Braskem and Petrobras make no progress on agreement for Comperj petrochem project

MOSCOW (MRC) -- Brazilian petrochemical company Braskem and national oil company Petrobras have made no progress towards an agreement on investing in new petrochemical plants at the Comperj site in Rio de Janeiro, according to Plastemart.

Emergence of shale gas as a source for petrochemical feedstock in the US has raised doubts about the competitiveness of the Comperj project.

Petrobras' first refining train at Comperj is due to start operating in mid 2016, but Braskem has delayed a decision on making an estimated USD5 bln investment in new petrochemical production at the site.

According to a report in Valor Economico, Petrobras and Braskem have so far failed to come to an agreement over the pricing of the light feedstock that Petrobras will supply to any new petrochemical plants at Comperj.

An official from Brazil's ministry of trade and development said that the government is looking at ways to reduce the price of natural gas in Brazil. He said that would make Comperj more competitive with petrochemical production in the US. However, according to the report, Comperj would still not be competitive in products such as polyethylene (PE).

Petrobras is the second largest shareholder in Braskem, behind construction giant Odebrecht. Braskem is also looking for incentives from the Brazilian government and the government of the state of Rio de Janeiro before committing to Comperj.

As MRC reported earlier, Braskem is participating in the bidding to acquire the polyvinyl chloride (PVC) assets of Belgium's Solvay in South America. Braskem said the negotiations had not yet concluded and it could not say when they would be completed.

Braskem is Brazil's main producer of polyethylene and polypropylene. In addition with ongoing plants located in both petrochemical complexes, in April 2008 Braskem opened a 300,000 metric ton polypropylene plant in the city of Paulinia (Sao Paulo).
MRC

MOSCOW (MRC) -- Honeywell was selected by the Sinopec Maoming Company for business management and automation technology aimed at rejuvenating and improving operational performance at aging petrochemical plants in Guangdong Province, China, said Hydracarbonprocessing.

Honeywell's Profit Suite R400 process optimization software will be deployed at two of Maoming Company's ethylene-cracking facilities, helping to improve plant performance by increasing energy efficiency, improving flexibility of its operations, and maximizing the plants' yield of high-value products.

The plants have been in operation for more than 50 years and currently produce 1 million tpy of petrochemicals. "Although new petrochemical plants are being built, globally the petrochemical industry is a mature industry, with many plants having been in operation for decades," said Aldous Wong, vice president and general manager for Honeywell Process Solutions in China.

"Honeywell's process optimization solutions can breathe new life into these aging plants, boosting profitability by increasing throughput and yields, improving product quality, and reducing costs," he added.

Ethylene is an important building block for petrochemicals and is primarily used in the manufacture of polyethylene, which, in turn, goes into a wide range of products, such as packaging, detergents, synthetic lubricants and synthetic rubber. In China, about 70% of its polyethylene is used in product packaging.

As MRC wrote before, Sinopec officially commenced operations at its new lubricant facility in Singapore. The lubricant plant, with an initial production capacity of 100,000 tpy, is the company's first direct overseas investment.
MRC

MOSCOW (MRC) -- A Chevron-operated pipeline carrying liquid petroleum gas (LPG) exploded in rural Texas on Thursday after a excavation crew accidentally drilled into it, said Upstreamonline.

The US supermajor confirmed that there had been "an incident" at one of its pipelines near Milford, Texas, at around 9:30 am local time. The company later confirmed local reports, saying an excavation crew was working at the site when the pipeline ruptured.

"Chevron has initiated its emergency response procedures and is currently responding to the incident," the company said in a statement. "Chevron's primary concern at this point is to ensure the safety of its employees and the surrounding community." No injuries were reported. Some residents of Milford, a town of 700, were asked to evacuate. A local fire chief said about 200 students were evacuated from a nearby school district.

The pipeline "has been shut off and residual burn continues", Chevron said, adding that it was monitoring an adjacent LPG line. Chevron is the majority owner of 10-inch, 2295-mile West Texas LPG pipeline system that transports fuel from New Mexico and West Texas to a processing plant in Mont Belvieu, Texas, near Houston, according to Reuters.

Chevron owns 80% of the pipeline system, with Atlas Pipeline Partners on 20%.

As MRC wrote before, Chevron Phillips Chemical, the petrochemical venture of US oil producer Chevron Corp. and refiner Phillips 66, has finalized the sale of its Chinese polystyrene business to Grand Astor Ltd. In the deal, Chevron Phillips is selling its affiliate company Chevron Phillips Chemical (China) Co. Ltd., which owns a polystyrene plant located in Zhangjiagang, China.

Chevron Phillips Chemica, headquartered in The Woodlands, Texas (north of Houston), US,l is one of the world’s top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping, and proprietary plastics. Chevron and Phillips 66 each own 50% of Chevron Phillips Chemical.
MRC

MOSCOW (MRC) -- Anglo-Dutch supermajor Shell and China’s Sinopec are drilling exploration wells to test the shale potential of an underexplored area of central China, said Upstreamonline.

The pair is currently drilling Engye-1, the second of a three-well programme to evaluate shale resources at the Xiang E Xi Block, located at the junction of the central Hunan, Hubei and Jiangxi provinces of east central China.

The joint venture completed the first well, Liye-1, last August but it was subsequently sealed after results from hydraulic fracturing were not "very satisfactory", a Sinopec official told the news wire. The official declined to be identified as he was not authorised to speak to media.

The official said a third exploration probe was planned for the block, but no timing or location was disclosed. China is still in the early stages of developing shale resources and has drilled less than 150 exploration wells, mostly in and around the Sichuan basin in south-west China.

In Sichuan, Shell is carrying out appraisal drilling at the Fushun-Yongchuan Block in partnership with state-run PetroChina. The joint venture is aiming to start commercial production after next year.

Shell secured the production sharing contract to develop the Sichuan block in March last year. It was the first shale PSC to be awarded in China.

A majority of the USD1 billion investment the company spent in 2013 on China’s upstream business went to Sichuan, Shell China spokesman Shi Jiangtao told Reuters in an email. A former Shell executive had said last year that the company planned to spend at least that much each year on exploring China’s shale gas resources.

However, Shell chief executive Peter Voser said in October it would take longer than expected for Shell to reap benefits from its global shale gas projects due to poor short-term results.

China is looking to replicate a boom in North American natural gas production, which has begun reshaping global energy markets. Chinese companies need international players such as Shell to lend technology and operational expertise in extracting the gas trapped in shale rock formations. China has set a target of producing some 6.5 billion cubic meters/year of shale gas by 2015 and as much as 100 billion cubic meters/year by 2020, up from virtually zero in 2012. That is a target some analysts have been skeptical the country can achieve.

MRC

MOSCOW (MRC) -- The Russian government has been working out issues on liquidation of JSC "Khimprom" (Volgograd ), but the production of emulsion polyvinyl chloride (EPVC) is unlikely to be shut down, reported MRC analysts.

JSC "Khimprom" has become unprofitable for the state for several years, and, therefore, the Russian government is considering a possibility of liquidating the company because of its huge debts before the energy sector. Khimprom's representatives are confident that, despite all the problems, they will be able to preserve EVPC production at the plant.

Volgograd "Khimprom"'s EPVC production is highly profitable among the other plant's units. And, even in case of a shutdown of the high-cost (in terms of energy consumption) chlorine and caustic soda units, the company can still preserve its PVC production. Chlorine for the resin production can be procured from a nearby plant - Kaustik (Volgograd), this scheme has been already practiced before. Despite the fact that it will result in increased costs of PVC production, it will still be highly profitable, a plant's spokesman said.

As noted earlier, JSC "Khimprom" is the only producer of emulsion PVC in Russia. The other two plants that prouduced EPVC were a plant in Novomoskovsk ("Azot", Novomoskovsk) and another one in Usole ("Usolekhimprom"), which were shut down several years ago.

RusVinyl (a JV of SIBUR and Solvin) intends to launch modern EPVC production with the capacity of 30,000 tonnes per year. However, even the launch of new capacities will not allow the Russian market to get rid of dependence from imports, as EPVC imports are about 115,000 tonnes (according to the data of 2012).
MRC