Azoty suffers Q4 loss

Grupa Azoty suffered a fourth-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) loss of zloty (Zl) 296m (USD67.4m) as Ukraine war market impacts caused “record-breaking and highly volatile” energy and raw material costs, said the company.

Estimated Q4 consolidated sales revenue was Zl 5.1bn while the estimated EBITDA margin in the quarter was minus 5.8%, it added. Estimates for the full-year 2022 results showed EBITDA of Zl 2.5bn, consolidated sales revenue of Zl 24.7bn and an EBITDA margin of 10.3%.

Grupa Azoty Group - which said it would release its consolidated Q4 and full-year results on March 30 - said its fourth-quarter consolidated EBIT and EBITDA were hit by significant impairment losses of around Zl 404m on non-financial non-current assets and inventories of finished products, semi-finished products and raw materials.

The impact of impairment losses on non-financial non-current assets also resulted in a decrease in the group's full-year consolidated EBIT by Zl 963m.

In remarks on the estimated results, state-controlled Azoty, Europe’s second largest fertiliser producer, said: “Record-breaking and highly volatile prices of raw materials, mainly natural gas, throughout 2022, as a result of Russia's aggression against Ukraine and unprecedented cost pressure, forced production cuts in three key Grupa Azoty companies, mainly in the Agro and Plastics segments. “The subsequent fall in gas prices allowed production to be restored in October."

The company added that “it should be emphasised that since the fourth quarter of 2022 in Europe we have been observing an imbalance in demand and supply in all segments, which is reflected in adapting the production volume of the Capital Group companies to the current market situation”.

“The overriding goal of Grupa Azoty remains to ensure access to fertilisers on our most important market in Poland,” it said. Azoty also observed that “analyses show that a large part of farmers have not yet decided to purchase specific fertilisers before the approaching application season.

We remind, Grupa Azoty launched a 40,000 tonne/year concentrated nitric acid unit, doubling its production capacity for the product. Azoty, the sole manufacturer of concentrated nitric acid in Poland, said the zloty (Zl) 57.1m (USD13.1m) plant, built over the course of two years, would be of great importance in securing the production of more high-value chemicals.

mrchub.com

INEOS reached a three-year labour agreement with two unions at one of its pigment plants in Ohio, the company said.

It reached the three-year tentative collective bargaining agreement on Friday with Teamsters Local Union 377 and Local 1033C of the International Chemical Workers Union Council of the United Food and Commercial Workers International Union.

The company said that ratification of its tentative agreement is pending approval by the workers and that it was looking forward to Plant 2 at Ashtabula, Ohio, returning to operation. INEOS did not comment on when production at Plant 2 would resume or the status of the ratification process.

INEOS Pigments had previously confirmed that hourly workers at Plant 2 have been on strike since 12 March. The company has two production facilities in Ashtabula. The second plant - where workers went on strike - produces titanium dioxide (TiO2) and chlorine.

Last week, INEOS said that this plant had been taken offline, ahead of a scheduled maintenance.

We remind, INEOS has secured EUR3.5bn in financing for its Antwerp, Belgium, cracker project, set to have the lowest CO2 output of any unit in the continent. The plant, expected onstream in 2026, has the capacity to operate entirely on low-carbon hydrogen, with scope for the addition of a carbon capture facility and electric furnaces in future, according to INEOS. The estimated budget for the project, which INEOS made a final investment decision (FID) on last year, currently stands at EUR4.0bn.

mrchub.com

Italy's cabinet is expected to decide next week whether to use its anti-takeover powers to block the sale of a Lukoil-owned refinery to Cypriot private equity firm G.O.I. Energy, two sources close to the matter told Reuters on Friday, said Hydrocarbonprocessing.

Prime Minister Giorgia Meloni's government wants to have a say in the negotiation as Lukoil's ISAB plant in Sicily refines 320,000 barrels of crude per day, accounting for a fifth of Italy's refining capacity and employing around 1,000 people.

The government has the power to veto the transaction under "golden power" regulation designed to shield industries deemed of strategic importance in sectors such as banking, energy, telecoms and health. Lukoil said in January it had reached a preliminary deal to sell the refinery to G.O.I Energy, paving the way for its first significant asset disposal since Moscow's invasion of Ukraine.

With backing from commodity trader Trafigura, G.O.I. Energy has so far prevailed over several suitors for the refinery, including U.S. investment platform Crossbridge. The decision on ISAB will likely be on the agenda of next week's cabinet, one of the sources said, asking not to be named due to the matter's sensitivity. Meloni's government ministers usually meet on Thursday.

Industry Minister Adolfo Urso has repeatedly said Rome would ensure that jobs are protected, and environmental standards maintained in the sale of the plant. Since the golden power was introduced in 2012, government authorities have blocked foreign forays into Italy just eight times.

In six cases, the vetoes stopped Chinese bids, while another last year rejected an attempt by Russia's state-owned atomic company Rosatom to acquire Faber Industrie, a hydrogen company. Some media outlets have speculated that the United States is concerned over the sale of the Priolo refinery because the plant is only about 50 Km away from a NATO base in Sigonella.

In response, G.O.I Energy issued a statement last month saying neither the company nor its CEO, Michael Bobrov, has any connection with Russia.

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

Russia's piped supply of Urals crude to the European Union via the southern spur of the Druzhba pipeline is set to rise 6% on a daily basis in the first quarter from the three months before, data from industry sources and Reuters calculations showed, said Hydrocarbonprocessing.

The EU pledged to stop buying Russian oil via maritime routes from Dec. 5. Supply via the Druzhba pipeline remains exempt from sanctions, though flows via its northern spur, which supplies Poland and Germany, dried up last month.

The southern branch of the Druzhba pipeline runs via Ukraine to the Czech Republic, Slovakia and Hungary, and has been the primary source of supply for their refineries for years.

Flows via Druzhba to those three countries will rise to about 3.1 M tons in the first quarter from some 3 M the quarter before, according to trade and industry sources and Reuters calculations. Alternative oil suppliers to their plants include the Adria pipeline connecting Croatia's Omisalj port to Hungary and the Transalpine pipeline (TAL) that connects Italy's Trieste to Czech refineries.

Russian oil exports via Druzhba's southern spur over the last six month have been lower compared to the period from March to September last year, sources told Reuters. "Average oil exports along the southern branch (of the Druzhba pipeline) in March-September 2022 stood above 300,000 bpd but went down to average some 250,000 bpd in October 2022 to March 2023," an industry source said.

The main buyer of Urals crude in Slovakia and Hungary is Hungarian oil and gas company MOL. The Czech Republic's sole buyer Unipetrol is controlled by Polish firm PKN Orlen. Rosneft, Lukoil and Tatneft were the main Russian exporters via the route. MOL and Russia's pipeline monopoly Transneft did not reply to requests for comment. Russia's Energy Ministry declined to comment.

"The Czech Republic has a negotiated exemption for oil from the Druzhba pipeline, which is valid until the implementation of an alternative solution is completed," Orlen Unipetrol told Reuters. Unipetrol has "secured sufficient supplies of crude oil for both our refineries in Litvinov and Kralupy nad Vltavou", the firm's representative said, with its refineries sourcing crude from "various regions".

Urals supplies via the northern spur of the Druzhba pipeline were fully suspended in February after Russia halted supplies of oil to Poland's PKN Orlen.

Germany voluntarily stopped importing Russian Urals via Druzhba from Jan. 1, 2023, with Germany and Poland hoping to make up for the shortage of Russian crude by importing Kazakh oil via the same pipeline.

We remind, PKN ORLEN, finalised a transaction to acquire a part of Poland’s largest plastics manufacturer, Basell Orlen Polyolefins, in which the ORLEN holds an equity interest. The acquisition was approved by the antitrust authorities in Poland and the Netherlands. The business segment, acquired by ORLEN, specialises in the production and sale of low-density polyethylene (LDPE) as well as customer service in the Polish market. It is a polymer commonly used to make consumer and industrial products, found in plastic films, bags, canisters, food packaging, as well as components of electronic devices, such as wires and cables.

mrchub.com

Mexican state-run oil company Petroleos Mexicanos, also known as Pemex, expects to increase its crude processing to 1.2 M bpd this year, Energy Minister Rocio Nahle said Thursday, said Reuters.

The rise from 922,000 bpd processed currently would come from Mexico's six active refineries along with Pemex's refinery in Deer Park, Texas, Nahle said at President Andres Manuel Lopez Obrador's regular news conference.

"Our commitment is to process 1.2 M bpd this year," she said.

Nahle added that the Olmeca refinery, which she has previously said will begin to process crude oil in July, is expected to help Mexico become self-sufficient in gasoline and diesel in 2024.

We remind, a fire broke out before noon on 14 March in one of the operating units at the Pemex Deer Park refinery, causing dark smoke that was visible in the community. The fire was extinguished about an hour later by the site’s emergency response team, a spokesperson for Pemex Deer Park said, and members of the team are currently assessing damages at the facility and the cause of the fire.

mrchub.com