Global roundup

31 May 2004 00:01  [Source: ACN]

Singapore warned that terrorists could use tankers as floating bombs, and Petrobras and Sinopec signed a cooperation agreement in the week 21-27 May. In the same week, Toray Industries signed a $2.96bn deal to supply Boeing with carbon-fibre materials and the two Koreas started defence talks

From stories supplied by the CNI and ACN teams. See www.cnionline.com. For exclusive news and analysis, see the rest of ACN

Indonesia bans urea exports

21 May. The Indonesian government has banned the export of all types of urea fertiliser.

The director for downstream chemicals at the Ministry of Industry and Trade, Benny Wahyudi, said the ministry would not be issuing any permits for the export of urea in May to ensure that supplies for local farmers were secured.

Urea exports reached 210 000 tonne in January-April 2004. Last year, Indonesia’s total urea exports reached 936 442 tonne, less than the 1.1m tonne for 2002.

The ministry suspects that urea has been exported illegally in the first four months of this year as producers benefit from price differentials of US$40-50/tonne. The local urea price is regulated strictly by the government under a subsidy mechanism.

Nippon Oil books net loss

21 May. Nippon Oil Corp (NOC) booked a net loss of Yen133.52bn (US$1.18bn) in its financial year to 31 March 2004 after making a net profit of Yen32.28bn in the previous year, owing to a decision to take a special write-down of assets and prolonged shutdowns at two of its seven refineries.

The company’s net sales were up by 2.2% to Yen4280bn from Yen4180bn a year earlier as higher crude oil prices in the second half pushed up prices of wholesale, refined products. Operating profit was down by 42% to Yen55.92bn from Yen96.58bn in the previous year.

The poor result was due mainly to the company’s decision to book special one-off losses on its assets of Yen206.8bn including appraisal losses of Yen171.5bn. This is in accordance with a new accounting method which has to be adopted by all listed companies by the start of the 2005-06 fiscal year.

NOC decided to adopt the new accounting method, which takes into account latent losses on assets such as land, plants and machinery, one year before the deadline.

The company also booked a special loss of Yen12.1bn for an early-retirement programme that saw the departure of 6% of its workforce.

The company said the result was not helped by prolonged shutdowns at its 127 000 bbl/day Marifu refinery after a lightning strike in early June which disabled the plant’s crude-distillation unit. The refinery did not restart until the end of October.

In addition, NOC’s 115 000 bbl/day Osaka refinery was shut down at the start of August for almost two months, after the company admitted to falsifying safety reports, to allow the authorities to carry out complete safety checks.

‘Tankers as floating bombs’ warning

21 May. Singapore’s deputy prime minister has warned that maritime terrorists might turn oil and petrochemical tankers travelling through the Malacca Straits into ‘floating bombs’ unless united action was taken by surrounding states to increase security.

Tony Tan, who is also Singapore’s Coordinating Minister for Security and Defence, said the perpetrators of recent pirate attacks in the straits had been observed to be well trained and might be linked to international terrorist organisations.

Speaking to reporters in Singapore, he said: ‘This may signal the start of serious preparations for a maritime terrorist attack as terrorists learn to navigate tankers to use them as floating bombs against other vessels, key installations, naval bases or port facilities.

Our attitude is to confront this problem squarely, discuss, collaborate, work with the littoral states, international players and extra-regional countries which have a vital interest in shipping in this part of the world.’

Polysindo posts net loss, future shaky

21 May. Polysindo Eka Perkasa reported a net loss of Rp1140bn (US$125.6m) in 2003, largely because the company had to operate at only 30-40% of its installed capacity for the past year due to its ongoing financial difficulties.

Industry sources said the extent of the loss made the company’s future more uncertain, with a consortium of Indonesian and Thai investors, led by former president Suharto’s son-in-law Prabowo Subianto, now less likely to go ahead with plans to invest in the company.

Polysindo booked consolidated sales of Rp190bn in 2003 – down by 50% from Rp380bn in the previous year, while its gross loss more than doubled to Rp515.66bn from Rp203.57bn in 2002. The company’s operating costs fell to Rp398.44bn from Rp518.21bn, Polysindo booked an operating loss of Rp914.1bn – up by 26.7% from Rp721.79bn in 2002.

Titan Holdings now Titan Petrochemicals

21 May. Titan (Holdings) has changed its name to Titan Petrochemicals Group.

The company announced on the Hong Kong Stock Exchange that it had registered the name change with authorities in Bermuda, where it is incorporated, on 12 May. It said the name change was made to reflect the principal activities of the group in the petroleum and petrochemical retail businesses.

Titan’s main activities include oil-products procurement, trading, transportation, storage, blending and transhipment within China and southeast Asia. It operates petrochemical storage facilities in Fujian, China, and earlier this year entered into agreements to build two other facilities in the county.

Sinochem seeks capital reduction

24 May. Sinochem, in final talks to take over Inchon Oil, is seeking a Won644bn (US$516m) capital reduction and debt write-down from the Korean side.

A source close to the talks said the two companies and the district court, which oversees the administration of the company’s debt-rehabilitation plan, were in final discussions on a memorandum of understanding for the proposed takeover.

At the end of the first quarter, Inchon Oil’s debt totalled around Won830bn, which means that, if the capital reduction is approved, Sinochem would inherit less than Won200bn of debt.

LG-Caltex to up PP compounding

24 May. LG-Caltex Oil Corp is to increase its polypropylene (PP) compounding capacity by 5000 tonne/year to 20 000 tonne/year in Yeochun, South Korea.

A company source said the project would double its PP compounding lines to six at the site. PP feedstock would be sourced from the company’s 180 000 tonne/year PP unit at the same site.

Shell completes EO expansion

24 May. Shell Chemicals has completed the expansion of its ethylene oxide (EO) plant in Moerdijk, The Netherlands, a company spokesman said.

The expansion raises the plant’s capacity to 305 000 tonne/year from 250 000 tonne/year, she added.

Ems sells Inventa-Fischer to Uhde

24 May. Ems said it had agreed to sell Inventa-Fischer, its polymer and synthetic-fibre engineering business, to Uhde.

The deal, for which financial terms were not revealed, will be effective from 1 January this year. Transfer of ownership will take place at the end of next month, subject to regulatory approval.

Fluor Daniel wins Saudi deal

24 May. National Petrochemical Industrialisation Co (Tasnee Petrochemicals) has selected Fluor Daniel as the project management consultant for its 1m tonne/year cracker project in Al-Jubail, Saudi Arabia, a source from Tasnee said.

The source said kick-off meetings had been held in Al-Jubail and Europe. He declined to disclose the value of the contract.

Fluor Daniel’s job will include defining the scope of the project, issuing invitation-to-bid documents to potential turnkey contractors, and evaluating their bids.

Ammonia-lorry accident kills 15

24 May. A lorry carrying ammonia overturned and exploded today in Mihailesti, eastern Romania, killing at least 15 people and injuring many others.

The lorry was reported to be the property of a Romanian company based in Dolj county, southern Romania, where the Doljchim chemical plant is located. Its destination was unknown, according to police sources.

The cause of the accident has yet to be officially determined, but a transport ministry official said the crash most probably occurred after a blow-out in one of the lorry’s tyres.

Petrobras, Sinopec sign pact

24 May. Petrobras and Sinopec have signed a two-year cooperation agreement in Beijing, China.

The agreement includes potential joint ventures in oil exploration, production, refining, petrochemicals and fuel sales.

It was one of several cooperation agreements between Brazil and China that will be signed this week during Brazilian President Luiz Inacio Lula da Silva’s five-day visit to China.

The Brazilian government also plans to take advantage of the official visit to expand Brazilian ethanol exports to China.

Axens wins FCFC project deal

25 May. Formosa Chemicals & Fibre Corp (FCFC) has awarded the production technology licence for its third aromatics project in Mailiao, Taiwan, to French company Axens.

An Axens spokesman said the company would provide a high-severity Aromizing CCR reformer to process naphtha feedstock, as well as a 784 000 tonne/year TransPlus unit to produce xylenes from toluene and C9 aromatics.

The project will be part of the Axens alliance with ExxonMobil in aromatics technologies.

An FCFC spokesman said the company was planning to produce 1.07m tonne/year of benzene, paraxylene and orthoxylene, with the output of each to be adjusted to meet market demand.

The new aromatics complex, which is due to come onstream in 2006, will also produce 600 000 tonne/year of styrene monomer.

The product from this plant will be used to feed the company’s 250 000 tonne/year polystyrene plant or its 370 000 acrylonitrile butadiene styrene plant in Mailiao.

Olefins players in Asia were worried that the extremely good margins they have been enjoying in the past few months may cease.

Koreas start rare defence talks

25 May. Senior military officers from North and South Korea have begun rare talks in a bid to reduce tension on the world’s most heavily fortified border.

Relations between the two have improved in recent years, but until now the North has resisted defence talks.

South Korea hopes to reduce the danger of renewed naval skirmishes and to build trust with Pyongyang.

The North’s agreement to talk is seen as a significant concession to its southern neighbour.

In the past, it had insisted on dealing directly with the US military, which has more than 37 000 troops stationed near the border in support of South Korea.

Fire at US chemical complex

25 May. Operations have been temporarily stopped at an Atlanta, Georgia, US, chemical complex where a fire broke out early today, sending chlorine-laden smoke throughout the area, officials said. About 450 employees were affected.

A spokesman for BioLab – a leading supplier of water treatment products – said the cause of the blaze had not been determined.

She said employees were at the site when the fire was discovered. No employees were injured; at least one fireman sustained minor injuries.

BASF seeks hike in Europe prices

25 May. BASF announced plans to raise by €150 (US$179.70)/tonne from 1 June its European prices of Ultradur polybutylene terephthalate resins as well as Terluran and Luran styrene copolymers.

The proposed hike for Ultradur is 5-7% over current prices, a company spokesman said.

For Terluran acrylonitrile butadiene styrene and Luran styrene acrylonitrile copolymers, the increase would be around 10%, the spokesman said.

BASF said the hikes were necessary as margins continued to erode due to further increases in raw-material costs.

TOC’s 2% output loss from shutdown

26 May. Thai Olefins Co (TOC) said it was likely to suffer a slight drop in its annual production as the result of a recent shutdown of its complex for safety inspections.

In a statement to the Stock Exchange of Thailand, TOC said its production would be down by about 2% this year from 638 254 tonne in 2003.

TOC shut its olefins complex on 18 May after smoke was detected during the decoking of one of the facility’s furnaces. The incident was minor and the smoke was eliminated within five minutes without any damage to other process equipment. But, according to TOC’s safety protocols, the plant had to be shut in order to investigate the cause and re-check the associated equipment. It was restarted on 22 May.

Celanese signs acetic-acid deals

26 May. Celanese said it had signed agreements related to its planned 600 000 tonne/year acetic acid plant in the Nanjing Chemical Industrial Park (NCIP), Nanjing, China.

It signed a 15-year agreement with the BOC Group to secure a supply of carbon monoxide. The company noted the BOC group was building plants and pipelines in NCIP for the supply of oxygen, carbon monoxide, hydrogen and steam to Celanese and other companies at the site. Construction of these facilities is expected to be completed by 2006.

Celanese also said it had signed a deal to buy the plant’s acetic acid reactor from AstroComos of California. Terms of the deals were not disclosed.

The company expects the Nanjing plant to come onstream in 2006. Foster-Wheeler has been contracted for the plant’s design while Maison Engineering and Constructors and China Huanqui Contracting and Engineering Corp have been engaged for engineering and construction work.

BRPL net profit up 70.7 %

26 May. Bongaigaon Refinery & Petrochemicals Ltd (BRPL) posted a rise in net profit of 70.7% to Rs3.04bn (US$67m) in its financial year to 31 March 2004 in what analysts said was further evidence that the company’s restructuring plan for its petrochemical business was starting to work.

Net sales increased by 52% to Rs29.50bn from Rs19.40bn a year earlier.

This is the second year running that BRPL, a subsidiary of Indian Oil Corp, has recorded a net profit after being in the red for six years before 2002-03. The result was helped by the fact that the company’s 2.35m tonne/year refinery increased its capacity utilisation to 90.5% from 62.3% a year earlier.

The latest results came after BRPL signed a strategic agreement with Reliance Industries Ltd (RIL) in October last year under which RIL undertook to restart its mothballed 34 200 tonne/year polyester staple fibre and 45 000 tonne/year dimethyl terephthalate plants in Dhaligaon, Assam.

The two plants were closed in October 2001 because of the high cost of production and marketing, but were restarted by RIL in December 2003.

$200m loan for Tuban project

26 May. A consortium of six Japanese and European banks has agreed to lend US$200m to Indonesia’s Trans Pacific Petrochemical Indotama (TPPI) to help it complete the long-delayed Tuban aromatics project.

The US$200m total is down from an earlier US$400m loan announced in a preliminary agreement between the consortium and TPPI in June 2003.

A spokesman for lead arranger Sumitomo Mitsui Banking Corp said the banks would transfer the first tranche of the US$200m to TPPI today and the rest would be paid over the next two years. The loan will have a maturity of eight years.

The spokesman said he could not reveal how much money would be in the first tranche but one source estimated it would be between US$30m and US$40m.

Besides Sumitomo Mitsui, the consortium includes Japan’s UFJ and Bank of Tokyo-Mitsubishi, Germany’s Hypovereinsbank and WestLB, and the UK’s Standard Chartered Bank.

KP Chemical op profit up 20.6%

26 May. KP Chemical said its operating profit rose by 20.6% to Won38.0bn (US$32.2m) in the first quarter of 2004, boosted by higher sales of its major products.

The company said its total sales rose by 19.1% to Won355.9bn.

The company said the results showed its efforts to restructure its operations were paying dividends as they came despite higher feedstock costs.

Toray wins $2.96bn Boeing deal

26 May. Toray Industries has won a Yen330bn (US$2.96bn) contract to supply Boeing with carbon-fibre materials over the next 18 years, the company said.

The contract, which was signed on 20 May, will see Toray supply carbon-fibre reinforced plastic (CFRP), which is used as the primary material in the construction of aircraft wings and bodies.

Toray said it would be the exclusive supplier of CFRP for Boeing’s new fuel-efficient 7E7 passenger airliner, which is due for launch in 2007.

IOC picks Panipat as C2 site

27 May. The board of Indian Oil Corp (IOC) has approved Panipat in Haryana, India, as the location for the company’s 800 000 tonne/year cracker project instead of Baroda in Gujarat, a company source said.

The major had been considering the two sites, both of which house IOC’s refineries. It had said earlier that the site decision would depend on factors such as feedstock availability and incentives granted by the local governments.

Most market observers had expected IOC to choose Baroda as the site. The reasons for IOC’s final decision were not immediately clear.

The company has selected ABB Lummus as the technology licensor for the cracker. A project-management consultant is due to be selected in June or in July. IOC will be appointing a turnkey contractor for each unit of the planned complex, which is slated for start-up in July 2007.

The complex includes two polypropylene (PP) units with a combined capacity of 600 000 tonne/year, a 350 000 tonne/year high-density polyethylene (hdPE)/linear low-density PE unit, a 300 000 tonne/year hdPE plant and a 300 000 tonne/year monoethylene glycol unit. A metathesis unit is under consideration. IOC also plans to build another 300 000 tonne/year PP unit, which is to be integrated with its refinery at Panipat.

China Q1 chem fibre output up

27 May. China’s chemical fibre production rose by 28.6% to 3.31m tonne in the first quarter of 2004 over the same period last year, according to figures from the National Bureau of Statistics.

Viscose fibre output increased by 16.7% to 225 100 tonne year-on-year, while synthetic fibre output soared by 29.9% to 3.05m tonne.

SDK to use more non-naphtha

27 May. Showa Denko (SDK) is aiming to double its usage of non-naphtha feedstock to 50% over the next two years in order to cut costs.

SDK already uses 25% of non-naphtha feedstock such as kerosene, diesel oil and liquefied petroleum gas to feed its 600 000 tonne/year cracker in Oita, Japan.

A company spokesman said the switch away from naphtha was further encouraged by a government decision to remove taxes on kerosene and diesel oil from 1 April this year. Another incentive to make the switch was that naphtha prices were currently running at an all-time high because of record crude-oil prices.

The switch would be made once the price of kerosene and diesel oil was US$10-15/tonne cheaper than naphtha, he said.

Chinese government curbs industry

PETROCHEMICAL projects and plants in China which fall below specified capacities or which employ technologies viewed as damaging to the environment will be subject to a review that could lead to them being scrapped.

China’s National Development and Reform Commission (NDRC) recently issued a circular on curbs on existing petrochemical plants and projects in China in an effort to cool the country’s economy, reduce lending risks and stop the repeated building of projects which do not meet certain criteria.

In addition to petrochemicals, the circular, jointly released by the NDRC, the People’s Bank of China and the China Banking Regulatory Commission, said that the curbs would also apply to the textile, steel, aluminium, building materials, machinery, leather and salt, printing and pharmaceutical industries.

Even where construction work has started, building will have to stop while the authorities carry out reviews. There are also other projects and plants that will have either to be scrapped or shut down as they come under a ‘banned’ list.

For plants or projects falling under the banned list, building work will have to be stopped and deadlines will be given for the shut down of operating facilities. Financial institutions must also halt funding.

Petrochemical plants that are banned include acetylene units with capacities of less than 10 000 tonne/year and which use open-concept furnaces that are said to harm the environment. Refineries with capacities of less than 1m tonne/year are also banned.

Petrochemical projects that are on the restricted list will have to stop building while the relevant authorities carry out reviews.

Petrochemical projects on the restricted list include:

- Catalytic reforming units with capacities of less than 500 000 tonne/year;

- Continuous reforming units with capacities of less than 400 000 tonne/year;

- Hydrocrackers with capacities of less than 800 000 tonne/year;

- Delayed coking units with capacities of less than 800 000 tonne/year;

- Crackers with capacities of less than 600 000 tonne/year;

- Polyethylene units with capacities of less than 200 000 tonne/year;

- Polypropylene units with capacities of less than 70 000 tonne/year;

- Styrene units with capacities of less than 200 000 tonne/year;

- Polystyrene units with capacities of less than 100 000 tonne/year;

- Ethylene dichloride-based polyvinyl chloride (PVC) units with capacities of less than 200 000 tonne/year;

- Acetylene-based PVC units with capacities of less than 80 000 tonne/year;

- Chlor-alkali units with capacities of less than 100 000 tonne/year;

- Acrylonitrile units with capacities of less than 100 000 tonne/year;

- Acrylonitrile butadiene styrene units with capacities of less than 100 000 tonne/year;

- Single purified terephthalic acid units with capacities of less than 225 000 tonne/year;

- Ethylene oxide/monoethylene glycol units with capacities of less than 200 000 tonne/year;

- Ethylene-based acetic acid units with capacities of less than 200 000 tonne/year;

- Methanol-based acetic acid units with capacities of less than 150 000 tonne/year;

- Caprolactam units with capacities of less than 100 000 tonne/year;

- Polyethylene terephthalate units with capacities of less than 100 000 tonne/year;

- Highly poisonous pesticides.

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