* CEO says clean-water regulations could fuel demand growth
* U.S. energy industry could have stricter rules in 2-3 yrs
* CEO says does not rule out sale of ChemSolutions unit
By Ludwig Burger and Frank Siebelt
FRANKFURT, May 2 Finnish chemicals group Kemira
believes stricter environmental regulation of its
customers in the oil and gas industry will create a big new
market for its water treatment chemicals, its chief executive
Kemira, one of the world's largest makers of chemicals for
the paper industry, is a relatively small supplier of chemicals
for fossil fuels extraction and mining, competing with BASF
, Clariant and SNF Flomin Inc.
But it is keen to bolster the business with takeovers, and
it is expecting a booming shale gas industry in particular will
soon be required to clean more contaminated flowback water from
hydraulic fracturing, for which it would need water treatment
"Our water re-use business is active on many fronts. In the
paper industry, water re-use is now well established and we have
a presence there thanks to our know-how in municipal water
treatment. The paper industry is operating under certain
environmental regulations, other industries may soon also be
subject to such regulations," CEO Wolfgang Buechele said.
The German national, who took the top job in early 2012,
said he expects the North American oil and gas industry to be
held to stricter clean-water standards in 2-3 years, while peers
in emerging markets could see such changes in about 4 years.
"This could be quite a sizable growth business," he added,
declining to provide figures.
Similar considerations have prompted rival BASF earlier this
year to combine its water solutions and oilfield and mining
Buechele has embraced his predecessor's strategic focus on
serving water-intensive industries and earlier this year sold
Kemira's stake in titanium dioxide maker Sachtleben to its joint
venture partner Rockwood.
Kemira's ChemSolutions division, a maker of animal feed
additives and chemicals for treating leather which like
Sachtleben is not water related, could also be put on the block,
"A sale cannot be ruled out if there is an attractive
The oil, gas, mining and paper chemicals units, meanwhile,
could be strengthened by takeovers, though some targets in the
energy chemicals sectors are offered at prohibitive premiums,
"My psychological barrier would be 10 times EBITDA (earnings
before interest, taxes, depreciation and amortisation)," he
said, adding that some asking prices in oil and gas are
currently well above that level.
Kemira derived 14 percent of its 2.24 billion euros ($2.95
billion) in 2012 group sales from chemicals for the oil and
mining industry, with paper chemicals accounting for 45 percent
and the waste water treatment unit accounting for 31 percent.
Kemira said earlier this month it was cutting more jobs and
aiming for higher growth ahead, after cost cuts helped boost its
($1 = 0.7585 euros)
(Editing by Mark Potter)