Huntsman announced agreement to sell Textile Effects Division

Huntsman Corporation announced it has entered into a definitive agreement to sell its Textile Effects division to Archroma, a portfolio company of SK Capital Partners, said the company.

The total enterprise value of the transaction is approximately USD718 million, which includes the assumption of approximately USD125 million in net underfunded pension liabilities as of December 31, 2021. The acquisition is being partially funded with preferred equity, of which Huntsman is taking up to USD80 million, an amount SK Capital Partners will seek to syndicate prior to the transaction closing.

Over the last twelve months ending June 30, 2022, the Textile Effects division reported sales of USD772 million and adjusted EBITDA of USD94 million. Huntsman anticipates cash taxes on the transaction of approximately USD50 million. Huntsman intends to report Textile Effects as discontinued operations beginning in the third quarter of 2022. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the first half of 2023.

Peter Huntsman, Chairman, President, and CEO commented: "Over the past seven months, we have conducted a comprehensive strategic review of our Textile Effects division, including detailed discussions with a wide range of relevant parties. After evaluating several different options and thoroughly reviewing prospective offers for the business, our Board of Directors decided that SK Capital would be a better owner of the business over the long-term than Huntsman and that the value they offered was in the best interests of our shareholders. After closing, Textile Effects will combine with SK Capital's Archroma business to create a world leader in textile chemicals and dyes, with a leadership in sustainability and innovation.

"We expect the cash proceeds from this divestiture to be deployed in-line with our current balanced capital allocation program which includes strategic investments and acquisitions to further strengthen our core businesses as well as returning cash to shareholders through both our dividend and share repurchase program."

BofA Securities is serving as Huntsman's financial advisor and Kirkland & Ellis LLP is acting as its legal advisor.

We remind, Huntsman Corporation announced the start of commercial operation of a new methylene diphenyl diisocyanate (MDI) splitter at its Geismar site in Louisiana. The USD180 million splitter gives Huntsman the ability to produce more high value, differentiated grades from the crude MDI manufactured at the plant, thereby enabling growth in key customer applications.
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Venezuela has suspended new crude shipments to Europe under an oil-for-debt deal and has asked Italy's Eni and Spain's Repsol to provide it with fuel in exchange for future cargoes, three people familiar with the matter said, said Hydrocarbonprocessing.

Venezuela's oil company PDVSA no longer is interested in the oil-for-debt deals that the U.S. State Department authorized in May, the sources said, which allowed the state company to resume shipments to Europe after a two-year suspension caused by U.S. sanctions.

Washington authorized the shipments as long as cargo proceeds were used to pay off accumulated debt PDVSA owed to joint ventures with Eni and Repsol. "PDVSA wants to go back to oil swaps, and that is not possible yet," said a person involved in cargoes previously delivered to Europe. "There's zero interest in the oil-for-debt deals."

Venezuelan oil shipments, particularly those sent to refineries in Spain, have helped Europe reduce purchases of Russian oil since the invasion of Ukraine. But the deal's terms have not provided needed cash or fuel to PDVSA, whose own refineries are struggling to produce gasoline and diesel after years of underinvestment and lack of repairs.

PDVSA, Eni, Repsol and the U.S. State Department did not immediately reply to requests for comment. According to PDVSA's shipping schedules, there are no loading windows assigned to Eni or Repsol for Europe-bound cargoes in August, even though stocks of diluted crude oil (DCO) at the Jose port rose to almost 5 MM barrels as of Aug 8.

PDVSA wants to get fuel in exchange for its crude, while using a portion of the cargoes' value to offset billions of dollars in debts to joint venture partners including Chevron, Eni and Repsol, according to the sources. The deal reshuffle could help the Venezuelan company reanimate its Orinoco Belt extra heavy oil operations, which need imported diluents such as heavy naphtha, and ease the country's motor fuel deficit.

Since last year, PDVSA has relied mostly on Iranian diluents to turn its extra heavy crude into exportable grades. Since June, Eni received a total of 3.6 MM barrels of Venezuelan diluted crude oil (DCO), according to the PDVSA's documents and tanker tracking data. Most of that volume was later delivered by Eni to Repsol, which has a larger capacity for refining the South American country's heavy sour crude grades.

As per MRC, Eni believes it will be able to completely replace Russian gas imports by 2025 as uncertainty over Moscow's energy supplies to Europe forces countries to seek alternative sources. After signing new gas supply agreements with Algeria, Egypt and Congo earlier this year, Eni sees additional opportunities arising in other countries including Libya, Angola, Mozambique, and Indonesia, as well as in its home country.
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China's refined fuel exports are likely to sink in 2022 to the lowest in seven years as the country seeks to maintain ample domestic supplies while refinery output posts a rare decline, said Reuters.

Regional rivals like India and South Korea are the probable primary beneficiaries of China's export cuts, which allow them to step up to fill shortages in Europe and elsewhere after the Ukraine crisis strained global fuel markets.

Beijing manages exports of gasoline, diesel and jet fuel under a quota system, issuing several batches of allocations over a year and viewing product shipments to global markets as a tool to manage domestic supply and demand balances.

Most quotas go to state oil groups, including China National Petroleum Corp, China Petrochemical Corp, China National Offshore Oil Corp, Sinochem Holdings and China National Aviation Fuel Company. Mega refiner Zhejiang Petrochemical Corp is the only private company with export allowances.

Through 2019 the government specified quotas by product, but since then it has allowed exporters to decide what to export from a general allocation.

Exports of very low sulphur fuel oil, a marine fuel that meets International Maritime Organization standards, are managed under a separate quota system. Bunker fuel volumes from bonded zones - which are considered as exports - have been rising since 2020 as China works to build its eastern port of Zhoushan into a regional shipping fuel hub that rivals Singapore.

As per MRC, five major Chinese companies including two of the country's largest oil producers will delist from the New York Stock Exchange. Sinopec and PetroChina -- two of the world's biggest energy firms -- will apply for "voluntary delisting" of their American depositary shares, the companies said in separate statements. The Aluminum Corporation of China, also known as Chalco, as well as China Life Insurance and a Shanghai-based Sinopec subsidiary.
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Mexico's state-oil company Pemex requested this week almost USD6.5 bn in additional funding from the government to pay for works at the"'Dos Bocas" refinery this year, according to a document and two sources familiar with the matter, said Reuters.

The additional funding is to cover works not initially included in the project's proposal, higher construction and startup costs, according to the document and sources. Mexican President Andres Manuel Lopez Obrador considers the new refinery a signature project and has argued it will help the country cut a longstanding dependence on gasoline and diesel imports.

The additional funding would take the refinery's price tag to USD14.6 B, the documents and the sources said, far above the original budget of USD8.9 B. The document, seen by Reuters, cites higher costs for building "associated" components in infrastructure needed to operate the refinery as the main reason for the increase.

Petroleos Mexicanos' (Pemex) board approved - by a majority but not unanimous vote - to request USD5.6 B from the government to continue the works, as well as USD853 MM for costs associated with the start-up of the Olmeca refinery, commonly known as Dos Bocas after the area where it is being built.

Pemex will own and operate the refinery, Mexico's eighth. Pemex, Mexico's finance ministry and energy ministry did not immediately respond for a request for comment. Up until June, USD10.3 B had been spent on the refinery, the document showed.

In April, sources close to the project told Reuters the refinery would cost at least USD14 B while other reports have put the final price tag several billion dollars higher. Lopez Obrador said in June the refinery would end up costing significantly more than the USD8.9 B that had been approved initially. At the time he estimated a price tag of USD11 B and USD12 B.

We remind that n late January, 2022, Pemex signed a long-term crude supply contract with Royal Dutch Shell Plc as part of its acquisition of the Deer Park refinery in Texas. Pemex and Shell in May, 2021, announced the transaction, which is worth almost USD600 MM and will make the Mexican firm the sole owner of the refinery near Houston. The facility has capacity to process 340,000 bpd. Shell will supply about 200,000 bpd of foreign and US crude to the plant for at least 15 years.
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Europe is heading into winter with seasonally low levels of diesel in storage tanks, with major implications for the continent's industries and drivers in the run-up to EU sanctions on Russian crude oil and refined product supplies, said Hydrocarbonprocessing.

Diesel, along with other distillate fuels such as heating oil and gasoil, are the lifeblood of industry with uses ranging from powering factories to heating homes, in addition to being used as a motor fuel. When Russia, which supplies Europe with about 60% of its import requirement, invaded Ukraine on Feb. 24, the diesel market went into shock as it priced in a possible cutoff of those supplies.

The six-month spread in European diesel futures went into a record backwardation of nearly USD600/t. In a backwardated market, current prices trade at a premium to prices for future deliveries, which makes it uneconomical for traders to put diesel into storage and book a profit. "No one in their right mind would put diesel into tanks at those levels," one European trader said. The result has been that European distillate stocks held by refiners are trending much lower than their historical averages.

Stocks of diesel and gasoil in commercial sites in the Amsterdam-Rotterdam-Antwerp (ARA) hub are also well below their historical average, data from Dutch consultancy Insights Global shows. The spread currently stands at about USD100 a ton, still well above levels for this time of year.

Compounding the situation further, extremely hot and dry weather in Europe has led to unseasonably low water levels on the Rhine river, a key waterway for moving barges carrying fuel from the massive oil refineries and tank farms in ARA to Germany, France and Switzerland.

Water levels at the gauge point of Kaub in Germany currently stand at 42 cm, and Germany's electronic waterway information service for inland shipping, or ELWIS, forecasts levels to drop further to 34 cm in the coming days. According to consultants FGE Energy, 240,000 barrels per day (bpd) of oil products traversed the Rhine to be unloaded in Germany in 2021, more than 10% of the country's oil demand.

At current levels, barge owners are opting to load their vessels at about a quarter or less of their 2,000-3,000 ton capacity to avoid grounding into the riverbed. This has created major bottlenecks along the route and has raised barge freight rates in some areas to record highs. While oil products also move through pipeline and by rail into Germany, those are already operating at full capacity, FGE says. Trucking is an option, but high fuel costs make this option uneconomical, they added.

"With the river levels so low there's no point in having product in ARA as you can't move it down the Rhine, and backwardation is discouraging having product in tank," one European trader said. "A major disruption to an important gasoil/diesel supply route from ARA to inland Europe could not come at a worse time," FGE said. The market is already tight due to refinery outages in Austria, which along with Germany and Switzerland will be looking to build heating oil stocks ahead of winter.

Soaring natural gas prices which are encouraging a switch to oil products for power generation could also tighten the market further, FGE said. The International Energy Agency on Thursday raised its forecast for oil demand growth for this year by 380,000 bpd to 2.1 MMbpd citing the gas-to-oil switch.

As per MRC, Wood, the global consulting and engineering company, has secured a new contract with INEOS in excess of USD100 MM to deliver engineering, procurement and construction management (EPCm) services for Project One, a new state-of-the-art petrochemicals complex in Antwerp, Belgium, which will deliver an ethane cracker with the lowest carbon footprint in Europe. Effective immediately, the 4-yr contract will be delivered by Wood’s Projects business unit. The scope is focused on the outside battery limit facilities for the ethane cracker and follows the successful completion of front-end engineering design for the facility. Wood’s integrated project management team will also continue to oversee the project, working closely with the INEOS project team.
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