Iraq oil output seen by Lukoil at peak as government cuts back

MOSCOW (MRC) -- Lukoil may spend about USD1.3 billion on the West Qurna 2 field, down from about USD3 billion the year earlier, reported Bloomberg with reference to the company's official.

Lukoil is pumping about 400,000 barrels a day at West Qurna 2 and plans to raise capacity to 1.2 million barrels daily in the next decade.

Crude output in Iraq, OPEC’s second-largest producer, has probably peaked and is likely to fall short of the country’s target over the next two years, according to an official with Lukoil PJSC, operator of one of the country’s biggest fields.

Iraq needs more investment to maintain production at current levels, according to the official, who asked not to be identified when discussing company matters. Yet output can’t keep up because the government is requiring companies to reduce spending, the person said. The oil ministry has reached agreements in principle with most international oil companies to reduce their 2016 budgets by about 50 percent, and final accords may be reached in about two months, the person said.

The Persian Gulf nation has boosted oil output as companies such as BP Plc, Royal Dutch Shell Plc and Lukoil are developing some of the largest deposits in its oil-rich southern region. They’ve been physically insulated from fighting against Islamic State militants in the country’s north, though the war effort and lower oil prices have strained the government’s finances and diverted its attention from developing new projects the companies are seeking to implement.

Iraq pumped a record 4.51 million barrels a day in January and 4.31 million in April, according to data compiled by Bloomberg. Its total production capacity is 4.8 million barrels a day, and increasing that to a target of 5 million will depend on oil prices, Deputy Oil Minister Fayyad Al-Nima said in a May 12 interview.

The government is negotiating with oil companies on production targets after asking them to reduce 2016 spending because of lower oil prices and cuts in government revenue, Falah Al-Amri, chairman of Iraq’s state Oil Marketing Organization, said in February. The talks may affect Iraq’s target to have crude production capacity of 6 million barrels a day by 2020, Al-Amri said.

Iraq needs Brent crude at about USD55 a barrel to break even on government spending, the Lukoil official estimated. Brent is trading this week near USD50 a barrel, about half the 2014 average. Lukoil has suggested linking compensation for work done at the fields to the market price of oil rather than basing payments on a flat fee as is the case now, the official said.

As MRC wrote previously, OAO Lukoil Holdings, Russia's No. 2 oil producer, will invest USD1 billion in the oil firm Samara-Nafta to increase production. Lukoil acquired Samara-Nafta from Hess Corp. this month for USD2 billion as part of a strategy to stabilize and increase oil production. Lukoil has for years fought declining output at its main, Soviet-era fields in Western Siberia. The investment in Samara-Nafta will increase production by between 5% and 7% over the next five years from 2.5 million tonnes a year, Prime news agency cited the company as saying.

LUKoil, a Russian-based company, is one of the global leaders in the production and refining of crude oil and gas resources. The world's largest privately owned oil and gas company, measured by proven oil reserves, LUKoil has operations in over 40 countries.
MRC

France uses strategic oil reserves to counter refinery blockade

MOSCOW (MRC) -- France has started using its strategic oil reserves for the first time since 2010 to counter union blockades of its refineries, the French oil industry federation said, reported Reuters.

Unions protesting against a planned labor reform are picketing refineries around the country. Coupled with some panic buying, the disruption has led to fuel shortages in large parts of France, including Paris, over the past week.

France has strategic oil reserves worth several months of consumption on which it can draw in emergencies. They were last used when unions blocked refineries for several weeks in protest against pension reforms in 2010.

Experts say French strategic oil reserves do not physically rise or fall, but that operators allocate volumes blocked in strike-hit refineries to strategic reserve obligations, freeing up other volumes in accessible locations.

Union Francaise des Industries Petrolieres (UFIP) President Francis Duseux told RMC radio that the industry had been using the strategic reserves for two days. A spokeswoman confirmed that "a small quantity" had been used.

"Every day we use the equivalent of about one day of consumption. At worst, if the situation remains very tense, we can do this for three months," Duseux said.

He added that even if all refineries were stopped, France's pipeline system would still allow the industry to operate.

Industry experts confirmed that the reserves - set up following the 1973-1974 oil crisis and stored in some 85 sites around the country - account on average for about three months of consumption, or longer during the summer months when there is no fuel consumption for heating.

They are composed of 44% of crude oil and 66% of refined products.

As MRC wrote earlier, Naphtachimie declared a force majeure on ethylene production from its plants in Lavera, France owing to an ongoing nationwide strike against proposed labour reforms by the French government. Located at Lavera in France, the cracker has a Ethylene production capacity of 775,000 mt/year.

Besides, Total SA said that it had shut down its Gonfreville and Feyzin refineries on 18 May and was in the process of halting operations at two others and was reducing output at a fifth refinery.
MRC

Kuraray to increase ethylene vinyl alcohol copolymer capacity at Pasadena

MOSCOW (MRC) -- Kuraray Co. (Tokyo, Japan) plans to increase the production capacity of ethylene vinyl alcohol copolymer, EVAL within its subsidiary, Kuraray America, Inc. (Houston), said Chemical Engineering.

The Kuraray EVAL plant located in Pasadena, Texas will increase their capacity by 11,000 ton/yr with planned operations to commence in the summer of 2018.

Currently, Kuraray’s EVAL product line provides the world’s widest range of EVOH resins and films. With global demand forecasted to increase at an annual rate of six to seven percent, this boost in capacity at the Pasadena EVAL plant will further solidify Kuraray as a leader in the production of EVOH resin and barrier materials.

"In addition to expanding EVAL production within the U.S., this announcement also represents a USD75-million investment towards the Bayport community," says Robert Armstrong, plant manager at Kuraray America, Inc. “With the recent opening of the Kuraray Poval plant and the consideration of enhancing current VAM production, Kuraray continues to further their commitment to southeast Texas."

Due to its superior gas barrier properties, EVAL applications include food packaging as well as agricultural and industrial applications, says the company. Kuraray is currently developing new applications of EVAL including industrial applications such as soil pollution prevention liners and agricultural applications including impermeable fumigation films.

As mRC informed earlier,in 2015, Kuraray acquired Australia's Plantic Technologies. With this, Kuraray expands into bio-based barrier materials, which meet the increasing global demand of bio-based food packaging materials.

Kuraray produces specialty chemicals, fibres and other materials, including functional resins and films, synthetic isoprene chemical products, synthetic leather, vinylon fibre and polyester fibre.
MRC

Technip wins contract for Saudi Kayan cracker furnace

MOSCOW (MRC) -- Technip (Paris, France) was awarded a contract by CTCI Corp. (Taiwan) to provide basic engineering and proprietary equipment for a grassroots ethylene cracking furnace at the Saudi Kayan Petrochemical Co.’s petrochemical complex in Jubail, Saudi Arabia, said Chemengonline.

The furnace design will be based on Technip’s proprietary USC furnace technology. Technip was awarded this project for its best proposal and because of its high-capacity, high availability, gas-cracking applications, says the company.

Technip’s operating center in Milton Keynes, U.K., will execute the project, which is scheduled for completion in 2017.

As MRC informed earlier, Technip announced an all-stock merger with U.S. rival FMC Technologies to create an oil services group with combined revenue of USD20 billion.

Technip has a market value of about USD6.2 billion, compared with USD6.5 billion for FMC Technologies. Technip has annual revenue of USD13.5 billion, more than double that of FMC Technologies.

MRC

Clariant Healthcare Packaging launches new range of Aroma-Can canisters

MOSCOW (MRC) -- Clariant, a world leader in specialty chemicals, and its Healthcare Packaging unit, is introducing a new and improved family of Aroma-Can canisters to enhance nutritional products by adding a pleasant scent to product packaging, said the producer on its site.

Modeled after Clariant’s desiccant canisters for pharmaceutical and nutraceutical packaging, Aroma-Can canisters employ aroma technology that can give consumers a positive sensory experience when they open product packaging. The technology embeds food-grade flavors, such as vanilla, orange and lemon, directly into a plastic canister, which can be inserted easily into a container.

"Smell can enhance or detract from the experience of using a product or the decision to make a repeat purchase," explains Robert Crossno, Head of Sales - Americas, Clariant Healthcare Packaging. "Products such as fish oil tablets and herbal supplements often emit odors that are unpleasant or unappealing to end users. A favorable scent within the product packaging can mask unpleasant odors or help enhance odorless products, such as vitamins."

Although the new Aroma-Can bears the same overall dimensions of standard desiccant canisters, its new and innovative one-piece design reduces further process and assembly and contains more surface area, which improve the canister’s aroma profile. Because of their dimensional uniformity with desiccant canisters, Aroma-Can canisters can be automatically inserted into packaging at rates up to 300/minute using standard desiccant canister insertion equipment.

As MRC wrote previously, in 2014, CB&I and Clariant announced that their new Ziegler-Natta (ZN) polypropylene catalyst plant in Louisville, Kentucky, was on schedule to begin production in 2015. The plant is part of a long-term strategic partnership between Clariant’s catalysts business and CB&I’s Lummus Novolen Technology business. Based at Clariant’s largest US production hub, the new facility will combine innovative catalysts jointly developed by both companies with high-capacity output.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.
MRC