Russia increasing fuel production after incidents at oil refineries

Russia is increasing fuel production and eliminating logistics constraints following incidents at oil refineries in the country, Energy Minister Nikolai Shulginov said, as per Interfax.

"The situation on the domestic market is under constant control. Due to the incidents at oil refineries, a set of measures is being taken - increase of production and elimination of logistical constraints," Shulginov said at a meeting of the State Duma Energy Committee.

The Energy Ministry said on March 13 that "measures are being taken to ensure the necessary utilization of oil refining capacity simultaneously with the coordination of the actions of oil companies and Russian Railways."

We remind, Russia announced additional voluntary cuts in oil supply mainly in the form of production cuts rather than exports, as it faced curtailed refining capacity as well as stricter sanctions. Russia has declared plans to cut its oil output and exports by an additional 471,000 bpd in April-June in coordination with some OPEC+ participating countries.

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Shell will revisit local content approaches in its projects in Kazakhstan in order to increase the purchase of local goods and services, the Kazakh prime minister's press service said, as per Interfax.

Prime Minister Olzhas Bektenov held a meeting with Shell Plc CEO Peter Costello to discuss the progress of joint oil and gas projects, according to the press release.

"Following the meeting, the company will review its local content development program in the nearest future to increase the purchase of goods and services on the domestic market," the press release says.

Bektenov said that it was a major priority to increase Kazakh content in the ongoing projects, also including through production localization in Kazakhstan.

"Today, the local content in the project operators' activities is at an acceptable level, while the share of local content in the purchase of goods still remains extremely low. To improve the situation, we need a closer cooperation with local producers," Bektenov said.

In addition, Bektenov and Costello discussed the progress of joint projects in the oil and gas sector.

The Karachaganak expansion project is aimed at maintaining the oil and gas condensate production at 11 million tonnes per year. To this end, the operator will put into operation additional gas reinjection compressors.

The prime minister and Shell CEO also discussed the operation of the Kashagan field. Over the past year, oil production at Kashagan amounted to 18.77 million tonnes and gas output came to 11.86 billion cubic meters, gas reinjection into the reservoir totaled 5.83 billion cubic meters, the press service said.

We remind, Shell Chemicals and petrochemical company Braskem have entered an agreement to bring bio-attributed and bio-circular polypropylene to the US market. Shell will supply the feedstocks to allow Braskem to manufacture polypropylene for sustainable options to meet growing consumer demand in the packaging, film, automotive and consumer goods markets. Shell is replacing hydrocarbon feedstock with a bio-attributed and bio-circular feedstock in its polypropylene product.

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An agreement has been reached to sell the Russian business of French food multinational Danone, Health & Nutrition (H&N), to Russian investors, said Interfax.

The source said dairy company Vamin Tatarstan and Chechen Deputy Prime Minister Yakub Zakriyev, nephew of Chechnya's leader Ramzan Kadyrov, are interested in buying the business. Zakriyev headed H&N from July 2023 to March 13, 2024, while the company was under the temporary management of the Federal Property Agency by order of the Russian president.

The buyers plan to pay for the business equally, the source said, adding that this has already been decided. But "on paper, meaning officially, the company is unlikely to be split in half," the source said.

Vedomosti also reported a source close to the Russian government and a source at a financial company as saying that Vamin Tatarstan and Zakriyev are interested in Danone's assets. The latter said that the French company was forced to agree to a substantially lower price for the business.

Representatives of Danone and H&N declined to comment. A spokesman for Vamin Tatarstan said that "there is no official information" and the companies are not commenting. The press services of the government of Chechnya and Russia's Agriculture Ministry, which is supposed to approve the deal, did not respond to questions, Vedomosti said.

The Financial Times, citing non-public documents, reported in late February that Danone planned to sell its business in Russia to Vamin Tatarstan. According to these documents, Vamin is owned by Mintimer Mingazov, who was appointed to the board of directors of H&N after the company was put under state management Zakriyev was appointed to head it.

In a letter sent to Russian Agriculture Minister Dmitry Patrushev, the director of a recently created company owned by Vamin, Airat Mukhamadeyev said that it had agreed to pay 17.7 billion rubles ($191.5 million) for control of Danone's Russian business, the FT said. Of this amount, 7.7 billion rubles will go toward servicing the debt of the Russian business and the rest will go toward paying for Danone's stake in the company.

Mukhamadeyev said in the letter that the price of the transaction represents a 56% discount to the market value of the business, according to an independent appraisal cited by the company.

He also said that, in order to ensure the continuity of its former Russian business, Danone has agreed to provide support until the end of July 2025, since H&N is continuing to localize production of certain ingredients in order to maintain the "high quality of products that Russian consumers are used to."

The head of Infoline-Analitika, Mikhail Burmistrov was reported as saying by Vedomosti that the fair value of Danone's Russian business, which includes 17 plants, is at least 60 billion rubles without its brand portfolio and about 80 billion rubles with the brands. The amount of 17.7 billion rubles is therefore 67%-72% less than the fair value, making it a "super lucrative deal" for the buyers, he said.

President Vladimir Putin signed a decree in mid-March cancelling the transfer of JSC Danone Russia and JSC Danone Trade to the temporary management of the Federal Property Agency. These Russian subsidiaries of the French company were renamed H&N and H&N Trade, respectively, after they were put under state managed in July 2023.

Danone Russia closed 2022 with net profit down to 5.6 billion rubles from 8.9 billion rubles a year earlier, on revenue up to 92.9 billion rubles from 85.1 billion rubles, the SPARK-Interfax system showed. Danone Trade's net profit fell to 612.7 million rubles from 1.4 billion rubles, although revenue rose to 112.7 billion rubles from 109.9 billion rubles.

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Russian oil company Gazprom Neft has opened a plant to recycle plastic packaging into secondary granules in Gatchina, Leningrad Region with annual capacity of 8,600 tonnes, said Interfax.

The new plant will handle the complete cycle of recycling plastic packaging made of polypropylene and polyethylene into feedstock for subsequent use, the company said.

The company will ship the produced feedstock, secondary polymer granules to Russian manufacturers of plastic products, as well as use them in-house to produce waterproofing materials for industrial and civilian construction.

The new plant has modern plastic recycling equipment and a closed-cycle water treatment system to ensure environmentally-friendly production, the company said. "The filtration equipment makes it possible to capture small plastic particles, purify the water and return it to the production cycle," the press release said.

Gazprom Neft expects that the use of secondary granules within the company will reach 3,200 tonnes per year by 2030.

"Using recycled raw materials is more cost effective and the recycling process is safe for the environment. Our plastic materials recycling project is an important step for the development of a closed-loop economy in the country. Its implementation will make it possible to return all the plastic that we and our partners produce into the production process," Gazprom Neft's head of petrochemicals and LPG, Igor Korolev said in the press release.

We remind, Gazprom is sticking to its goal of achieving 100% of the technically possible level of network gasification by 2030, and is actively working with the regions via five-year programs, Deputy Chairman of the Board of Gazprom Oleg Aksyutin said in an article in the company's corporate magazine.

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Clariant, a sustainability-focused specialty chemical company, and its process partner Lummus Technology have been selected by Huizhou Boeko Materials Co. Ltd., to provide their CATOFIN catalyst and process technology for the dehydrogenation of isobutane at the new plant in Huizhou City, China, said the company.

The process technology is exclusively licensed by Lummus Technology, while the tailor-made catalyst is supplied by Clariant. It is the first time Huizhou Boeko will license the CATOFIN technology at one of their sites.

The scope of the current award includes the technology license and basic engineering. Once complete, the plant will produce 550,000 metric tons per annum (MTA) of net isobutylene, which will serve as feedstock for the downstream production of methyl tertiary butyl ether (MTBE). The highly efficient CATOFIN process uses fixed-bed reactors and operates at optimum reactor pressure and temperature to maximize catalytic dehydrogenation of isobutane for high yields of isobutylene at low investment and operating costs.

“We are delighted to deliver our industry leading CATOFIN catalyst to this first Huizhou Boeko plant and look forward to a fruitful partnership. CATOFIN offers excellent reliability and productivity, yielding superior annual production output, which in turn leads to increased overall profitability for the plant,” said Jens Cuntze, Business President Catalysts and APAC at Clariant.

We remind, Clariant is a focused specialty chemical company driving value creation with its innovative and sustainable solutions across diverse industries. With this partnership, Safic Alcan will offer Clariant’s range of functional ingredients including emollients, emulsifiers, rheology modifiers, pearlizers, preservatives, and mild surfactants, complementing its existing range and providing more valuable synergies for customers.

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