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Tuesday, 3 January 2017

Huntsman completes sale of European surfactants business for $225 mn

THE WOODLANDS, US: Huntsman Corporation has completed the sale of its European surfactants business to Innospec Inc for an enterprise value of $225 million. This business represented approximately $24 million of EBITDA in 2015.

The business is currently managed from Belgium and has manufacturing assets in France, Italy and Spain. With sales revenues of around $230 million, the business employs approximately 430 people. Innospec will integrate the acquisition into its performance chemicals business.

The sale of the European surfactants business represents another step in Huntsman's strategic transformation of its performance products business, which recently expanded its downstream positioning with a polyetheramines expansion in Singapore and is currently undertaking a substantial cost savings and business improvement initiative.

"By completing the sale of this business, we are executing our plan to focus on businesses within our portfolio with a greater long-term strategic fit, while continuing to grow our downstream differentiated businesses. With the early repayment of another $260 million of debt using proceeds from the sale and existing cash, we have now repaid approximately $550 million of debt in 2016 and significantly strengthened our balance sheet," said Peter Huntsman, president and CEO of Huntsman.

“We are delighted to welcome the new employees to Innospec, and we look forward to working with our customers and offering a much wider range of products and technologies,” said Bruce McDonald, president of performance chemicals at Innospec.

GE, Baker Hughes merger to shake up oilfield services sector

By Shivani Mody

General Electric Co (GE) announced that it will merge its oil & gas business with Baker Hughes Inc (BHI) on 31 October, to create a new oilfield service (OFS) business. The merger will see the creation of the world’s second-largest oilfield services provider as competition heats up to supply more-efficient products and services to the energy industry after several years of low crude prices.

Given GE and BHI’s strong positions in digitally-based applications and downhole technology, respectively, the new entity will be well-positioned to benefit from a strengthening global E&P sector. Also, the combination comes at a favourable time for both companies as prolonged commodity price weakness increases the value of efficiency gains within the OFS sector.

“The merger of GE Oil & Gas and BHI will create a new, more technologically advanced breed of OFS company that is well-placed to benefit from an E&P recovery. The new venture will have strong capabilities to both boost productivity from core unconventional plays and compete for market share in emerging offshore acreage,” said Business Monitor International Ltd (BMI) Research.

The deal to create a company with $32 billion in annual revenue will combine GE’s strengths in making equipment long-prized by oil producers with Baker Hughes’s expertise in drilling and fracking new wells. GE will own 62.5 percent of the new publicly-traded company with BHI taking the remaining 37.5 percent stake, also with GE contributing $7.4 billion to fund a dividend for BHI shareholders.

The deal is expected to close in mid-2017. Lorenzo Simonelli, head of GE’s oil & gas business will lead the new entity, to be called “Baker Hughes, a GE company.”

GE is already the world’s largest oilfield equipment maker and it has invested heavily in large data processing services just as the oil industry eyes its potential to boost oil recovery. Baker Hughes, by contrast, is seen as one of the world leaders in horizontal drilling, chemicals used to frack and other services key to oil production.

The new company will vault Baker Hughes’s market share ahead of rival Halliburton Co, which tried and failed to buy Baker until the deal collapsed last May. GE and Baker Hughes will reach out to the Justice Department and European antitrust enforcers, according to a source close to the company. GE will argue to antitrust enforcers - who stopped the deal between Halliburton and Baker Hughes just months ago - that their deal is complementary, and that they are committed to any remedy needed to win approval, the source said, reported Reuters.

Merger complements, not substitutes

The melding of the two firms will significantly benefit both GE and BHI, producing a more efficient company that is significantly more integrated across the OFS supply chain. Though the deal is pending regulatory approval, it is likely to receive clearance given the limited amount of overlap between business units. With the exception of their Artificial Lift segments, the two companies are complementary, suggesting significant value creation via the new OFS entity. GE’s data capabilities will boost the efficacy of BHI’s top-tier equipment, enhancing their service offerings in a highly-competitive upstream market.

There is significant long-term opportunity in offshore given a continued focus on deepwater resources in a number of emerging and frontier markets. BHI’s offshore well construction, stimulation and intervention capabilities will complement GE’s well maintenance and control tools. This will allow the company to compete for share in West African and Latin American offshore markets including Brazil, Mexico and Nigeria, all of which we forecast will increase output over the next decade.

Gearing up for a new normal

Though oil prices will average higher as the market rebalances, OFS companies will remain under significant pressure to keep costs low. The forecast is a modest appreciation of oil & gas prices over the next decade, with crude expected to average below $70/bbl through 2020. This will encourage OFS providers to boost efficiencies and sharpen product offerings, thereby creating value for customers in a lower price environment, forecasted BMI Research.

Also, the deal comes at a time when North American oil & gas producers are putting rigs back to work after a near-freeze in activity caused by a slump in oil prices that began mid-2014. But the deal is predicated on a forecast for oil prices to rise to $60 per barrel by 2019, GE chief executive Jeff Immelt told investors, reported Reuters.

Global oil prices have risen by a third this year to near $50 a barrel.

Baker CEO Martin Craighead, who will become vice chairman of the new company said, “We see growth in any market environment. Our customers continue to spend massive amounts of money.” The industry-wide push for pumping more oil and natural gas at cheaper costs should only accelerate that trend, he said.

Source: Company data

ExxonMobil makes natural gas discovery onshore Papua New Guinea

IRVING, US: ExxonMobil Corporation has made a new natural gas discovery in the Papua New Guinea (PNG) North Highlands, 13 miles northwest of the Hides Gas Field.

The PNG is a joint venture comprising of ExxonMobil who owns (42.5 percent), Oil Search Limited (37.5 percent) and Barracuda Limited, a subsidiary of Santos Limited (20 percent) with Oil Search Ltd as an operator.

Oil Search began drilling the Muruk-1 well on 2 November 2016.

The well is located in petroleum prospecting license 402, which covers 126,000 acres (510 square kilometres).

The Muruk-1 well encountered similar high-quality sandstone reservoirs as the Hides field and was in line with pre-drill expectations. It was safely drilled to 10,630 feet (3,130 meters). Evaluation is underway to determine the size of the discovery.

“We are excited by the results of the Muruk-1 exploration well, which confirms the presence of hydrocarbons in the same high-quality sandstone reservoirs as the Hides field that underpins the PNG LNG project,” said Steve Greenlee, president of ExxonMobil Exploration Company.

“The Muruk exploration success demonstrates the strength of ExxonMobil’s long-term investment approach and reaffirms its commitment to Papua New Guinea. Over the coming months, we will work with our co-ventures’ to better determine the full resource potential,” said Greenlee.

Reliance Industries commissions new paraxylene plant in Gujarat

MUMBAI, INDIA: Reliance Industries Limited (RIL) declared that it has successfully commissioned the first phase of Paraxylene (PX) plant at Jamnagar, Gujarat.

This is a tribute to the visionary founder chairman of RIL, Shri Dhirubhai H Ambani, on his birth anniversary, said the company.

The plant with a capacity of 2.2 mmtpa is built with state-of-the-art crystallisation technology from BP which is highly energy efficient and environment-friendly. With the commissioning of this plant, RIL’s PX capacity will more than double from 2.0 mmtpa to 4.2 mmtpa. On commissioning of entire PX capacity, Reliance will be the world’s second largest PX producer with 9 percent of global PX capacity and 11 percent share of global production.

The new PX capacity will add value to the output from refineries and improve the profitability of the Jamnagar complex. PX is the building block for the entire polyester chain. The new capacity will complete the integration within Reliance’s polyester value chain, leading to improved margins and also strengthen its position in the polyester industry globally.

“Commissioning of the new PX plant marks beginning of the culmination of a series of projects including the refinery off-gas cracker, ethane import project and petcoke gasification. These projects are part of the largest contemporary investment, in excess of Rs. 100,000 crore, in Refining and Petrochemicals sector anywhere in the world,” said Mukesh Ambani, chairman and managing director, RIL.

“Our projects are on schedule and at an advanced stage of mechanical completion. The new PX capacity takes us a step closer to being among the top 10 petrochemical players globally,” added Ambani.

4 killed from pesticide poisoning at Texas: Officials

AMARILLO, US: Four children died after someone at their home sprayed water on an applied pesticide, causing a reaction that resulted in toxic gas, officials in Amarillo, Texas, said.

At least five other people were hospitalised in the incident.

Fire Captain Larry Davis said a family member used water to try to wash off the aluminium phosphide, which had been administered before. The incident preliminarily has been ruled an accidental poisoning.

There were 10 people inside the mobile home at the time of the incident, according to Davis.

It was unclear how long the home’s residents had been exposed to the poisonous gas.

The children ranged in age from 7 to 17, CNN affiliate KVII reported.

First responders went to the hospital for treatment of possible exposure. Several firefighters are being held for observation, according to KVII.

Aluminium phosphide is listed in the Toxicity Category I by the U.S. Environmental Protection Agency -- the highest and most toxic category. Specifically, the EPA points to the "acute effects via the inhalation route."

Stricter environmental regulations will drive demand for effective solvent-based low-VOC alternatives

By Prasad Kulkarni, Siddharth Jaiswal, Namita Shetty

In place since the 1970s, regulations limiting Volatile Organic Compounds (VOC) emissions in paint & coating products are getting stricter. Enforced by agencies such as the Environmental Protection Agency (EPA) in the US and legislations like the Registration, Evaluation and Authorization of Chemicals (REACH) in the EU, they are meant to limit the use of organic chemical compounds that are harmful to human health and contribute significantly to atmospheric ozone depletion as well as global carbon emissions.

Growing Demand for Low-VOC Paints Will Drive the Low-VOC Solvents Market

The global paints and coatings industry (worth over $135 billion) is one of the largest sources of man-made volatile organic compounds globally, prompting strict regulatory frameworks (particularly in industrialised regions) to limit its impact.

Besides government regulations, concerns over the effects of global warming and shifting consumer preferences toward ‘greener’ alternatives are also driving demand for low VOC paints and coatings over recent years, especially for indoor architectural applications.

This shift will invariably affect allied industries — particularly the paint solvents industry — creating a possible windfall for manufacturers of low-VOC solvent alternatives.

While the paints & coatings industry was their biggest customer in 2015, accounting for over 50 percent their total business, the global solvents market has been slowing down in recent years. Regulatory pressure forced paint manufacturers to shy away from solvent-based to water-based low-VOC formulations. Suppliers in growing markets like China and Latin America are under pressure as well, with several countries gearing up to formalise regulations related to VOCs in paints. With the US and EU expected to enforce additional restrictive regulations in order to limit VOCs over the next five years, solvent manufacturers are now hard-pressed to develop alternative technologies with comparable performance.

While most players are wary of the new regulations, this could be a huge market opportunity for alternative solvents that boast lower ecological and toxicological profiles.

Current Low-VOC Solutions May Fall Short of Meeting Inevitable Demand

Solvent suppliers are under growing pressure to cater to the growing demand for low-VOC raw materials in the paints and coatings industry. In a bid to regain the market share they’ve lost to water-based technologies, solvent manufacturers are developing and deploying products with properties that are similar (or comparable to) traditional solvents.

• Low/No-VOC solvents: To meet stricter VOC standards, solvent manufacturers like Dow have focused on developing low/no-VOC versions of their traditional solvents. These products possess properties and application characteristics similar to conventional solvents. Besides being cheaper than conventional solvents, low/no-VOC solvents are designed to be consumed by paint/coating formulators while using existing production equipment.

• Bio-solvents: Bio-solvents are developed using renewable raw materials as their feedstock, and they have lower VOC emissions as compared to typical solvents. Although bio-solvents have been available for the past ten to fifteen years, and some have even seen commercial success in niche markets, the industry is still underdeveloped. Most of the world’s large chemical corporations do not sell bio solvents, and only niche industrial solvent manufacturers such as Myriant and TBF Environmental Technology offer bio-based solvents.

Solvent Manufacturers Need to Focus on Rapid Development and Commercialization of Low-VOC Solvent Technologies

While a step in the right direction, paints/ coatings formulated using current low-VOC technologies have some drawbacks. Issues such as visible brush marks (they tend to dry faster than conventional solvent-based paints) and plasticizing make traditional solvent-based systems more appealing to paint/coatings consumers over non-solvent based technologies, and manufacturers offering improved low- VOC solvent-based system could recoup their markets. Manufacturers need to increase their research and development efforts in solvent-based low-VOC offerings, with a focus on enhancing product properties that make them comparable to conventional solvents. While it would require considerable investment to improve on current performance and features, solvent manufacturers that fully commercialise new and improved offerings within the next 5-10 years would be in a prime position to capitalise on the inevitable demand for low-VOC solvent alternatives.

Authors: Prasad Kulkarni is Senior Manager, Business Research & Advisory practice at Aranca and currently heads the Chemicals and Oil & Gas sector.

Siddharth Jaiswal is Assistant Manager for Chemicals sector at Aranca’s Business Research and Advisory practice.

Namita Shetty is a Senior Consultant at Aranca’s Business Research and Advisory practice.

Specialty Chemicals Market explores vigorous size & growth during 2015-2021

FLORIDA, US: Speciality chemical industry is one of the creative, entrepreneurial, and shopper driven ventures. These Specialty chemicals include low-volume, high-esteem chemicals with particular applications and constitute a noteworthy part of the Indian chemical industry, as per Zion Market Research.

Specialty chemicals are high value added products that are utilized as catalysts, intervenes, constituents, protectants, or additives in different products and applications. Speciality chemicals are in some cases alluded to as "performance" chemicals, or "effect" chemicals, or "formulation" chemicals. Specialty chemicals are usually utilized in low amounts (not in mass) and are focused on towards particular end-use applications. The physical and chemical qualities of these chemicals impact the performance of end products.

Specialty chemicals are comprehensively divided into agrichemicals, including, insecticides, herbicides, and fungicides; glues; food additives, that include, salt, sugar, and vinegar; cleaning materials; cosmetics additives; construction chemicals; elastomers; flavors; mechanical gasses; polymers; surfactants (emulsifiers, frothing operators and dispersants); material assistants; and ointments. The previously mentioned sorts can be further sub-portioned on the premise of technology, function, applications, type, and plastic type. Specialty chemicals can be sub-sectioned in light of end-user industries. The major end-users of Specialty chemicals are the automotive, food, aviation, cosmetics, manufacturing, agriculture, horticulture, and textile businesses.

Rising need for these chemicals at the end user industries due to their physical and chemical qualities emphatically impacts the worldwide market growth. Growth in population, diminishing arable land, expanding the requirement for development in harvest yields, and growing construction sector are a portion of the factors affecting the development of Specialty chemicals, such as, pesticides, Specialty coatings and surfactants, and construction chemicals. Furthermore, these chemicals are progressively utilized as a part of water treatments. The introduction of more complex water treatment technologies, such as, ion-exchange includes use of Specialty chemicals in modern water treatment. Furthermore, rising R&D exercises for the advancement of imaginative items to meet ecological regulations will offer adequate openings for the development of worldwide Specialty chemicals market.

Asia Pacific leads the worldwide Specialty chemicals market is determined to witness the most elevated development in the near future. Increasing demand in the major end-user ventures including automotive, construction, agribusiness, packaging, textile, personal care, and gadgets alongside with rising infrastructure investments; and development of environment-friendly products offer plentiful revenue generation chances to the makers of Specialty chemicals. Expanding mechanical exercises in creating nations, for example, India and China will build the interest for strength chemicals in these nations.

Then again, few government directions on the use of several chemicals in food processing industry and other manufacturing industries may ruin the development of global speciality chemicals market.