Aramco sells USD12B bonds out of record USD100B demand

MOSCOW (MRC) -- Saudi Aramco is set to raise USD12 billion with its first international bond issue after receiving more than USD100 billion in orders, a record breaking vote of market confidence for the oil giant which has faced investor concerns about government influence over the company, said Hydrocarbonprocessing.

State-owned Aramco's bond issue, split into maturities ranging from three to 30 years, is seen as a gauge of potential investor interest in the Saudi company's eventual initial public offering. Before the bond deal was marketed on Monday, Saudi Energy Minister Khalid al-Falih said initial indications of interest for the paper were over USD30 billion.

Having swelled to over USD100 billion during the sale process, demand appeared to be the largest ever for emerging markets bonds, fund managers said, surpassing orderbook value of more than USD52 billion for Qatar's USD12 billion deal last year, USD67 billion for Saudi Arabia's inaugural issue in 2016 and USD69 billion orders for Argentina's USD16.5 billion trade that year.

Such strong interest was also the latest sign that international investors are pouring money back into Saudi Arabia, as the kingdom tries to move on from the murder of Saudi journalist Jamal Khashoggi after his killing at the hands of Saudi agents in October strained ties with Western allies. "Purely on figures, it is a fantastic credit," said Damien Buchet, CIO of the EM Total Return Strategy, Finisterre Capital.

But he added: "The thing is, they are part of Saudi Arabia, they are a government arm. For equity investors this is always going to be an issue, more so than for bond investors." The Aramco issue has attracted interest from a wide range of investors, as the oil producer's vast profits would put its debt rating - if unconstrained by its sovereign links - in the same league as independent oil majors like Exxon Mobil and Shell.

Aramco has insisted on its independence while meeting investors ahead of the bond issue last week, saying the Saudi government remained committed to Aramco's governance framework to safeguard its independence even when oil prices dropped.

But for some investors Riyadh's control over the oil giant is an issue as its state ownership means decisions will ultimately be for the benefit of the government rather than investors.

As MRC informed earlier, demand for Saudi Aramco's inaugural international bond, seen as a gauge of potential investor interest in the oil company's eventual initial public offering, is higher than USD30 billion

Shell says Pernis oil refinery strike having significant impact

MOSCOW (MRC) -- Royal Dutch Shell said a strike over wages was having a significant impact at its 400,000 barrel per day Pernis oil refinery and the Moerdijk petrochemical plant, reported Reuters.

Dutch trade union FNV said on Monday production at Europe’s biggest refinery will be gradually reduced to 65% of capacity.

"The actions (are) significant in many ways, short-term and longer-term, and we are disappointed in the heaviness and size of the actions already from the start," a spokeswoman said.

"(The salaries of) those that register themselves as ‘actioners’ will be cut by a percentage I can’t specify further. Again, this is to support the majority of the workers that are work-willing and that are impacted by the actions as well."

The wage reductions will be implemented as early as this afternoon for as long as the strike continues, she said, declining to give more details.

As MRC wrote previously, in May 2018. China National Offshore Oil Corporation (CNOOC) and Shell Nanhai B.V. (Shell) announced the official start-up of the second ethylene cracker at their Nanhai petrochemicals complex in Huizhou, Guangdong Province, China.

Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. Shell companies have operations in more than 70 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects.

David Castaneda is new CEO of Elix Polymers

MOSCOW (MRC) -- Elix Polymers, a Spain-based manufacturer of ABS resins and derivatives, has appointed David Castaneda as its new CEO, as per Canplastics.

Castaneda takes over for Wolfgang Doering, who stepped down at the end of March. In a statement, Elix said that Castaneda has more than 15 years of experience in the polymer and chemical industry, and he has held various senior management roles in operations, technology, and business development and innovation. He has worked for Elix for the past several years, the company said, and “has been part of the successful transformation of [Elix], leading the organization to the next level of operational excellence, and identifying business opportunities that have supported [our] growth and expansion."

Doering had been with Elix since 2012, and “made a significant contribution to the development of Elix under the ownership of Sun European Partners LLP,” the statement said. “This year, on Jan. 9, he led the first steps towards integrating Elix into the chemical group Sinochem International (Overseas) Pte. Ltd."

Elix is headquartered in Tarragona, Spain; it’s North American subsidiary, Elix Polymers Americas, is located in Weston, Fla.

As MRC informed earlier, ELIX Polymers, a thermoplastics manufacturer located in Tarragona's Poligono Sur industrial complex, has announced a new investment amounting to 4 million euros, whose objective is to optimize its ABS powder production facilities. The company expects to begin executing this new project in 2018, which it will continue to develop and consolidate throughout this year and 2019.

ELIX Polymers is one of the most important manufacturers of ABS resins and derivatives in Europe, with 40 years of experience in engineering plastics and an installed capacity of 180,000/year from their plant in Tarragona (Spain) to the world. The operation starts in 1975, when the Tarragona ABS and SAN production plant was inaugurated.

High oil supply disruptions set stage for next slump

MOSCOW (MRC) -- Global oil output is being hit by expanding US sanctions and other unplanned disruptions which, in an echo of market conditions around five years ago, are pushing prices higher in the short term but also setting the stage for the next slump, as per Hydrocarbonprocessing.

Unplanned factors reduced global production by 2.8 million barrels per day in March, down from 3.3 Mbpd in February, but up from 1.8 Mbpd a year earlier, according to the U.S. Energy Information Administration (EIA).

Disruptions among members of the Organization of the Petroleum Exporting Countries (OPEC) reached 2.49 Mbpd in March, double the same month last year. In recent months, OPEC and total disruptions have been running at the highest levels for almost three years and near some of the highest for a decade (“Short-Term Energy Outlook”, EIA, April 2019).

And the EIA figures do not include Venezuela, where output has been erratically declining and too variable to define a "normal" undisrupted level. Nor do they take into account the potential impact of renewed fighting in Libya, which could upset production and exports in the next few months if it intensifies.

The figures, therefore, understate the extent to which involuntary production cuts - actual and threatened - have caused the oil market to tighten in recent months.

Sanctions and unplanned problems can help make Saudi Arabia’s role as swing producer more effective by simplifying coordination with other producers and reducing the risk of cheating.

But unplanned problems can also cause the oil market to over-tighten temporarily, pushing prices higher and masking underlying imbalances between production and consumption, contributing to a subsequent slump.

The recent sudden tightening bears many similarities to events in 2013 and early 2014 - which paved the way for a slump in late 2014 and through 2015.

Talks with China to cut ethanol tariffs 'positive'

MOSCOW (MRC) -- US Agriculture Secretary Sonny Perdue said that talks with China regarding reducing Beijing’s tariff on U.S. ethanol products were “positive” but cautioned the discussions were not over, as per Hydrocarbonprocessing.

"There have been conversations with China on reducing that tariff on ethanol, which would obviously be good for our domestic corn industry," he told reporters. "While things look positive, it’s never over till it’s over with the Chinese."

Beijing last summer imposed retaliatory tariffs of up to 70 percent on U.S. ethanol shipments, which made exports to the key market uneconomical. The United States and China have been embroiled in a tit-for-tat tariff battle since July 2018, roiling global financial markets and supply chains, and costing both of the world’s two largest economies billions of dollars.

U.S. officials are pressing China to make changes to address longstanding concerns over industrial subsidies, technology transfer and intellectual property rights.

The two sides wrapped up the latest round of talks in Washington late last week and will be resuming discussions this week remotely.

Perdue also added that he wanted the Environmental Protection Agency to more tightly control its use of small refinery waivers that exempt plants from their obligation to blend biofuels like corn-based ethanol under the Renewable Fuel Standard, and had discussed the matter with EPA chief Andrew Wheeler.