New Saudi refining JV Satorp hits full capacity

MOSCOW (MRC) -- Saudi Arabia’s newest oil refinery reached full capacity last month, adding to international competition that Total and Vitol said will force more European plants to close, said Hydrocarbonprocessing.

The Satorp refinery, a venture between Total and Saudi Arabian Oil Co., processed crude at full capacity of 400,000 bpd on Aug. 1, Patrick Pouyanne, Total’s president of refining and chemicals, said at a conference in Brussels on Tuesday.

Europe’s refineries are too small and not sophisticated enough to compete with new plants, Chris Bake, executive director at Vitol, the world’s largest oil trader, said at a separate conference in Fujairah, in the United Arab Emirates.

European refineries are shutting or converting to storage depots at the fastest pace since the 1980s after demand for oil products dropped for seven years and competition from other regions intensified. Seventeen plants closed in the past six years, according to the International Energy Agency, the Paris-based adviser to 29 nations.

Another 10 refineries need to close, equating to 1.5 million to 2 million bbl of daily capacity, Pouyanne said.

Another 4.8 million bbl of daily capacity would have to be cut worldwide by 2019 to increase the average refinery-utilization rate to the levels last seen before the 2008 financial crisis, Bosoni said. This may be done by closing existing plants or delaying or canceling new projects, she said.

European refiners are at risk of closing because "they’ve been under-investing for too long and are too small to compete with the biggest refineries in the Middle East and India," said Vitol’s Bake.

Satorp is the first of three new Saudi refineries. Saudi Arabian Oil Co., known as Aramco, is constructing another 400,000 bpd plant at Yanbu on the Red Sea coast with China’s Sinopec Group. The project is in the “precommissioning” stage, Aramco CEO Khalid Al-Falih said on Sept. 10.

The Jazan refinery project in the kingdom’s southwest will also process 400,000 bpd of crude and is planned to begin operations in 2016.

Satorp, a company that is 62.5% owned by Aramco and 37.5% owned by France’s Total S.A., plans to build a 400,000 barrel-a-day export refinery in Jubail. The refinery complex, estimated to cost more than USD10 billion to build, is part of a drive by the world’s top oil exporter to boost refining capacity by more than 1.7 million barrels a day from installed capacity of 2.1 million barrels a day now.MRC

MOSCOW (MRC) - Total production of unmixed polyvinyl chloride (PVC) in Russia increased by 3% in the first eight months of 2014.
A significant increase in production volumes showed Bashkir Soda Company and Khimprom (Volgograd), according to MRC ScanPlast.

Russia's unmixed PVC production decreased to 30,100 tonnes in August, compared with 56,950 tonnes in July, mainly because of a scheduled maintenance works at the largest Russian PVC producer - SayanskKhimPlast. Total PVC production in the country grew to 409,400 tonnes in January - August of this year, compared with 403,300 tonnes year on year. Russian PVC production increased because of a production rates at Bashkir Soda Company an absence of maintenance works at Khimprom Volgograd.

SayanskKhimPlast almost all August was shut for maintenances, so producer's PVC production in August was only 1,000 tonnes. Producer's PVC production in January - August of this year remained at the last year's level at 180,500 tonnes.

Bashkir Soda Company (formerly Kaustik (Sterlitamak), significantly increased capacity utilisation in August, having reached 19,700 tonnes of suspension PVC (SPVC) last month. Producer's production of SPVC totalled 152,500 tonnes in January - August of this year, up 10% year on year.

Kaustik Volgograd has been working at a lower capacity utilisation in the last two months, so SPVC production by the producer was 8,100 tonnes. Kaustik Volgograd increased SPVC production to 64,200 tonnes in the first eight months of 2014, compared to 62,900 tonnes year on year.

The only emulsion polyvinyl chloride (EPVC) producer in Russia - Khimprom (Volgograd) decreased EPVC production to 1,400 tonnes in August because of technical problems at the carbide furnaces, compared with 1,700 tonnes in July. Producer's EPVC production totalled 12,400 tonnes in the first eight months of the year, up 16% year on year because of the reduction of time of turnaround.

As it was already reported, Rusvinil (JV SIBUR and SolVin) in August launched SPVC production in the test mode. There is no official data on the August production at Rusvinil.


MRC

MOSCOW (MRC) - Production of polyethylene (PE) in Russia decreased by 11% in the first eight months of this year. Production of all PE grades decreased, the exception was linear low density polyethylene (LLDPE), according to MRC ScanPlast.

August PE production in Russia decreased to 108,600 tonnes (111,200 tonnes in July) because of the scheduled maintenance works at Gazprom neftekhim Salavat and Ufaorgsintez. Total PE production in the country reduced to 1.005 ml tonnes in January - August of this year, compared with 1.005 tones year on year. Russian producers have reduced production of low density polyethylene (LDPE) and high density polyethylene (HDPE), while the production of LLDPE increased.

Structure of PE production in Russia over the reported period looked as follows.

Russia's HDPE production was 68,800 tonnes in August, compared with 68,300 tonnes in July. Total HDPE production in Russia was 579,100 tonnes in the eight months of this year, down 17% year on year. The increase in production at Gazprom neftekhim Salavat and Kazanorgsintez could not compensate the shutdown of Stavrolen.

August LDPE production in Russia decreased to 39,700 tonnes, compared with 42,800 tonnes in July largely because of the scheduled maintenance at Ufaorgsintez. Total LDPE production in Russia decreased to 410,400 tonnes in the Jan-Aug 2014, down 2% year on year.

Nizhnekamskneftekhim did not produce LLDPE in August. Total production of LLDPE was a little more than 16,000 tonnes in the first eight months of the year, up 13% year on year.
MRC

MOSCOW (MRC) -- ThyssenKrupp Industrial Solutions is making its Steam Active Reforming (STAR) process available to Formosa Plastics Corp (FPC) for a propane dehydrogenation (PDH) project in Texas, USA, according to Hydrocarbonprocessing.

The PDH plant is to be built at Formosa's existing petrochemical complex in Point Comfort.

The contract awarded to ThyssenKrupp includes licensing, basic engineering, detail engineering for the key equipment, delivery of the catalyst (STAR catalyst) and technical support during the entire project execution.

"Having already acquired several major fertilizer plant contracts for as a result of the shale gas boom in the US, we are confident we can now profit from forthcoming investments in propane dehydrogenation plants," said Hans-Theo Kuhr, CEO of the process technologies business unit at ThyssenKrupp Industrial Solutions.

The PDH plant in Point Comfort will have a capacity of 545,000 tpy of propylene and is part of the Point Comfort petrochemical complex expansion announced by FPC in February 2012.

As MRC reported earlier, in early August 2014, the US Environmental Protection Agency (EPA) issued three final GHG Prevention of Significant Deterioration construction permits for the Formosa Plastics facility in Point Comfort, Texas.
Formosa is expanding its chemical complex, located near Victoria, and taking three actions with its turbines unit, olefins unit and low-density polyethylene (LDPE) unit.

According to the olefins GHG permit, a new ethane cracker and propane dehydrogenation (PDH) unit will have a combined capacity of 1.75 million tpy of "high-purity ethylene product". Meanwhile, the LDPE unit will have a a capacity of 625,500 tpy and be able to produce resin at different grades.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company's plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC

MOSCOW (MRC) -- Rosneft, Russia's biggest crude oil producer, may back out of a deal to buy Morgan Stanley's oil trading unit because Western sanctions make it virtually impossible to finance day-to-day operations, reported Reuters with reference to three sources close to the state-controlled company.

The people said the chances of the deal going through range from "possible" to "highly unlikely."

The business in question trades actual barrels of oil instead of just contracts linked to the price of crude. Morgan Stanley is under US pressure to sell the unit because regulators regard physical oil trading as too risky for a major bank to own because unpredictable events like oil tanker leaks could expose it to billions of dollars in liability.

A spokesman for Morgan Stanley declined to comment. Ruth Porat, the bank's chief financial officer, said in July she expected the deal to close later this year. Rosneft declined official comment.

Rosneft agreed to buy the unit in December. Since then, the United States and the European Union have slapped wide-ranging sanctions on Russia's energy and military sectors to punish Moscow for its incursion into Ukraine. Rosneft's chief Igor Sechin, a close ally of Russian President Vladimir Putin, has been on the US sanctions list since April. Rosneft itself was added to the list in July.

Rosneft has enough cash to buy the Morgan Stanley unit, which sources said carries a price tag of between USD300 million to USD400 million. But to operate day-to-day, the business requires billions of dollars of bank lines of credit, funding that's difficult to secure given the sanctions.

"This deal just cannot go through. It is not an issue of finding USD300 million to buy the business. Rosneft has the money. But it won't be able to operate it," one Russian-based source with direct knowledge of the matter said.

One remaining obstacle for the deal is approval from the Committee on Foreign Investment in the United States, a regulatory group that vets mergers and acquisitions that may affect US security. CFIUS has asked Rosneft and Morgan Stanley for more information about the deal, without approving it or rejecting it, a step that lawyers said is not unusual for a transaction under review.

As MRC wrote before, in early September 2014, the European Commission approved the acquisition of parts of Morgan Stanley's Global Oil Merchanting Unit by OJSC Oil Company Rosneft of Russia.

Rosneft became the world's biggest listed oil producer in March after the USD55 billion acquisition of Anglo-Russian oil firm TNK-BP. Its oil output accounts for over 40% of the total in Russia, the global leader in crude production.

Rosneft has amassed assets abroad in the past few years, including refineries in Germany and Italy, but has bought no significant assets in the United States. Rosneft has an oil trading division in Geneva, which helps supply its refining assets in Europe.
MRC