Lukoil agrees to sell Italian refinery to consortium

MRC) -- Russia's Lukoil has sold its Italian refinery to a consortium of Western private equity and trading firms in the first major asset sale, said Hydrocarbonprocessing.

Since its inception following the collapse of the Soviet Union, Lukoil had been one of the most active western asset-buyers of Russian companies, but these overseas assets became problematic after the West imposed broad sanctions on Russia in response to Moscow's invasion of Ukraine.

The sale of the plant to a consortium, led by Cypriot private equity firm G.O.I. Energy and backed by Geneva-based Trafigura, caps months of talks and can be viewed as a partial success given disorderly processes elsewhere as Moscow and the West confiscate each other's assets.

Global sanctions have frozen around USD300 billion, almost half of what Russia had in its gold and forex reserves, though Lukoil has not been directly targeted by Western sanctions.

The sale process is in contrast to Germany's confiscation of Rosneft's Schwedt refinery and Gazprom Germania, or Russia's takeover of Sakhalin 1 from Exxon Mobil.

G.O.I. Energy is run by Michael Bobrov, who is also CEO of Israeli firm Green Oil that holds a major stake in Israel's biggest refiner Bazan Group.

Trafigura will provide some financing and handle crude oil supplies and refined products output, the companies said. Trafigura will not hold a stake in the plant.

The deal marks an expansion into the refining sector for Trafigura that concluded a similar deal with Prax in 2021 for a refinery in Britain. Trafigura also holds a 3% stake in Italian refiner Saras, an indirect stake in India's major Nayara refinery and runs two small refineries via its subsidiary Puma Energy.

The ISAB plant in Sicily refines 320,000 barrels per day of crude, accounting for a fifth of Italy's refining capacity, and directly employs about 1,000 people in an economically depressed area in the country's southernmost region.

In a statement, the companies said the deal was expected to close in March. The companies did not provide a value for the deal. Earlier price discussions with other bidders were just under 1.5 B euro (USD1.61bn).

The agreement to sell the plant needs approval from Italy's government, which under what are known as golden power regulations, reserves the right to block or impose conditions on deals involving companies deemed of strategic importance.

We remind, LUKOIL completes reconstruction of several units at Volgograd refinery. A large-scale reconstruction has been completed at the Volgograd refinery. The project included modernization of the CDU-VDU-5 crude distillation unit with production capacity of 3.5 MMtpy and the solvent extraction unit with production capacity of 300, 000 tpy. Over 230 core equipment items were installed and technologically outdated units were decommissioned. The share of Russia-made equipment installed during the reconstruction exceeded 70%. The construction site spanned the area of 34 thousand square metres; investments into the project exceeded 12 B roubles.

mrchub.com

Samsung Engineering, one of the world’s leading engineering, procurement, construction and project management (EPC&PM) companies, announced that it was awarded a contract for an ethylene unit and its utilities for the Ras Laffan Petrochemicals Project (RLPP) in Qatar, said Hydrocarbonprocessing.

The Letter of Award (LoA) of the petrochemical plant, which will be located in Ras Laffan Industrial City, 80km north of Doha, was received on October 2022. Due to a binding confidentially agreement, the announcement was publicized today. Samsung Engineering will be executing the RLPP Ethylene Project jointly with CTCI as the ‘Samsung Engineering CTCI Joint Venture’ (SCJV).

The project is being built by Ras Laffan Petrochemicals (RLP), which is a joint venture consisting of Qatar Energy with a 70% stake and Chevron Phillips Chemical with a 30% stake. QatarEnergy and Chevron Phillips Chemical are building petrochemical projects in Qatar and the United States.

Samsung Engineering will be in charge of the major ethylene production facilities with its scope of work including furnaces, C2 hydrogenation, hydrogen purification unit and three main compressors. CTCI will be in charge of the utility infrastructure, including steam/condensate collecting and boiler feed water, among others. The project is expected to be completed in late 2026.

RLPP consists of two packages and SCJV is responsible to deliver Package 1, which includes the production facilities for 2.08 million tons of ethylene, as well as its utilities and offsite facilities. Ethylene produced by the unit will be delivered as feedstock for Package 2, which encompasses the project’s two high-density polyethylene units.

This project is meaningful to Samsung Engineering, since it is securing a new client in RLP and also marks the re-entry into the Qatari market after previously executing the Ras Laffan Diesel Hydrotreater (DHT) project. The company is currently executing numerous projects in MENA and this project further strengthens its regional presence.

It is also noteworthy that this project is one of the world's largest ethylene units in terms of capacity with 2.08 million tons per year. Through the expertise and know-how accumulated in previous ethylene projects, together with CTCI's rich experience in the Qatari market, Samsung Engineering is confident in delivering the RLPP Ethylene Project safely and at the client’s satisfaction. In addition, Samsung Engineering plans to provide exceptional schedule management to the client by applying a range of innovative strategies such as modularization, automation, and early purchasing of key equipment and materials.

Samsung Engineering’s President and CEO Hong Namkoong said, "Samsung Engineering is the ideal EPC contractor for this megaproject. We have the know-how and experience of successfully completing numerous ethylene projects," and further added, "We’re confident that we can deliver a supreme project to Ras Laffan Petrochemicals and therefore strengthen our relationship with them and position ourselves firmly in the MENA market."

We remind, Samsung Engineering, one of the world’s leading engineering, procurement, construction and project management companies announced that it has signed an agreement with Aramco for the National EPC Champions initiative. The official signing occurred on July 5, during the Saudi Aramco Namaat Industrial Investment Program event, held in the Al-Ghawar Hall at Aramco’s main office in Dhahran, Saudi Arabia. The formal agreement signing between Samsung Engineering, Al Rushaid Petroleum Investment Company (ARPIC), and Aramco took place earlier.

mrchub.com

Phillips 66 and DCP Midstream, LP announced that they have entered into a definitive agreement pursuant to which Phillips 66 will acquire all of the publicly held common units representing limited partner interests in DCP Midstream for cash consideration of USD41.75 per common unit, increasing its economic interest in DCP Midstream to 86.8%, said Hydrocarbonprocessing.

“We are delivering on our commitment to grow our NGL business,” said Mark Lashier, President and CEO of Phillips 66. “Our wellhead-to-market platform captures the full NGL value chain. As we continue integrating DCP Midstream, we are unlocking significant synergies and growth opportunities."

In combination with the previously announced realignment of Phillips 66’s economic and governance interests in DCP Midstream, the transaction is expected to generate an incremental USD1 billion of adjusted EBITDA for Phillips 66. In addition, Phillips 66 expects to capture operational and commercial synergies of at least USD300 million by integrating DCP Midstream into its existing midstream business.

Phillips 66 plans to fund the approximately USD3.8 billion cash consideration through a combination of cash and debt while maintaining its current investment grade credit ratings. The transaction is expected to close in the second quarter of 2023, subject to customary closing conditions.

The transaction was unanimously approved by the board of directors of DCP Midstream GP, LLC, the general partner of DCP Midstream GP, LP, the general partner of DCP Midstream, based on the unanimous approval and recommendation of a special committee comprised entirely of independent directors after evaluation of the transaction by the special committee in consultation with independent financial and legal advisors.

Affiliates of Phillips 66, as the holders of a majority of the outstanding DCP Midstream common units, have delivered their consent to approve the transaction. As a result, DCP Midstream has not solicited and is not soliciting approval of the transaction by any other holders of DCP Midstream common units.

Barclays acted as exclusive financial advisor to Phillips 66, Bracewell LLP acted as legal counsel to Phillips 66, and Morris, Nichols, Arsht & Tunnell LLP acted as special Delaware counsel to Phillips 66. Evercore acted as financial advisor to the special committee of the board of directors of DCP Midstream GP, LLC, and Hunton Andrews Kurth LLP and Richards, Layton & Finger, PA acted as legal counsel to the special committee.

We remind, Harvest Midstream will buy the Belle Chasse terminal in Louisiana from U.S. refiner Phillips 66, the privately held company said this week, a move that will boost its existing regional crude pipeline systems. The financial terms of the deal were not disclosed. Phillips 66 had unveiled its plans in November last year to convert the 50-year-old facility, formerly known as Alliance refinery, into an oil and refined products terminal after the refinery was idled due to severe damage from Hurricane Ida.
mrchub.com

Venezuela's oil exports last year declined due to infrastructure outages, U.S. sanctions and rising competition in its key Asia market despite assistance from ally Iran, according to shipping data and documents, said Reuters.

Exports this year are expected to get a lift after the United States relaxed oil sanctions by authorizing some partners of state-run firm Petroleos de Venezuela (PDVSA) to resume taking Venezuelan crude.

Iran expanded its role in Venezuela last year, sending supplies to boost exports and technicians to repair a refinery. But the poor condition of the country's ports, oilfields and refineries and harsh competition from Russia on crude supplies to China will keep limiting export gains, experts said.

PDVSA and its joint ventures exported some 616,540 barrels per day (bpd) of crude and refined products last year, a 2.5% drop from 2021 and slightly below 2020, according to a Reuters tally of data and documents.

"Despite the increased Iranian help, the decline in net exports results from a combination of production stagnation and the increasing competition of Russian exports in the Chinese black market," said Francisco Monaldi, a Latin American energy expert at Rice University's Baker Institute.

The OPEC-member country boosted its exports of petroleum coke, methanol and other oil byproducts, which helped offset some of the revenue loss. Shipments of these lower-value products more than tripled to 4.36 MM metric tons last year from 2021.

PDVSA's refineries began the new year processing 386,000 bpd of crude, less than 30% of their 1.3 MMbpd installed capacity, according to figures from employee unions.

We remind, U.S. oil producer Chevron Corp plans to export this month its first cargo of Venezuelan crude to its Pascagoula, Mississippi refinery following a U.S. license granted last year. The 500,000-barrel cargo of Hamaca heavy crude, to be loaded at state-run PDVSA's Jose port, comes from the Petropiar oil joint venture operated by both companies.
mrchub.com

Technip Energies has been awarded a large contract for Project Management Consultancy (PMC) by Kuwait Oil Company (KOC), said Hydrocarbonprocessing.

The five-year framework agreement contract covers front-end engineering design (FEED), project management, and associated services for KOC’s major projects.

This contract represents a renewal of the first five-year framework agreement that was awarded to Technip Energies by KOC in 2014.

Charles Cessot, Senior Vice-President T.EN X of Technip Energies, commented: “We are delighted by the continued confidence shown by KOC with this award to support them on their major developments. This award reinforces the strong and lasting relationship we have built with KOC and reaffirms our outstanding consultancy delivery as well as our long-standing presence in Kuwait."

A “large” award for Technip Energies is a contract award representing between €250 MM and €500 MM of revenue. As the framework agreement is call-off in nature, the overall value of the contract will be progressively added to order intake as it is called off by the client.

We remind, Technip Energies has been awarded a contract for the supply of proprietary cracking furnaces for the 2,000,000 tpy ethane cracker for the Golden Triangle Polymers project, a joint venture between Chevron Phillips Chemical (CPChem) and QatarEnergy, along the Gulf Coast in Orange, Texas. This latest award is in line with our early engagement strategy with CPChem and QatarEnergy, which resulted in the selection of our proprietary ethylene technology and includes the successful completion of the ethylene license and Process Design Package (PDP).
mrchub.com