Chemical Update

An increasing flow of commodity and specialty chemicals from China, India, the Middle East and Eastern Europe have chemical buyers participating in a more complex global supply chain. The upshot: New concerns for chemical buyers such as volatile energy costs in various global markets, logistical bottlenecks, changes in distribution channels, quality and safety concerns and intricate global economics/currency issues are all adding to the challenges of effective chemical sourcing, Purchasing reports.

Bob Zieger, category manager at Sunnyvale, Calif.-based procurement services provider Ariba, puts it this way: "Effective sourcing of specific chemicals requires a basic understanding of their cost drivers and supply and demand links." And those factors are not the same worldwide.

"Global trade is robust for many commodity chemicals and regional market conditions are often variable and volatile," adds Zieger. As with most international purchases, he says, it is important to understand the total landed-cost elements in sourcing chemicals, including duties and tariffs, since logistics costs can be a significant cost factor in lower value chemicals.

Zieger points to challenges in purchasing specialty chemicals, specifically, in overseas markets. "Supply bases are typically narrower and the number of qualified sources is usually reduced as the level of chemical compound customization increases. Security of supply and cost containment can be challenging without viable alternatives."

Zieger adds that when dealing with specialty chemicals, the emphasis is usually on technical aspects and quality-control capabilities, which require greater supplier oversight and due diligence.

Long-time purchasing executive Vaughn McCoy, senior global procurement manager for Kingsport, Tenn.-based Eastman Chemical, says today, "There is a global flow of chemicals that did not exist five to ten years ago that is having a significant impact on competition in the chemical industry. We see manufacturing locations and logistics as key cost drivers of our international chemical purchases."

McCoy takes a global view of the chemicals market. "You can look at the cost of feedstocks, petroleum and natural gas specifically, to see where the international chemical market is migrating," says McCoy. And a lot of it is not in the U.S. He says that in addition to chemical plant development in China, Saudi Arabia, with its access to petroleum, is building gigantic chemical plants that will dramatically increase petrochemical supply. Middle Eastern markets are also developing technology-based joint ventures with western chemical companies.

And India, having gained expertise in current good manufacturing practices, also is building up its chemical infrastructure, especially concentrating on working with specialty chemicals for the pharmaceutical industry.

The article notes that there are about 1,500 chemical manufacturing projects current in process, with 80–90% of the new capacity coming online in Asia and Europe.

U.S. Paper Chemicals Demand to Reach $8.8 Billion by 2011, per Reportliner.com

U.S. demand for pulp and paper chemicals is projected to reach 20 billion tons in 2011, valued at $8.8 billion, according to the new “U.S. Pulp & Paper Chemicals Market” report by Reportlinker.com. This demand will be supported by increases in paper and paperboard production, as well as the need to comply with stringent environmental standards, the report notes.

Commodity chemicals such as calcium carbonate and clays will continue to be the largest products (by quantity) consumed in the pulp and paper industry. Through 2011, specialty additives are expected to record the fastest growth. Among the specialty additives, products such as biocides and deposit control agents, and retention and drainage aids, should continue to experience the fastest gains. Growth will be based on the increasing use of recycled fibers and reuse of water, which put greater strain on machinery and equipment. Further supporting demand are ongoing efforts to reduce mill emissions as well as efforts to reduce production costs by using higher filler loading levels, which require the use of greater quantities of specialty additives.

Fillers and coating pigments will continue to be the largest pulp and paper chemical segment. During the past decade, calcium carbonates (especially precipitated varieties) have taken significant market share from clays in paper and board fillers and coatings, so that they have now surpassed clays in this segment. This trend should continue, supported by greater demand for brighter printing and writing papers, which can be achieved with calcium carbonates at a lower cost than competing products, such as titanium dioxide or kaolin clay, the report concludes.

Paper mills, the largest end-user of pulp and paper chemicals, are expected to record the fastest growth in chemical demand through 2011. More specifically, the printing and writing papers and tissue paper markets will provide the best opportunities. Demand for pulp and paper chemicals in these markets will result from increases in production of these paper grades, as well as stricter requirements, such as increased brightness and printability for printing and writing papers, and increased softness and wet strength for tissue paper. In addition, the use of recycled fibers and other environmental issues will encourage a shift in product mix to higher value chemicals.

First India Chemical Industry Outlook Conference, April 15-16, 2008

Chemical Week and the Indian Chemical Council, responding to India's explosive growth, have teamed up to create the first India Chemical Industry Outlook, to be held 15-16 April, 2008 in Mumbai. This event is the only chemical conference in India that addresses the full spectrum of issues impacting the country's chemical sector at this important moment of expansion.

The chemical industry in India is poised for rapid development in the coming years. India's consuming middle class and the population's disposable income are expanding, potentially driving growth of demand at exponential rates; the government has set in place special economic and investment zones for the chemical sector; and several of the country's chemical and oil majors have announced aggressive investment plans.

The India Chemical Industry Outlook, to be held in Mumbai, will take a look at key segments of the Indian chemical industry and explore the growth opportunities and challenges in each segment. India's climate for mergers and acquisitions will also be examined.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, says, "The Indian market for petrochemicals will increase four times in the next ten years. It will witness a sustained double-digit growth rate. This growth would be faster than that of China."

For more information, visit www.chemweek.com/india.

UAE Industrial Vigor Continue

UAE Industrial Vigor Continues

The UAE has been riding on the back of a robust economy with big initiatives in the non-hydrocarbons sector and diversification poised to gather even greater momentum in the near future.

The federation is now one of the Arab world’s leading powerhouses, having attracted large foreign direct investments and developed regional and international trade at a remarkable pace. GDP was expected to touch nearly Dh700 billion ($190.7 billion) against approximately Dh600 billion in 2006, which itself was a 23.4 per cent advance over the previous year.

Fuelling the drive towards greater diversification is the UAE’s unique string of free zones and industrial cities as well as investments in huge projects such as Dubai World Central comprising what will be the world’s largest airport at Jebel Ali and Dubai Logistics City, among other facilities. Transport and communications have reached new heights with the main seaports in Dubai and Abu Dhabi undergoing large-scale expansions and the Dubai Metro having just completed a trial run. The UAE is also looking forward to linking the Dubai Metro to other emirates within the country and to a proposed GCC network, the latter with potential to expedite cargo movements. The emergence of a single GCC market could enhance the roles of various industrial hubs in the UAE greatly facilitating trade with the grouping.

Dubai’s expertise in running free zones and managing ports has been exported with Dubai World already involved in projects across the globe. Dubai Ports World, a subsidiary of Dubai World, has 42 terminals and 13 new developments across 27 countries.

Another subsidiary, Dubai Dydocks World, has completed major expansions at its Dubai yard and plans investments in Asian yards to become one of the world’s most successful shipbuilding and ship repair companies in the world. Already proceeding towards that mark, it paid last year $424 million to acquire Singapore shipbuilder Pan-United Marine and $1.6 billion to buy the city-state’s offshore oil-rig builder Labroy Marine.

Currently there are around 30 free zones operating in the country. Some 6,000 business entities are ensconced in the largest of them, the Jebel Ali Free Zone. The nearby Dubai Airport Free Zone is home to more than 1,150 tenants. Companies located at Sharjah’s Hamriyah Free Zone have crossed the 1,000 mark. Ajman, one of the fastest growing free zones, has 2,700 tenants, while 3,400 companies are operating at the Ras Al Khaimah Free Zone.

At Dubai Industrial City, one of the newest industrial enclaves, the aspiration is that companies will invest around $15 billion by 2015. Among the enterprises signing up in recent months are Al Habtoor, which is creating a distribution and warehousing facility for its various vehicles brands, Taher Al Taheri Trading which is setting up a juice plant, and ALEC, a construction firm which has set up its headquarters in the city.

Spurring trade and commerce is the UAE’s flourishing events industry with Dubai and Sharjah serving as leading players and Abu Dhabi catching up fast. Not least among the initiatives are the huge real estate projects to create apartments and leisure facilities on reclaimed land and newly created islands. One of the buildings will be the world’s tallest.

The flourishing construction industry has boosted the output of local manufacturers of building materials including steel and glass products, aluminium extrusions and basic material such as cement and tiles.

Economy Minister Sheikha Lubna Al Qasimi observed recently that the UAE economy rested on strong fundamentals that were not merely oil-driven. She said sectors such as tourism, education, media, health, industry and finance had evolved as ideal platforms for enhanced investment.

“The economy has performed admirably over the past few years and is posed to forge ahead with assertiveness and confidence. All-round development is perceptible in every emirate offering more opportunities for investors and making rapid strides in developmental initiatives,” she said in a message recently.

UAE Central Bank Governor Sultan Al Suweidi commented that with high oil prices the economy would continue to do well. He highlighted that the GDP had been growing at a rate of more than 10 per cent in the last 10 years.

Industrial activity is set to continue its amazing run, both as a result of funding from within the country and foreign direct investment (FDI). According to the Ministry of Economy, FDI came close to $19 billion in 2006, up 10.8 per cent and among the highest in the world per capita.

Total, which has invested heavily in the hydrocarbons industry in the UAE, will be one of the main investors in a project to develop two third-generation nuclear reactors in the country. The other main investor will be Suez, and both will collaborate with nuclear reactor maker Areva

The wheels of commerce and industry are moving fast. The UAE has initiated huge infrastructure and manufacturing projects, some of them involving the inflow of overseas investment, but all certain to encourage ancillary industries.

Among the prominent initiatives are the $33 billion Dubai World Central; the $7 billion Dubai Festival City; the $4.3 billion redevelopment of the Dubai World Trade Centre and the $2.7 billion creation of Dubai Exhibition World.

Another major project, the Dubai Metro, will be completed fully in 2009 at a cost $15.5 billion.

Dubai is planning to build a massive power and desalination complex that will cost up to $15 billion and produce 9,000 MW of electricity and 600 million gallons a day of desalinated water.

Abu Dhabi is expected to spend $200 billion in the next five years on urban development. Part of Plan Abu Dhabi 2030, it includes a water transport system, a railway and a metro.

Abu Dhabi Ports Company is implementing a $10 billion port and industrial zone. The industrial zone will feature industrial clusters for base metals, transport vehicles assembly, chemicals, shipyards and building materials. By 2028 the Khalifa Port will be geared to handle 37 million tonnes of general cargo and 5 million containers per year.

A sour gas project is being implemented in Abu Dhabi at a cost of more than $10 billion. It will boost sour gas output by around a billion cu ft per day and require the installation of four sulphur-processing units to treat the gas.

The $3.3 billion Emirates Global Capital Corporation (EGCC), which was incorporated in April 1999, has been granted a 50-year concession by Saadiyat Free Zone Authority (SFZA) to establish a major new commodities market and free zone on Saadiyat Island near Abu Dhabi city.

Borouge has signed contracts worth approximately $3.1 billion for its second phase, a major expansion project at the company’s production facilities in Ruwais, Abu Dhabi. Also in the emirate, construction is ongoing to set up the world’s largest single-site aluminium smelter of Emirates Aluminium (Emal) whose second-phase production will reach 1.4 million tonnes per year.

The UAE is, in fact, leading the Middle East in initiatives for greenfield aluminium smelters and expansions, whether locally or overseas. Dubai Aluminium (Dubal), which is jointly developing the Emal project with Mubadala, recently signed an agreement with Emal under which it will lend its in-house-developed proprietary DX reduction cell technology.

Dubal will complete soon its own expansion that will take production capacity from 890,000 tonnes per year to 945,000 tonnes.

State-owned Abu Dhabi Basic Industries Corp (Adbic) is in final talks with Rio Tinto Ltd/Pic to develop a three-phase aluminium smelter in the UAE with each phase consisting of 700,000 tonnes per year of capacity.

The UAE has made sure it will receive the main raw material alumina for its smelters having taken a 33 per cent stake in a bauxite mining company in Guinea.

Adbic is also in the process of establishing a polymer park near Mussafah, one of three clusters it is setting up, the other two being aluminium and steel. The company has set massive expansion plans for Emirates Steel Industries and will invest billions of dirhams to boost the emirate’s steel and plastic industries.

Source: Gulf Industry

Kuraray Expands Vectran Fiber Production

Kuraray Co., Ltd. (Fort Mill, S.C.), a leader in the synthetic fiber industry, has completed expansion of its trademarked Vectran fiber manufacturing facility in Saijo City, Japan. The company’s manufacturing facility in Fort Mill, S.C. has also undergone recent improvements, in preparation for additional capacity set to come on-line in May 2008.

The company said it is increasing production of its Vectran fiber by 40 percent, to 1,000 tons annually. This fiber is the world’s only multifilament yarn melt spun from liquid crystal polymer (LCP) and is used in a wide range of applications where strength, durability and dimensional stability are critical to performance and safety.

These high-performance fibers are marketed around the world in more than 50 segments, from ropes and cables, to aerospace, military, industrial, composites, recreation and leisure, and cut resistance. Vectran’s uses range from deep sea heavy-lifting systems and helicopter slings to puncture-resistant bicycle tires, inflatable wind-turbine generators, sails and NASA space systems.

Vectran fiber was originally developed by Hoechst Celanese as a tire cord fiber in the early 1980s. Kuraray purchased the Vectran business from Celanese Advanced Materials in 2005. Before buying the division, Kuraray manufactured the product under a licensing agreement with Celanese.

Texas Chemical Industry Helps Boost Houston to 2nd Place Among U.S. Exporting Cities

Houston’s new ranking as America’s No. 2 exporting city is substantially rooted in sales to other countries by the Texas Chemical Industry, one of the state’s largest employers and taxpayers.

Data gathered by the U.S. Department of Commerce and reported recently in the Houston Chronicle shows that local chemical companies exported more than one third ($18.9 billion) of the $53.3 billion in exports credited to Houston in 2006. The Bayou City surpassed Los Angeles as an exporter for that year – the latest for which statistics are available – and was second only to the New York City region.

Texas is home to dozens of chemical manufacturers whose materials go into a huge array of consumer products, making them more effective and resilient. Examples include nitrogen (extends shelf life for potato chips), carbon black (used to make ink for pens), polyethylene (used to create plastic food bags) chlorine (for disinfecting bottled water) and cetyl alcohol (for moisturizing hand lotion).

Celanese Signs Deal With Southwest Research And Design Institute Of Chemical Industry

Celanese Corp. announced that it has entered into a definitive agreement with Southwest Research and Design Institute of Chemical Industry, or SWRDICI, that will accelerate Celanese's research and development efforts in acetyls. Terms of the deal were not disclosed.

The company said that SWRDICI would collaborate exclusively with Celanese to jointly develop technological advances in the production of acetic acid and other acetyls.

PTT Chemical Plans to Raise 10-14 billion baht

PTT Chemical PCL (PTTCH) said recently it planned to raise 10-14 billion baht ($312-$437 million) on domestic markets in the second half of this year to help finance capacity expansions.

PTTCH, Thailand's biggest olefins maker, would spend 36.6 billion baht on the expansions this year, senior executive vice president Panada Kanokwat told reporters.

"The investment budget is higher this year because of spending delays from last year," Panada said. "We need ten to fourteen billion baht to spend on the projects, which can be from both loans and bonds from domestic markets," she said.

Olefins spreads would rise to $490 per tonne this year from $485 per tonne last year, with ethylene prices down in the fourth quarter and next year as new plants in Saudi Arabia and Kuwait started production, fellow executive Puntip Oungpasuk said.

The spread of high density polyethylene (HDPE) would rise to about $700 per tonne this year from $666 per tonne of last year, she said.

The spread on monoethylene glycol (MEG), which helped boost its revenues last year, would fall to $370 per tonne this year from $450 per tonne last year as a plant in Saudi Arabia resumed operation after a shutdown last year, she said.

PTTCH produces ethylene and propylene, together called olefins, used to make plastics and bottles, especially for the packaging industry. It a flagship in the olefins petrochemical business of top energy firm PTT PCL.

The company said in a statement it was aiming to increase revenues 15 percent over each of the next five years to 2012.

Yushiro Chemical Industry Plans New Subsidiary in India

Japan-headquartered Yushiro Chemical Industry, a manufacturer of metalworking fluids, is planning to set up a wholly-owned subsidiary in India with a view to further expand its business with clients such as Toyota Kirloskar Motor, Suzuki Powertrain India, Maruti Suzuki, Honda Siel and Yamaha Motor India, amongst others, Hindu Business Line reports.

The company, in November 2005, has a joint venture company in Chennai with its Korean partner Buhmwoo Chemical Industry Co Ltd, to cater to the automotive manufacturers located in India such as Hyundai Motors India Ltd. Buhmwoo Chemical Industry holds 76.52 per cent stake in the joint venture ‘Yushiro Buhmwoo India Co Pvt Ltd’, while Yushiro Chemical Industry has 23.48 per cent shareholding. However, Yushiro does not have any technology collaboration license agreement or technical collaboration agreement with the joint venture company.

Yushiro is now proposing to set up a company in northern India for supply to its clients products such as metalworking oils and fluids (cutting and grinding oils and fluids, forming oils and fluids and surface treatment agents); products for hi-tech area (cutting oils and fluids for silicon/crystal/ceramics and cutting oils and fluids for non-metal materials; and products for related areas, sources said.

Initially, Yushiro India would function as a sales company to import and sell the products in Indian market until they set up production facility and start commercial production in the country.

Under the current policy, a prior approval from the Foreign Investment Promotion Board (FIPB) is required under Press Note 1 (2005 series), since the proposed company in India would manufacture the products in the same field as the products manufactured by YBI.

Yushiro has already obtained a ‘no objection certificate’ from Yushiro Buhmwoo (India) co Pvt Ltd, sources added.

Ineos Group Expands in Europe and Asia
Ineos Group Expands in Europe and Asia
Ineos Group companies continues to march forward with acquisitions and expansion plans to grow the company, reports Industrial Info Resources. Ineos is now the No. 3 chemical company in the world with 80 manufacturing facilities in 20 countries. The European Commission recently cleared the purchase of the Hydro Polymers businesses in Norway, Sweden and the United Kingdom from Norsk Hydro (OTC:NHYDY) (Oslo, Norway).

The deal also covers the balance of 50% of the Noretyl ethylene cracker at Rafnes. Ineos Group acquired the initial 50% from Borealis in 2007. The chlor-alkali, PVC and compounds businesses in the deal have excellent synergies with Ineos' existing portfolio and will be integrated into the company's ChlorVinyls and Ineos's Films & Compounds divisions. The company now becomes the chlor-vinyls market leader in Europe.

In another deal, which will be completed by the end of March, Ineos Enterprises will acquire the full shareholding in Ineos Asiatic Chemical Company (IACC) in Bangpoo, Thailand. Ineos will take over the 40% shareholding of the local partner EACT to become the sole owner of IACC. The Thai company manufactures the proprietary Cereclor chlorinated paraffins and other blended products. Ineos is now working on a project to debottleneck the chlorinated paraffin plant to increase production capacity. IACC turned over about $13 million in 2007.

Ineos Polyolefins announced that it will invest in random co-polymer technology on its liquid pool polypropylene (PP) units at Grangemouth, Scotland. Ethylene supply from the company's crackers will be linked to the PP unit to produce random co-polymer grades with a wide range of melt flow rates starting in the third quarter of 2008. These products will be marketed to the blow molding, packaging and medical sectors.

De-bottlenecking of the 50,000-ton-per-annum (TPA) liquid pool polypropylene unit at Grangemouth raised capacity in this unit to 285,000 TPA in early 2007. The company now intends to introduce swing capability on its 310,000 TPA LLDPE plant to produce HDPE grades. Rotomolding grades have recently been developed at the site, and ICO Polymers has been appointed as an exclusive partner to distribute Ineos's range of advanced hexane co-monomer rotomolding polymers. These investments will create a robust production platform throughput Europe and support the company's leading market position.

Also, the Ineos group received clearance from the EU competition authorities for the acquisition of BP's (NYSE:BP) (London) vinyl acetate monomer and ethyl acetate businesses. The deal covers 500,000 TPA of production capacity at Saltend near Hull in northeast England and the Teeside to Saltend ethylene pipeline. The deal broadens the company's portfolio of oxygenated solvents and also allows for the optimization of links between the Hull and Grangemouth manufacturing sites.

Sipchem Confirms Saudi JV Talks with Ineos

Saudi International Petrochemical Co. has confirmed CWs exclusive report that the company is in discussions with Ineos to form a joint venture that will build a previously announced multibillion-dollar petrochemical complex at Al Jubail, Saudi Arabia. Ahmad A. Al-Ohali, president and CEO of Sipchem, told CW recently that Sipchem is discussing a key part of the project with Ineos. "The whole complex would be too big for Ineos so we are talking to them to become partners in the cracker and polyolefins plants," Al-Ohali says. Sipchem, a private-sector group, received the Ministry of Petroleum and Minerals (Riyadh) most recent allocation of feedstock for petchem production in Saudi Arabia.

The allocation was announced several months ago. Sipchems planned petchem complex at Al Jubail is highly diversified, comprising about 15 separate plants. The feedstock allocation is for 35% ethane and 65% propane, Al-Ohali says. The complex gas cracker and polyolefin units will have capacity to produce 1 million m.t./year of ethylene, 215,000 m.t./year of propylene, 500,000 m.t./year of high-density polyethylene (PE), and 250,000 m.t./year of EVA low-density PE. Sipchems plans encountered a setback last year when the Saudi government asked the company to find an alternative partner to Hanwha Chemical, which had been negotiating to join the project until Hanwhas chairman Kim Seung-youn was jailed in Korea for assault. "We were negotiating with them to become our partner but the ministry did not think they were suitable, so we are back to the drawing board looking at different concepts," one Sipchem source tells CW. Sipchems choice of partner has to meet the ministry’s conditions, which include know-how, technology, and R&D requirements, Al-Ohali says.

The project will have "more than one partner because it is too big for just one," he says. Ineos agreed earlier to license its acrylonitrile technology for a 200,000-m.t./year plant that will form part of the Sipchem complex. Sipchem is also negotiating a JV with Lucite International to build a 250,000-m.t./year methyl methacrylate plant as part of the complex. Other downstream plants planned for the complex will make products including ethylene vinyl acetate, carbon fiber, ethylene vinyl alcohol, polyvinyl acetate, polyvinyl alcohol, polyvinyl butyral, polyacrylonitrile, sodium cyanide, and PE pipe and film.

Kemrock to Acquire Top Glass SpA

Kemrock Industries & Exports Ltd (Gujarat, India) has announced that it has reached an in-principle understanding to acquire the business of Top Glass SpA (Osnago, Italy). The deal was negotiated and agreed in-principle on Feb. 8, 2008, by Kalpesh Patel, chairman and managing director of Kemrock and Mr. Alfonso Branca, managing director of Top Glass, as reported by the Web site www.equitybulls.com.

The acquisition, subject to customary due diligence, will enable Kemrock to integrate Top Glass’ technical capabilities in pultrusion with Kemrock’s growing reputation as a major Asian composites manufacturer employing all the major process technologies.

Top Glass will remain an autonomous entity as a subsidiary of Kemrock.

Dow Corning Expands Polymer Production for Silicon-Infused Bilayer Photoresist

Dow Corning Electronics announced that it is more than doubling its production capacity for the silicon polymer resin used to produce an innovative bilayer photoresist for semiconductor manufacturing.

In December 2006, Dow Corning and TOK announced that they had jointly developed a bilayer photoresist using a proprietary Dow Corning silicon polymer resin in the imaging layer, which provides improved etch selectivity for chip makers' 193nm lithography processes. In December 2007, the companies announced that the bilayer photoresist is now being used in production by a memory chip manufacturer.

Lanxess to Build 400-mln euro Rubber Plant in Singapore

Lanxess AG, the German chemical manufacturer spun off from Bayer AG, said recently that it will invest 400 million euro to build a rubber plant in Singapore.

The new chemical facility for synthetic rubber, located at the chemical park on Jurong Island, is due to begin construction in 2009 and will be completed by the end of 2010, Chief Executive Axel Heitmann announced at a press conference here.

From 2011, the new plant will produce up to 100,000 tons of butyl rubber annually that are used in the production of tires, making it the largest facility of its type in Asia.

"By setting up this new location in Singapore, Lanxess is responding to the significant growth in global demand for butyl rubber," said Heitmann.

The global market for butyl rubber will rise steadily in the coming years, especially in China and India. The demand from China will grow 6 percent annually and that India more than 8 percent, according to Lanxess.

The single largest investment of Lanxess was also a nice shot in the arm for Singapore's chemical industry, said Aw Kah Peng, official of Singapore Economic Development Board. Lanxess' high value-added project is "a superb demonstration" of Singapore's strategic intent to extend its higher olefins chemistry chains, she said.

The output from the chemicals cluster now stands at 82 billion Singapore dollars (about 58 billion U.S. dollars), surpassing electronics as the largest contributor to Singapore's manufacturing output at nearly 34 percent, according to Aw. Singapore attracted Exxon Mobil and Shell to build petroleum crackers here last year.

Dow, Gazprom, and Sibur Consider Baltic Coast for Petchems JV

Dow Chemical, Gazprom, and Gazprom's Sibur petrochemicals subsidiary are looking to establish a petrochemical joint venture project on the Baltic coast in Russia, Sibur president Dmitry Konov tells Chemicalweek. Sibur's previously announced plans for a large petrochemicals project at Orenburg, Russia are separate form the discussions with Dow, Konov says. It will take 2-3 years to finalize agreements between Dow, Gazprom, and Sibur, and the planned petchem complex, inlcuding a wold-scale, 1-million m.t./year ethylene plant would come onstream in about eight years, according to Viktor Viehweg, head of corporate strategy at Sibur The plan involves transporting gas from the area around Urengoi, western Siberia via a 3,000-km pipeline to the Baltic coast. An existing pipeline owned by Gazprom would need to be modernized and extended by a 600 km to reach the desination, Viehweg says. Dow is not interested in the upstream part of the project and would only be involved in the petchem plant, Viehweg says. Primorsk, Russia--located on the Baltic--was once considered as a possible location for such a complex, but that has now been discounted because it is a densely populated area. "We have signed a memorandum of understanding that says the three parties will look at the configuration of a project and prepare a joint dedvelopment agreement for a project of a yet-to-be designed configuration," Viehweg says. That would involve the transportation of light hydrocarbons from western Siberia to the central part of Russia and to the petrochemical complex on the Baltic Sea, and may also be an opportunity to include Dow's assets in eastern Germany, as suggested by Dow. The German part of the plan is unlikely to materialize, however, Viehweg says. "President Vladimir Putin has declared that exporting light hydrocarbons for processing abroad is equivalent to exporting crude oil," he says. The target is to add value to hydrocarbons locally, he adds.

PetroChina: Unipol Process for new PP Plant at Fushun

PetroChina has chosen the Unipol process of Dow Chemical (Midland, Michigan / USA; www.dow.com) for its new polypropylene facility at Fushun in Liaoning Province, northeastern China, scheduled to come on stream in 2010 with a capacity of 300,000 t/y. Aker Kvaerner (Lysaker / Norway; www.akerkvaerner.com) has won the construction contract. PetroChina chose the same constellation for the PP production line currently under construction in Chengdu, Guangxi / China. It is also building PE production facilities at both Fushun and Changdu.

Kuwait Petroleum to Set Up Integrated Oil Refinery in India

Kuwait Petroleum Corp (KPC) announced recently that it was contemplating setting up of a multi-billion dollar world scale integrated oil refinery cum petrochemical complex in India.

Discussions on forging an alliance with an Indian partner for this project were held between KPC’s senior brass and the managements of Reliance and Indian Oil Corporation (IOC) over the last two days. Chief executive of KPC, Saad Al-Shuwaib met Reliance Industries officials in Mumbai on Wednesday and called on petroleum minister Murli Deora on Thursday followed by a meeting with the IOC board over lunch.

Shuwaib said his company was not keen to invest in an existing refinery project but will go for a new grassroot project in India. “We have talked to RIL and IOC officials. We intend to finalise a partner as soon as possible,” he said.

The size of the oil refinery project could be anywhere around 12-15 mtpa along with a chemical plant with an annual capacity of one million tonne. The Kuwaiti national oil company would process Kuwati crude oil in the refinery and plans to export fuels and chemicals from the proposed plants in India.

After his meeting with Al-Shuwaib, Deora said KPC may be interested in IOC’s proposed 300,000 barrels per day refinery at Ennore in Tamil Nadu. IOC and its subsidiary CPCL are planning investment of over $6 billion by 2015-16 in setting up the refinery-cum-petrochemical complex at Ennore, for which a request for 3,500-4000 acres of land has already been placed with the state government.

Shuwaib said KPC was not looking to buy stakes in existing Reliance refineries. The proposed greenfield refinery project will be an export-oriented unit and will use the Kuwati crude. Kuwait Petroleum will be increasing its crude oil exports to India once the project is finalised.KPC managing director (international marketing) Abdullatif A. Al-Houti said KPC withdrew from IOC’s 150,000 barrels per day Paradip project some years ago as it was interested only in an integrated refinery-cum-petrochemical complex.

“Now, they have changed the configuration of the project (to include a petrochemical plant and doubling capacity). We are looking into that (too).”

Shuwaib said he saw India’s excess refining capacity not a deterrent in the company’s plans and felt the export-oriented unit would be very much viable. “Yes, we feel it will be viable. We always said we wanted to invest (in refineries) in Asia (and) India is one of the strategic places for us,” he said.

Similar plans on setting up a refinery-cum-petrochemical unit have been announced by KPC with China’s Sinopec. Asian and Middle East nations are building more than a dozen new refineries to feed demand in developed nations, where there has been little capacity expansion in recent years.

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