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Oil prices declined as petchem and gas gained in February

Oil and gas prices reversed the moves seen in January with Brent oil declining 4.7 percent in February 2013, while natural gas gained 11.8 percent. Petrochemical product prices continued their gains with an exception to benzene, MTBE and propylene. The TASI petrochem index declined 2 percent, underperforming the TASI all shares index which declined 0.6 percent only. This is according to a new report issued by NCB Capital.
"SABIC resumed operations at its petrochemical complex at Geleen (Netherlands) after a six day labor strike which started on Jan. 31, 2013. The company said the strike has not resulted in any financial losses", the report said.
According to the report, Sahara’s Al Waha complex was closed for 10 days due to a problem in the cooling system. The actual impact is expected to be higher than the company’s initial estimates of a loss of SR 2 million and a production loss of 10,000 mt in Q1, 2013.
Sipchem’s planned shutdowns at IMC and IDC facilities conducted during January–February 2013 are likely to lower earnings by SR 38 million in Q1.
APPC signed a MoU with Vinmar Projects Ltd. to explore expansion opportunities in the US over the next three years.
Ma’aden Phosphate Co. (JV between Maaden and SABIC) resumed operations at the DAP facility in mid-February 2013 after the three weeks maintenance shutdown.
Labor strike lowered production at SABIC’s petrochemical complex at Geleen (Netherlands) during Jan. 31–Feb. 5, 2013. The company said that the shutdown is not expected to have any financial impact. This complex has an annual production capacity of 4 million mt of various petrochemical products.
Sipchem has started the maintenance at two of its facilities – International Gas Co. (IGC) (0.3 million mtpa of carbon monoxide) and International Acetyl Co. (IAC) (0.5 million mtpa of acetic acid) — on March 2, 2013 for four weeks. The financial impact will be announced when the maintenance ends.
Sipchem’s methanol facility resumed operations on Feb. 13, 2013 after a four-week scheduled turnaround. This, coupled with a two-week planned maintenance shutdown at the butanediol plant in January 2013, is estimated to lower earnings by SR 38 million in Q1, 2013. Operational efficiency of both plants are likely to improve following the turnaround.
Sipchem refinanced SR 1.04 billion worth of commercial loans obtained by its affiliates in 2008. The new facilities have a competitive fluctuating interest rate with the first instalment payable in H2, 2013.
Operations at Sahara’s Al Waha facility were halted during Feb. 14–24, 2013 due to a technical issue at the cooling system. As per initial estimates, repair work was supposed to be completed within 7 days resulting in production loss of 10,000 mt of polypropylene in turn lowering Q1, 2013 net profit by SR 2 million. However, the shutdown was extended to 10 days.The company said it will use the inventory to fulfill contractual obligations.
APPC and Vinmar Projects Ltd. signed a Memorandum of Understanding (MOU) on Feb. 4 to jointly establish a company which seeks to explore growth opportunities in the US. The MOU is valid for three years.
Alujain’s subsidiary, National Petrochemical Industrial Co. (NATPET), extended the planned shutdown of its propylene and polypropylene plants by two weeks (previously scheduled for 22 days starting from Jan. 27, 2013) due to additional repair work. The extended duration is expected to increase the production loss from 24,000 mt to 37,824 mt of polypropylene equivalent to SR 196 million (earlier estimate of SR 125 million).
The WTI oil futures contracts for 2013 are trading at a slight premium while 2014 contracts are trading at a 1.3 percent discount to the current levels. The gold futures for all periods continue to trade in line with the spot prices. The oil future curve shifted downward when compared to last month, however the gas futures curve remained unchanged. The gold futures curve shifted downwards. The gold future contracts continue to trade broadly in line with the current spot price of near $1,576/oz.

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