Sasol says fire damage at Lake Charles LDPE unit is limited, investigation ongoing

MOSCOW (MRC) -- Sasol says the low-density polyethylene (LDPE) unit at the company's Lake Charles Chemicals Project (LCCP) at Westlake, Louisiana, suffered limited damage from an explosion and fire in a high-pressure section of the unit earlier this month but that nearby major equipment and other units have not been affected, reported Chemweek.

Parallel commissioning activities on the rest of the 420,000-metric tons/year LDPE unit will continue while an investigation continues to determine the cause, extent of the damage, and scope and timeline of any repairs. "Initial findings indicate the damage is limited to a small portion of the LDPE unit and, importantly, major equipment such as the compressors were unaffected," says Sasol. "The technology providers, licensors, and other external experts are fully engaged and in addition, we have mobilized and dispatched a team of Sasol technical and operations experts to support the investigation team."

Ethylene currently being produced by the LCCP’s steam cracker that was originally destined for the LDPE unit will be sold externally until the LDPE unit can be started up, according to Sasol. The ethane cracker has been operating at nameplate capacity following the replacement of the acetylene reactor catalyst in December.

Projected earnings for the troubled LCCP complex in the current financial year "will only be impacted by the loss in the margin of ethylene to low-density polyethylene," Sasol notes. The insurance process has also been initiated and cover includes construction and commissioning activities, says Sasol. The scope of repair and outage duration is expected to be determined by the second half of February, it adds.

All the other previously commissioned units at LCCP were unaffected and are operating to plan. The ethoxylates, Ziegler, and Guerbet downstream units are also unaffected and remain within cost and schedule as per previous guidance, according to the company.

Sasol says that at the end of December engineering and procurement activities at LCCP were "substantially complete and construction progress was at 98%." Overall project completion was at 99%, with capital expenditure so far amounting to USD12.5 billion. The LCCP has been plagued by cost escalation and delays, resulting in Sasol’s joint CEOs, Bongani Nqwababa and Stephen Cornell, stepping down in November following a review of the project.

All employees and contractors were safe and accounted for following the explosion during the final stages of the LDPE unit’s commissioning on 13 January and, in line with standard safety protocols, the unit had to be made safe before re-entry of personnel into the affected area could be allowed, the company says.

In Sasol’s latest production and sales metrics for the financial half-year ended 31 December 2019, also released today, it says the ethane cracker is planned to operate close to its nameplate capacity for the rest of this year.

Sasol’s gross ethylene production in North America, including from its existing cracker, totaled 454,000 metric tons, it says. For the six months ended 31 December 2019, gross ethylene production from the LCCP cracker alone was 220,000 metric tons. Total PE production at LCCP over the same period was 184,000 metric tons, and the ethylene oxide (EO) value chain’s production at LCCP was 162,000 metric tons.

The LCCP’s linear low-density PE plant achieved beneficial operation in February 2019 and the EO/ethylene glycol (EG) unit and ethane cracker followed in May and August, respectively. The high-density PE plant continues to produce at planned rates, the company says.

Despite the LCCP cost overruns, Sasol says it expects a "largely strong operational performance" for the full financial year ending 30 June 2020.

In line with previous market guidance, Sasol’s group base chemical sale volume excluding US polymer products is expected to be 1–2% higher than in the prior year, with total sales volume expected to be 15-0% higher.

For the fiscal first six months ended 31 December, higher sales volume was offset by a further softening of chemical prices. Base chemical sales volume, excluding US polymer products, was 1% higher than in the prior-year period. This was despite an 18% decrease year on year (YOY) in fertilizer volume to 165,000 metric tons due to an extended shutdown, Sasol notes. The US polymers business achieved PE sales volume of 320,000 metric tons and ethylene and coproduct sales volume of 149,000 metric tons.

The base chemical segment's average sales basket price for the half-year fell 15% YOY but only 1% in the second quarter compared with the first quarter. "Softer commodity chemical prices are being experienced across most of our sales regions and products, largely attributable to weaker global demand and increased global capacity, particularly for polymers," says Sasol. Heightened geopolitical risks for the rest of the financial year "especially in the Middle East and the ongoing trade discussions between China and the US are likely to impact prices," it adds.

Sasol's US polymer basket prices were impacted by changes in the company’s product mix during the first six months, including its re-entry into the merchant ethylene market following the start-up of the new cracker as well as lower worldwide polymer prices.

In its performance chemicals segment, Sasol expects full-year sales volume to remain flat to slightly below the prior year’s level, excluding LCCP. Total sales volume for the business is expected to be 7-9% higher than in the prior year, despite continuing macroeconomic headwinds and a softer outlook on worldwide GDP growth, says Sasol.

The six months ended 31 December are described by the company as "challenging" because of a generally softer macroeconomic environment in Europe and Asia on the back of the US-China trade dispute, especially in the automotive market. Total sales volume nevertheless rose 6% compared with the prior-year period because of the LCCP’s EO/EG plant contining to produce as planned, it says. The unit produced 74,000 metric tons in the second quarter of the fiscal year, up from 70,000 metric tons in the first quarter, and 37,000 metric tons in the fourth quarter of Sasol's 2019 fiscal year.

Excluding LCCP volumes, Sasol says its organics business sales declined 3% YOY mainly because of the soft macro environment affecting demand. The company's organics-portfolio sales prices were "negatively impacted by the higher share of monoethylene glycol and lower oleochemicals pricing," it says.

Sasol has also highlighted a 2% YOY rise in volumes from its Eurasian-based assets in the first six months of the financial year, mainly supported by production ramp-up at the company's new ethoxylation unit in China, which achieved beneficial operation in April 2019, as well as increased alkylate volumes from Italy.

As MRC informed before, an explosion and fire damaged Sasol's new low density polyethylene (LDPE) plant at its Louisiana complex on 13 January, 2020, as the unit was coming online while wrapping up commissioning. The company's new 1.5 million mt/year cracker was not affected by the incident and was operating at its nameplate capacity.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

Saudi Kayan swings to loss in full year, widens fourth-quarter loss

MOSCOW (MRC) -- Saudi Kayan, a Sabic affiliate, has reported an increase in net loss in the fourth quarter of 2019, citing lower average selling prices, which could not be compensated for by lower average feedstock costs, reported Chemweek.

Fourth-quarter net loss rose to SR167.41 million (USD44.61 million) from a loss of SR110.90 million. Sales were down 14.26% at SR2.259 billion.

Kayan’s full-year net loss reached SR636.770 million compared with a net profit of SR1.702 billion in 2018. Sales in the full-year were down 22.2% at SR9.536 billion. The drop in earnings and revenues in 2019 was due to lower average selling prices, and came despite larger production and sales volumes and a decrease in the average cost of feedstocks.

As MRC wrote earlier, in February 2016, Saudi Kayan Petrochemical Co. awarded Taiwan's CTCI Corp. a contract worth USD94.5 million (SAR 354.4 million) to build a new cracker at its complex in Jubail Industrial City. Under the deal, CTCI was to manage the engineering, procurement and construction management (EPCM) for the project, which is located in the Eastern Province of Saudi Arabia.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Saudi Kayan Petrochemical Company is a manufacturing affiliate of the Saudi Basic Industries Corporation (Sabic, 35%). Saudi Kayan is the fifth-largest petrochemical manufacturer by market value in Saudi Arabia.
MRC

Bostik completes the acquisition of LIP

MOSCOW (MRC) -- Bostik, part of Arkema, has recently completed the acquisition of LIP Bygningsartikler AS (LIP), the Danish leader in tile adhesives, waterproofing systems and floor preparation solutions, according to Arkema's press release.

Thus, this acquisition, which was completed on 3 January 2020 and which was like the Prochimir acquisition finalized in October 2019, is in line with Arkema’s strategy to continuously grow its Adhesives business through bolt-on acquisitions which complement Bostik’s geographic presence, product ranges and technologies.

As MRC informed previously, Arkema has recently announced the proposed divestment of its Functional Polyolefins business to SK Global Chemical, a subsidiary of SK, the major South Korean corporation. The proposed disposal, which is subject to an information and consultation process involving Arkema’s employee representative bodies and to the approval of the relevant antitrust authorities, is expected to be finalized in second quarter 2020. With this project, Arkema continues its shift towards specialty chemicals and advanced materials.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Arkema is a global manufacturer in specialty chemicals and advanced materials, with 3 business segments - High Performance Materials, Industrial Specialties, and Coating Solutions - and globally recognized brands. The Group reports annual sales of EUR8.8 billion. Buoyed by the collective energy of its 20,000 employees, Arkema operates in close to 55 countries.
MRC

Valero appoints president and COO

MOSCOW (MRC) -- Valero Energy Corp. has approved officer promotions, effective Januany 23, 2020, according to Oil&Gas Journal.

Lane Riggs has been promoted and elected president of Valero and will hold the title of president and chief operating officer, reflecting the expansion of his responsibilities to also include renewables and logistics operations.

Gary Simmons has been promoted and elected executive vice-president and chief commercial officer. Gary has lead Valero’s commercial organization since 2014. He will continue in his new role with oversight of the company’s crude supply and products trading, wholesale marketing, transportation, and international commercial operations groups.

Eric Fisher has been promoted and elected senior vice-president of wholesale marketing and international commercial operations.

As MRC wrote before, Valero Energy Corp on Saturday shut a diesel hydrotreater at its 335,000 barrel-per-day (BPD) Port Arthur, Texas, refinery. Also, a hydrocracker remains shut at the refinery for repairs.

Besides, last year, Valero Energy Corp restarted the small CDU at its Port Arthur refinery after repairing a valve on 25 September. And in late October 2019, Valero Energy Corp shut the small crude distillation unit (CDU) at its Port Arthur refinery. The 75,000-bpd AVU 147 CDU was shut to repair a heat exchanger.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, the PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC

Import of injection moulding PET chips to Kazakhstan increased

MOSCOW (MRC) -- Supply of imported injection moulding PET chips to Kazakhstan increased by 49% compared to the same period in 2018 and reached 50,700 tonnes in January-November 2019 against 34,000 tonnes year on year, according to MRC's DataScope.
In November 2019, the import of material amounted to 3,900 tonnes, exceeding the volume of imports of the same period in 2018 by 47%. In October last year, external deliveries of injection moulding PET chips to the country reached a maximum in recent years and amounted to 9,300 tonnes.

The key supplier of PET granulate to Kazakhstan was China with a share of deliveries in the total import volume of about 99%. The import of Chinese-made material increased by 66% last year and amounted to 50,000 tonnes against 30,000 tonnes in January-November 2018.


MRC