Sasol profit drops as power outages hit production

MOSCOW (MRC) -- South African petrochemicals group Sasol said full-year profit dropped 6 percent, pulled down by interruptions to production, a stronger rand and employee share-based payment expenses, reported Reuters.

Core headline earnings per share (HEPS) for the year ended June 30 fell to 36.03 rand (USD2.46) compared with 38.47 rand a year earlier. HEPS is the main profit gauge in South Africa, which strips out certain one-off items.

The firm said its financials were affected by unplanned electricity supply interruptions from state-owned power utility Eskom and two internal outages at its Secunda Synfuels and Natref operations that resulted in lower production.

A stronger average rand-to-dollar exchange rate compared with a year earlier also hurt results, Sasol said, while expressing optimism about operations in the coming year.

"2019 will be a defining year for Sasol with the start-up of the LCCP in the US, a catalyst for transforming our earnings profile," Chief Executive Officer Stephen Cornell said in a statement.

The Lake Charles Chemicals project (LCCP) ethane cracker in North America, which has been hit by delays and rising costs, is about 88 percent complete and is expected to cost USD11.13 billion, the firm said.

Sasol, the world’s top manufacturer of motor fuel from coal, said earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10 percent to 52 billion rand (USD3.55 billion).

The difference between core headline earnings and EBITDA was due to depreciation costs of 16 billion rand and employee share-based payment expenses of 1.5 billion rand, Sasol said.

The company declared a final dividend of 7.90 rand per share, up 1.3 percent year-over-year. That brings its total dividend declared for the period to 12.90 rand per share, compared with 12.60 rand per share a year earlier.

As MRC informed before, in July 2018, Honeywell announced that Secunda Synfuels Operations, an operating division of Sasol South Africa Ltd., will use a Honeywell Connected Plant service to monitor the operating reliability of its two Honeywell UOP CCR Platforming units at its refinery in Secunda, South Africa.
MRC

MOSCOW (MRC) -- Brazilian state-owned oil company Petroleo Brasileiro SA said it would resume operations at its Paulinia Refinery (Replan), the country’s largest, after oil industry regulator ANP gave it the green light, as prer Reuters.

ANP said it cleared areas of the facility not affected by a fire that broke out last week to restart. Petrobras said that will happen on Wednesday, with the 415,000-barrel-a-day refinery reaching 50 percent of its capacity within a week.

As MRC wrote previously, in late October 2017, Petrobras’s minority stakes in Braskem and Deten Quimica was excluded from Petrobras’s divestment program, according to a government decree published in Brazil’s Official Gazette last week. The decree prevents Petrobras from immediately selling its minority stake in Braskem, which had been announced this year. A new decree will be required to release the stock sale.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

MOSCOW (MRC) -- The chemical manufacturing unit of Malaysia’s state energy firm Petronas is actively looking to acquire companies to expand its specialty chemical business, reported Reuters with reference to its chief executive officer.

Petronas Chemicals Group Bhd is looking to grow aggressively in specialty chemicals, which are raw materials used to manufacture consumer products such as high-performance tyres and LCD televisions.

CEO Sazali Hamzah said acquisitions would be a key step toward expanding the higher-margin specialty chemicals business.

"We have already targeted a few. When we acquire, it’s not only for technology but also for market penetration," Sazali told Reuters in an interview, adding that Petronas Chemicals was looking at companies in Europe, the United States and India.

Sazali also said the acquisition market was competitive as a lot of companies are looking to expand into petrochemicals.

The hunt for acquisitions comes as parent company Petroliam Nasional Bhd, or Petronas, relies more on its downstream business to boost revenue amid analyst estimates that it will produce less oil in the future.
Much of Petronas’ capital expenditures in the last few years has been spent on its downstream business, particularly the Refinery and Petrochemical Integrated Development (RAPID) project in the southern Malaysian state of Johor.

RAPID is part of the Pengerang Integrated Complex (PIC) that includes a 300,000 barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes and an oil storage site.

Companies such as Saudi Aramco, Exxon Mobil Corp and Royal Dutch Shell Plc have all been expanding into petrochemicals in recent years to diversify their businesses from crude oil production.

Last year, Aramco inked a deal to invest USD7 billion in RAPID. It later bought a USD900 million stake in petrochemical projects in the RAPID complex.

Petronas Chemicals is spearheading the petrochemicals component of RAPID, which is Petronas’ largest downstream project with an estimated USD27 billion of total investment.

Sazali said Aramco could expand its investment in PIC.

"There is a possibility... Some we offer to them, some they are interested in but subject to the economics of it," he said.

The company is conducting joint studies with other potential partners for developing more petrochemical projects in PIC, he said, declining to provide details.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
MRC

MOSCOW (MRC) -- South Africa’s competition watchdog approved Glencore’sroughly USD900 million bid for Chevron’s local and Botswana assets on Thursday, bolstering its chances of scuppering a rival bid from China’s Sinopec, reported Reuters.

Chevron agreed last year to sell its stake to state-owned Sinopec before miner and commodities trader Glencore swooped in after reaching a deal with minority shareholders, who backed it and exercised preemptive rights on the sale.

At stake is a 75 percent share in Chevron’s South African subsidiary that runs a 100,000-barrels-per-day oil refinery in Cape Town, a lubricants plant in Durban and 820 petrol stations and other oil storage facilities.

The sale also includes 220 convenience stores across South Africa and Botswana.

For Glencore, the deal would secure the trader’s first refining asset since it ventured into downstream investments. For Sinopec, it would mark its second major refinery investment as the company looks to expand overseas amid a saturated home market.

Both deals have now been given the green light from the Competition Commission subject to several conditions that include the preservation of jobs after the deal.

It is now up to the Competition Tribunal, which makes the final ruling on deals, to decide whether to accept the Commission’s recommendations. The Tribunal has already approved Sinopec’s bid.

As MRC informed earlier, in July 2016, USD36.8bn expansion of the Tengiz oilfield in Kazakhstan, the largest investment by private sector oil companies this decade, was given the go-ahead by Chevron of the US, bucking the trend of delays and cancellations resulting from the slump in crude prices since mid-2014.

Chevron Corporation is an American multinational energy corporation. One of the successor companies of Standard Oil, it is headquartered in San Ramon, California, and active in more than 180 countries. Chevron is engaged in every aspect of the oil, natural gas, and geothermal energy industries, including hydrocarbon exploration and production; refining, marketing and transport; chemicals manufacturing and sales; and power generation.
MRC

MOSCOW (MRC) -- Total has accepted an offer from INEOS Styrolution, the leading global styrenics supplier, to acquire its polystyrene business in China, as per the company's press release.

It includes in particular two facilities with a production capacity of 200,000 tons per year each, located in Ningbo, Zhejiang Province, and in Foshan, Guangdong Province.

In a highly competitive polystyrene market, Total considered it did not have the required critical mass in China, unlike its positions in Europe and the United States.

"The sale is in line with our active portfolio management strategy" commented Bernard Pinatel, President, Refining & Chemicals at Total. "Our polystyrene business will be now focused on Europe and North America, two markets where we are the No. 2."

INEOS Styrolution has made clear commitments to maintain the business and jobs and meet commitments to customers. The transaction is subject to the approval of the relevant regulatory authorities.

The Ningbo plant produces 200,000 tons of polystyrene a year and has 54 employees. It also includes a unit that manufactures polypropylene compounds for automotive parts. After the closing of the transaction, the polypropylene compounds production will be exclusively dedicated to Total.

The Foshan plant produces 200,000 tons of polystyrene a year and has 86 employees.
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