BCI, CP Kelco sign deal for joint gum factory in Jubail

Updated 16 September 2013
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BCI, CP Kelco sign deal for joint gum factory in Jubail

Basic Chemical Industries Co. (BCI) has signed a memorandum of understanding with CP Kelco for jointly building and operating a xanthan gum facility to be located in Jubail.
Subject to further engineering feasibility, the plant will have a production capacity of between 5,000 and 10,000 tons. This capacity will be dedicated to oilfield application markets both within the Kingdom as well as for export. The main client for local consumption of the gum is Saudi Aramco, the world largest oil producer, and Saudi Arabia National Oil Company.
CP Kelco headquartered in Atlanta, Georgia, USA, is a major producer of specialty hydrocolloids with offices and facilities across the globe. Featuring an extensive range of specialty hydrocolloid solutions, CP Kelco leverages its capabilities to bring concepts and ideas to real-world products in a broad range of applications.
Serving over 100 countries, CP Kelco established the quality and safety standards the industry is measured against. CP Kelco ingredients touch a wide variety of industrial applications, consumer and household products, tailored to meet the needs of regional consumers. Key product lines are gellan gum, pectin, cellulose gum, xanthan gum, carrageenan, arboxymethyl cellulose, diutan gum and microparticulated whey protein concentrate, as well as other unique biopolymers.
BCI headquartered in Dammam has been listed in Saudi stock market (Tadawul) since 2008. The company has been producing basic chemicals, including chlorine, caustic soda and hydrochloric acid, and engaging in two joint ventures producing specialty chemicals.
The main clients of BCI are major industry players such as Saudi Aramco, SABIC, Procter & Gamble and major manufacturers in the GCC as well as government bodies. BCI, as parent for six companies, has wide ranging chemicals serving most of the industrial sectors.


Asia’s refining profits slump as Mideast exports surge

Updated 42 min 40 sec ago
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Asia’s refining profits slump as Mideast exports surge

  • Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India
  • However, overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs

SINGAPORE: Asia’s biggest oil consumers are flooding the region with fuel as refining output is exceeding consumption amid a slowdown in demand growth, pressuring industry profits.
Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India.
Yet overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs.
Compounding the supply overhang, fuel exports from the Middle East, which BP data shows added more than 1 million barrels per day (bpd) of refining capacity from 2013 to 2017, have doubled since 2014 to around 55 million tons, according to Refinitiv.
Car sales in China, the world’s second-biggest oil user, fell for the first time on record last year, and early 2019 sales also remain weak, suggesting a slowdown in gasoline demand.
For diesel, China National Petroleum Corp. in January said that it expected demand to fall by 1.1 percent in 2019. That would be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990.
The surge in fuel exports combined with a 25 percent jump in crude oil prices so far this year has collapsed Singapore refinery margins, the Asian benchmark, from more than $11 per barrel in mid-2017 to just over $2.
Combine the slumping margins with labor costs and taxes and many Asian refineries now struggle to make money.
The squeezed margins have pummelled the stocks of most major Asian petroleum companies, such as Japan’s refiners JXTG Holdings Inc. or Idemitsu Kosan, South Korea’s top oil processor SK Innovation, Asia’s top oil refiner China Petroleum & Chemical Corp. and Indian Oil Corp., with some companies dropping by about 40 percent over the past year. Jeff Brown, president of energy consultancy FGE, said the surge in exports and resulting oversupply were a “big problem” for the industry.
“The pressure on refinery margins is a case of death by a thousand cuts ... Refinery upgrades throughout the region are bumping up against softening demand growth,” he said.
The profit slump follows a surge in fuel exports from China, India, Japan, South Korea and Taiwan. Refinitiv shipping data shows fuel exports from those countries have risen threefold since 2014, to a record of around 15 million tons in January.
The biggest jump in exports has come from China, where refiners are selling off record amounts of excess fuel into Asia.
“There is a risk for Asian market turmoil if (China’s fuel) export capacity remains at the current level or grows further,” said Noriaki Sakai, chief executive officer at Idemitsu Kosan during a news conference last week.
But Japanese and South Korean fuel exports have also risen as demand at home falls amid mature industry and a shrinking population. Japan’s 2019 oil demand will drop by 0.1 percent from 2018, while South Korea’s will remain flat, according to forecasts from Energy Aspects.
In Japan, oil imports have been falling steadily for years, yet its refiners produce more fuel than its industry can absorb. The situation is similar in South Korea, the world’s fifth-biggest refiner by capacity, according to data from BP.
Cho Sang-bum, an official at the Korea Petroleum Association, which represents South Korean refiners, said the surging exports had “triggered a gasoline glut.”
That glut caused negative gasoline margins in January.