ADI Chemical Market Resources Newsletter
February 8, 2010

AMERICAS

LyondellBasell Updates

China Petroleum & Chemical and TPG may acquire LyondellBasell

China Petroleum & Chemical Corporation (Sinopec) and TPG Capital, L.P. (formerly Texas Pacific Group) are planning a joint bid to acquire LyondellBasell Industries AF S.C.A.Reliance Industries Limited have previously submitted a preliminary non-binding offer to acquire a controlling interest in LyondellBasell in a transaction valued at approximately USD 12billion.

Private equity firm Apollo Management, L.P. may also be in the race to acquire LyondellBasell.Evercore Partners is acting as financial advisor to LyondellBasell.

Comments: LyondellBasell is now continuing its efforts to progress toward getting the reorganization plan approved so that it can emerge from bankruptcy. Of many items in the reorganization plan, one item involves the steps to settle the disputes among creditors -the Lender Litigation Settlement. In December 2009, LBI announced the intended steps to achieve the goal, as part of which LBI has 1) filed a motion to approve a settlement of various claims asserted against its pre-petition secured senior and bridge lenders (the Settling Lenders) 2) filed a motion to approve an Equity Commitment Agreement it entered into on Dec. 11, 2009. Now a hearing date for this is set for February 11, 2010.

LyondellBasell specifically clarifies the Lender Litigation Settlement as follows: The Lender Litigation Settlement, which is subject to court approval, would resolve various claims against LyondellBasellprepetition secured senior and bridge lenders alleging that their liens and guarantees should be avoided by, among other things, (a) providing USD 300 million to be shared among general unsecured creditors of relevant debtors and (b) establishing and funding a litigation trust to pursue certain claims against parties other than the Settling Lenders for the benefit of those general unsecured creditors. Approval of the Lender Litigation Settlement will help pave the way for LyondellBasell’s emergence from Chapter 11.

As far as the Reliance bid to take over LyondellBasell (for its, global presence; propylene; and polyolefin technologies and markets –the probability is reducing with time –people are indicating the probability of Reliance taking over, currently stands at a mere 50%.

Dow CEO predicts better prospects in 2010

Dow Chemical returned to profit in the fourth quarter on strong volume growth, particularly in emerging economies, and strong performance at its Mideast and Dow Corning joint ventures. The company reported a fourth-quarter net income of USD 178 million reversing a loss of USD 1.55 billion in the year-ago quarter. The sales loss in North America and Europe were well compensated in Asia-Pacific and Mideast regions, resulting in overall gains for the company.

Plastics-related businesses accounted for about 40% of Dow’s segment sales in 2009, equally divided between Basic Plastics (polyethylene, polypropylene, styrenics, and polycarbonate) and Performance Products (polyurethane, epoxy, and other specialty materials).

In 2010, Dow will continue to look for partners for its commodity plastics units and a buyer for its Styron styrenics business. The company reduced its workforce, shut plants, and sold assets last year to buoy earnings and pay off a loan used to buy Rohm & Haas Co. during the recession.

The following have beenDow’saccomplishments in 2009.

Reducing overall debt by USD 2.5 billion since April 1

Reduced the workforce by over 4,000

Eliminated several back-office, IT, and administration functions in the U.S through outsourcing and/or offshore -in sourcingSoldUSD 3 billion of non-core assets, including the Morton Salt unit of Rohm and Haasexcept the tie layers –the main reason for acquiring the Morton group..,

Meeting 70% of its two-year target of USD 2.5 billioninRohm and Haas-related savings

Paying off an acquisition-related bridge loan ahead of timeEstablishing a Dow-record USD 1.6 billion research and development budget for 2010 and continued emphasis on basic R&D into alternate energy and new materials.

Dow continues to follow the K-Dow issues through the courts.

Comments: The year 2009 was a tough year for most chemical companies but particularly so for Dow. The dissolution of the K-Dow deal after Dow already committed to the purchase of Rohm and Haas forced Dowtake drastic measures to improve the company’s financials. The listed five accomplishments in 2009 strongly indicate Dow’s ability to rebound under unprecedented adverse conditions –partly helped by the end of the global crisis.

DuPont expands Polyvinyl Fluoride Film Capacity

DuPont intends to invest USD 175 million to expand production capacity for Tedlar-polyvinyl fluoride (PVF) films, a key component of the protective back sheets of photovoltaics (PV). The Circleville, OH expansion will bring online enough capacity to support 10 gigawatts of PV module production.

DuPont previously announced that it planned to expand its capacity to produce raw materials for the films by more than 50%. As part of the total budget, a USD 120 million investment includes a monomer facility at Louisville, KY, and a resin plant at Fayetteville, NC. Both sites are already under construction and are scheduled to come online in mid-2010. The company also manufactures Tedlar in Buffalo (NY), Parlin (NJ, Fort Madison (IA), and Towanda(PA).

Comments: Polyvinyl fluoride (PVF) is most commonly used in applications such as weather-resistant film for glazing panels, surface covering for PVC film, covering the interior of aircraft to reduce flammability, and glazing for solar panels. In recent years, the demand for solar panels has seen significant growth due to a push for an alternate source of energy. The main advantage of PVF includes (1) resistance to weathering (2) staining and chemical attack (except ketones and esters) (3) exhibits very slow burning and (4) low permeability to vapor.

The expansion of the production capacity will allow DuPont to meet the growing demand for PVF. Globally the solar panel demand has increased by close to 60% from 2005 to 2009. Europe has the highest demand for solar panels and the governments have been heavily subsidizing the cost. China has the highest production of Solar panels with close to 29% of the global production followed by Europe and Japan. North American production is currently at 6% of the total global production.

Braskem sees more US acquisitions under expansion plan

Braskem’s takeover of SunocoChemicals’ polypropylene(PP) operations is intended to be the first of a number of acquisitions planned by the Brazilian company in the US market.

On 22 January, Braskem consolidated the petrochemical arms of Brazil’s Petrobras, Odebrecht, and Quattorto making it the largest plastic resins producer in the Americas as part of its long-term plan to become one of the world’s five largest producers.

Comments: Consolidation in the Brazilian petrochemical industry began in 2001 in an attempt to integrate, what was then, a highly fragmented industry. One of the major consolidations was the formation of Braskem in 2002 integrating six companies -Copene, OPP, Trikem, Nitrocarbono, Proppet, and Polialden –owned by Odebrecht Group (62.3%), Petroleo Brasileiro SA (Petrobras) (31%), and BNDESPAR (Brazil’s National Bank for Economic and Social Development). In 2007, there was a second round of M&A activity during which Braskem acquired the petrochemical business of Grupo Ipiranga and Petrobras made a move on Suzano group which was subsequently merged with Unipar to form the Southeast Petrochemical Group. Quattro was formed in 2008 as Petrobras and Unipar combined their plastic resin assets into one company.

Braskem to purchase polypropylene business for USD 350 million

Sunoco Inc. announced that it has reached an agreement to sell its polypropylene resin business to BraskemSA for USD 350 million.

The deal will further expand São Paulo-Brazil-based Braskem, which recently signed another deal to buy a majority stake in Quattro Petroquimica, another Brazilian firm. That deal will make Braskem the largest maker of commodity plastics PP, polyethylene, and PVC in the Americas.

The all-cash Sunoco deal is scheduled to close by March 31. Included in the sale are Sunoco’s PP plants in Marcus Hook(PA), La Porte(TX), and Neal (WVA), which have a combined annual capacity of 2.1 billion pounds. The sale also includes Sunoco’s Research and Technology Center in Pittsburgh.

Comments: Sunoco has always been an independent PP producer. Sunoco was never among the top PP producers in the U.S. because of its (1) limited production, (2) dependence on merchant propylene, and (3) vertical integration into compounding through JVon principally into the automotive application.

Historically, Equistar-Lyondell-Basell’s small PP unit based on Novolentechnology and Sunoco’s PPunit have been considered outliers and excellent opportunities for someone attempting to enter U.S. markets as an independent player.

Since the separation of Washington Penn from Sunoco, it has made it easier to acquire an independent standing PP unit for sale. It is an excellent opportunity for Braskem for getting a foot-hold on the U.S market,

Braskem’s current strategy includes:

1) Strengthening regional position via consolidation of Brazilian assets –They have sponsored 9 mergers and acquisitions in the last 9 years with Quattro being the latest one –making them the largest resin producer in the Americas.

2) Feedstock strategy in Latin America -They made a move in oil-rich Venezuela and became the preferred partner of the Venezuelan petrochemical company, Pequiven. They have also made similar moves in Bolivia and Peru, which are natural gas-rich and present significant opportunities for petrochemicals.

3) Internationalization through investments to secure market access –They have an ongoing internationalization strategy through important Greenfield projects under development in Mexico, Venezuela, and Peru. While moving to Peru and Venezuela further strengthens their market position in Latin America, the proposed participation in the Eteno21 project with the Mexican Odessa group opens up opportunities in the Central and North American regions.

4) Internationalization via Acquisitions –Leveraging on cash position, the industrial and commercial base they wish to create potential acquisitions or strategic alliances to expand their presence in the U.S. market. The Sunoco acquisition is a part of this strategy. Braskem has further plans to target assets of other petrochemical majors in their efforts to create a strong position in the US market –presumably the world’s largest consumer. Braskem’s stakeholders, Odebrecht group and Petrobras, are injecting approximately USD 2 billion to support potential acquisitions in the US. Acquisition of Sunoco’s assets adds 950 KT of annual resin capacity to Braskem’s current capacity of 5.51 million tons(following the Quattor deal) making them the single largest polymer producer in the Americas.

ConocoPhillips launches PP business –Rajiv Singh becomes the Head.

ConocoPhillips Co. has launched its own Copylene-brand polypropylene business. The company will operate as ConocoPhillips Specialty Products Inc. and will handle sales and marketing of PP produced at a PP plant in Linden, N.J. Material produced at that plant had been marketed by LyondellBasell Industries for several years, but the contract between the two firms expired at the end of 2009.

The Linden site has an annual capacity of about 350 KTA of PP and can produce both homopolymer and impact copolymer grades.

Comments: The Bayway Unipol PP unit was originally proposed by Union Carbide and Tosco to utilize the propylene from Tosco’s refining operations. This was later acquired by Phillips Petroleum Corp, which included Tosco’s refining assets. Upon Phillips’ merger with Conoco, it became a wholly owned subsidiary of ConocoPhillips. In October 2002, ConocoPhillips entered an exclusive marketing agreement with Basell, under which Basell would be the exclusive purchaser and marketer of the polypropylene resins produced at ConocoPhillips’ Bayway plant in Linden, N.J. The relationship had worked well for both parties and the contract was renewed again in 2007 with a term effective until December 31, 2012.

After the formation of LyondellBasell and the subsequent financial troubles including the filing of Chapter 11, ConocoPhillips (in January 2009) informed LBI that it would not continue to ship polypropylene to Basell under the agreement unless alternative credit terms acceptable to ConocoPhillips were proposed in writing. To avoid a shutdown of the facility LBI agreed to pay ConocoPhillips a deposit on future shipments and both parties agreed to engage in long-term modifications to the existing agreement/relationship.  Following discussions and negotiations, in July 2009, LBI filed a motion in Bankruptcy Court to reject the exclusive marketing agreement with an effective date of December 31, 2009. The new ConocoPhillips specialty business unit was created in response to the above events and will now be entirely responsible for 350 KTAPP units including production, marketing, sales, and distribution. The products are expected to remain the same as before but with a new brand name Copylene®.

Congratulations to Rajeev Singh an MBA from RICE University.

Massive Toyota recall centers on plastic friction device

The massive recall of Toyota Motor Corp. vehicles for faulty accelerator pedals is focusing on a friction device made of nylon 4/6 or polyphenylene sulfide within the pedal assembly. Toyota has stated that the device could“stick” under certain conditions.

Toyota halted sales of many of its most popular brands in the U.S. and has recalled 2.3 million vehicles dating back to the 2005 model year to fix the problem, which can result in sudden acceleration.

Most vehicles made today use the electronic throttle. As a remedial measure, Toyota will place a specially designed steel reinforcement bar between the two plastic surfaces to reduce excess friction.

Comments: Toyota’s problem with the stuck accelerator is very old. Since 1995, there have been cases on and off that involved unexplained accelerations of the car resulting in major accidents –including my own experience -most of the time they have explained away as resulting from confusion between breaks and accelerators. Glad the issue is being addressed in a more carefully analyzed fashion

Mexichem expects to move ahead with acquisitions

Latin America’s largest producer of PVC pipes, vinyl resins, and compounds is optimistic Mexico’s antitrust authority will approve its contentious purchases of arrival plastic pipe maker and a PVC resin producer by the end of March.

In October, the Federal Competition Commission (CFC) upheld its June 2009 decision to block Mexichemproposed acquisition of pipe maker Plásticos Rex SA de CV and resin producer Polycid SA de CV. It argued that allowing the deal with chemical company Cydsa SAB de CV(Garza García, Mexico), would constitute a risk for the market.

Mexichem acquires Fluorochemicals Unit from Ineos

Ineos is selling its Ineos Fluor unit to Mexichem. The deal includes Ineos’s Fluorochemicals operations in North America, Europe, and Asia. The unit once sold would have sales estimated at more than USD 500 million/per year. The deal is a result of Ineos’strategy’ to focus its portfolio on its large-scale petrochemicals businesses.

Comments: In April 2008, Mexichem had proposed that Cydsa SAB de CV swap Polycid and Plasticos Rex in exchange for a Mexichem caustic soda and chlorine plant in Santa Clara, Mexico, plus a cash payment. In June 2009, the Mexican antitrust authority refused to allow the Mexico City-based conglomerate -Mexichem to buy PVC resins producer Polycid SA de CV and plastic pipe maker Plasticos Rex SA de CV from Cydsa.

Mexichem has been aggressively looking to expand its business. They have acquired Ineos’ Fluorochemicalsunit for USD 350 million in their pursuit of expansion. Mexichem is known to be looking for more acquisition targets in the Americas and is currently in talks with several undisclosed companies.

Ineos GroupLtd vs. Chevron Phillips Chemical Company–Temporary Injunction case

INEOS appeals to the trial court’s issuance of a temporary injunction prohibiting it from soliciting, negotiating, or entering into technology licensing agreements for a PE grade made by using a Phillips loop slurry technology. The temporary injunction is based on Chevron Phillips Chemical Company’s (“CPChem”) claim that the technology underlying this manufacturing process is derived from its trade secrets. INEOS argues that the technology is no longer entitled to trade secret protection because, through a lack of vigilance, CPChem disclosed the technology to third parties, which are no longer required to keep the information confidential.

Ineos supported this by offering a number of agreements between Phillips and third-party companies. Several of these agreements contained fixed-term secrecy, which required the other party to maintain the confidentiality of Phillip’s disclosed trade secrets for a set number of years. Therefore, at the time of the court hearing, the agreement between Ineos and Phillips had expired and Ineos possessed CPChem’s trade-secret information without restriction and were free to publicly disclose it. INEOS asserted that the expiration of these clauses destroyed the trade secret status of CPChem’s technology.

CPChem responded to these claims by providing evidence that it has always been vigilant in maintaining the secrecy of its loop slurry technology. In addition, it also provided countervailing evidence to show that, under the unique circumstances of each, the secrecy of its technology with Ineos remained intact, despite the expiration of the secrecy clauses.

Comments: Since 1958, Phillips and CPChem.(name change occurred in 2000 after Phillips Chemical merged with Chevron Chemical) have entered into over 100 licensing agreements for the loop slurry technology. In the 1950s, Phillips was licensed to Celanese, which was later purchased by Solvay,& Cie to become Soltex, the name was later changed to Solvay Polymers in around 1990. In 2004, BP purchased Solvay’s interest in the joint venture. BP then formed a separate company Innovene to hold the assets of the joint venture.

In 2005, Ineos purchased Innovene and succeeded in the interests of the original licensees. Pursuant to three separate licensing agreements, Ineos provided the Innovene loop slurry technology to three Chinese companies for the construction of polyethylene plants. Learning that. CP Chem. then sued Ineos and sought permanent injunctive relief and damages. Ineos continued to license the Innovene loop slurry technology to other companies. CP Chem. then requested the trial court to grant a temporary injunction prohibiting Ineos from disclosing the Innovene loop slurry technology to any third party, including Ineos’ licensees, pending trial

.At the hearing’s conclusion, the trial granted CP Chem’s request for a temporary injunction but narrowly tailored the injunctive relief. The resin grade in this injunction is 5502 having a melt index from 0.3 to 0.4 and a density of 0.954 to 0.957 g/c.c. using a chrome catalyst in a loop slurry process.

Eastman Wins Patent Infringement Case

The U.S. District Court has ruled in favor of Eastman Chemical in a patent infringement lawsuit filed by Willman. The court’s decision that held two Wellman patents invalid ended the case, which was scheduled to go to trial on February 17.

Wellman filed a lawsuit against Eastman in September 2007, alleging that Eastman’s ParaStar polyethylene terephthalate(PET) resins, which are made from the company’s IntegRex process, infringed on two Wellman patents. The ruling confirms that Eastman continues to be free to practice its independent and innovative technology used to make its ParaStar products.

Comments: With the ruling in favor of Eastman (vs.Wellman), Eastman is fighting another battle to protect its technology. The Eastman vs.Indorama lawsuit relates to three Eastman patents that encompass PET manufacturing technology. Eastman sued Indorama (a major PET producer and a licensee of Eastman)for the breach of contract and trade claims, arising from Indorama’s unauthorized disclosure and use of information covered by a license agreement between Eastman and several European Indorama entities.

America’s Plastic Bagdevelopments

California legislature rejects25-cent bag tax

The early demise of two bills that would have placed a 25-cent tax on single-use plastic and paper carryout bags in California underscores the budgetary pressures that will likely influence any additional efforts to tax or ban plastic bags in California.

The two bills, both carried over from the 2009 legislative session, were dropped when they were held in the state Assembly Appropriations Committee. State estimates were that the initial startup costs to impose the 25-cent fee would have been in the neighborhood of USD 300,000 with annual enforcement costs of USD 1 million.

Plastic bag developments in other states

Lubbock, Texas, is weighing whether to follow the lead of Brownsville, Texas, which earlier this year became the 12th UScity to ban plastic bags, with its ban effect next Jan. 1, 2010

.At the state level, the Florida Department of Environmental Protection is scheduled to make its final recommendations on Feb. 1 on how to achieve the state’s 75 percent recycling goal by 2020. A draft report, since withdrawn, had proposed a 5-cent tax on plastic bags starting in 2011, which would have increased to 25 cents in 2014, followed by a ban in 2015.

Both Virginia and Maryland have introduced proposals to place a 5-cent tax on all plastic and paper shopping bags —which would mimic the 5-cent fee on such bags that went into effect in the District of Columbia on Jan. 1.

WTO rules for Thailand in bag dumping appeal

The World Trade Organization has told U.S. trade authorities to amend anti-dumping duties placed on polyethylene retail carrier bags imported from Thailand.

WTO said the U.S. Commerce Department, in calculating the duties to be placed on bags made in Thailand, used a controversial practice called “zeroing.” With the tactic, authorities considering whether a product was being dumped at a price below its manufacturing cost, ignored cases where the product would cost more in the United States than in the home country.

U.S. trade officials did not oppose the action brought by the Thai government at the WTO, which means a policy change is likely.

Comments: Plastic bags represent nearly 14% of LLDPE consumption and are a major issue for bag manufacturers, resin producers, consumers, and public organizations that have responsibility for waste consequences…

Like most good things, the producers and consumers have to take life cycle responsibility –resin and bag producers also have to accept some responsibility to solve this all-encompassing issue. Just putting a bag fee on consumers is a one-sided issue and sometimes may be considered a license to pollute -Someone punishes you 5cents –for littering with a plastic bag -You will start thinking of it as Another Unique Service FromChemical Market Resources, Inc. 560 Blossom Street, Ste C, Houston, TX 77598 USA; Tel: 281-557-3320Email: POE-SNA@CMRHouTex.ComCopyright ©2009Page 9/14of Issue 03 –Volume 8a fee to throw it on the floor and as long as 5 cents negligible you will continue to do it and rationalize “I am paying 5 cents for the right to dispose of in public… “ 

Chemical Firms’ earnings report

ExxonMobil’s record profits drop to lowest in 7 years

Exxon Mobil’s profits fell by more than half to USD 19.3 billion in 2009, the lowest total in seven years -but the oil giant remains the nation’s profit leader.

Exxon finished last year with a 23% decline in fourth-quarter results and has now posted lower profits for five straight quarters after setting a record of USD 14.8 billion in the third quarter of 2008.

Dow Chemical record Profit on Strong Volume Recovery

Dow Chemical returned to profit in the fourth quarter on strong volume growth, particularly in emerging economies, and strong performance at its Mideast and Dow Corning joint ventures. The company reported a fourth-quarter net income of USD 178 million reversing a loss of USD 1.55 billion in the year-ago quarter.

Shell Chemical profits improve on higher volumes

Shell Chemicalsfourth-quarter earnings from its chemical business increased compared to the year-ago period because of improved income from equity-accounted investments, higher sales volumes, and lower operating costs.

Mitsubishi Chemical reportsProfit

Mitsubishi Chemical reported a net profit of ¥10.2 billion (USD 113 million), for the nine months ended December 31, 2009, compared with a net loss of ¥11.4 billion in the year-ago period.

Sumitomo records a rise in Nine-Month Profits

Sumitomo Chemical recorded a 62% rise in net profits for the nine months ended December 31, 2009, to about ¥1.2 billion (USD 13.5 million), compared with the year-ago period, mainly due to an improvement in foreign currency exchange losses and gains from the sale of investment securities.

Siam Cement reports a rise in Profits

SCG Chemicals reported a 105% increase in net profits for the full-year 2009, to baht13 billion (USD 394 million), compared to 2008. Sales for 2009 decreased by 26%, to baht101 billion, mainly due to lower product prices.

Lubrizol registersProfit

Lubrizol reported fourth-quarter 2009 earnings of USD 134 million, compared with a loss of USD 281 million in the year-ago period.

PolyOne’s Income Rises on Higher Sales, Specialty Platform

PolyOne reported a fourth-quarter 2009 net income of USD 24 million, up compared to a net loss of USD 282.6 million for the year-ago quarter.

Catalyst Division lifts Grace’s Profits

W.R. Grace’s fourth-quarter net income soared 83%, to USD 46.5 million excluding Chapter 11-related expenses, a loss on noncore activities, and noncore tax items. Earnings rose 7% including those items.

LGChem records rise in Fourth-Quarter Profits

LG Chem reported a 238.5% increase in net profits, to won208.5 billion (USD 180 million), for the fourth quarter of 2009, compared with the year-ago period.

Asahi Kasei reports fallin Profits and Sales

Asahi Kasei reported an 18% decline in net profits, to ¥20.6 billion (USD 229 million), for the nine months ended December 31, 2009, compared to the year-ago period. Sales decreased by 16%, to ¥1.02 trillion, mainly due to lower market prices in the chemicals segment as an effect of declining feedstock

Kuraray Records Fall in Profits and Sales

Kuraray reported a 25% decrease in net profits, for the nine months ended December 31, 2009, to ¥12 billion (USD 133 million), compared with the year-ago period. Sales decreased by 20%, to ¥243 billion.

EUROPE

Shell to cut more jobs in uncertain future

SHELL plans to cut another 1000 jobs this year, mainly in its downstream refining businesses, as it seeks to turn around a disappointing performance in 2009. The job cuts come on top of the 5000 employees Shell lost in 2009 through redundancies and the sale of business areas.

The company disappointed the market with a 75% drop in fourth-quarter earnings –mainly because of weak performance in refining and natural gas. Shell has significant assets in both areas, which have suffered from falling prices, weak demand, and strained margins. Shell is not counting on a swift recovery and maintained that the outlook for 2010 was uncertain.

As part of its strategy going forward, Shell intends to cut its refining business and focus on fewer, more profitable markets with growth potential, through disposals and selective growth investment.

Comments: Shell’s CEO Mr. PeterVoser said the 4Q 2009 was the worst refining environment in his 25 years with the company. The weak performance in refining and natural gas, falling prices, weak demand, and compressed margins have cumulatively led to this downsizing–as part of the restructuring of the company. The 1,000 job cuts will be on top of the 5,000 job cuts already implemented; the 1,000 jobs amount to about 1% of Shell’s workforce. In addition, in 2009, Shell announced its change in strategy -It will shift its production emphasis towards gas from oil and hopes to achieve 50/50gas versus oil in 2011. It has been at a 40/60 ratio favoring oil.

MIDDLE EAST & AFRICA

Saudi Aramco to invest around USD 120 billion over the next 5-6 years

Saudi Aramco has planned an investment of almost USD 120 billion over the next 5-6 years, to develop projects in the oil and petrochemicals sector. Investment by the oil sector is around USD 60 billion, while the remaining investment would be for the development of petrochemical projects and foreign investments.

After the successful completion of several refinery expansions, the company is working on meeting the country’s gas demands in addition to moving downstream into the production of petrochemicals.

Comments: Saudi Aramco, the world’s largest oil exporter, has already completed a USD 10 billion refinery in the southern province of Jazan. The new refinery, located in the Jazan Economic City, will have a capacity of 250,000 to 400,000 barrels per day. This investment further reinforces the company’s focus on meeting the local gas demands in addition to moving downstream into petrochemical production. The expansion completed last year was impressive as it came at a time when the world oil demand fell with the global recession, leaving the Kingdom with a larger-than-expected buffer to meet any future demand increase or surprise outage in global supply.

For the next couple of decades, it is expected that the majority of global oil demand will come from China, India, and the Middle East. Saudi Arabia is the only oil producer in the world with significant spare capacity that can be quickly deployed. The addition of downstream petrochemical exports to China and India will further increase the value addition for the Kingdom for the oil that is converted to petrochemicals and polyolefins.

PIC plans to build an olefins complex at USD 3 billion

Kuwait’s state-run Petrochemical Industries Co (PIC) plans to build a USD 3 billion olefins complex –its third. The initial study phase has been initiated and is scheduled for completion by February 2010.

Comments: Kuwait is one of the six states of the Gulf Cooperation Council (GCC). It is adjacent to the Persian Gulf. Both the PE (800 KTA total capacity employing the Unipol process) and PP (150 KTA with the UNIPOL process) are manufactured close to the port of Shuaiba. The construction of the new olefin complex will greatly accentuate the growth of downstream polyolefin operations in the Kuwait region. With a population of 3 million, most petrochemical products are exported.

ASIA-PACIFIC

Haldia Petrochem completes Project Supermax; to reopen with higher capacity

PTT Chemical explores capacity expansion in neighboring countries

PTT Chemicals is exploring future investment opportunities in nearby countries. The company wants to pursue opportunities to extend business further along lines that fit its core strategies and expertise. Since the company’s strength lies in gas and plastics, it intends to focus expansion in these areas, in ASEAN countries. The company has targeted doubling revenue to USD 4.5 billion(Bt149 billion) this year. The company has expanded its petrochemical business by building a 1000 KTAethane cracker that will facilitate olefins production to increase from 1800 KTA to 2800 KTA and increase polymer output from 500 KTA to 1500 KTA.

PTT Chemical has eight projects on the list of chemical projects suspended in Map Ta Phut. The company expects to get a quick waiver for three projects, of which only one is a major project.

Comments: PTT Chemical’s plan to expand into neighboring countries would allow the company to take advantage of the rapid growth in the region. Asian countries, in recent years, have been experiencing the highest economic growth in the world, led by Vietnam having a growth rate of 6.0 %in 2009. There have been similar trends in Cambodia, Indonesia, and Laos.

PTT Chemical was formed in 2005 when oil and gas company PTT acquired National Petrochemical Public Co. Ltd. and combined it with its Thai Olefins unit. Currently, the company is a fully integrated petrochemical from Ethylene and Propylene to polyolefin.

DuPont to Expand R&D Center in Hyderabad, India

DuPont plans to expand the DuPont Knowledge Center in Hyderabad, India. The company will add research & development (R&D) capabilities to support local customer needs for businesses serving safety and protection, construction, transportation, and packaging markets in India, the ASEAN (Association of Southeast Asian Nations), and in other emerging markets.

Amcor completes acquisition of Alcan

Amcor Ltd. has completed its USD 1.948 billion acquisition of Alcan Packaging from Rio Tinto Plc. The announcement comes after months of waiting for regulatory approval from authorities in the US and Europe.

Amcor gained approval from the European Commission in December, only weeks after proposing to divest two pharmaceutical and food packaging plants in Spain to allay anti-trust fears.

Comments: Alcan started in 1902 as Northern Aluminum Company, the Canadian subsidiary of the Pittsburgh Reduction Company (later Alcoa). It was renamed Aluminum Company of Canada in 1925 and was separated from Alcoa in 1928. In 2000, Alcan group became a subsidiary of Alcan AluminumLimited, which was renamed Alcan Inc in 2001. In October 2007, the leading mining organization Rio Tinto acquired Alcan and was integrated with Rio’s Tinto’sexisting aluminum business, resulting in Rio Tinto Alcan.

The acquisition of Alcan Packaging GlobalPharmaceuticals, Alcan Packaging Food Europe, Alcan Packaging Food Asia, and Alcan PackagingGlobal Tobacco will bring Amcor to one of the largest players in the packaging industry with a wide range of products. The move is in line with the company’s objective of growing in the areas of flexible packaging and folding cartons packaging.

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