Sibur, Gazprom Neft study construction, expansion of gas chemical complexes in Uzbekistan

MOSCOW (MRC) -- Sibur, Gazprom Neft, and Uzbekneftegaz have agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility, said Chemweek.

"Sibur and Gazprom Neft will explore the possibilities of participating in the implementation of the project to expand the production capacity of the Shurtan Gas Chemical Complex,” says Sibur, Russia’s largest petrochemicals producer. The companies will also “consider the possibility of joint implementation of an investment project for the construction of a gas chemical complex based on natural gas resources produced in Uzbekistan with a capacity of up to 3 billion cubic meters," it says. The location for the new complex and potential investment amounts were not given.

The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins [MTO] technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex,” says Uzbekistan’s energy ministry in an official statement. The cooperation agreements were signed by the two Russian companies and Uzbekneftegaz last week during an official visit to Moscow by a delegation from Uzbekistan’s energy ministry, the ministry says.

The Shurtan complex, operated by state-owned Uzbekneftegaz, currently processes ethylene and more than 134,000 metric tons/year of polyethylene (PE), 116,000 metric tons/year of liquefied petroleum gas (LPG), 103,000 metric tons/year of gas condensate, and 4.1 billion cu meters/year of raw gas, according to latest information on the SGCC website.

In October Lummus Technology was awarded a contract by Enter Engineering (Tashkent, Uzbekistan) to design and supply four cracker furnaces to more than double ethylene production at the facility in the Kashkadarya region of southwestern Uzbekistan. Expansion plans for the SGCC have been in process for several years, following a $1.3-billion engineering, procurement, and construction contract undertaken by Uzbekneftegaz with Enter Engineering, which has progressed the expansion to the detailed design phase.

Local press reports in Uzbekistan have previously outlined proposed plans by Uzbekneftegaz to build a new gas chemicals cluster at a provisional cost of $4.25 billion using MTO technology, with up to 10 downstream polymer derivatives plants producing up to 250,000 metric tons/year of polypropylene (PP), 100,000 metric tons/year of synthetic rubber, 100,000 metric tons/year of polyethylene terephthalate (PET) and ethylene–vinyl acetate (EVA), and up to 150,000 metric tons/year of ethylene glycol (EG) and PE.

As per MRC, LyondellBasell, the world’s leading licensor of polyolefin technologies, announced that the Amur Gas Chemical Complex project, being implemented by SIBUR Holding PJSC, the largest integrated petrochemicals company in Russia, has selected LyondellBasell’s Spheripol technology for a new facility.

According to MRC's DataScope report, Russian companies increased external purchases of polypropylene in November, imports reached 20,400 tonnes against 17,900 tonnes a month earlier. Thus, overall PP imports into Russia reached 202,000 tonnes in January-November 2020, compared to 167,400 tonnes a year earlier. Purchasing of all grades of propylene polymers in foreign markets increased, with homopolymer PP imports accounting for the most noticeable rise.

PPG completes acquisition of Ennis-Flint

MOSCOW (MRC) -- PPG said 24 December that it has completed the acquisition of specialty transport coatings maker Ennis-Flint, said Chemweek.

PPG previously announced that the acquisition was valued at approximately USD1.15 billion. Ennis-Flint is a global leader in pavement markings and traffic safety solutions with a wide range of products, including traffic paint, hot-applied and preformed thermoplastics, raised pavement markers and intelligent transportation systems. The company has approximately 1,000 employees globally, with production within the United States, Europe, South America, Australia and Asia. Ennis-Flint’s full year of 2020 revenue is expected to be approximately USD600 million, with mid-teen percentage EBITDA margins.

PPG will provide additional details relating to the business acquisition, including acquisition-related financial impacts, during the company's fourth-quarter earnings conference call on 21 January.

PPG last week separately announced plans to acquire Baltic region coatings maker Tikkurila for EUR1.1 billion (USD1.3 billion). That deal is expected to close in first-half 2021.

We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.

SK Capital completes purchase of 40% Venator stake from Huntsman

MOSCOW (MRC) -- SK Capital Partners has completed the acquisition of a 39.75% stake, roughly 42.4 million shares, in titanium dioxide maker Venator from Huntsman for roughly USD100 million, according to Chemweek.

The deal includes a 30-month option for the purchase of Huntsman’s remaining approximate 9.5 million shares by SK at US2.15/share. Huntsman spun off Venator in a 2017 initial public offering.

"We are excited to engage with (SK founder) Barry Siadat and the SK Capital team, who have a strong reputation within the chemical industry for supporting long term growth and innovation," said Simon Turner, president and CEO of Venator.

"Our business is poised for increased shareholder value creation as demand for our world class functional and specialty products continues to strengthen." Venator said it remains "well positioned to deliver the full USD55 million in EBITDA improvement from our 2020 business improvement program over the next two years. We look forward to implementing additional steps to strengthen our business and further unlock shareholder value.”

SK said in a regulatory filing 23 December that it intends to "engage in discussions with management or the board of directors of (Venator) about its business, operations, strategy, plans, and prospects, from time to time." Discussions may concern "any extraordinary corporate transaction, a sale or transfer of a material amount of assets, a change in the board of directors or management, a material change in the capitalization, other material changes in the company’s business or corporate structure, or similar actions."

Huntsman said that the sale will provide cash tax savings of approximately USD150 million from the offset of a capital loss on the sale of Venator shares against the capital gain realized on the sale of its chemical intermediates and surfactants businesses in early January. The company said the Venator sale will secure a total related benefit of approximately USD250 million in cash this year.

As MRC reported earlier, Nanjing Jinling Huntsman, a joint venture between Huntsman and Sinopec Jinling, planned to shut its propylene oxide plant in Nanjing (Nanjing, Jiangsu Province, China) on November 1 for scheduled maintenance. This plant with a capacity of 240,000 tonnes/year of propylene oxide will be closed until approximately 25 November.

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

According to MRC's DataScope report, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2019 revenues of approximately USD7 billion. The company's chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. The company operates more than 70 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 9,000 associates within our four distinct business divisions.

Gazprom loses ground in Finland to LNG from the Baltic States

MOSCOW (MRC) -- Gazprom has lost a third of its share of the Finnish gas market after a new pipeline made it possible to import liquefied natural gas (LNG) via the Baltic States, data from Gazprom and Estonian gas grid operator Elering showed, reported Reuters.

The Balticconnector pipeline, which opened early this year, links Finland and Estonia and can also send gas to the Baltics.

In the first nine months of 2020, a total of 5.8 terawatt-hours (TWh) of gas was exported to Finland via the pipeline, data provided by Elering showed.

Meanwhile, direct gas exports from Russia to Finland over same period dropped by 35% to 11.4 TWh, from 17.6 TWh over Jan-Sept in 2019, Gazprom's quarterly data, published on its website, showed.

Natural gas prices between Finland and the Baltic states of Estonia, Latvia and Lithuania vary due to their access to the global LNG market, ability to store gas in Latvia and different Russian gas supply contracts.

Haroldas Nauseda, board member at Lithuanian state-controlled gas trader Ignitis, told Reuters: "In 2019, gas in Finland cost about 7 euros per MWh more than in Lithuania, a difference of 150 million euros for the full year."

"Today, there's little difference left."

Ignitis supplied 2.23 TWh to Finland over Jan-Sept and expects to keep the share in Finland next year, Nauseda said.

Most of the gas came from the only large-scale LNG import terminal in the Baltic states, in Lithuania, with capacity of 39 TWh per year.

Nauseda said that during the cold winter months the Balticconnector pipeline is unable to satisfy demand and prices in Finland go up.

Built to transport about 25 TWh of gas per year, Balticconnector has been limited to about 11 TWh per year due to delays upgrading compressor stations.

Gazprom is also facing competition in other parts of Europe from LNG imports, including from the United States.

The Baltic and Finnish gas markets will be connected to mainland Europe at the end of 2021 by a new pipeline linking Lithuanian and Polish gas grids, potentially bringing in more competition.

"The four countries consume about 60 TWh of gas per year, compared with 200 TWh in Poland, so the region will attract international players," Nauseda said.

As MRC informed before, Gazprom neftekhim Salavat, part of Gazprom, has restarted its low density polyethylene (LDPE) production after a scheduled maintenance. The plant"s customers said Gazprom neftekhim Salavat resumed its LDPE production on 10 August, 2020, after the scheduled turnaround. The outage lasted slightly longer than originally planned. LDPE production capacities were shut for the turnaround on 1 July.

According to MRC's ScanPlast report, October estimated LDPE consumption in Russia grew to 50,030 tonnes from 23,930 tonnes a month earlier. Russian producers increased domestic LDPE shipments after the September shutdowns for maintenance. Russia's estimated LDPE consumption was about 456,490 tonnes in January-October 2020, down by 1% year on year. Lower production was offset by higher imports.

COVID-19 - News digest as of 24.12.2020

1. Asia distillates-Jet fuel cracks hover near multi-month peak as aviation demand ticks up

MOSCOW (MRC) - Asia's refining margins for jet fuel dipped on Tuesday but remained within close sight of multi-month highs touched last week, supported by seasonal heating demand for kerosene and a slow but gradual recovery in regional aviation demand, Reuters. However, a fast-spreading new coronavirus strain that has shut down much of Britain has prompted several countries to reimpose travel curbs on UK routes, triggering worries about fuel demand recovery and near-term air travel outlook. Refining margins, or cracks, for jet fuel slipped 24 cents to $4.36 per barrel over Dubai crude during Asian trade on Tuesday. The jet cracks, which also determine the profitability of closely-related kerosene, have gained 37% in the last month, Refinitiv Eikon data showed. Cold season in the northern hemisphere typically brings peak demand for kerosene in Japan and Korea, where the fuel is used as a heating oil to fend off winter chill.