Nynas AB, one of the world’s largest suppliers of naphthenic base stocks, filed for reorganization protection in a Swedish court Friday after banks refused to extend its loans.
Officials said in a press release that Nynas and its shareholders have a plan to return the company to profitability but that it needs relief from loan payments that are due and which it is unable to pay.
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Nynas is a joint venture between Venezuela’s national oil company,Petroleos de Venezuela S.A. and Finnish refiner Neste. Nynas and Neste both blamed its predicament on economic sanctions that the United States imposed against PdVSA in 2017. In separate press releases the companies said the sanctions have eroded Nynas profitability over time. Nynas also said it had been stopped from buying Venezuelan crude oil and been forced to turn to more expensive alternatives.
In October, Neste said it had written off its holding in Nynas, meaning the Finnish refiner no longer estimated its stake in Nynas to have any value.
As a result of the sanctions, the company had high financial prices and lost business because of the sanctions, Nynas said in Fridays press release. Now, a situation has arisen where there is no longer a continuous financing of the company’s operations.
“Sales of naphthenic base oils have fallen 8 percent due to sanctions and constraints on purchases of Venezuelan crude,” Vice President for Naphthenics Simon Day said.
The company said its plan would allow it to escape sanctions in early 2020 and return to profitability in three years by changing the raw material mix to its refineries.
The plan did not persuade Nynas banks to adjust the terms of the company’s loans.
“In the short term, we see no other opportunity than to request a reorganization, in the long term, we see good conditions to continue the business. Nynas has a strong offering with good demand from the market,” said acting Nynas CEO Bo Askvik.
Nynas, which also produces asphalt, operates two naphthenic base oil plants in Europe: one in Nynashamn, Sweden, with capacity to produce 7,600 barrels per day and another in Harburg, Germany, with capacity of 6,300 b/d.
Nynas also holds a marketing agreement with the Isla Refineria in Curacao, though the facility hasn’t produced any base stocks for at least a year. When operating, the Curacao plant has capacity to make 3,700 b/d naphthenic base oils and also produces API Group I paraffinic oils.
“Despite loyal customers and dedicated work by our employees, we have not been able to avoid the situation that has arisen,” Askvik said. “Because the business is of great importance to our customers, and it is my absolute hope that the company can be reorganized under controlled forms so that we can continue to deliver our products.”
Nynas representatives could not be reached for comment.