APD Air Products and Chemicals Inc

Air Products & Chemicals Inc. (APD) announced that it has signed an agreement with Indonesia based JGC Corporation to supply its proprietary propane pre-cooled mixed refrigerant process and MCR main heat exchanger  to LNG project in Luwuk, Central Sulawesi, Indonesia.

The Donggi-Senoro LNG project is a joint venture between Indonesia's state-owned oil and gas company, Pertamina, and other companies including Mitsubishi Corporation, Korea Gas Corporation and PT Medco Energi Internasional. The project is expected to start in 2014.

The plant will make use of Senoro region’s gas fields located in the Toili block and the Matindok Area as feed gas for the fourth LNG project located in Indonesia. Air Products technology has been exploited in all four projects including PT Arun and PT Badak, which originally started in the late 1970s, and Tangguh LNG, which began operations in 2009.

Air Products has a long history of working on LNG projects in Indonesia and is pleased with the agreement as it will continue to build not only on experience but also improve its position in the region.

The company’s technology plays a pioneering role in developing LNG projects around the world. The company produces a majority of LNG worldwide and has designed, manufactured and exported over 80 LNG heat exchangers for projects in 15 countries from its Wilkes-Barre, PA facility over the last four decades. According to Air Poducts, it is a very important project for Indonesia's LNG industry as it also supplies to Japan and East Asia.

We currently have a Zacks #2 Rank (short-term Buy recommendation) on the stock.

Based in Pennsylvania, Air Products benefits from a long-term take-or-pay contract, a consolidated industry structure, a diverse customer base and sustained pricing power. However, soaring energy and raw material costs pose a threat to margin expansion.

In order to compensate for escalating raw material costs, Air Products has been increasing the price for a range of chemicals it makes for industrial use. Air Products faces stiff competition from Praxair Inc. (PX) and The Linde Group.

 
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