Nizhnekamskneftekhim selects Spherilene process for new LDPE/HDPE plant
Nizhnekamskneftekhim announced the selection of Basell’s Spherilene® polyethylene technology for a new 230 KT per year plant to produce linear low-density and high-density polyethylene. The plant is to be built in Nizhnekamsk, Republic of Tatarstan, Russia, with a start-up planned for 2007.
According to Basell, the new generation Spherilene gas phase process is based on a simplified design that reduces capital and operating costs & the process’ product capability has also been expanded with the use of Basell’s new Avant catalysts.
The Nizhnekamskneftekhim license agreement is the first granted for the new-generation Spherilene technology and is the eighth license overall signed by Basell in Russia; these licenses represent a combined annual capacity of 1.4 million tons of polyethylene and polypropylene.
Comments: Spherilene is a multi-reactor, fluidized-bed process for producing polyethylenes. In 1990 Himont embarked on an effort to design a polyethylene process based on the extensive experience it had garnered during the development of the very popular Spheripol process, announcing it had perfected the process in 1993, calling it Spherilene. Taking another cue from its polypropylene technology, Himont designed a catalyst for the process based on concepts from its Reactor Granule Technology which imparts a spherical morphology to the final product. The process is designed to produce products ranging from VLDPEs (0.900 g/cc) to HDPE (0.962 g/cc). Unlike other LLDPE/HDPE gas-phase processes, Spherilene is more complex with its multiple reactor design.
Since its introduction, licensing of Spherilene has been lackluster. In 2002, Basell shut down its only commercial-scale Spherilene facility based in Lake Charles, Louisiana. Basell has six other licensees independently operating their Spherilene facilities.
The total installed capacity is estimated to be 1,420 KT, including plants that have been mothballed. The Nizhnekamskneftekhim agreement represents the first Spherilene license in the last few years. Simplification of the process, coupled with increased demand for bimodal polyethylene products, is likely a major factor in Spherilene’s revival.
The news is a welcome development for Prof. Galli.
Lyondell subsidiary Equistar enters into a metallocene licensing agreement with Univation
Lyondell Chemical Company announced that its Equistar Chemicals business entered into a licensing agreement to use Univation Technologies’ XCAT™metallocene polyethylene (PE) technology for the production of certain polyethylene resins in its UNIPOL™ gas-phase PE reactors.
Under the agreement, Univation’s metallocene catalysts will be used to produce new grades of PE resins. These next-generation resins will feature enhanced properties such as impact strength, and tensile and heat-seal characteristics which are valuable to Equistar’s customers and their customers in the flexible and rigid packaging market.
Comments: Equistar Chemicals has done a lot of work in the area of metallocene/single-site catalysts, but was unsuccessful at implementing a proprietary catalyst. One of the areas of interest was the production of metallocene-based HDPE using its STAR single-site technology. Commercial-scale runs were conducted in a slurry plant in Clinton. The recent licensing agreement with Univation suggests that the internally developed catalyst system was unable to provide the range of products at a competitive cost structure.
The license should allow Equistar to increase its participation in the North American polyethylene industry. The total demand for metallocene-based polyethylene in North America was estimated to be in excess of 1.5 billion pounds. The major applications of m-LLDPE in North America are (1) film, (2) polymer modification, (3) wire & cable, (4) industrial, and (5) medical. Film applications accounted for over 90% of the overall m-LLDPE demand in North America.
Mitsui & Idemitsu’s polyolefins merger was approved by the Fair Trade Commission
Japan’s Fair Trade Commission approved the merger of the polyolefins business of Mitsui Chemicals Inc and Idemitsu Kosan. The companies will merge their polyolefin businesses into a new subsidiary by Apr 1, 2005. But FTC has set several guidelines to limit the impact of the merger on the domestic polypropylene market.
With the merger, Mitsui Chemical and Idemitsu would have a 40% share of Japan’s PP market. FTC said both companies have agreed to take several measures to limit the impact of their merger on the PP market. Both companies agreed to allow trading firms or competitors the right to buy from them a minimum of 30,000 MT/year of PP in total at production costs for at least five years. The companies also agreed to cut the number of PP grades they would produce by 20% within three years, and establish a comprehensive compliance system. Both companies would report to the FTC about their progress in these matters, it said
Comments: The continuing consolidation trend in Japanese polyolefins has reduced the number of companies from slightly over a dozen to a handful over the last decade.
The Japanese polyolefins industry evolved from the specialty product concept (i.e., every grade was a specialty grade), requiring smaller and more flexible processes and numerous grades. The emergence of the polyolefins industry in nearby regions, which compete more on a commodity basis, has forced many Japanese players to merge/consolidate to leverage economies of scale. A couple of years back, Mitsui and Sumitomo were considering consolidating their operations, but that agreement dissolved due to holding interest issues. The Mitsui and Idemitsu merger is further along, and will likely come to fruition. Individually, Mitsui and Idemitsu rank second and third, respectively, in Japan. Once merged, the total capacity for the company will exceed 1.2 million tons, making it the largest PP company in Japan. The next closest competitor in Japan would be Japan Polypropylene, a joint venture between Mitsubishi Chemicals and Chisso.
For a broad review of (1) the Japanese polyolefin industry, (2) the Japanese Soga-social system, (3) the significance of the current mergers, and (4) Japan’s attempts to move to commodities – please read our analysis in New Generation Polyolefins.
Keltic Petrochemicals to construct PE plant using Unipol® gas-phase process
Keltic Petrochemicals announced its plans for a PE plant in Goldboro, NS. It has selected Univation’s Unipol® PE gas-phase process for the complex. The $3.5-billion facility will include two Unipol PE lines, each with a design capacity of at least 350,000 MT/year.
These will be fed by a gas cracker of 1.5 million tons design. Start-up is planned for the second half of 2008. Under the terms of the letter of intent signed two weeks ago in Halifax, Univation Technologies (Houston, Tex,) will begin front-end engineering design work, with basic engineering design performed by Stone & Webster LP Canada (Toronto). The new Unipol Lines will produce both linear-low and high-density polyethylenes using Univation’s conventional and advanced catalysts. This will include the capability to produce metallocene PEs as well as single reactor bimodal HDPE, using Prodigy bimodal catalysts. In addition, the new lines will be able to operate using Univation’s Super Condensed Mode Technology (SCM-T) for high-capacity production.
Comments: Keltic Petrochemicals Inc. was incorporated in March 2000 to develop, construct, and operate a world-scale petrochemical facility in Goldboro, Nova Scotia. The intended facility will consist of ethylene, polyethylene, propylene, and polypropylene plants as well as a supporting cogeneration plant and a receiving terminal for liquefied natural gas (LNG). The intended Unipol facility should enable Keltic to produce products that are competitive in the North American markets including metallocene and bimodal polyethylenes.
Reliance Industries family conflicts become public – impacting millions of investors and potentially the future direction of Reliance Industries
Reliance Industries is a classic example of rags to riches story made possible through hard work and entrepreneurship – the lifetime achievement of Mr. Dhirubhai Ambani.
Dhirubhai Ambani – Entrepreneur who built up the only Indian business to feature in the Forbes 500 One of India’s most dynamic and flamboyant entrepreneurs, Reliance is the only Indian private company to make the Fortune 500 list of the world’s largest corporations, and Ambani was listed by Forbes as the 138th richest person in the world this year.
The son of a petty trader from a remote village in rural Gujarat moved to Aden as a teenager to seek his fortune. He started to work as a gas station attendant before taking up a clerical position for an oil company that was the sole distributor of Shell products there.
Starting his business with $3,000 in seed money for the modest trading enterprise that Ambani set up when he returned to Bombay in 1958. The trading house Reliance Commercial Corporation began by importing polyester yarn and exporting spices.
He opened his first textile mill in Naroda, near Ahmedabad, in 1966 and then concentrated on quietly building up his business. Vimal, the textile brand he established, flourished and remains a household name in India today. Starting in 1977 with 58,000 investors buying shares; eventually, the number of Reliance shareholders was to climb to some three million.
In 1982 Ambani began the process of backward integration, setting up a plant to manufacture polyester filament yarn. He subsequently diversified into chemicals, gas, petrochemicals, plastics, power, and telecom services.
Ambani also saw the Indian Government’s privatization program as a means of further growth. Two months before his death, Reliance successfully bid for the giant public-sector Indian Petrochemicals.
The two sons of Mr. Ambani – Mukesh and Anil carried on the entrepreneurial spirit of their father to make Reliance a Global player in chemicals, communication, and textiles.
With the demise of Mr. Dhirubhai Ambani, the organization is going through an adjustment period between the family members, especially the two brothers, sister, and mother – a normal course for most family-owned businesses, except Reliance is a large part of Indian lives, Indian politics, way of doing business and Global energy industry. Even minor perturbations will have large repercussions.
Braskem to increase PE & PVC capacity in Brazil
Brazilian petrochemical producer, Braskem announced its plans to add PVC and polyethylene capacity in 2005.
The company plans to add 90 million pounds of PE capacity at its plant in Camacari, Brazil by mid-2005. Another 110 million pounds of PVC capacity will be added in Marechal Deodoro, Brazil, by mid-2005.
Braskem will also add 33 million pounds of ultrahigh-molecular- weight PE capacity, in Camaçari, in January 2005.
Comments: Brazil has recovered from its financial crises of the 90s and seems to be poised for growth. This economic recovery will help the petrochemical industry in Brazil as well as Latin America. Braskem is planning to increase its LLDPE capacity by 30 thousand tons. This expansion will utilize $4 million in Unipol technology. This expansion of 15% will increase the plant’s capacity from 200,000 tons to 230,000 tons. The plans to expand the capacity in Bahia are mainly due to the success of Braskem Flexus®, a line of polyethylene with metallocene technology. Braskem was the first company to introduce this product in Latin America. The company anticipates that part of the additional production will be exported to US and Europe. The total capacity for LLDPE in Brazil is 455 KT. The other major suppliers of LLDPE are Ipiranga and Politeno with 150 KT and 95 KT LLDPE capacity respectively.
Braskem is also considering an investment of $28 million to increase the PVC capacity by 50,000 tons. Braskem currently has 490 KT/year of PVC capacity. This expansion will increase its PVC capacity by 10%. The total PVC capacity in Brazil is 740,000 tons. The other major supplier of PVC in Brazil is Solvay Indupa with production facilities in Santo Andre, SP. The company accounts for the remaining 250 KT of PVC capacity in Brazil. Braskem is also planning to add 33 million pounds of Ultra High Molecular Weight PE.
Ultra High Molecular Weight PE (UHMWPE) has polymer chains 10 to 20 times longer than high-density polyethylene. UHMWPE is a polyethylene homopolymer with Mw ranging from 3 to 6 million made in a slurry process using a Ziegler catalyst. The longer chains give UHMWPE major advantages in toughness, abrasion resistance, and freedom from stress cracking. Since it is a polyethylene it shares the lubricity, chemical resistance, and excellent electrical properties of conventional HDPE. The long chains are also responsible for the difficulty encountered in processing the material on conventional molding and extrusion equipment. When heated above the melting point it becomes clear but does not flow. It is used in gears or snowmobile drivers and impellers for snow blowers, where it provides low-temperature toughness, corrosion resistance, and lubricity. In the mining industry, it is used as a sliding surface in chutes and hoppers because of its excellent abrasion resistance and chemical resistance.
Polialden Petroquimica SA (A subsidiary of Braskem) is the major supplier of this material in South America. In 2002 Polialden Petroquimica SA purchased the UHMWPE business from Basell.
BP to close US linear alpha olefin production capacity
BP announced its plans to close its Linear Alpha Olefin (LAO) production facility in Pasadena, Texas, by the end of 2005. The company will continue the manufacture of linear alpha olefins at its other two facilities in Alberta, Canada, and Feluy, Belgium. Closure of the Pasadena site will reduce BP’s global linear alpha olefin capacity by 500,000 tons (1.1 billion pounds) per year.
The Pasadena site is the oldest of BP’s three operating LAO plants and dates back to the 1960s when it was originally built to make linear alcohols for use primarily in detergents. In 2002 BP ceased production of linear alcohols at the Pasadena site.
BP also operates a polyalphaolefin (PAO) plant in Deer Park, near the Pasadena site. Operations at this unit are not affected by the closure of the LAO unit. After the restructuring, BP will have an annual linear alpha olefin production capability of 300,000 tons (660 million pounds) at Feluy, Belgium, and another 250,000 tons (550 million pounds) at the Joffre, Alberta plant.
Comments: Over the last few years, there has been overcapacity in the LAO markets. By closing the Pasadena site, BP will be able to utilize its other LAO production facilities effectively & competitively.
BP’s worldwide production capacity grew to 1.05 million tons (2.3 billion pounds) with the startup of the Joffre, Alberta plant in 2001. Expansions by BP and other producers during the last several years have added over 450 thousand tons (1 billion pounds) of capacity, resulting in an industry overcapacity.
The major applications of LAOs include (1) comonomers (C4-C8) in polymers production, (2) plasticizer alcohols (C6-C10), (3) detergent alcohols (C12-C18), (4) lubricant additives, (5) LAO surfactants, (6) alkyldimethylamines, and others. The major producers of Laos include (1) Shell, (2) Chevron Phillips, and (3) BP Chemicals. There are several new capacities planned for LAO from producers such as Q-Chem (a joint venture between Qatar Petroleum and Chevron Phillips), Sasol, Sabic, and Idemitsu-Formosa.
Shin-Etsu to invest $1 billion in PVC production plants
PVC producer Shin-Etsu announced its plans to invest $1 billion (EUR750 million) in a huge project for PVC and its feedstocks in the US. The project will be located on the Gulf Coast at one of two sites where the firm’s US subsidiary Shintech is already present. Overall, an additional 600,000tpa of PVC capacity will be added to Shintech’s existing 2 million tpa capability for the polymer. Upstream of the PVC capacity, the project calls for 500,000tpa of caustic soda and over 700,000 tpa of VCM. The first phase is scheduled for completion by the end of 2006 with the balance planned for the following year.
Up to now, Shintech has focused purely on PVC manufacture. Now it is not only moving into full integration but considering building an ethylene cracker in the US. In Europe, the company is active through the PVC business it acquired from Shell.
Comments: The issue here is the size and suddenness of the announcement that took many industry watchers off guard. This is not only a PVC announcement but is a new move upstream for Shintech which prior to this announcement, was only integrated upstream in Europe. The driving force for the announcement is the company’s desire to have a new and secure source of VCM here to fore mostly purchased from Dow. With realignments at Dow in their VCM business, Shintech has ultimately decided to leverage its feedstock supply program and go on its own. This will leave spare capacity at Dow and also that building VCM and PVC capacity in Louisiana, a nonattainment area, could be difficult. The result is that this announcement, with an addition of 8% of additional VCM/PVC to the national US supply-demand balance may not be a sure thing until relations with the historical supplier are fully explored. The silver lining to this announcement is that it will increase USGC ethylene demand and this will help extend the US ethylene cycle into 2007.
Vinnolit to invest in the expansion of chlorine, EDC & VCM in Europe
Vinnolit announced its plans to expand the chlorine, EDC, and VCM capacities at its Knapsack plant. The commissioning of a further electrolyzer employing membrane technology raises the annual chlorine capacity at this site to 310 KT.
Annual capacity for EDC (direct chlorination) and VCM will, in both cases, be increased to 370 KT. These measures aim to further reduce the need to buy in EDC and to support the planned measures to expand Paste-PVC production at the Burghausen plant.
Investment is also being made in the area of Suspension-PVC with the further optimization of Vinnolit’s proprietary high-performance internal cooling technology for the production of S-PVC. Investments in Burghausen and Knapsack together total about EUR30 million
Comments: Formed in 1993, Vinnolit is one of the leading PVC producers in Europe. The company was initially formed as a joint venture between Wacker-Chemie and Hoechst AG. In 2000, the company was purchased by Advent International. The company produces special PVC grades with a total PVC capacity of about 650 KT/year. The company is a major producer of PVC paste used in several applications such as can coatings, coil coatings, automotive, textiles, and others.
With the increased VCM & EDC supply, the company plans to increase its PVC-paste production. This will help the company to be vertically integrated all along the value chain.
Pemex May Be Turning From Gusher To Black Hole
Source: Business Week Online
Mexico is the world’s seventh-largest oil producer and one of the top three suppliers to the U.S., up there with Canada and Saudi Arabia. Yet state oil monopoly Petroleos Mexicanos (Pemex), a giant with $55.9 billion in revenue, is hardly thriving. Indeed, in recent years the company has only been able to make ends meet through massive borrowing so it now owes a staggering $42.5 billion, including $24 billion in off-balance-sheet debt. Why? Because Pemex is the Mexican government’s cash cow. The state-run company pays out over 60% of its revenue in royalties and taxes, and those funds pay for a third of the federal government’s budget. If oil prices drop or there are no major discoveries of crude, that could spell big trouble for Pemex — and Mexico’s finances.
Pemex’s mounting debt has international rating agencies worried. They don’t believe the company will default on its obligations, which are considered quasi-sovereign debt and are implicitly guaranteed by the Mexican government. But Pemex’s debt could begin to hamper its access to international capital markets unless the government finds other sources of tax revenue to meet its budget.
The question for Pemex, and Mexico, is what will happen if oil prices head south — as many analysts predict they will next year. After all, Mexico’s foreign debt crisis in the early 1980s was sparked, in part, by a drop in crude prices. And Pemex’ total debt load is four times that of ExxonMobil Corp. To compound the problem, production from Mexico’s biggest oil field has peaked. The shallow-water Cantarell field in the Gulf of Mexico still provides 62% of Mexico’s overall crude output, but by 2006 production will begin falling by as much as 14% a year, Pemex says.
With the federal government draining its coffers, Pemex doesn’t have enough money to invest in serious exploration. So while Mexico’s oil production has risen 17.2% since 1999, to 3.4 million barrels a day, proven reserves have plunged by nearly 50%, to 16 billion bbl., over the same period.
In November, Pemex announced the discovery of possible reserves that may total 200 million bbl. of oil in the deep waters of the Gulf of Mexico. Yet independent oil analysts point out that extensive seismic studies and test wells will be needed to confirm the area’s true potential, and Pemex has neither the financial resources nor the technical expertise to carry out those follow-ups on its own.
Mexico, which nationalized its oil industry in 1938, is the only major Latin American country that doesn’t allow foreign oil majors to participate in oil exploration and production.
That leaves Pemex with few options but to raise money for investment in the debt markets. It does so through bond offerings, plus off-balance-sheet project financing schemes known as pidiregas. In the past five years, Pemex has taken on some $24 billion in pidiregas, which are often financing packages offered by contractors that must be paid back when projects are completed.
Thwarted By Congress
Talk of privatizing Pemex — one sure way to put it on a firmer financial footing — remains politically taboo in Mexico. So President Vicente Fox has instead focused on improving the way the oil monopoly is run and making sure it has the financial resources it needs to keep pumping oil. But the opposition-dominated Congress has foiled him at every turn. Raul Munoz Leos, the former DuPont (DD) executive Fox appointed to run Pemex, quit on Nov. 1 after less than four years on the job, frustrated that his efforts to shake up the bloated, inefficient oil monopoly had been thwarted. And last month the senate quashed a bill that would have reduced the royalties Pemex must pay the government on future oil finds. As a last resort, the government recently floated the idea of allowing Pemex to raise money by issuing shares that could be purchased only by Mexican citizens and local pension funds. But that proposal got a chilly reception from Congress, too.
Critics charge that high oil prices have bred complacency among Mexican politicians. Mexico will reap $22 billion in revenue from oil exports in 2004 — a 24% increase over 2003. That has allowed the government to put aside money for regional infrastructure projects and sock away millions into a rainy-day fund that can be tapped when oil prices are low. Mexico has used its oil bounty less productively than Russia, which is running a fiscal surplus even as it spends many of its petrodollars to pay down the country’s debt.
That’s a huge wasted opportunity. If Mexico doesn’t open its oil industry to private investment, the government will have to come up with $70 billion to $100 billion in investment capital for Pemex in the coming decade to maintain production at current levels. “There’s no way Mexico can tap its oil reserves with public money — the government doesn’t have enough resources, and it never will,” says Luis Tellez, a former Energy Minister who now heads the Mexico office of Carlyle Group, a Washington private-equity outfit. If the price of oil does drop, along with Mexico’s production, the country’s nearsighted politicians will have a lot to answer for.
Rohm and Haas and Engelhard awarded a $5.2 million grant to develop new technology to produce acrylic acid from propane
Rohm and Haas with support from Engelhard Corporation has been awarded a $5.2 million grant by the US Department of Energy’s (DOE) Industrial Technologies Program to develop a major new manufacturing process using propane instead of propylene to manufacture acrylic acid. The novel technology, if adopted worldwide by acrylic acid and other propylene derivative manufacturers, could save up to 37 trillion BTUs per year, eliminate 15 million pounds of environmental pollutants annually, and potentially save the US industry nearly $1.8 billion by the year 2020.
Rohm and Haas will complement its expertise in oxidation catalyst research with Engelhard’s innovative approach in the development and application of monolithic catalysts used to control emissions. The two companies will optimize catalyst formulations and develop technology for depositing them onto heat exchangers and other monolithic structures. Technical and commercial success—the ability to cost-effectively manufacture acrylic acid directly from propane—depends largely on uncovering the appropriate catalyst system. The University of Delaware, a partner in the project, will provide computational modeling capabilities. From an environmental standpoint, steam crackers and their furnaces require high energy consumption and generate carbon dioxide, nitrogen dioxide, and sulfur dioxide as by-products By replacing crackers with comparatively small Short Contact Time Reactors, if deployed across the propylene value chain, could reduce these emissions.
Comments: Acrolein is a useful intermediate in the production of various compounds including acrylic acid, methionine, methionine hydroxy analog, 1,3 propanediol, and glutaraldehyde.
The principal process for its production is via oxidation of propylene with air. Union Carbide (now Dow) and BASF have developed processes for the production of acrolein using lower-cost propane as the starting material. These processes are based on oxydehydrogenation(ODH) of propane. The propylene stream is converted in situ to acrolein and finally to the desired acrolein derivative. Unreacted propane and propylene plus inert gases are recycled to the ODH reactor.
The reliable source of propane and the constant pressure on propylene due to its by-product status of ethane crackers is the driving factor in the industry.
The switch to propane (typically half the cost of propylene) will yield significant savings in manufacturing costs. This would translate into huge savings for Rohm & Haas since acrylic acid is the key raw material for all of their products.
Rohm & Haas is an organization built on the acrylic molecule. Rohm & Haas is on the forefront of partial oxidation technology for the last 25 years. Rohm & Haas in the past developed a successful technology to convert propylene to methacrylic only to be shelved by acetone and Hydrogen cyanide suppliers.
The technology currently being planned by Rohm & Haas and Engelhard is neither unique nor innovative – but rather, a timely opportunity to develop propane as an alternative to propylene.
Shenhua and Dow Chemical agreed to study the Coal-to-Olefins opportunity in China
The Shenhua Group and The Dow Chemical Company have signed an agreement to jointly evaluate the feasibility of coal-to-olefins projects in China.
A feasibility study that covers areas such as economics and market analysis, logistics, and technological applications will be undertaken to evaluate the potential and value of building large-scale coal-to-olefins plants in China.
Areas around Yulin City, Shaanxi province, have been identified as the location for the study which will start in the first quarter of 2005. It is anticipated that the study will be concluded by the end of next year.
Comments: This announcement looks like the first major step in an actual project for the Dow Chemical Company to evaluate the promising new technology of methanol to olefins. Reportedly, the Shenhua evaluation will focus on the manufacture of a large quantity of methanol from coal which will then be converted to olefins feedstocks in China.
The technology to produce Coal based methanol to olefins was developed in the late 70s. The economics (related to lower oil prices) put an end to the speculations. Almost all of the major chemical-related organizations including Dow Chemical Company have developed methanol to olefins technology in the past and have abandoned it. The only new topic here is “China Syndrome”. Nothing more!
Qatar Petroleum and ExxonMobil announce the commencement of major activities for the Qatargas II project
Qatar Petroleum and Exxon Mobil Corporation announced that the companies are commencing a number of significant activities to advance the $12 billion Qatargas II project, which will supply LNG from Qatar to the United Kingdom by the winter of 2007/8. Qatargas II is a joint venture between Qatar Petroleum (70 percent) and ExxonMobil (30 percent).
Several milestones have been reached that are critical to the implementation of the project, which is the largest integrated LNG project ever undertaken. These include:
Letters of authorization have been signed with Engineering, Procurement, and Construction (EPC) contractors for the construction of platform topsides, pipelines, and two 7.8 million-ton-per-year (MTA) LNG trains at Ras Laffan Industrial City in Qatar that set new standards for scale and efficiency. The value of the associated contracts is approximately $4.5 billion.
Qatargas II and South Hook LNG Terminal signed financing documents securing funds to execute the project. Qatargas II entered into funding agreements totaling $ 6.5 billion of debt and South Hook LNG Terminal entered into funding agreements totaling 600 million pounds sterling. In total, $ 7.6 billion was raised from 57 institutions, the largest energy project financing ever, and the first-ever financing on a full LNG chain-integrated basis.
The formation of two new companies to manage the LNG importation, terminal operations, and sales of natural gas to ExxonMobil Gas Marketing Europe (100 percent ExxonMobil owned) for sale, in turn, to UK markets.
Comments: This project is certainly the biggest of its kind so far by a factor of two times in the annals of global LNG projects. It is the biggest in terms of supply chain integration, shipping, liquefaction, and marketing undertaken so far with an ultimate capacity of about 16 million tons per year (MTA) LNG trains. This is the 7th major LNG project underway with 28% of the planned capacity in LNG for Qatar.
Everything about this project is mega-scale, from the financing through 57 institutions through the shipping of 210,000 m3 LNG tankers that are approximately 40% larger than the biggest currently in service. Economies of scale notwithstanding, the ultimate market for this massive LNG pool is the UK which becomes a large net importer of BTUs as North Sea production wanes. The two massive receiving terminals at Milford Haven, Wales will each throughput 1BCF/day. The first receiving terminal for LNG will not begin operations in the UK until 2005 so the Milford Haven location’s startup date of 2007 is not far behind and shows the UK’s natural gas needs from offshore are growing quickly, just in time for the massive Qatar project.
BASF to reshape superabsorbent polymer (SAP) manufacturing in North America
BASF announced its plans to construct an SAP manufacturing facility in Freeport, TX. At the same time, it will close two older plants in Mississippi and Virginia.
The German group opened a new plant in Antwerp two years ago using its technology and will now apply the formula in the US, improving quality, availability, and competitiveness.
The superabsorbent polymer materials, cross-linked acrylates, find their main outlet as disposable nappies and are also used in packaging, cable wrapping environmental containment, and fire fighting.
Comments: BASF is one of the leading producers of superabsorbent polymers in both North America and Europe. BASF’s decision to close two older sites in North America will help them compete in the market effectively and also gain the advantage of the growing markets.
Super Absorbent Polymers (SAPs) are crosslinked polyacrylate powdered granules that are capable of absorbing large amounts of solution (30-50 times its weight). This property makes them ideally suited for end-use applications that include: (1) baby diapers, (2) adult incontinence products (3) feminine care products, (4) medical and miscellaneous applications. The demand for SAPs is expected to increase by about 6-7% globally.
BASF brought an online SAP manufacturing facility in Antwerp, Belgium in 2001 having a capacity of 170 KT/year, and in Sao Paulo, Brazil in 2003.
Arkema & Alvoe form a joint agreement for the development of Pebax® Polyether-Block-Amide foams
Arkema, the first producer of Polyether-Block-Amide (Pebax®), and ALVEO, the European leading manufacturer of crosslinked Polyolefin foams announced their plans for joint development of a range of foams marketed under the Pebaxfoam® trademark.
According to the company, Pebax® based foams show unique properties among which: (1) softness, (2) lightweight, (3) thermal insulation, (4) shape recovery, (5) energy return, (6) water vapor permeability, (7) flexibility at low temperature, (8) excellent UV and aging resistance, and (9) high friction coefficient. The Pebaxfoam® product range benefits from the combined know-how of Arkema for PEBAX® and ALVEO for foam technology. ALVEO and Arkema are sharing R&D and marketing efforts for the development of this new material which will be commercialized by ALVEO.
Comments: Arkema a producer of polyether block amides markets its product as plasticizer-free thermoplastic elastomer which is also an engineering polymer. The product called Pebax® has properties of polyamide and also acts as an elastomer.
Pebax® applications include (1) athletic footwear and sports equipment, (2) industrial tubing and piping, (3) drive belts, (4) films and packaging, (5) health care, (6) Medical/Hygiene textiles, (7) roofing membranes, (8) agricultural films, and others.
Alveo, a subsidiary of Sekisui is a major global manufacturer of polyolefin foams. Their markets include (1) adhesive coating, (2) automotive, (3) construction, (4) consumer goods, (5) footwear, and other applications. The partnership will be able to utilize Arkema’s expertise in polyether-block-amide properties with Alveo’s foam manufacturing technology and market capabilities.
Sumitomo Corporation enters the recycling business with polyvinyl chloride interior waste materials
Sumitomo Corporation broke into the recycling business with polyvinyl chloride interior waste materials by accepting the allocation of new shares to a third-party (Investment amount: JY49.5 million; Investment ratio: 6.2%) from Refineverse Inc., a polyvinyl chloride interior waste material recycling venture business.
Sumitomo will be selling recycled materials (PVC compounds and sheets), produced by Refineverse, to flooring and construction material manufacturers domestically and overseas (such as China), while selling ECO mark-certified tile carpets for offices(note) that are made of recycled materials through a comprehensive interior business with 100% capital participation by Sumitomo, Sumisho Interior International Inc.
Sales, in the amount of JY2 billion, are anticipated for the Sumitomo Corporation group of companies as a whole over three years (fiscal 2007).
Waste materials subject to recycling range diversely from tile carpets for offices, hard flooring materials, and wallpaper that are polyvinyl chloride interior materials, to construction and automotive materials. Recycled materials, obtained by pulverizing these items, can contribute to a huge reduction in carbon dioxide emissions and energy consumption during manufacturing processes when compared to the use of virgin materials.
Bayer MaterialScience and Teijin Chemicals supply each other with polycarbonate resins
Teijin Chemicals Ltd., Japan, and Bayer MaterialScience AG, Germany, have signed a letter of intent (LOI) to supply each other with specific polycarbonate resin grades on a regional basis. This agreement will enable both companies to improve efficiency, enhance productivity and increase the availability of polycarbonate in the global market. Teijin Chemicals is producing Panlite® polycarbonate in Japan and Singapore. Bayer MaterialScience is producing Makrolon® polycarbonate in Germany, Belgium, the United States, and Thailand.
Both companies have new polycarbonate production plants under construction in China. Initially, as part of the agreement, Bayer and Teijin agreed to supply each other with specific types of polycarbonate resin for specific applications. Teijin Chemicals is planning to start Panlite® polycarbonate production in Jiaxing City, Zhejiang District in April 2005. Bayer will start its Makrolon polycarbonate production in the Shanghai Chemical Industry Park in mid-2006. The cooperative range can be expanded depending on the degree of its progress.
Comments: The agreement between Teijin Chemicals Ltd. and Bayer Material Science gives a flavor of the type of agreements that the industry will witness in the coming years. As companies increasingly compete in global markets they will look for alliances and agreements that help the companies gain competitive advantage in different regions. The current agreement will allow both companies to gain the competitive advantage of supplying polycarbonate resins in the fast-growing Chinese region. Polycarbonate is projected to grow at double-digit rates in some Asian countries. In the past, the United States and Japan have been the exporting countries while the major importing region has been the Far East.
Because of its low shrinkage, low warpage, and dimensional stability, polycarbonate is often used for intermediate-sized housings, such as automotive bezels, appliance housings, and electronic structural components. Because it is an amorphous material, it is used in molding applications where the combination of transparency and strength is an important criterion. As producers build capacities in Asian countries this region will also become self-sufficient and the need for imports will decrease. The major suppliers of polycarbonate on a global basis include (1) General Electric, (2) Bayer, (3) Dow, (4) Teijin, (5) Mitsubishi, and others. GE is the largest supplier with approximately 45% of the share while Bayer is the second largest supplier with approximately 25% of the share.
BASF to eliminate 3,200 jobs in Germany over the next two years
BASF plans to reduce the workforce at its Ludwigshafen complex in Germany by 10% over the next two years to improve the site’s international competitiveness.
BASF has reached a deal with employee representatives at Ludwigshafen to decrease jobs from 35,200 at the end of last year to 32,000 by the end of 2007. They will remain at that level until 2010. The reduction will be achieved through natural attrition to avoid enforced redundancies. But the agreement will be reviewed annually so that further cuts can be made in the event of adverse market conditions.
The company is in the midst of a restructuring program at the site that is expected to achieve savings of EUR450 million ($600 million) by mid-2005. This drive to raise competitiveness will be extended beyond mid-2005 through continuous process improvements.
Dainippon Pharmaceutical Sumitomo Pharmaceuticals to merge
Japanese pharmaceutical firms Dainippon Pharmaceutical Co. Ltd. and Sumitomo Pharmaceuticals Co. Ltd. announced their plans to merge. The merger will be effective from October 1, 2005.
Sumitomo and Dainippon expect ethical drug sales of the combined entity to reach ¥230 billion ($2.2 billion) by 2007, with operating income and R&D costs both coming in at ¥45 billion. The new company to be established by the merger (“New Company”) will rank among Japan’s top 10 pharmaceutical companies in terms of domestic ethical pharmaceutical sales.
Comments: The business environment in which the Japanese pharmaceutical industry operates has become increasingly challenging due to various factors, such as the government’s continuing initiatives to restrain medication expenditure through periodical drug price cutting and other measures, the soaring R&D spending of drug discovery, the intensifying competition with U.S. and European mega pharmaceutical companies, and the ongoing restructuring of the pharmaceutical industry.
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