February 2010 Archives

I've just discovered a fantastic set of resources free to download on the Association of Petrochemicals Producers in Europe website. I've pasted PDFs of the maps below. Click here for a link to these resources which show the locations of crackers, plus ethylene and oil pipeline networks across the region. I've printed the lot and pinned them up so I can gaze at them adoringly as I work.  

This excellent website also has loads of school resources for teaching young people about the importance of chemistry.

cis cracker map.pdf

map_europe crackers and pipes.pdf

Cis Cracker Map

My colleague, Anna Jagger, attended a conference in Vienna, Austria, last week. There she learned that Turkey's Petkim is seeking partners for a major petrochemicals expansion at its complex near Izmir in western Turkey.

Petkim - the country's main petrochemical major - has suffered decades of underinvestment resulting in a huge polymer deficit in Turkey. The country is a massive importer of plastics due to lack of domestic capacity.

So the news that privatised Petkim is going to grow will be very welcome in the country.

Kenan Yavuz, the chief executive of parent group Socar & Turcas, told ICIS: "We are looking for strategic partners." There has been some interest from companies in the US, Europe and the Far East, he revealed.

Petkim plans to double its petrochemicals capacity by 2018, Yavuz said. Naphtha feedstock for the expansion would be provided by Socar & Turcas, which planned to build a $4bn-5bn refinery next to the Petkim complex, he added.

Socar & Turcas, which owns a 51% stake in Petkim, expects to complete the 10m tonne/year refinery project in 2014, said Yavuz.

Enhancing its green credentials, a nest of white-tailed eagles containing a brood of three nestlings has been recently discovered near Polish chemical group ZA Puławy's discharge canals.

According to the company: "It is probably the third nest of that extremely rare bird to be found in the vicinity of the Company's industrial facilities. The first one appeared in the late 1990s, in the area near lake Piskory (just a few kilometres away from the enclosure of the Company's industrial site).

The discharge canal and the so-called flood plain near the village of Wólka Gołębska is an important bird watching location. As many as seven or even eight specimens of the white-tailed eagle have reportedly bee sighted by those water reservoirs. As the canal water is a little warmer, it has provided a wintering habitat for numerous bird and fish species for many years now. Here the white-tailed eagle, which feeds on large (weighing up to several kilograms) fish, can hunt carp and other fish, but also aquatic birds (such as mallard, coot or common moorhen)." 

Hungary's oil and chemical major, MOL, has been the subject of takeover rumours and bids for many years. Not so long ago there were whispers that the Russians were intent on building a stake in MOL as they sought a foothold further West. A merger with Poland's PKN Orlen has been on the cards for at least a decade. Next Austria's OMV made a hostile bid which was rejected vigorously. 

So the blog was not surprised to read a Budapest Business Journal   article suggesting yet more share dealings are afoot. Russian businessman Kirill Kasatkin, a representative of the British company Sinocor, is reported to have made an offer for the MOL shares held by Russian peer Surgutneftegas in return for INEOS shares but the deal fell through.

The BBJ said: "Asked by local paper Népszabadság, MOL denied that either the company or its managers has been in contact with Sinocor.

The report came just days after MOL denied a report by the Russian business daily Vedomosti that it had made an offer to buy its own shares from Surgutneftegas.

Surgutneftegas acquired a 21.1% stake in MOL from Austrian peer OMV for €1.4 billion in March 2009. MOL's management called the deal unfriendly and Hungary's president expressed concern about the transaction."

The news that global chemical distributor, Univar, is to purchase Dutch-owned Quaron could raise some eyebrows amongst competition authorities in France, according to Marc Fermont of consultancy Districonsult.

He says the merger would leave only two major chemical distributors in France, both with revenues above E500m.

As he says, "the French market for industrial chemicals could be moving from an oligopolistic position with three main suppliers, namely Brenntag, Univar and Quaron, to a duopoly with only two mega suppliers. Other distributors like Beauseigneur, Platret, Gaches Chimie, Caldic or Ciron only play a limited regional role with considerably lower revenues in comparison with the two giants. To sum it up, the French industrial chemical market which is already the most consolidated in Europe, could eventually be served by what will be in fact a true duopoly.
 
He concludes: "This [merger] could be realized if the French competition authorities authorize the further consolidation of the French industrial chemical market, which in our view ought not to be taken for granted.
 
In the same article, Fermont highlights the impending results of anti-trust investigations in European chemical distribution which have been going on since 2007 and involve Univar and Brenntag. "In case these on-going investigations, partly based on pleas for clemency filed by the main players in 2007, additionally reveal that various forms of illegal cooperation existed between the two leaders, the French competition authorities might have additional reasons to be reluctant to give clearance to the merger."

Here at ICIS we've been tracking progress towards an initial public offering for several months.

I suspect this may be getting closer, or if not an IPO then some sort of M&A (merger and acquisition) activity.

This is because the company has become exceptionally and unusually quiet in recent weeks. Brenntag is usually extremely keen to get coverage in the pages of ICIS Chemical Business and on our news website, www.icis.com/news .

We've been trying to tie them down to agree an interview on its strategy in Central and Eastern Europe and have been turned down.

My journalistic instinct smells a rat.

Image credit http://www.sxc.hu/browse.phtml?f=download&id=839071

 

Spolchemie's general manager, Francois Vleugels, has sent me a Powerpoint presentation detailing his strategy for rescuing the ailing Czech epoxy resin producer. He is presenting this at the World Refining Association's Global Petrochemicals conference in Vienna this week.

As you'll see, Vleugels' plan involves steep cost cuts, process optimisation, and major moves to improve the company's image amongst disillusioned customers. 

Vleugels seems to thrive on the stress of rescuing distressed businesses and is already looking for his next challenge. Rather him than me.

I've just interviewed Czech epoxy resins general manager, Francois Vleugels, about his strategy for rescuing this company which he took over later last year. Vleugels was forced to do a deal with lenders to stop the group going bankrupt. He has put in place a vigorous rescue plan, and has already regained the market share Spolchemie lost when it began to lose its financial viability. There is nothing more likely to scare customers away than the though of a supplier going bust. Vleugels showed them a convincing rescue plan and many have returned. With some innovative "green" feedstock technology he now hopes to boost his position in more specialty epoxies. 

The top 10 chemical companies in 2015 will be dominated by Middle East and Asian players according to global consultancy KPMG. Take alook at their latest white paper on the chemical industry in Europe. The rank assumes historical growth rates will continue. I've pulled the list off:

Top 10 chemical producers, 2015/16
Rank  Company  Country
1. SABIC Saudi Arabia
2. BASF Germany
3. Reliance India
4. Exxon Mobil US
5. Sinopec China
6. Sinochem China
7. Dow Chemical US
8. Saudi Aramco Saudi Arabia
9. Dupont US
10. ADNOC / IPIC Abu Dhabi
Source: KPMG in the UK, December 2009

Zaklady Azotowe Pulawy (ZAP), Poland's largest fertilizer producer, and Zaklady Chemiczne Police (ZChP), the country's second-largest fertilizer producer, today signed a business cooperation agreement.

With the two groups in the midst of privatisation, I wonder if potential purchasers might look to merge the two groups, with all the consequent savings in overheads. ZAP produces nitrogen fertilizer, melamine and caprolactam, while ZChP produces nitrogen phosphorus potassium (NPK) fertilizer and titanium dioxide (TiO2) so there are obvious synergies in terms of prduct portfolio.

Any moves entailing job cuts or plant closures will attract fierce opposition in Poland, where social considerations have stymied previous attempts to rationalise outdated operations.

According to ICIS news, the agreement would initially address possible joint activities in optimising production processes, investing in and repairing fertilizer and ammonia units, and pushing ahead with environmental protection and energy initiatives, the companies said.

It replaced a previous cooperation agreement drawn up in 2008, which was abandoned because of the economic downturn.

The news that the International Monetary Fund is standing by to bail out Greece must be a worry to chemical producers regionally. So far we've had no reports of a negative impact on demand for chemicals at ICIS. But financial instability is bound to affect the buying habits of consumers and a negative impact on GDP growth.

Greece's problems have hit the Euro, which has fallen sharply against major currencies. This could be an unexpected benefit for Eurozone chemical producers who will benefit from cheaper exports and more expensive imports.

Let's hope the newly-elected government there can act swiftly to resolve a deficit worth 12.7% of GDP. According to The Independent "Earlier [last] week, investors showed unexpected appetite for Greek debt when the market responded with €25bn-worth of demand for its issue of €5bn-worth of five-year bonds, allowing the government to raise the issue to €8bn."

Image source http://www.sxc.hu/browse.phtml?f=download&id=1233814