Page 9 - FSUOGM Week 37 2019

FSUOGM PIPELINES & TRANSPORT FSUOGM
Kazakh CPC sales to Asia at all-time high
KAZAKHSTAN
CPC sales are replacing US oil supplies.
KAZAKH CPC Blend BFO-CPC crude oil exports to Asian countries are set to reach an all- time high in September as China is increasing CPC Blend purchases to replace US crude, Reu- ters reported, citing trading sources and loading data. Refitiniv Eikon data shows CPC Blend crude oil supplies were just above 2mn tonnes for September delivery, up from the previous record of 1.7mn tonnes registered in December 2018.
Amid China’s ongoing trade war with Washington, Beijing slapped a 5% tariff on US crude imports starting from September 1, lowering China’s purchases of American oil. Exports of CPC Blend mainly consist of the Kazakh crudes alongside smaller amounts pro- vided by Russia’s Lukoil and Rosneft. Kazakh- stan is currently gradually raising its crude oil production.
South Korea remains the main importer of CPC Blend, which tends to replace condensate at South Korea’s refineries. The country is planning
to import around 1mn tonnes in September, according to the Refitiniv Eikon data.
China now stands as the second largest buyer of CPC Blend in Asia with plans to import 500,000 tonnes, a record high for China’s CPC Blend purchases.
The remaining part of the 2mn tonnes will be exported to Singapore and India.
Two trading sources told Reuters that China’s Unipec, a trading arm of China’s Sinopec, was the buyer of CPC Blend for delivery to China.
“Unipec was optimising its crude oil choices as African grades were costly while the Brent-Dubai spread was narrow. There is also a tariff on U.S. oil,” one of the sources said.
“As China has to reduce offtake of the United States crude due to the trade war, they now look for alternative lights”, the second trader who works with CPC Blend was cited as saying. “China used to buy a little amount of CPC, just a number of irregular purchases. Now given the market situation it became an option.” ™
INVESTMENT
SIBUR places $500mn of Eurobonds
RUSSIA
Sibur is the leader of the Russian petrochemicals industry.
RUSSIAN petrochemical major Sibur placed $500mn worth of five-year Eurobonds on the Irish Stock Exchange, with initial coupon rate of 3.75% annually cut to 3.45% as the demand for the issue exceeded supply 2.5-fold at $1.3bn, the company announced on September 17.
As reported by bne IntelliNews, during the relative calm in sanction rhetoric Russian corporate issuers have placed $6.9bn worth of Eurobonds in 14 deals in January-June 2019, almost as much as the $7.8bn in 18 issues placed in 2018 overall. The average issue size is up to $494mn versus $460mn in 2018.
Sibur’s issue was organised by Goldman Sachs, JP Morgan, Gazprombank and Sberbank CIB. The company intends to use the funds to continue carrying out its growth strategy and to optimize its credit portfolio.
The Eurobonds were purchased by global investors, more than half of which were for- eigner (Russia, 41%; Continental Europe, 26%; Asia and MENA, 15%; the UK 11%; the USA, 7%). Moody’s rated the bonds at Baa3, while Fitch gave them a rating of BBB-.
“For the new Sibur [placement], we estimated fair YTM [yield-to-maturity] at 3.35-3.45%, thus, we see no more than 10bp of potential yield decline,” BCS Global Markets commented on September 17.
Sibur is the leader of the Russian petrochem- ical industry and one of the largest companies
globally in this sector. Most recently Sibur voted to pay a record-high dividend of RUB33.8bn ($0.5bn) for 2018.
Throughout the end of 2018 Sibur was in focus as the company was expected to announce a highly anticipated IPO, to raise $2bn-3bn based on a valuation of $20bn-$26bn.
In July 2019 Fitch Ratings upgraded Sibur’s long-term issuer default rating (IDR) to invest- ment-grade BBB- from BB+, with Stable out- look. Fitch’s upgrade reflects the significant progress on the ZapSibNeftekhim project, including the completion of major production units ahead of schedule and on budget and the start of commissioning, while maintaining lever- age below the forecasts throughout the intensive investment cycle.
Russia’s largest petrochemical holding is controlled by Kremlin insiders Leonid Mik- helson (48.5%), Gennady Timchenko (17%), and Kirill Shamalov (3.9%). Chinese Sinopec and the Silk Road fund each acquired 10% in the company.™
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