Eni to spin off minority stake in its new retail and renewable business

MOSCOW (MRC) -- Italian energy group Eni is planning to spin off a minority stake in its new retail and renewable business next year, after announcing first quarter profits that missed expectations, reported Reuters.

Several European energy companies, including Spain's Repsol , aim to divest parts of their renewables business to raise money to reduce debt and pay for the shift away from oil and gas. Eni said it planned to list or sell a minority stake in the business that includes renewable energy and retail energy sales next year.

Analysts at Jefferies said the business, which has 10 million customers and plans to grow green power generation to over 5 gigawatts (GW) by 2025, could be worth EUR9 billion (USD10.89 billion) including debt. Eni expects the new unit to almost double its core earnings, or EBITDA, by 2024 to EUR1 billion.

"The combination of these two entities clearly could move the vehicle to the range of a double-digit multiple (to EBITDA)," CFO Francesco Gattei said on a call with analysts.

In the first quarter, Eni's adjusted net profit jumped almost five times to 270 million euros (USD327 million) as firmer oil prices offset lower production. The result was below an analyst consensus of about EUR440 million, in part due to a weaker performance in gas and refining margins. Cash flow from operations fell 12% to EUR1.6 billion.

Pandemic lockdowns throttled fuel demand last year prompting energy groups like Eni to rein in investments and returns. But Europe's energy companies this year have posted increased earnings boosted by higher oil prices as demand starts to pick up.

The group said it was looking for acquisitions to grow its green business to reach 4 GW of renewable capacity by 2024 from 1 GW this year, with a focus on the US and southern Europe. In 2021 the company expects to make disposals worth around EUR500 million while buying assets worth EUR1 billion.

As MRC wrote previously, Italian energy group Eni is evaluating conversion of its Livorno refinery in northwest Italy into a biorefinery, as part of the Italian company's wider strategy to make its activities more environmentally sustainable. Eni has already converted two of its Italian refineries and is looking to almost double its biorefining capacity to around 2 million mt/year by 2024, and expand this to at least five times by 2050, as part of its pledge to achieve complete carbon neutrality by 2050.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.

Eni, abbreviation of Ente Nazionale Idrocarburi, in full Eni SpA, Italian energy company operating primarily in petroleum, natural gas, and petrochemicals. Established in 1953, it is one of Europe's largest oil companies in terms of sales.
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US largest biofuels producer in talks with Flint Hills to acquire its ethanol assets

MOSCOW (MRC) -- POET, the largest biofuels producer in the United States, is in discussions with Flint Hills Resources to acquire the entirety of Flint Hills’ ethanol assets, both companies told Reuters on Thursday.

The deal would increase POET’s potential production capacity for ethanol by more than a third to 3 billion gallons per year, said Jessica Sexe, a spokeswoman for POET.

That could help the company tap into potential growth in the biofuels market as the Biden administration considers boosting biofuels as part of a broader strategy to decarbonize the nation’s economy to fight climate change.

Both Sexe and Jake Reint, spokesman for Flint Hills, declined to put a price on the deal.

Flint Hills, a refining, biofuels and petrochemical company, is based in Wichita, Kansas, and is currently the fifth-largest ethanol producer in the United States. Its biofuels division includes six ethanol plants with a combined capacity of about 800 million gallons per year, 1.5 million tons of distillers grains and about 200 million pounds of corn oil, Reint said.

Both companies are privately held.

The discussions come after a hard year for the ethanol industry because of the coronavirus pandemic, which sank demand for fuel. Ethanol’s top market is for use in blending with gasoline, something required under US law.

As MRC informed earlier, Encina Development Group (Encina; The Woodlands, Texas) and Flint Hills Resources said in February, 2021, they are exploring a collaboration to produce renewable chemicals and fuels from plastic waste. The two have signed a non-binding term sheet that proposes construction of a facility in Corpus Christi, Texas. Flint Hills would market the aromatic products produced at the Encina Corpus Christi facility and work with its affiliates to market renewable aromatic products from other Encina plants in the US.

We remind that in November 2019, Motiva Enterprises, the US refining arm of Saudi Aramco, acquired 100% of Flint Hills Resources chemical plant, adjacent to its Port Arthur, Texas, oil refinery. The Flint Hills plant operates a 1.57 billion-pound-per-year ethylene cracker, a unit producing nylon component cyclohexane, and a network of pipelines and storage caverns.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.
MRC

Chinese April crude oil imports down by 0.2% on squeezed refining margins

MOSCOW (MRC) -- China's crude oil imports in April fell 0.2% from a year earlier as refiners curbed production to relieve a squeeze in profit margins brought about by rising crude oil prices and bulging inventories, reported Reuters.

The world's biggest crude oil buyer brought in 40.36 million tonnes of crude oil in April, or 9.82 million barrels per day (bpd), data from the General Administration of Customs showed on Friday. That was the lowest since December and was down from 11.69 million bpd of imports in March.

As crude oil prices hovered above USD60 a barrel, versus historic lows a year earlier, refiners - in particular small, independent plants - faced shrinking margins as overall fuel supplies swelled due to increased operations at larger, more efficient private refiners. Margins were also hurt as traders brought in a record amount of light cycle oil (LCO), a blending fuel for making diesel, pushing stocks of diesel to multi-year highs. LCO inflows are expected to slow due authorities' clampdown on illicit trading of the fuel.

However, analysts said robust domestic fuel demand and reviving refining margins in recent weeks are likely to prompt some refiners to shorten maintenance periods, bolstering crude trade in coming months.

"We expect imports over May-June to be higher than what the market previously anticipated. Crude imports should rise to 11.0-11.5 million bpd levels in August-September, with the ramp up of new refining capacities," said Chen Jiyao, head of China client advisory at energy consultancy FGE.

As MRC informed earlier, more crude oil was being refined in China's refineries in April 2020 than in US refineries for the first month on record, and this trend continued for all remaining months in 2020 except for July and August. Thus, China processed more crude oil than the United States not only because of the unique effects of COVID-19 pandemic-related restrictions in 2020, but also because of differences in the longer-term structural refining trends between the two countries.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.
MRC

Canadian plastic pipe maker Soleno buys Plastiques VPC

MOSCOW (MRC) -- In a move that further positions it in the reycling sector, Canadian plastic pipe maker and cleantech company Soleno, said to be one of the largest recyclers of HDPE in Eastern Canada, has acquired Plastiques VPC, a start-up specializing in the recovery of oil-contaminated plastics, said Canplastics.

The financial terms of the deal have not been disclosed. Plastiques VPC is headquartered in Saint-Henri, Que., and in a news release, officials with New Brunswick-based Soleno said the deal “will position the province of Quebec advantageously in the recycling industry."

"Annually, in Quebec and the Atlantic Provinces, more than 3.5 million kg of oil and antifreeze containers can be recycled,” the news release said. “By acquiring Plastiques VPC, [we] will be the only company in Eastern Canada able to recover materials from these territories in a fully integrated manner, while ensuring exemplary traceability from the beginning to the end of their life cycles."

Soleno represents a group of four business units, including Soleno, Soleno Recycling, Soleno Service and Soleno Textile, which employs 500 workers in nine industrial sites in Quebec, Ontario, and New Brunswick. The company manufactures and distributes a wide range of products for the collecting, conveying, treating, and storage of stormwater for the infrastructure, residential, natural resources, and agricultural sectors. The majority of Soleno’s products are made of HDPE.

As per MRC, Canada-based thermoplastic piping systems manufacturer Ipex has completed its stock purchase of Silver-Line Plastics. Silver-Line Plastics is a U.S. manufacturer of plastic pipe products with production facilities in North Carolina, Oklahoma, and Florida. The goal of the acquisition, which was first announced in August, is to allow Ipex to increase its market position in the U.S. with an expanded product portfolio serving a broader client base.

As per MRC ScanPlast, March total HDPE production reached 175,900 tonnes versus 152,500 tonnes a month earlier, all producers raised their capacity utilisation. Russian plants" overall HDPE output reached 505,800 tonnes in the first three months of 2021, up by 15% year on year.
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Lyondell Basell Industries does not plan to perform major maintenance at its global assets

MOSCOW (MRC) --- Petrochemical producer Lyondell Basell Industries does not plan to perform major maintenance at its global assets, including a Houston refinery, in the second quarter of 2021, said Chief Executive Bob Patel during a Friday morning conference call with Wall Street analysts, said Hydrocarbonprocessing.

"Deferred turnarounds from 2020 are resulting in high levels of planned maintenance downtime for many of our competitors during the second quarter," Patel said. "Lyondell Basell has no major planned maintenance for the second quarter at any of the global assets that we operate."

The company's 263,776 barrel-per-day (bpd) Houston refinery is running at nearly full production, said Michael McMurray, chief financial officer. In the first quarter, the Houston refinery operated at an average 57% of capacity because of the severe cold weather that shut it for about a month beginning in mid-February, McMurray said.

Patel said he hopes that the company's refining segment, which recorded a USD110-million loss in the first quarter of 2021, will return to break even in the third quarter of this year.

As per MRC, LyondellBasell Industries N.V. (Rotterdam the Netherlands) announced another step towards its ambition to advance the circular economy by making virgin quality polymers from raw materials derived from plastic waste at its Wesseling, Germany, site. Produced by the thermal conversion of plastic waste, this raw material is converted into ethylene and propylene in the LyondellBasell production facilities, and then processed into polypropylene (PP) and polyethylene (PE) in the downstream units for plastics production. The first use of raw material derived from plastic waste follows the company’s successful production of plastic materials made from renewable-based raw materials such as used cooking oil, which helps to reduce CO2 over the product life cycle and reduce the use of fossil-based raw materials.

As per MRC, LyondellBasell, the world's largest polyolefins producer, has declared a force majeure (FM) on shipments of some polypropylene (PP) grades from its Ferrara plant in Italy as of May 3, according to NCT with reference to a source familiar with the issue. This plant is able to produce 285.000 tons/year of PP. At the time of press, no details were shared regarding the reason or duration of the FM.

According to MRC's ScanPlast report, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
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