CCI gives approval to SABIC acquisition of additional stake in Clariant

MOSCOW (MRC) -- The Competition Commission of India (CCI) has cleared SABIC BV's incremental acquisition of a 6.51% shareholding in Clariant AG, according to Apic-online.

The transaction, which will raise SABIC's stake in Clariant to 31.5%, is part of SABIC's growth strategy in specialties.

In September 2018, the companies signed a memorandum of understanding to merge their specialty chemicals businesses into a new high-performance materials specialty chemicals business, following SABIC's purchase of a 24.99% interest in Clariant, which was completed the same month.

Last July, the parties agreed to temporarily postpone discussions of merging the businesses, attributing the delay to unfavorable market conditions.

As MRC wrote before, SABIC swung to a second-quarter net loss of 2.22 billion Saudi riyals (USD587 million) from a net profit of SR2.03 billion in the prior-year period. The loss for the three-month period to end-June is mainly attributed to lower average product prices, lower sales volumes, and an impairment charge of SR1.18 billion related primarily to "certain petrochemical assets in the European region," Sabic says. The company, acquired by Saudi Aramco for USD69.1 billion in a deal completed in June, says the lower prices and volumes were mainly due to the impact of the COVID-19 pandemic. The adjusted net loss figure of SR1.04 billion, excluding the asset write-down, missed analysts’ consensus estimate for a profit of SR900 million. Sabic reported a net loss of SR1.05 billion in the first quarter of this year.

We remind that Sinopec SABIC Tianjin Petrochemical Co. (SSTPC), a 50-50 joint venture of Sinopec and SABIC, completed the debottlenecking of its ethylene cracker on 11 July 2020, adding another 30,000 tons/year output to its current capacity. Followed the expansion, the Tianjin based plant become the country's largest compressor unit, producing 1.3 million tons of ethylene annually.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Saudi Basic Industries Corporation (Sabic) ranks among the world"s top petrochemical companies. The company is among the world"s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

Braskem new joint venture EDC plant startup planned for H2 2022

MOSCOW (MRC) -- A demonstration ethylene dichloride (EDC) plant scheduled to be built in Brazil will cost about USD18 million and is slated to start up by the second half of 2022, reported S&P Global with reference to a top executive with Brazilian petrochemical producer Braskem's statement Sept. 2.

Fabio Barbosa, Braskem's head of commercial chlor-alkali, disclosed those details via email about the joint venture announced on Aug. 20. He also said construction was slated to begin in 2021.

Braskem has teamed up with US chemistry technology company Chemetry to build the plant, which will use less power and cost less than traditional production methods.

California-based Chemetry will employ its eShuttle EDC process, which involves a metal chloride reaction with ethylene to make EDC, bypassing the need to make chlorine gas to react with ethylene.

EDC is a precursor to polyvinyl chloride (PVC), a construction staple used to make pipes, window frames, vinyl siding and other products.

In May 2019 Braskem shut its sole 520,000 mt/year EDC plant in Brazil, as well as an upstream chlor-alkali plant and a salt mining operation, when a government report linked the mining activity to geological damages in Maceio, the capital city of the state of Alagoas.

The company has since been dependent on EDC imports to maintain downstream PVC production. Before the shutdown, Braskem had occasionally imported EDC cargoes to supplement its own output after having expanded PVC capacity.

Braskem aims to restart the shut plants in early November, once infrastructure is in place to ensure delivery of salt imports to feed the chlor-alkali plant and a new permanent substation is online to provide power for that unit. The Maceio salt mining operation has been permanently shut.

The new EDC plant could further reduce the company's occasional EDC import needs as well.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia totalled 13,800 tonnes in the first half of 2020, up by 5% year on year, whereas exports grew by 7% year on year.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).


Lukoil selects Lummus PP technology for new plant in Russia

MOSCOW (MRC) -- Lukoil (Moscow, Russia) has selected Lummus Technology’s Novolen polypropylene (PP) technology for a previously announced new petrochemical facility in Kstovo, Russia, said Chemweek.

Lummus says its Novolen business has been awarded a contract by the Russian oil company to supply the technology license for the 500,000 metric tons/year PP production unit, as well as basic design engineering, training and services, and catalyst supply. The PP technology license award is the first since Lummus became an independent company earlier this year, it says. The contract is the largest Novolen PP unit licensed in Russia to date, according to Lummus.

Russia is "a critical market where Lummus has had a strong presence for decades," and where it will continue to expand, says Leon de Bruyn, president and CEO at Lummus Technology.

The award increases the total amount of licensed volume for Novolen technology worldwide to more than 17 million metric tons/year, according to Lummus.

Lukoil took an investment decision mid-2019 to proceed with the PP plant at its existing Kstovo refinery in the Nizhny Novgorod region, with the refinery to provide feedstock for the new unit, which is planned to produce PP largely for the export market. The company also said at the time it planned to build a 300,000-metric tons/year styrene manufacturing complex at the same site.

As per MRC's ScanPlast, Russian plants' total PP production grew to 158,800 tonnes in July, compared to 149,400 tonnes a month earlier; ZapSibNeftekhim, Nizhnekamskneftekhim and Poliom increased their capacity utilisation. Russia"s overall PP production reached 1,063,700 tonnes in January-July 2020, compared to 854,500 tonnes a year earlier. Five out of eight producers raised their capacity utilisation, with a new producer - ZapSibNeftekhim - accounting for the main increase in the output.

Kstovo is one of Lukoil’s largest refineries in Russia with a throughput of 17 million metric tons/year.

DSM forms JV to produce facemasks, components in Netherlands

MOSCOW (MRC) -- DSM says it has formed a 50/50 joint venture (JV) with VDL Groep (Eindhoven, Netherlands), called Dutch PPE Solutions, to produce medical facemasks and establish the first permanent production of critical facemask components in the Netherlands, said Chemweek.

The companies are investing several million euros to purchase manufacturing equipment and build manufacturing facilities to produce meltblown polypropylene (PP), the critical material layer in medical facemasks that filters viruses, and make medical masks, DSM says.

Construction of the first permanent production facility for critical filter material in the Netherlands will provide greater resilience to possible future surges in demand for facemasks and the underlying material, DSM says. Production of facemasks will begin at Helmond in October 2020, and the meltblown PP plant is expected to be fully operational at Geleen in April 2021, it says.

The new JV will help to meet the urgent need to diversify the worldwide production and supply chains of PPE at scale by reducing dependency on a small number of international sources, the company says. “The global demand for medical facemasks and critical filter material exceeds the limited supply. The need for reliable and high-quality supply chains is more urgent than ever,” says Pieter Wolters, vice president/innovation at DSM.

According to MRC's DataScope report, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.


ExxonMobil, Chevron may write down big chunk of reserves if weak prices persist

MOSCOW (MRC) -- Low commodity prices and deep spending cuts in the first half of 2020 could lead US supermajors ExxonMobil and Chevron to write down huge chunks of their proved oil and natural gas reserves if prices remain depressed in the second half, reported S&P Global with reference to recent SEC filings.

In a 10-Q filing, ExxonMobil said Aug. 5 it could write down as much as 20% of its proved reserves, which totaled 22.4 billion barrels of oil equivalent at year-end 2019, thus implying a nearly 4.5 billion boe write-down.

If low prices persist for the rest of the year, "certain quantities of crude oil, bitumen, and natural gas will not qualify as proved reserves at year-end 2020," ExxonMobil said.

Separately, Chevron said in an Aug. 5 filing that it may revise downward its proved reserves by about 10%, mostly in the US Permian Basin and Australia.

"Should the current low commodity prices persist, it is expected that proved reserve quantities would decrease for oil and gas properties where economic limits are negatively impacted. Lower prices will positively impact proved reserves due to entitlement effects," Chevron said in the 10-Q filing.

The impacts of the COVID-19 pandemic on the economy and the unprecedented oil market crash prompted a wave of spending cuts but also hefty write-downs by most of the integrated oil and gas majors in the last several months, as they all shifted their longer-term crude price outlooks lower.

Chevron took a USD5.4 billion upstream charge in the second quarter, primarily related to a non-operating field in the Gulf of Mexico, conventional operations in the Permian, and various producing assets in Asia and Africa. The charge also included a USD2.6 billion impairment on assets in Venezuela, sparked by the uncertain operating environment and outlook in the South American country.

London-based BP booked a second-quarter post-tax write-down of USD10.9 billion for non-operating items and a post-tax impairment of USD6.5 billion on upstream exploration activities. Shell reported a post-tax charge of $16.8 billion in the second quarter.

Prior to the recent filing, ExxonMobil had not offered guidance regarding possible write-downs, after unveiling in April that it would trim this year's capital expenditures by 30%, from USD33 billion to USD23 billion, and slash its operating budget by 15%. As a result of the capex spending cuts, ExxonMobil also disclosed in the Aug. 5 filing it would cut its estimates of proved reserves by 1 billion boe for the year, most of it from US shale.

"Consequently, unit-of-production depreciation and depletion rates for upstream assets increased beginning in the first quarter," ExxonMobil said in the filing.

ExxonMobil will make deeper cuts to its operations and spending in 2021, the company said on its second quarter earnings call.

"Looking ahead to 2021, we see significant potential for additional reductions based on the identification of further long-term structural efficiencies, reduced activity levels, and an evaluation of our workforce requirements, including the potential for further reductions in overhead and management positions," ExxonMobil Senior Vice President Neil Chapman said July 31.

ExxonMobil's additional spending cuts as well as a review of the value of assets should be finalized with the company's board of directors in November and should be released in the first half of 2021.

As MRC informed previously, Chevron Phillips Chemical, part of Chevron Corporation, declared force majeure Sept. 1 on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations,

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.