This week's world news

The world this week

03 January 2011 00:00  [Source: ICB]

QATAR PETROLEUM, SHELL SIGN MOU FOR RAS LAFFAN
Qatar Petroleum (QP) and Shell have signed a memorandum of understanding for the joint development of a worldscale mixed-feed cracker and petrochemicals complex at Ras Laffan, in Qatar. The project includes a monoethylene glycol (MEG) plant with a capacity of up to 1.5m tonnes/year that would use Shell's proprietary OMEGA technology. Also under consideration are other olefin derivative plants that would yield more than 2m tonnes/year of finished products. The feasibility study for the Shell/QP cracker and downstream units now begins in earnest, a Shell spokeswoman said. The MEG plant is likely to be the world's largest and has been under consideration for some time.

BAYER EXPLORES SHALE GAS CRACKER FOR US
Germany's Bayer is exploring the idea of potential investors using one of its sites in West Virginia for a cracker using feedstock derived from Marcellus Shale natural gas. Bayer is looking at two of its West Virginia sites as the potential location of an ethylene unit, said spokesman Bryan Iams. The sites include New Martinsville, with about 1,000 acres (405 ha), and Institute, with about 460 acres. "Bayer's Institute and New Martinsville Industrial Parks might be the ideal locations for a thermal cracker for converting the excess ethane found in the gas liquids from the shale," Iams said.

DSM MAKES $1.09BN BID FOR US MARTEK
Dutch life sciences and materials company DSM has agreed to pay $1.09bn (€828m) for US-based nutritional supplement firm Martek Biosciences. DSM is offering $31.50 per share for Martek in an all-cash tender offer, a 35% premium over the US company's closing share price on 20 December. The boards of both companies have agreed the deal. The tender process is expected to close in February 2011, with the transaction expected to close in the first quarter (Q1) or Q2 of the year. This is the first major acquisition for DSM since its transformation into a life sciences and materials company, it said.

REPUBLICANS SET TO STRIP EPA OF GREENHOUSE RULE
US Congressional Republican leaders will likely propose legislation in 2011 to completely strip the Environmental Protection Agency (EPA) of authority to regulate greenhouse gas emissions from US industry. Robert Dillon, spokesman for the Republican minority on the Senate Energy and Natural Resources Committee, said that Republican focus now would be to deny the EPA's authority to regulate industrial emissions of greenhouse gases (GHGs), rather than seek a temporary suspension of that power for a couple of years. Senator John Rockefeller (Democrat, West Virginia) announced that his bill to suspend the EPA's regulation of GHGs had lost Republican support and would not come to a vote.

THAI PTTAR MULLS NEW PROJECTS, RISE TO CAPEX
Thailand's PTT Aromatics and Refining is keen on pursuing new projects, including a $1bn (€760m) cracker, for inclusion in its investment budget over the next four years. The company is currently reviewing its investment plan for the 20102014 period, with the initial capital expenditure set at $358m, a company source said. "We are currently still studying new projects and would require board approval before they are implemented," the source said, adding that the new budget would be revealed by June next year.

EU CHEMS WARN OF CARBON LEAKAGE
Europe's chemical industry is threatened with "carbon leakage" - the relocation of production facilities to other regions - despite what are seen as improvements to current EU climate change proposals, a Cefic panel chairman said. Europe's chemical trade group Cefic said it appreciated the decision by the European Commission's ­Climate Change Committee on 15 December to lower the ­threshold for free allocation of carbon credits to new capacities compared with earlier draft ­proposals. Chairman of Cefic's energy and climate change ­program council, Hans-Ulrich Engel, said, however, that the proposals would still damage EU chemical operations.

TATA CHEMICALS' BRUNNER MOND TO BUY BRITISH SALT
Tata Chemicals subsidiary Brunner Mond will pay £93m ($145m, €109m) for British Salt, the UK's largest producer of pure, dried, vacuum salt. The binding agreement, expected to gain regulatory approval in January 2011, secures long-term brine supply for the Brunner Mond soda ash and sodium bicarbonate operations. It is the sole UK manufacturer of the widely used chemicals. British Salt owns brine wells with a residual life of 50 years. "The acquisition is in line with the strategy of Tata Chemicals to deepen its presence in the food and farm sectors and will result in securitizing raw material for Brunner Mond," said Tata Chemicals managing director R. Mukundan.

DIOKI REVEALS DONATIONS AFTER CEO ARREST
Croatia's Dioki has released information on its political donations, following the arrest of its CEO as part of a corruption investigation into ex-Croatian prime minister Ivo Sanader. Croatia's Office for the Suppression of Corruption and Organized Crime is investigating claims that CEO Robert Jezic, Sanader and the former CEO of state-owned electricity utility HEP conspired to supply electricity to Dioki at a below-market price. Sanader is currently awaiting extradition from Austria to Croatia, where he has been charged with obtaining money from various companies and institutions for personal gain, the office said.

YIZHENG, FAR EASTERN NEW CENTURY TO BUILD PTA
China's Sinopec Yizheng Chemical Fibre and Taiwan's Far ­Eastern New Century (FENC) plan to build a 1m tonne/year purified terephthalic acid (PTA) plant at Yangzhou Chemical ­Industrial Park in eastern Jiangsu province. Yizheng, FENC and Yangzhou Chemical Industrial Park signed a letter of intent on investment and cooperation on 20 December. Under the letter of intent, the two companies will establish a joint venture to build the PTA plant in the industrial park. FENC will have a 60% stake in the new company, and Yizheng will have the remaining 40%.

HIN LEONG CONSORTIUM EYES SINGAPORE REFINERY
Oil trader Hin Leong Trading leads a consortium that is planning to build a $6bn-8bn (€4.58bn-6.11bn) refinery in Singapore, local newspaper the Business Times (BT) reported in late December, citing unnamed sources. A 300,000-500,000 bbl/day refinery - the fourth in the city-state - is being considered by the consortium, which includes one of the top four national oil companies in China and a European partner, BT said. The planned greenfield project would be located on Singapore's chemicals hub on Jurong Island and would make the city-state the world's third-largest oil refining and trading hub after Houston and Rotterdam, the newspaper said.

AMYRIS AND SAO MARTINHO PREPARE FOR JV
US-based Amyris and Grupo Sao Martinho are starting to prepare the construction site of a renewable products plant in Brazil. Amyris has a joint venture (JV) with Brazil's Sao Martinho, where a biobased hydrocarbon, Biosene, will be made. The JV plant will be built at Usina Sao Martinho, the site of an 8.5m tonne/year sugarcane crush facility in Pradopolis, Sao Paulo state. The project is expected to be completed during the second quarter of 2012.

TARGA PLANS TEXAS NGL PIPE CONNECTION
Targa Resources has signed a memorandum of understanding to develop a pipeline that will transport natural gas liquids (NGLs) from the Eagle Ford shale to Mont Belvieu, Texas. The pipeline could also accommodate an extension into the Permian Basin in West Texas. The pipeline is among a number of expansion projects being considered by Targa and the other companies that signed the memorandum - TexStar Midstream Services and TEAK Midstream. The Targa-operated Cedar Bayou fractionation facility in Mont Belvieu would increase its capacity by 100,000bbl/day, with operations starting in late 2012.

PPG TO PAY $3M IN FINES FOR US EXPORT VIOLATIONS
A subsidiary of US paints and coatings major PPG Industries will pay $3m (€2.29m) in fines and serve five years of corporate probation for violations of US export-control laws. The China-based subsidiary, PPG Paints Trading Shanghai, was alleged to have shipped paint in 2006 to the Pakistan Atomic Energy Commission for use in the construction of a nuclear power plant. The settlement was made with the US Department of Justice and the US Department of Commerce's Bureau of Industry and Security.

TRELLEBORG BAGS DISTRIBUTOR LUTZ
Sweden-based polymer technology firm Trelleborg has agreed to buy US precision seals and rubber components distributor Lutz Sales. Chicago-based Lutz has annual sales of about Swedish kronor (SKr) 100m ($15m, €11m) and employs a staff of 50. Trelleborg expects to complete the deal by the end of the current fourth quarter.

CHINA'S WISON PLANS OXO-ALCOHOLS PLANT
China-based Wison (Nanjing) Clean Energy is planning to build a 250,000 tonne/year oxo-­alcohols plant at Nanjing, the capital city of the eastern Jiangsu province, to expand its product portfolio, a company source said. Construction work will probably start early next year, once the country's central government has granted approval. "We are expected to start up the plant in 2013-2014," the source said. The new plant could help the company extend its downstream chain. Wison (Nanjing) operates a coal-based methanol facility with a nameplate capacity of 300,000 tonnes/year and two carbon monoxide and synthesis gas (syngas) units at Nanjing Chemical Industry Park.

MITSUI EYES SINGAPORE ALPHA-OLEFIN UNIT
Japan's Mitsui Chemicals may build a new alpha-olefin copolymer line on Singapore's Jurong Island as demand increases. The plant will produce a high-performance elastomer under the brand name TAFMER and will start up in 2014 at the earliest. "If we increase the capacity [of TAFMER], Singapore would be the best place," a company official said. Mitsui Chemicals will decide the details, including the capacity of the new production line, in 2011 at the earliest.

AZERBAIJAN'S SOCAR TO INCREASE PE, PP CAPACITY
The State Oil Company of Azerbaijan Republic (SOCAR) plans to increase the country's polymer production capacities. Polyethylene (PE) capacity at Azerbaijan's state-run petrochemical holding, Azerikimya, will rise from 200,000 tonnes/year to 350,000 tonnes/year. Polypropylene (PP) capacity will also rise, from 200,000 tonnes/year to 320,000 tonnes/year. SOCAR also aims to build a new refinery and a new gas processing plant in Sangachal, close to the capital, Baku.

ZOTEFOAMS' 2010 SALES GROW BY OVER 20%
UK foam producer Zotefoams' full-year sales grew by more than 20% because of the strong performance recorded across its major markets, particularly Asia. In 2009, the company posted £31.82m ($49.05m, €37.47m) in sales and a pretax profit of £2.75m. Sales at its high-­performance polymer segment would be about 50% higher than 2009 levels, it said in a statement. Zotefoams said its business performed in line with its expectations, with fourth-­quarter sales expected to increase by about 7%.

TIANJIN SODA EYES JAN START-UP OF ACETIC ACID
China's state-owned Tianjin Soda Plant plans to start up its new 200,000 tonne/year acetic acid plant at the city of Tianjin in early January 2011, a company source has said. Construction of the plant was completed in early December, but its start-up had been postponed because of poor market conditions. Meanwhile, Tianjin Soda Plant started up its new 500,000 tonne/year upstream methanol facility at the same site last weekend, the source said. On-spec methanol production would be achieved this week and output from the unit would be for captive consumption, according to the source.

RUSSIAN CRUDE REACHES CHINA IN NEW PIPELINE
China has received the first batch of crude imports from Russia, transported through a newly-built pipeline between Moscow and Daqing, under a long-term supply agreement between the two governments, according to an official announcement from China. The 250,000 tonnes of crude oil arrived at Daqing terminal over the weekend after travelling through the 1,030km (639 mile) Sino-Russian pipeline, said China's state-owned Assets Supervision and Administration Commission of the State Council. The crude oil was loaded in Moscow on 1 November and arrived at Mohe in the northernmost part of China nine hours later. The crude import then made its way from Mohe to Daqing in northeast China during the period 12-19 December.

LIMITED US E-15 DECISION CONFUSES MARKET
Lawsuits filed against the US 15% ethanol fuel blend (E-15) underscore the need for consistency in E-15 legislation, a trade group for the industry has said. "EPA [the Environmental Protection Agency] could have avoided this kind of market confusion by following all the science to its logical conclusion and allowing the use of E15 for all cars and light-duty pickup trucks," the Renewable Fuels Association (RFA) said. "The only way to meet the nation's energy, economic and environmental goals as put forth in the Renewable Fuels Standard is to increase ethanol consumption," the group added.

OXEA COMPLETES FIRST PHASE OF ACID EXPANSION
German oxo-chemicals producer Oxea has completed the first phase of a three-stage project to increase carboxylic acid production capacity at its units in Oberhausen, Germany. Conclusion of the initial stage has added 5% to its global capacity. This will climb to 20% on completion of the entire project at the end of 2011. "With our capacity increase, we are responding to the growing demand for synthetic fatty acids in particular in segments such as energy-efficient lubricant esters and specialty phthalate-free plasticizers," said executive board member Miguel Mantas.

OMV DOWNGRADED BY BANK OVER REFINERY PLAN
Austrian oil company OMV is looking to buy into a Turkish refinery-cum-petrochemicals joint venture (JV) that industry experts have become convinced Turkey will not need, an Austrian investment bank says. Raiffeisen Centrobank cited the negative outlook for the Ceyhan project in downgrading its recommendation on OMV stock from "buy" to "hold." The bank noted that the Socar & Turcas/Petkim project to build a refinery for the production of petrochemical feedstock in Turkey's Aliaga province was now "well on track." Raiffeisen added: "This reduces the probability of the construction of the Ceyhan refinery in which OMV wants to participate."

GERMANY'S SKW TO BUY AKZONOBEL CARBIDE PLANT
German specialty chemicals firm SKW Stahl-Metallurgie will acquire the assets of AkzoNobel's calcium carbide business in Sweden, including Scandinavia's only carbide plant near Sundsvall, for an undisclosed sum. SKW said the acquisition of Akzo's Carbide Sweden was a "vertical integration project" with focus on the European calcium carbide market for hot metal desulfurization. Also, Carbide Sweden supplies calcium carbide for the production of acetylene gas - a new market for SKW. Carbide Sweden said it welcomed the deal, as SKW holds a strong position in the European steel industry.

GERMAN BUSINESS CONFIDENCE RISES
Germany's business confidence has continued to improve in December, hitting its highest level since 1991 as a result of strong growth in domestic demand, according to a survey. Munich-based economics research institute Ifo said its business climate index for ­Germany rose to 109.9 points from 109.3 in November. The widely-followed index is based on a monthly survey of around 7,000 firms in the manufacturing, construction, wholesale and ­retail sectors. December's ­improvement was primarily because of a "very good" business situation in retailing and wholesaling, Ifo said.

POLAND'S PCC COMPLETES CONSTRUCTION AT PLOCK
Poland's PCC Exol has completed construction of a 30,000 tonne/year ethoxylation plant in Plock that it plans to start up in ­January, German parent ­company Petro Carbo Chem (PCC) says. Difficult weather conditions ­delayed the facility's start-up, but it should go ahead in January with the first production batch of ethoxylates, categorized as nonionic surfactants, set to be ­available within a few weeks. PCC owns PCC Exol through its 100%-owned Polish subsidiary PCC Rokita, which is the country's only surfactants manufacturer. The plant has been built in Plock, 100km (62 miles) northwest of ­Warsaw and in close strategic ­vicinity to oil and petrochemicals group PKN Orlen, which would supply ethylene oxide (EO) feedstock.

ROCKWOOD TO SELL ALPHAGARY PLASTICS
US-based specialty chemical company Rockwood Holdings has agreed to sell its AlphaGary plastic compounding business to Mexican chemical manufacturer Mexichem for $300m (€228m) in cash. AlphaGary, which makes specialty plastic compounds for the wire and cable business, as well as medical applications and other uses, is the largest division in Rockwood's specialty compounds segment. "The completion of the sale of this compounding business is another step in concentrating our portfolio on high-margin specialty chemicals and advanced materials ­businesses," said CEO Seifi Ghasemi. Rockwood expects to complete the deal in the first quarter of 2011.

CANADA APPROVES MACKENZIE PIPELINE
Canada's energy regulator has approved the Mackenzie Valley natural gas pipeline, but ­analysts say the Canadian dollars (C$) 16.0bn ($15.8bn) project may not be built immediately because of North American gas market oversupply. Canada's chemical industry has been looking to ethane from the 1,200km (744 mile) pipeline, and another planned pipeline project from Alaska, as a future source of feedstock for new ­petrochemical plants and expansions in the ­Alberta province. The country's National Energy Board approved Mackenzie this week, subject to some 260 conditions, after many years of review. The project was first proposed in the 1970s.

SPOLCHEMIE FORECASTS NEAR-RECORD 2010 PROFIT
Czech resins group Spolchemie has seen a big turnaround in its fortunes and is hopeful of ­posting the second-highest annual net profit in its history at more than koruna (Kc) 200m ($10.50m, €7.95m) for 2010. The preliminary figure stood in stark contrast to the net loss of Kc340m ­suffered in 2009, and if achieved, would buoy the firm as it entered into crunch new-year talks with a group of five banks on the ­refinancing of its debts, totaling around Kc2.6bn. "The performance of the company severely collapsed last year, but [the new management] has now brought the performance back up to what it should be. I'm extremely optimistic going forward," said CEO Francois Vleugels.

EU CONSTRUCTION OUTPUT GROWS BY JUST 0.5%
EU building and engineering construction remains severely depressed, although there was marginal month-on-month growth of 0.5% for the sectors in October, data from statistics agency Eurostat shows. Seasonally adjusted output was stable in the euro area, the data shows. Construction output rose in five member states but fell in seven others. Building construction ­increased by 0.5% in the EU27 and remained stable in the 16-­member euro area. Civil engineering rose by 0.5% in the 27-member EU and by 0.4% in the eurozone. Compared with October 2009, construction output was down in eight but up in five member states.

BASF TO GROW US AND EU SUPERABSORBENTS
German chemical group BASF plans to expand its existing ­superabsorbent polymer production capacities at its Antwerp plant in Belgium and its Freeport site in the US. The company plans gradual debottlenecking and technical expansion measures to raise annual capacity by 70,000 tonnes/year to a total of 470,000 tonnes/year by 2012, with each site contributing an ­additional 35,000 tonnes. The company did not disclose the ­investment cost. "The aim of the planned investments is to ­support market growth and drive innovation," said BASF.

CHINA-INDIA FREE-TRADE PACT A LONG WAY OFF
China and India may not rush into a free trade agreement soon, even with the pledge between the two Asian giant economies to boost bilateral ties, analysts say. The two governments, in a joint communique, said they were aiming to double their ­annual trade to $100bn (€76bn) by 2015. Chinese Premier Wen Jiabao visited India for a three-day official visit on December 15-17. Discussions on furthering bilateral ties between China and India could start in January, China's state-owned media organisation, Xinhua News Agency, quoted Chinese ambassador Zhang Yan as saying.

By: Will Beacham
+44 20 8652 3214

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