PKN set to win EU approval to acquire Lotos

MOSCOW (MRC) -- PKN Orlen (Plock, Poland), the country’s largest oil refiner and petrochemicals producer, is set to gain EU antitrust approval for its takeover of smaller rival Lotos (Gdansk, Poland) after agreeing some concessions aimed at allaying competition concerns, reported Chemweek with reference to Reuters citing people familiar with the matter.

PKN wants to buy at least 53% of Lotos. EU said it was concerned that the deal may push up prices and reduce competition in Poland, the Czech Republic, Estonia, Lithuania, Latvia, and Slovakia.

PKN last month offered to sell Lotos’s stake in a joint venture with BP called Lotos–Air BP Polska (LABP) and also pledged to supply jet fuel to LABP with the aim of creating a viable competitor. The company has since made some minor changes to the package after rivals and customers provided feedback to the European Commission, Reuters says.

The acquisition of Lotos by PKN was initiated in February 2018 by signing a letter of intent with the Polish State Treasury, holding 53.19% of voting rights. In April 2018, a due diligence process was commenced at Lotos to examine its commercial, financial, legal, and tax positions ahead of the planned acquisition. In November 2018, a draft application for approval of the concentration was submitted by PKN to the European Commission.

PKN says the aim is to build a strong entity with international potential, which would be an important player on the oil supply market. This is particularly important for the fuel and energy security of supply for Poland, but also for Central and Eastern Europe. The creation of such an entity would also increase its ability to finance large, multibillion-dollar projects. With the closing of the acquisition, Poland would join the global trend toward building major players on the fuel and energy market, PKN says.

As MRC wrote before, Honeywell has recently announced that PKN Orlen plans to use the UOP Q-Max and Phenol 3G technologies to produce 200,000 metric tons per year of phenol at its facility in Plock, Poland. UOP is providing a license for the technology, in addition to basic engineering design services, plus key equipment, catalysts and adsorbents and technical services.

Phenol is one of the main feedstocks for the production of bisphenol A (BPA), which, in its turn, is used for the production of polycarbonate (PC).

According to MRC's ScanPlast report, Russia's estimated consumption of polycarbonate (PC) granules (excluding imports and exports to/from Belarus) rose in January-May 2020 by 19% year on year to 38,900 tonnes (32,700 tonnes a year earlier).

Pertamina unexpectedly shut down PP plant in Indonesia on upstream issues

MOSCOW (MRC) -- Pertamina (Persero) PT was forced to take its polypropylene (PP) unit in West Java, Indonesia off-line last weekend following an unspecified technical glitch at the upstream RFCC unit that causes a disruption of the propylene feeds, reported CommoPlast with reference to market sources.

It is expected that the PP line would remain shut for about 12 days.

The RFCC unit produces 45,000 tons of propylene annually while the PP plant has a capacity of 45,000 tons/year.

“Due to the technical difficulties, the producer has to reduce the contract allocation to local buyers. This might continue to support the current firming trend into July,” a distributor added.

As MRC informed earlier, in May 2016, PT Pertamina and Russia’s Rosneft OAO signed a cooperation agreement that includes a plan to build a new oil refinery in the Southeast Asian nation. Pertamina, which hasn't built a new refinery since 1997, will be the majority shareholder in the facility at Tuban, East Java. The two companies may invest USD12 billion to USD13 billion in the refinery project which includes a petrochemical unit, Dwi Soetjipto, president director of Pertamina, told a press conference after signing the accord.

According to MRC's ScanPlast report, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Pertamina is an Indonesian state-owned oil and natural gas corporation based in Jakarta. It was created in August 1968 by the merger of Pertamin (established 1961) and Permina (established 1957). Pertamina is the world's largest producer and exporter of liquefied natural gas (LNG).

COVID-19 - News digest as of 30.06.2020

1. Saudi Polymers to permanently shut down PS complex

MOSCOW (MRC) -- National Petrochemical Co. (Petrochem) said that the board of directors of its subsidiary, Saudi Polymers Co., decided to shut down the polystyrene unit and amortize its value, due to difficulties in achieving profits amid the global polystyrene market conditions, said Argaam. The company expected this process to have an impact of up to SAR 277 million on its financial statements for Q2 2020.


Grand Resource to shut No. 1 PP unit for maintenance

MOSCOW (MRC) -- Dongguan Grand Resource Science and Technology Co Ltd (JuZhengYuan) is planning to shut its No. 1 polypropylene (PP) plant for scheduled maintenance on 10 July, 2020, according to CommoPlast with reference to market sources.

Based in Dongguan, China, the company has a propane dehydrogenation (PDH) plant with production capacity of 600,000 tons/year and two PP plants with a combined production capacity of 600,000 tons/year.

As MRC wrote before, Dongguan Grand Resource Science and Technology Co Ltd restarted its No.2 PP plant on January 16, 2020, following a turnaround. The plant was shut for maintenance on January 6, 2019.

According to MRC's ScanPlast report, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Dongguan Grand Resource Science and Technology Co Ltd is owned by Juzhengyuan Energy (Shenzhen, Guangdong, China). On 26 October 2019, Dongguan Grand Resource’s (Dongguan, Guangdong, China) integrated complex for polypropylene production in Dongguan officially started up.

Zhejiang Petrochemical to produce on-spec material at new ACN plant in China this week

MOSCOW (MRC) -- Zhejiang Petrochemical Co Ltd is poised to produce on specification material at its new acrylonitrile (ACN) plant plant this week, reported S&P Global.

The company started up this plant on 23 June, 2020.

Based in Zhejiang, China, this plant is able to produce 260,000 tons/year of ACN. Initially, the company planned to begin operations at this production in early May, but then postponed the start to the second half of May. Zhejiang Petrochemical last announced mid-June to be the start.

As MRC informed earlier, Zhejiang Petrochemical Co Ltd started up its ethylene cracker in late December 2019 and its polyolefin plants in late December 2019-January 2020.

Market sources reported then that one of its polypropylene (PP) plant with capacity of 450,000 tons/year started up by 30 December 2019, followed by another line with same capacity by 15 January 2020.

Meanwhile its 450,000 tons/year of linear low density polyethylene (LLDPE) and 300,000 tons/year of high density polyethylene (HDPE) were launched around similar time with PP plants.

ACN is the main feedstock for the production of acrylonitrile-butadiene-styrene (ABS).

According to MRC's DataScope report, overall ABS imports to the Russian market increased in the first four months of 2020 by 5% year on year to 10,900 tonnes. This figure was at 10,400 tonnes in January-April 2019. April imports of material to the Russian Federation rose by 5% to 3,300 tonnes from 3,100 tonnes a year earlier. March ABS imports into the country were 2,800 tonnes.