Sinopec raises refinery runs to mitigate impact of weaker crude

MOSCOW (MRC) -- China Petroleum & Chemical Corp., Asia’s biggest oil refiner, posted a 22% decline in profit for the first half of the year as the slump in prices outweighed the benefit of cheaper crude to its refining business, as per Hydrocarbonprocessing.

Net income dropped to 25.4 billion yuan (USD4 billion), or 0.21 yuan/share, from 32.5 billion yuan, or 0.28 yuan, a year earlier, the Beijing-based company, known as Sinopec, said in a statement to the Hong Kong stock exchange Wednesday.

Sinopec sought to counter the fall in crude prices by increasing oil refining, which along with marketing accounted for half of the company’s revenue last year. The company plans to further raise refinery runs for the rest of the year and reverse a decline in crude output.

"It’s been a roller-coaster ride for Sinopec in the first half," said Laban Yu, a Hong Kong-based analyst at Jefferies Group. "It lost money in refining in the first quarter because they had to use higher priced inventory bought last year, and then turned to profit in the second quarter because they were able to consume cheaper crude."

As MRC informed earlier, in the first three months (Q1) of 2015, Sinopec announced that its net profits plummeted 84.6% year on year. Net profits during Q1 stood at 2.17 billion yuan (USD354.58 million), while its business revenues on oil refining pared 3.36 billion yuan. Sinopec attributed the slump to plunging oil prices in the global market.

Sinopec Corp. is one of the largest scale integrated energy and chemical companies with upstream, midstream and downstream operations. Its refining and ethylene capacity ranks No.2 and No.4 globally. The Company has 30,000 sales and distribution networks of oil products and chemical products, its service stations are now ranked third largest in the world.
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MOSCOW (MRC) -- A permanent lifting of sanctions against Iran could accelerate Iranian methanol capacity by an additional 10 million metric tons (MMT) by 2025, as per Hydrocarbonprocessing with reference to the global consultancy IHS' new report.

Already a major producer of methanol, Iran currently produces 5 MMT of methanol annually, which represents nearly 5% of global methanol capacity.

A full repeal of sanctions would also open up a large volume of methanol supply to global markets within the next five years, reducing the country's dependence on the Indian and Chinese markets for its exports, the IHS report said.

"Iran has proposed projects totaling more than 20 MMT of new methanol capacity, but a more realistic figure of approximately 10 MMT could be added by 2025, if and when the sanctions are lifted," said Mike Nash, global director of syngas chemicals at IHS Chemical.

Methanol is a key commodity and an integral part of the global economy. Traditionally, it has been a chemical feedstock consumed in the manufacture of derivatives essential to the production of consumer goods as diverse as plastic bottles, polyester fibers, paints, adhesive, inks, pharmaceuticals, herbicides and cigarette filters.

However, methanol is also increasingly being used in energy applications, with the most significant application as a direct gasoline blendstock. China leads global market demand for gasoline blending, but other countries such as Israel, Australia, Thailand, Iran, Iceland, Azerbaijan and Uzbekistan also use methanol for gasoline blending.

According to IHS Chemical, in 2015, total global methanol demand is expected to reach 70 MMT, driven in large part by the resurgence of construction and automotive markets, and increased demand for cleaner energy.

Before the imposition of sanctions on Iran, the country tended to function as a classic swing producer, selling methanol on a spot basis to maximize the short-term netbacks; this resulted in minimal regional price differentials. Iran was a major supplier of petrochemicals to Europe - primarily ethylene, polyethylene (PE) and methanol.

However, after the imposition of the sanctions, business with Europe and several countries in Asia virtually disappeared and export volumes from Iran were redirected to China and India as well as a few other countries in Asia and Middle East. Iran was restricted to selling all of its output to a limited number of markets, with regional spot prices much lower than in other countries.

According to IHS Chemical analysis, in 2014, Iran exported 2.9 MMT of methanol, with 60% of its exports going to China and 29% to India. IHS estimates that more than 100 thousand metric tons (TMT) of methanol are currently imported into Europe from Iran.

"In the short-term, after the sanctions are lifted, Iran will likely re-kindle its relationships with Korea, Japan and Italy," Nash said. "And with the door to the West reopened, Iranian producers can choose the highest-priced market to sell Iran’s new 10 MMT methanol capacity, which will lead to a greater convergence of regional pricing."

We remind that, as MRC reported earlier, currently number of active Iranian Petrochemical complexes are 53, with total production capacity of 59 million metric ton, producing range of polymers, chemicals, aromatics & liquid gas, located mainly at Iranian south region, next to Persian Gulf, called Assaluyeh and Mahshahr Special Economic Zones.
At the moment, there are 67 developments projects in the country which are under construction, adding 61 million metric ton on total production and estimated to fully run till 2018.
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MOSCOW (MRC) -- Zhangjiagang Yangzijiang has restarted a propane dehydrogenation (PDH) plant following a brief outage owing to mechanical problems, as per Apic-online.

A Polymerupdate source in China informed that the plant was shut early last week. The plant has resumed operations over weekend.

Located at Jiangsu province in china, the PDH plant has a production capacity of 600,000 mt/year.

As MRC reported earlier, in early June 2015, Ningbo Haiyue New Material Co shut down its PDH in China for repaires for 8-10 days. Located at Ningbo in China, the plant has a propylene capacity of 600,000 mt/year.

Besides, in late January 2015, Shaoxing Sanyuan Petrochemical took off-stream PDH unit owing to technical issues. Located in Zhejiang province, China, the unit has a propylene capacity of 450,000 mt/year.
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MOSCOW (MRC) -- Petronas Chemicals, Malaysia’s state oil and gas company, has shut its No. 2 methanol plant for maintenance turnaround, as per Apic-online.

A Polymerupdate source in Malaysia that the plant was taken offstream in mid-Aug 2015 for a maintenance turnaround. It is likely to remain off-stream for around 45 Days.

Located at Labuan in Malaysia, the no. 2 methanol plant has a production capacity of 1.7 MMT/year.

As MRC reported before, Petronas has reportedly postponed the start-up of its USD16bn Refinery and Petrochemical Integrated Development (RAPID) project in Johor to mid-2019, citing a drop in oil prices over the past year.

The RAPID project includes a 300,000-b/d refinery, which will supply naphtha and liquefied petroleum gas feedstock for the production of about 3-million t/y of ethylene, propylene, C4 and C5 olefins and several downstream units.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
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MOSCOW (MRC) -- Bashkir company Gazprom neftekhim Salavat, one of the largest Russian petrochemical producers, has resumed production of high density polyethylene (HDPE) after an outage for maintenance, reported MRC analysts.

Gazprom neftekhim Salavat shut down its HDPE production for a long turnaround on 24 July. Preparations for the launch of the production after maintenance works started on Monday, 24 August. And the company's customers said on-spec production had been already produced by the middle of the week.

Gazprom neftekhim Salavat's HDPE production capacity is 120,000 tonnes per year. The plant produced 57,400 tonnes from January to July 2015, up by 4% year on year.

JSC "Gazprom neftekhim Salavat" (formerly JSC "Salavatnefteorgsintez") is one of Russia's major petrochemical complexes. The company was integrated into JSC "Gazprom" system. The concentration of the full cycle of hydrocarbon processing, petrochemistry and mineral fertilizer production on the one site is the main advantage of GNS. The company comprises oil refinery, chemical plant, gas&chemical plant and monomer plant. The list of manufactured commodity products now includes more than 140 items, including 76 items of the main products: motor gasoline, diesel fuel, kerosene, fuel oil, toluene, solvent, liquefied gases, benzene, styrene, ethylbenzene, butyl alcohols, phthalic anhydride and plasticizers, polyethylene, polystyrene, silica gel and zeolite catalysts, corrosion inhibitors, elemental sulfur, ammonia and urea, glycols, and amines, a wide range of plastic consumer goods, surfactants and others.
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