ExxonMobil explores sale of elastic polymer business aiming reduce its debt pile

MOSCOW (MRC) -- ExxonMobil Corp, one of the world's petrochemical majors, is exploring a sale of its Advanced Elastomer Systems (AES) division, potentially valuing the elastic polymer maker at around USD800 million including debt, reported Reuters with reference to people familiar with the matter.

The deal would allow the oil major to nibble at its debt pile, which totaled USD45.5 billion at the end of December. Its shares are up around 37% year-to-date on investor expectations that the company will benefit from a recovery in energy prices.

Exxon has hired investment bank Morgan Stanley to solicit interest in AES from potential buyers, including private equity firms, the sources said. The sources cautioned that no deal is certain and requested anonymity because the matter is confidential. Exxon and Morgan Stanley declined to comment.

Exxon incurred a historic loss of USD22.4 billion last year. It is trying to convince a skeptical Wall Street that it can rebound after years of overspending left it deeply indebted and lagging rivals better geared for a world demanding cleaner fuels.

AES is known for its Santoprene thermoplastic vulcanizates (TPVs), which are elastic polymers used in automotive, industrial and consumer products. The business was launched in 1991 as a limited partnership between ExxonMobil Chemical and Solutia. Exxon became the sole owner of AES in 2002.

The global TPV market is seen growing from USD1.6 billion in 2019 and to USD2.6 billion in 2027, though the industry has been adversely affected by the COVID-19 pandemic due to factory shutdowns and supply chain issues, according to a report by ResearchAndMarkets.com.

As MRC informed previously, Sinopec Engineering (Group) and ExxonMobil (Huizhou) Chemical (EMHCC) have just entered into a BEPC (basic design, engineering, procurement and construction) contract for the proposed Huizhou Chemical Complex Project (Phase I). The main units of the project include a 1.6 million tonnes/year ethylene flexible feed steam cracker, downstream polymer and derivative units and utilities. The main product units include two performance polyethylene (PE) lines and two differentiated performance polypropylene (PP) lines.

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

According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.

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.

SIBUR and TAIF decided to merge their assets

MOSCOW (MRC) -- Russia's Sibur and TAIF will combine their petrochemical businesses to create one of world's top five producers of polyolefin and rubber products, said companies.

Russian energy companies, led by privately owned Sibur, have increasingly been shifting their focus to petrochemicals in a drive to capitalise on the fast-growing sector and offset the volatile market for crude oil exports. "This combination will make the new company's petrochemical operations more competitive in the global market, improve its resilience to market fluctuations, and also unlock further growth potential of Russia's petrochemical industry," the companies said in a statement.

TAIF said the deal would help TAIF Group accelerate key projects in its 2030 strategic development programme that will see more than 1.5 trillion roubles (USD20 billion) of investments over the next 10 years. Sibur, the largest petrochemicals producer in eastern Europe, said existing TAIF shareholders would receive a 15% stake in PJSC Sibur Holding in exchange for transferring a controlling interest in TAIF's group of petrochemical and energy firms. The remaining stake in TAIF can be subsequently purchased by the combined company.

The deal will close subject to completing relevant corporate procedures and receiving necessary regulatory approvals. RIA news agency, citing the head of Sibur, said the deal could be closed by the end of the year.

Leonid Mikhelson, head of and major shareholder in Russia's largest gas producer Novatek, owns 48.5% of Sibur.Gennady Timchenko, Mikhelson's business partner owns another 17%, while China's Sinopec and Silk Road Fund have 10% each. Some former and current managers own 14.5% of the company.

TAIF, located in the Russian Republic of Tatarstan, accounts for 64% and 28% of Russia's total output of rubbers and plastics respectively.

Earlier it was reported that SIBUR increased sales of polypropylene and polyethylene last year amid growing utilization of the ZapSibNeftekhim complex. This led to an increase in the company's revenue in the olefins and polyolefins segment by 77.1% to RUB 187.3 billion. This growth was mainly due to an increase in sales of polypropylene and polyethylene as a result of increased utilization of the ZapSibNeftekhim complex and was partially offset by a decrease in prices for these types of products.

It was also noted that TAIF plans to receive more than 1.75 trillion rubles of revenue per year by 2030. In 2020, the proceeds from the sale of commercial products amounted to 582 billion rubles. To implement more than 30 large-scale investment projects, TAIF will require a colossal amount of investments. Their size over the next 10 years will amount to 1.6 trillion rubles. This is 2 times higher than investments in the entire history of TAIF Group from 1995 to 2020. Taking into account the implementation of the Development Strategy for 2021-2030. the total investment of TAIF Group for 1995-2030 will amount to 2.5 trillion rubles.

According to MRC's ScanPlast report, Russia"s estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

SIBUR is the largest vertically integrated gas processing and petrochemical company in Russia, uniting a number of production sites in various regions of the Russian Federation. The company sells products to consumers in the fuel and energy complex, automotive, construction, consumer goods, chemical and other industries in more than 80 countries around the world.

PSC "TAIF" was established in 1995, is the parent company of the group of the same name, which includes enterprises structured in four business areas: oil and gas processing, chemistry and petrochemistry (energy); investment and financial services; building; telecommunications and complex services, including trade. TAIF Group of Companies is a large Russian holding that controls 96% of the chemical, petrochemical and oil and gas processing industries in Tatarstan. The most important of its areas is the Chemistry, Petrochemistry and Oil and Gas Processing Division, which includes the leading Russian polymer producers Nizhnekamskneftekhim and Kazanorgsintez.

COVID-19 - News digest as of 23.04.2021

1. American Kraton has developed a polymer against coronavirus

MOSCOW (MRC) -- The American company Kraton has announced that the US Environmental Protection Agency (EPA) has granted an emergency exemption for the use of its new sulfonated polymer, which rapidly inactivates the coronavirus, said the company. The Environmental Protection Agency has issued an emergency permit for the use of the polymer in the states of the United States, Georgia, Utah and Minnesota for specific applications to protect against the COVID-19 virus. American Delta Airlines will be the first to use this material in these states.


Crude futures up on optimism over Europe reopening

MOSCOW (MRC) -- Crude oil futures were higher in the mid-morning trade in Asia April 23, as optimism over the reopening of Europe lent support to the market, even as concerns remained on the progression of the pandemic in India, reported S&P Global.

At 11:17 am Singapore time (0317 GMT), the ICE Brent June contract was up 27 cents/b (0.41%) from the April 22 settle at USD65.67/b, while the June NYMEX light sweet crude contract was 36 cents/b (0.59%) higher at USD61.79/b.

Market analysts said that oil prices pared their loses in the week of April 18 due to an improved outlook for Europe. COVID-19 cases in major European economies have plateaued and countries such as Italy, Greece and France are on track to ease some of their mobility restrictions, according to media reports.

Meanwhile, concerns over the rise in COVID-19 infection numbers in India, the third largest oil importer in the world, continued to persist, capping upside in the market. The country reported record highs of 314,644 cases and 2,104 deaths on April 21, latest data from John Hopkins university showed.

Analysts noted that volatility in the market seen in the week of April 18 comes from the tussle between a bullish outlook for oil demand in the US and Europe, and a bearish outlook in India.

As MRC informed earlier, COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz 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. 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”.

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

According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.

Ineos declares force majeure on mLDPE supply from Cologne, Germany

MOSCOW (MRC) -- Ineos has declared force majeure (FM) on its metallocene linear low density polyethylene (mLLDPE) supplies from its plant in Cologne, Germany, following an unplanned outage on April 6, according to NCT with reference to a source familiar with the issue.

The company could not be reached for comments at the time of publication, however.

The company’s Cologne LLDPE plant has a production capacity of 230,000 mt/year.

This site also houses another plant with the capacity of around 400,000 mtyear of low density polyethylene (LDPE).

We remind that Ineos declared FM on its LDPE supplies from Cologne, Germany due to a power outage on November 11, 2020. The force majeure was slated to last for 3 weeks. The company’s mLLDPE unit at this site was reported to be unaffected,

As MRC informed before, in January 2019, INEOS announced Antwerp as the location for its new petrochemical investment. The EUR3 billion investment will be the biggest ever made by INEOS and is first cracker to be built in Europe in 20 years. The investment is a game changer for the chemical sectors and will bring huge benefits to the Belgium and wider European economies.

According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively LDPE increased.

INEOS Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.