Petro Rabigh plans capital reduction

Petro Rabigh plans capital reduction

MOSCOW (MRC) -- Rabigh Refining and Petrochemical Co (Petro Rabigh) plans a Saudi riyal (SR) 1.21bn (USD321m) capital reduction, followed by a rights issue of up to SR7.95bn (USD2.12bn), said Argaam.

“The purpose of this Petro Rabigh capital reduction and capital increase is to eliminate the accumulated losses incurred due to the large deficit in FYfiscal year 2020 and strengthen Petro Rabigh’s financial position,” Japan’s Sumitomo Chemical said in a statement.

Petro Rabigh is a joint venture between Saudi Aramco and Sumitomo Chemical - each with a 37.5% stake in the company, while the remaining 25% is held by Saudi investors. The planned twin exercise is still subject to regulatory approvals.

Under the plan, about 120.5m Petro RaUSDigh shares will be cancelled, bringing the total down to 755.5m shares after the reduction. The rights issue of up to $2.12bn will be done soon after the capital reduction, with both Saudi Aramco and Sumitomo Chemical chipping in USD795m, equivalent to their respective stakes in Petro Rabigh.

Petro Rabigh’s financial performance in the current fiscal year “continues to be healthy to date due to its stable operations and improvements in market conditions, such as prices for crude oil and petrochemical products”, the Japanese shareholder said. In the third quarter of 2021, the Saudi manufacturer of refined petroleum products and petrochemicals swung into a net profit of SR221m on the back of improved product margins.

Petro Rabigh posted a nine-month net profit of SR1.59bn, compared with the SR3.85bn loss recorded in the same period last year. In October 2020, Sumitomo Chemical and Saudi Aramco jointly loaned out a total of $2bn to Petro Rabigh, which faced shortfall of working capital following a deterioration in the market environment since end-2019 amid the coronavirus pandemic.

As per MRC, Saudi Arabia’s Rabigh Refining and Petrochemical Co (PetroRabigh) has no overhaul schedule for its polypropylene (PP) plant at the moment. The company operates two lines at this plant, which can produce 350,000 mt/year of PP each.

As MRC wrote previously, the company conducted a 55-day scheduled turnaround at its PP units in Rabigh since end-February 2020. Besides, the company has a 300,000 mt/year high density polyethylene (HDPE) unit, a 160,000 mt/year low density polyethylene (LDPE) unit and a 600,000 mt/year linear low density polyethylene (LLDPE) plant at the same site.

PetroRabigh, a joint venture between Saudi Aramco and Japan's Sumitomo Chemical, has an annual output capacity of 18 million tonnes of refined products and 2.4 million tonnes of petrochemicals. Thus, the complex currently has a cracker to produce 1.6-million t/y of ethylene, as well as downstream production of polyethylene, polypropylene, propylene oxide, ethylene glycol and butene-1.

SIBUR maintains high CDP scores in 2021

MOSCOW (MRC) -- On 7 December 2021, Carbon Disclosure Project (CDP) published its A List of environmental leaders. Over 13,000 companies from all over the world disclosed through CDP and were scored. In 2021, SIBUR kept its B score (management level), which is above the global average, as per the company's press release.

The company also ranked top in climate change retaining the A score (leadership level) and outperforming the industry average.

An important factor that helped SIBUR remain among the world’s above-average players was an improved score for climate risks and opportunities disclosure.

Every year, SIBUR discloses detailed information on its climate change performance and action. Targets for reducing GHG emissions are part of the Company's sustainable development strategy, which is mandatory for the management under its performance assessment metrics.

Maxim Remchukov, Head of SIBUR’s Sustainable Development said: “CDP score is one of the most recognisable in the wide range of international and Russian ESG ratings. It covers all aspects of companies’ efforts to reduce GHG emissions. Climate change has recently come to the fore of the ESG agenda: legislative requirements are being tightened both in and outside Russia, and there is a clear focus on identifying and implementing best practices in climate action. We are already seeing change as in 2021 global players have improved their positions in climate rankings thus raising the respective average scores internationally and industry-wide. The B score retained by SIBUR indicates that we keep marching forward, but to move one step further and get on the A List, SIBUR has to reach the ambitious climate change mitigation targets outlined in our updated Sustainable Development Strategy.”

As MRC reported earlier, SIBUR and Sinopec closed the deal to create a JV based on Amur GCC in late December 2020. As a result of the deal, the parties obtained joint control over the JV in shares of 60% and 40%, respectively.

SIBUR is implementing an Amur GCC project for processing ethane fraction and liquefied petroleum gases (LPG) at Gazprom's Amur GPP.

The capacity of the Amur GCC, as the future world's largest complex for the production of base polymers, will be 2.7 mln tons per year: 2.3 ml tons of polyethylene (PE) and 400,000 tons of polypropylene (PP). The complex's products will be represented by a wide range of grades. The construction of the complex is synchronized with the gradual reaching full capacity of Gazprom's Amur GPP. The approximate time frame for completion of construction and commissioning is 2024.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in the first nine months of 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.

SIBUR Holding is the leader in the Russian petrochemical industry and one of the largest global companies in the sector with over 23,000 employees. Over the past 10 years, SIBUR has implemented a number of large-scale investment projects worth about Rb1 trillion.

COVID-19 - News digest as of 09.12.2021

1. Crude oil prices drop as investors assess impact of Omicron coronavirus variant

MOSCOW (MRC) -- Oil prices edged lower in choppy trade on Wednesday, taking a breather after gains earlier this week, as investors assessed the impact of the Omicron coronavirus variant on the global economy, reported Reuters. The market had a muted reaction to US weekly inventory figures, which showed a smaller-than-anticipated decline in crude stocks and another bump up in overall production, giving credence to expectations that supply will increase in coming months. Brent crude futures were down 15 cents, or 0.2%, to USD75.29 a barrel at 10:52 a.m. EDT (1552 GMT). US West Texas Intermediate crude was at USD71.94 a barrel, down 16 cents or 0.3%. Brent crude prices have rebounded by over 9% since Dec. 1 on signs Omicron has had only a limited impact on oil demand, after a 16% drop since Nov. 25.


PVC production in Russia up by 3% in Jan-Nov 2021

MOSCOW (MRC) -- Russia's overall production of unmixed polyvinyl chloride (PVC) totalled 918,900 tonnes in the first eleven months of 2021, up by 3% year on year. Three producers increased their output, according to MRC's ScanPlast report.

November production of unmixed PVC rose to 86,600 tonnes from 85,600 tonnes a month earlier, higher output was due to the increased capacity utilisation of Kaustik (Volgograd) after a scheduled turnaround. Overall output of polymer totalled 918,900 tonnes in January-November 2021, compared to 891,000 tonnes a year earlier. Three producers increased their production, whereas one manufacturer maintained its last year's figures.

The structure of PVC production by plants looked the following way over the stated period.

RusVinyl produced slightly over 29,600 tonnes of PVC in November, with emulsion polyvinyl chloride (EPVC) accounting for 2,600 tonnes, compared to 30,000 tonnes a month earlier. RusVinyl's overall output of resin reached 318,800 tonnes in the first eleven months of 2021, compared to 306,000 tonnes a year earlier. Higher production was mainly caused by the absence of a shutdown for maintenances this year.

SayanskKhimPlast slightly reduced its output last month slightly and produced just over 27,100 tonnes of suspension PVC (SPVC), compared to 28,000 tonnes in October. The Sayansk plant managed to produce 281,500 tonnes of PVC in over the stated period, compared to 270,900 tonnes a year earlier.

Baskhir Soda Company produced about 23,000 tonnes in November versus 23,400 tonnes a month earlier. Baskhir Soda Company's overall output of resin reached 245,300 tonnes in January-November 2021, which virtually corresponds to the last year's figure.

Kaustik (Volgograd) produced 6,900 tonnes of SPVC last month, whereas this figure was 4,100 tonnes in October. The plant's overall production of resin reached 73,300 tonnes over the stated period, up by 5% year on year.


Mubadala Investment Company to acquire 1.9% of SIBUR

Mubadala Investment Company to acquire 1.9% of SIBUR

MOSCOW (MRC) - UAE sovereign wealth fund Mubadala Investment Company is buying 1.9% of SIBUR Holding, reported Interfax, citing Mubadala Investment's statement.

The terms of the deal were agreed upon prior to TAIF joining SIBUR.

The announcement did not disclose the terms of the purchase, but it was noted that it is Mubadala's largest investment in Russia.

The deal is a continuation of a long-standing partnership between the companies. In 2015, the fund invested in SIBUR's logistics terminal in Ust-Luga, and also participated in debt financing of ZapSibNefteKhim, said the investor.

At present, Leonid Mikhelson (31%) is the largest shareholder of SIBUR, Gennady Timchenko has 14.45%, Chinese Sinopec and the Silk Road Fund have 8.5% each, SOGAZ has 10.625%, the current and former top management has 12.325%, TAIF shareholders - 15%.

During the merger with TAIF, the merged company was valued at Rb1.9 trillion, or USD26.8 billion. Hence, the cost of the 1.9% stake may be about USD0.5 billion.

As MRC reported earlier, in October 2021, SIBUR closed the deal to acquire 100% of TAIF JSC, which includes Nizhnekamskneftekhim, Kazanorgsintez and TGK-16.

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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

SIBUR manufactures and sells petrochemical products in the Russian and international markets in two business segments: olefins and polyolefins (polypropylene, polyethylene, BOPP, etc.), as well as plastics, elastomers and intermediate products (synthetic rubbers, expanded polystyrene, PET, etc.).