a bill as early as this week to impose the new sanctions on Russia and bar President Donald Trump from easing them without Congress' approval.

The European Union fears the new US restrictions could be an obstacle to its companies doing business with Russia and threaten the bloc's energy supply lines, but the 28-country bloc is divided over how to respond.

The head of the German Committee on East European Economic Relations said potential damage to European energy sector companies with business interests in Russia could justify counter-sanctions.

"It's the last thing we want, but we must keep the option open," Michael Harms told a news conference in Berlin.

"The sanctions they want against pipeline projects seem designed to boost US energy exports to Europe, create US jobs and strengthen US foreign policy."

Unlike the United States, whose growing production of shale gas has slashed its reliance on energy imports, much of Central Europe depends on imports of Russian gas through a vast latticework of pipelines.

"Imposing sanctions that hit a third party, namely Europe, and at the same time promoting the American economy with the slogan 'buy American gas' - that's pretty striking," said Kurt Bock, chief executive of Germans chemicals giant BASF?, which drills for gas in Russia.

The EU has imposed its own sanctions against Russia over its role in the Ukraine crisis, and Germany has taken a particularly tough stance towards Moscow.

Last week Reuters reported that Germany was urging Brussels to add four more Russian nationals and companies to its blacklist over Siemens gas turbines delivered to Ukraine's Crimea region, annexed by Moscow in 2014.

German economy minister Brigitte Zyries complained on Thursday that Washington had abandoned the "common line" it has maintained with Europe over Russia.

But despite the EU sanctions and Europe's criticism of Moscow on other fronts as well as Ukraine - including allegations that Russian spies are meddling in Western elections - Russia remains a crucial business partner for Germany.

On Thursday, the Committee raised to 20% its forecast for growth in German exports to Russia in 2017, compared to 10% in its previous forecast.

As MRC informed before, Russia's overall output of chemicals increased in the first six months of 2017 by 7.4%, despite lower production in May and June, according to Rosstat. According to the Federal Service of State Statistics, last month's production of basic chemicals dropped by 1.4% from May 2017. This reduction was 1.5% a month earlier. However, production of basic chemicals grew by 7.4% year on year. June output of ethylene was 257,000 tonnes, compared to 260,000 tonnes a month earlier, lower production in April was caused by a scheduled shutdown for maintenance at Angarsk Polymers Plant. Overall, over 1.5 m tonnes of this olefin were manufactured in the first six month of 2017, up by 10.2% year on year.
MRC

MOSCOW (MRC) -- W. R. Grace & Co., a supplier of polyolefin catalyst technology and polypropylene (PP) process technology, has contracted to license its UNIPOL PP Process Technology to Canada Kuwait Petrochemical Corporation (CKPC), a 50/50 JV between Pembina Pipeline Corporation of Canada and Petrochemical Industries Company K.S.C. of Kuwait, as per Hydrocarbonprocessing.

The new installation will be part of CKPC's proposed integrated propane dehydrogenation/PP facility located in Sturgeon County, Alberta. If built, the PP line would be the world's largest single train, capable of producing 550,000 mtpy of PP, including homopolymer, random copolymer, and impact copolymer thermoplastic resins.

This is Grace's 16th new UNIPOL PP technology license since 2012 and its second in Canada. Grace's all gas-phase UNIPOL PP Process Technology provides the advanced and broad range of homopolymers, random copolymers, and impact copolymers in the industry.

As MRC informed earlier, in July 2016, BASF closed the previously announced transaction to divest its global Polyolefin Catalysts business to W. R. Grace & Co. Earlier, W.R. Grace acquired Dow's Unipol PP process licensing and related catalyst business for USD510 million in 2013.
MRC