Lotte Titan plans maintenance at LLDPE unit

MOSCOW (MRC) -- PT Lotte Titan Nusantara Indonesiam, part of Lotte Group, is likely to take its Linear Low Density Polyethylene (LLDPE) unit off-stream at Cilegon, as per Apic-online.

A Polymerupdate source in Indonesia informed that the company has planned to halt operations at its unit on mid-December, 2017 for maintenance. The unit is expected to remain off-line for around 15 days.

Located in Cilegon, Indonesia, the plant has a production capacity of 200,000 mt/year.

As MRC reporeted earlier, Lotte Chemical Titan, a local petrochemical unit of South Korean conglomerate Lotte Group, plans to start construction of a USD4 bln naphtha cracker plant in Indonesia next year. The project, which has been delayed for three years due to land acquisition problems, will help Indonesia reduce expensive chemical imports. The plant will have a capacity to produce 1 million tons of ethylene and 600,000 tons of propylene annually.

The Lotte Group currently has a presence in Indonesia via its subsidiary, Honam Petrochemicals, which acquired Malaysia’s polyolefin major Titan Chemicals in July 2010. Included in the acquisition was Titan’s Indonesian subsidiary - PT Titan Petrokimia Nusantara (TPN), which has a polyethylene (PE) production capacity of 450,000 tonnes/year.
MRC

Eni targets plastics purchase in strategy shift

MOSCOW (MRC) — Energy firm Eni aims to express an interest in bidding for an Italian bioplastics business in a move that underlines a longer-term desire to hedge its exposure to oil and gas, financial sources said, as per Hydrocarbonprocessing.

Eni wants to revive its chemicals, retail and refining businesses to offset volatility in oil prices and regain favour with investors after its shares underperformed those of industry rivals in the past three years, the sources said. The state-controlled major is looking at the Italian assets of bioplastics multinational Mossi Ghisolfi, which has been put under creditor protection, two banking sources said.

"Non-binding bids are due in the next few days and Eni is there," one of the sources said, adding that the deal was worth "hundreds of millions of euros". There has been media speculation about Eni being interested in Mossi Ghisolfi, but this is the first time it has emerged the group would submit bid interest in the assets. Eni did not comment.

The potential acquisition, although small for Eni, flags an ongoing strategy shift for CEO Claudio Descalzi, who has spent four years creating a lean exploration business, racking up big discoveries in places like Mozambique and Egypt.

While keeping a firm focus on exploration, the 62-yr-old reservoir engineer now wants to rejig the business model to bolster and create greener midstream and downstream businesses like marketing and refining as a hedge against oil price swings.

An acquisition of Mossi Ghisolfi's Italian unit, which uses agricultural waste to make plastics, would fit such a profile. The move comes at a time when the boom in renewable energy and the prospect of a world powered by electric vehicles is creating a challenge for the oil industry.

Eni has been sounding out investors on why its shares have underperformed and feedback suggested more downstream protection is needed, said two fund managers contacted by the group. Its heavy presence in high-risk areas such as Libya and Nigeria was another reason for concern, they said.

"It makes sense to build a more balanced portfolio less exposed to oil price swings ... It will help boost multiples and support the stock," said Mediobanca oil analyst Alessandro Pozzi.

Since oil prices plunged from above $100 a barrel in 2014 to below $30 in 2016, Eni shares have fallen more than 20% while France’s Total has risen 7% and Royal Dutch Shell 9%. Total and Shell have fared better because they have greater exposure to downstream businesses such as refining and petrochemicals, where demand is lifted by economic growth fueled by lower crude prices.

ExxonMobil Corp said last week it was revamping its refining and chemical operations to boost profits. Eni, whose exploration and production (E&P) arm generated more than 80% of operating income over 2015 and 2016, has been the industry's best discoverer in recent years. But its downstream business has struggled.

A year or so ago, it toyed with the idea of selling its chemicals and retail operations but pulled both deals, opting instead to streamline operations and make them more profitable. That strategy has led it to consider acquisitions, sources said. CEO Descalzi has said the group could float its retail arm with an initial public offering (IPO) within 2 yr to 3 yr. A banker familiar with the matter said Eni wanted to strengthen its retail business, adding this could involve acquisitions.

Eni is seeking to reduce its carbon emissions, making new investments in solar plants and converting refineries to biofuels. Last month, it signed a deal with carmaker Fiat Chrysler to work on new carbon-low fuels for cars. It also plans to expand its LNG business. "It used to be all about E&P. Now at its roadshows Eni dedicates almost half the time to downstream," the banker said.
MRC

European producers did not raise December PE prices for CIS countries

MOSCOW (MRC) - December contract price of propylene in Europe was agreed up by EUR32/tonne from the level in November. However, most European polyethylene (PE) producers did not increase their December export PE prices to the CIS countries, as per ICIS-MRC's Price report.

Negotiations over December prices of European PE to be shipped to the CIS markets began in the beginning of last week. Many negotiators said most European producers had not increase their export PE prices, despite the rise of monomer prices. The only exception was linear polyethylene, which nevertheless increased by EUR30/tonne in comparison with the level in November.

The difficult situation was with high density polyethylene (HDPE) prices in November. At the beginning of the month, producers from Europe decreased prices, and then in the second half of November there was also another price cut.
As a result, by the end of the month, HDPE prices fell to EUR920-1,000/tonne, FCA.

European producers announced December HDPE shipments in the range of EUR990-1,070/tonne, FCA, but in the process of negotiations they had to drop prices to the level of EUR980-1,050/tonne, FCA.

Deals for black PE100 were discussed in the range of EUR1,270-1,290/tonne FCA, up EUR20/tonne from November.
Deals for November shipments of low density polyethylene (LDPE) were negotiated in the range of EUR1,070-1,180/tonne FCA, whereas last month's deals were done in the range of EUR1,085-1,180 /tonne FCA.

European producers increased the price only for hexene and octene linear polyethylene (LDL C6 and C8). Deals for linear low density polyethylene (LLDPE) were agreed in the range of EUR1,310 - 1,420/tonne FCA, up on average by EUR30/tonne from November.
MRC

Alfa Laval awarded USD6.5-MM heat exchanger order

MOSCOW (MRC) — Alfa Laval—a company in heat transfer, centrifugal separation and fluid handling—has won an order to supply Alfa Laval Packinox heat exchangers to a refinery in the Middle East, as per Hydrocarbonprocessing.

The order worth approximately USD6.5 MM, is booked in the Welded Heat Exchangers unit of the Energy Division. Delivery is scheduled for 2018.

The order comprises compact heat exchangers for energy recovery in the refinery process where low octane refinery naphthas are converted into high-octane liquid products.
MRC

Re-emerging supply, lower demand push down oil refining margins

MOSCOW (MRC) — Profits on refining fuel oil have been hammered to multi-month lows over the past two weeks on emerging signs of growing supply and faltering demand, retreating from stubbornly elevated levels at the start of the quarter, said Hydrocarbonprocessing.

By the end of October, fuel oil refining margins in Singapore were around 30% higher than the same time a year ago. They were boosted by expectations that the Organization of the Petroleum Exporting Countries would continue propping up crude oil prices by withholding supplies of fuel oil rich grades, as well as by lower output from key producers like Russia and Venezuela.

But some indications of growing supply and weaker demand conditions have recently dragged on fuel oil refining margins, four trade sources said. They all declined to be identified as they were not authorized to speak with media.

"It's not too surprising (that margins have fallen)," said one Singapore-based fuel oil trader. "Fundamentals are looking slightly weaker and (refining) margins were probably over-extended."

The discount of the Rotterdam 380-centistoke high-sulfur fuel oil to benchmark Brent crude for January settled at an eight-month low of USD9.21/bbl on Wednesday, sharply down from the USD7.51/bbl discount at the start of November.

Pakistan State Oil (PSO), a key Asian fuel oil consumer, recently cancelled a tender to import up to 565 Mt of fuel oil for January delivery and announced it would suspend imports of the fuel as the country turns to LNG to fuel its power sector.

PSO in 2017 imported an average of about 400 Mt to 650 Mt of fuel oil a month, and its lower fuel oil demand has this week driven stocks of the fuel in the Fujairah oil hub in the United Arab Emirates, where most of its imports are sourced, to a more than four-month high.

In the Singapore storage hub, fuel oil inventories also climbed to a five-week peak, the latest official data showed.

Meanwhile, fuel oil coming out of Mexico is on the rise. Exports could climb by 250 Mt to 400 Mt by January following the restart of the Salina Cruz refinery on the country's Pacific coast, two Singapore-based fuel oil traders said.

Since the start of August, Singapore fuel oil imports from Mexico have totaled 290 Mt compared to the 960-Mt imported over the same period in 2016, official data shows.
MRC