Pakistani Engro plans construction of propane dehydrogenation unit and PP production

MOSCOW (MRC) - Pakistani company Engro Corp will spend USD31.4 million on design, engineering and technical studies for the proposed propane dehydrogenation unit and polypropylene (PP) production, the company said.

"This is in continuation to our letter to the PSX dated April 26, 2019, in relation to the company’s intent to explore investment opportunities in the petrochemical sector and the approval by the Board of Directors of the company (the “Board”) for commencement of a study in relation to a polypropylene facility based on propane dehydrogenation (“PDH-PP Project”)," the company said in a statement to the bourse.

Engro said that its Board in its meeting held on April 8th, 2021, has approved an amount of up to USD 31,400,000 towards conducting engineering, design and technical studies including a Front End Engineering Design (FEED) study in relation to the PDH-PP Project.

"The results of these studies, when completed, are expected to inform the final investment decision in relation to this project, which decision will also be based on a conducive policy environment and arranging the right mix of debt and equity partners at such time," the company added.

Earlier it was reported that Pakistani Nimir Chemicals resumed production of phthalic anhydride in Bhikki, Pakistan on January 7 after scheduled repairs. This production with a capacity of 30 thousand tons of phthalic anhydride was closed on December 24 last year. The company closed its two-line plant for regular maintenance during this period, a company source said.

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

According to the ScanPlast review by MRC, the total PP production in Russia increased by 8% in the first two months of this year compared to the same indicator in 2020 and amounted to about 350 thousand tons. All manufacturers, except for Nizhnekamskneftekhim, have increased their operating time.

Engro Corp, a fertilizer and petrochemicals manufacturer in Pakistan, is the largest listed conglomerate in the country.


The loss of profits of NKNK last year was due to large foreign currency loans

MOSCOW (MRC) - Net profit of Nizhnekamskneftekhim in 2020 decreased by 81% to 4.4 billion rubles, but not because of the lockdown caused by the coronavirus, but because of gigantic loans in euros, BUSINESS Online reports.

NKNK's revenue also decreased, but not so much - by 15%, or 26.2 billion, to 147.9 billion rubles. According to the consolidated financial statements in accordance with IFRS, the operating result fell generally by only 5.4 billion to 22.7 billion rubles.

Earlier it was noted that the key owners of the TAIF group, which includes Nizhnekamskneftekhim, decided that financing of the construction of an olefin complex with a capacity of 600 thousand tons of ethylene per year would be carried out mainly through borrowed funds. And in 2018, at the St. Petersburg economic forum, they signed an agreement with a consortium of banks to raise EUR807 million.The general contractor was Linde Engineering, an agreement with which the Taif people signed in 2017 at the same forum in the presence of Vladimir Putin.

One of the consequences was an increase in long-term and short-term loans of NKNK by 47 billion to 103 billion rubles based on the results of 2020. On currency revaluation of assets and debts, NKNK received a negative balance of 16.5 billion rubles. In the consolidated financial statements, the net exchange rate difference is estimated at minus 11.8 billion rubles.

As for other external sources of funds, in 2020 the accounts payable (to suppliers and customers) of NKNK doubled to 22 billion rubles, while accounts receivable (counterparties' debts) decreased by EUR0.5 billion to EUR13.9 billion. Together with the fall in retained earnings and the growth of bank debts, this is a wake-up call, especially if we take into account the decline in the company's revenue. If this trend continues, the debt burden of petrochemists will sharply increase relative to their own funds, which could potentially lead to a revision of credit conditions.

At the same time, about half of NKNK's revenue is generated in the ruble zone, that is, making foreign currency loans unprofitable, the weak ruble simultaneously helps smooth out the price dip. Against the dollar, the Russian currency dropped 11% over the year to 72.1 rubles per dollar, while prime cost declined slightly more slowly than revenue, dropping 14% to 111.7 billion rubles. At the same rate, commercial expenses (storage, advertising, sales) decreased by 14%.

Earlier it was reported that by the end of 2020, sales of Nizhnekamskneftekhim were able to restore to the level that was before the coronavirus crisis. However, due to the pandemic, the demand for all types of rubber has decreased, which has led to overstocking of warehouses on a huge scale.

According to the ScanPlast of MRC, Nizhnekamskneftekhim produced just over 19,000 tonnes of propylene polymers in the last month of 2020 against 18,000 tonnes a month earlier. During the period under review, the total polymer output at the Nizhnekamsk enterprise reached the level of 219,700 tonnes against 211,700 tonnes in 2019.

PJSC "Nizhnekamskneftekhim" (NKNKH) is one of the largest Russian producers of petrochemical products. The production complex of the company includes ten factories of the main production and ten departments (railway transport, main ethylene pipelines, etc.). NKNKh produces over 120 types of chemical products, including synthetic rubber, polyethylene, polypropylene, polystyrene, surfactants. Nizhnekamskneftekhim is part of TAIF Group.

COVID-19 - News digest as of 09.04.2021

1. Russia sees pandemic impact on crude oil demand to last until 2023-2024

MOSCOW (MRC) -- Russia expects the fallout from the COVID-19 pandemic on the global consumption of oil and oil products may last until 2023-2024, a draft government document, seen by Reuters, showed. The global oil and liquid fuels production dropped in 2020 to 94.25 million barrels per day (bpd) from 100.61 million bpd in 2019, amid the pandemic, which led to lockdowns, halting 80% of air traffic and a quarter of road traffic at its peak and denting fuel consumption. The Organization of the Petroleum Exporting Countries expects oil demand to grow by 5.6 million barrels per day this year under its base case scenario. Russian Deputy Energy Minister Alexander Novak has also projected similar growth.


Major fire breaks out at Pemex refinery in Minatitlan by the Gulf of Mexico

MOSCOW (MRC) -- A major fire has broken out at an oil refinery run by Petroleos Mexicanos (Pemex) in the eastern city of Minatitlan in the southern state of Veracruz, reporte Reuters with reference to Mexican media and authorities' statements.

According to media reports and Mexico's safety, the blaze started at this refinery, one of six operated by Pemex, which has a capacity of up to 285,000 barrels per day, on Wednesday afternoon.

Energy and environment regulator ASEA said it was monitoring the situation.

ASEA's executive director Angel Carrizales said on Twitter the fire started in a gasoline transfer pump.

Police from the state of Veracruz said emergency services were arriving at the scene. It was not immediately clear what, if any, human cost the blaze had caused.

Pemex did not immediately reply to questions about the fire.

As MRC informed before, there was a fire at Pemex's Minatitlan refinery in mid-June 2018. There were no injuries. The fire was put out soon.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).

Sinopec Shanghai Petrochemical to shut its LDPE plant in China for maintenance on 18 April

MOSCOW (MRC) -- Sinopec Shanghai Petrochemical plans to shut its low density polyethylene (LDPE) unit in Shanghai for a scheduled turnaround, according to CommoPlast.

Thus, the company will take this plant off-stream on April 18, 2021. The LDPE plant is expected to resume operations after a 29-day maintenance on May 17, 2021.

Located at Shanghai in China, the unit has a production capacity of 210,000 mt/year.

Sinopec Shanghai Petrochemical also operates its high density polyethylene (HDPE) unit in Shanghai with a production capacity of 260,000 mt/year.

As MRC reported earlier, Sinopec Shanghai Petrochemical took off-stream its HDPE plant for maintenance on June 30, 2020. The plant resumed operations on July 8, 2020.

According to MRC's ScanPlast report,January estimated LDPE consumption in Russia grew to 61,210 tonnes from 43,090 tonnes a year earlier. Russian producers increased their capacity utilisation, and export LDPE shipments decreased. Russia's estimated LDPE consumption was about 563,730 tonnes in 2020, up by 1% year on year.

China Petroleum & Chemical Corporation, or Sinopec Limited is a Chinese oil and gas company based in Beijing, China. It is listed in Hong Kong and also trades in Shanghai and New York . Sinopec is the worlds fifth biggest company by revenue.