Oil prices flat; weak US demand offsets Mideast tensions

MOSCOW (MRC) - Oil prices were flat on Friday in see-saw trade, under pressure from weak US demand but drawing support from a sharp decline in Iraqi crude exports due to tensions in the Kurdistan region, said Hydrocarbonprocessing.

US light crude was 10 cents higher at $51.39. Brent crude was up 24 cents at USD57.47/bbl by 11:44 a.m. EST (1544 GMT). "We've continued to see signs that the market needs a steady drumbeat of positive information," said Gene McGillian, director of market research for Tradition Energy. "This week's DOE report where gasoline demand dropped to its lowest since March gave a little pause to that."

Oil exports from Iraq's Kurdistan via the Turkish port of Ceyhan were flowing at average rates of 216,000 barrels per day (bpd), down from the usual flows of around 600 Mbpd, a shipping source said. Iraqi troops regained control of two major oilfields northwest of Kirkuk from Kurdish Peshmerga forces this week, and the oil ministry in Baghdad expects to bring the fields back on stream on Sunday.

Russia's biggest oil company, Rosneft, has agreed to take control of Iraqi Kurdistan's main oil pipeline in a USD1.8 billion investment. Olivier Jakob, chief strategist at consultancy Petromatrix, said the deal with Rosneft "makes it a bit harder for Baghdad to do anything against those flows".

Analysts said the market was on a path toward rebalancing. "The oil market has moved into modest undersupply and we expect this will persist at least through the end of the year," US investment bank Jefferies said. U.S. commercial stocks of crude oil have dropped 15 percent from their March records, to 456.5 MMbbl, below levels seen last year.

Part of this drawdown has been due to rising exports as a result of the steep discount of US crude to Brent, which makes it attractive for American producers to export their oil. Crude oil for immediate use now carries a premium over forward futures, making it profitable to sell oil produced now rather than storing it for sale later.

Shipping data in Thomson Reuters Eikon shows that overseas U.S. crude oil shipments have soared from virtually zero before the government loosened export restrictions in late 2015 to around 2.6 MMbpd in October. "While outbound shipments recently approached 2 MMbpd, our math suggests that physical bottlenecks are unlikely to kick in until waterborne exports approach 3.2 MMbpd," RBC Capital Markets said.

MRC

MOSCOW (MRC) -- JG Summit has awarded Fluor an engineering, procurement and construction management (EPCM) contract for a petrochemical complex expansion in Batangas City, the Philippines, as per Apic-online.

The project will increase JG Summit's ethylene production by 160,000 t/y and propylene production by 50,000 t/y. Also included in the project are new and expanded downstream units. Completion is expected by the end of 2020.

Under the contract, for which a value was not disclosed, Fluor will be responsible for the utilities, offsites and infrastructure scope of work.

"JG Summit is the sole cracker operator in the Philippines and we are pleased to support their expansion program," noted Ken Choudhary, president of Fluor's Energy & Chemicals business for the Asia-Pacific region.

JG Summit announced earlier this year, as MRC informed before, that it was planning to invest USD700-million in five new petrochemical projects in the Philippines, which includes a new butadiene extraction plant, an aromatics unit, an expansion of its existing naphtha cracker and polypropylene facility, and a new bimodal polyethylene unit. Operations are scheduled to start by 2021.
MRC

MOSCOW (MRC) - The US Environmental Protection Agency (EPA) has backed off a series of proposed changes to the nation’s biofuels policy after a massive backlash from corn-state lawmakers worried the moves would undercut ethanol demand, according to a letter from the agency to lawmakers seen by Reuters.

The letter could end uncertainty about the future of the U.S. Renewable Fuel Standard under the administration of President Donald Trump that has roiled commodity and energy markets for months. The program, which requires refineries to blend increasing amounts of ethanol and other biofuels into the nation’s fuel supply every year, appeared on the verge of a massive overhaul.

EPA Administrator Scott Pruitt said in the letter dated Oct. 19 that the agency will keep renewable fuel volume mandates for next year at or above proposed levels, reversing a previous move to open the door to cuts. He said the EPA would not pursue another idea floated by EPA leadership that would have allowed exported ethanol to be counted toward those volume quotas.

Pruitt also said the EPA did not believe a proposal to shift the biofuels blending obligation away from refiners was appropriate. That plan is backed by representatives of a handful of independent refining companies. Those ideas would have eased the burden on some in the refining industry, who have argued that biofuels compete with petroleum, and that the blending responsibility costs them hundreds of millions of dollars a year.

But Midwestern lawmakers, including Republicans Charles Grassley and Joni Ernst, had vocally opposed all those ideas, calling them a betrayal of the administration’s promises to support the corn belt. They were concerned the moves would undercut domestic demand for ethanol, a key industry in the region that has supported corn growers.

In Pruitt’s letter, he said the EPA was prepared to work with Congress to examine the possibility of a waiver that would allow the sale of E15 gasoline, containing 15 percent ethanol, year-round - something currently not permitted during the summer due to concerns about smog.

Renewable Fuels Association President and CEO Bob Dinneen said in a response to the letter on Friday morning that the U.S. ethanol industry was “grateful for Administrator Pruitt’s epiphany on the road to the RFS.”
MRC

MOSCOW (MRC) -- Italian oil and gas group Eni is keen to strengthen ties with Russia's Rosneft and could forge a partnership in the liquefied natural gas (LNG) sector, reported Reters with reference to its chairwoman.

In May this year, Eni extended a cooperation agreement with Rosneft to explore the Russian Barents Sea and the Black Sea, and consider further opportunities together.

"We are discussing a series of projects ... and are talking for a possible partnership in LNG," Emma Marcegaglia said at an energy conference.

Eni, which in recent years has uncovered around 115 Tcf of gas in Mozambique and Egypt, said earlier this year it was looking to develop its LNG business worldwide.

The state-controlled major recently sold a 30% stake in its giant Zohr gas field in Egypt to Rosneft and the Russian energy giant has an option to buy a further 5%.

Speaking at the same conference, Rosneft CEO Igor Sechin said the Russian company was happy with its investment in Zohr.

"We are looking positively at the matter to realize this option," he said.

Sechin said Rosneft would start drilling activity with Eni, and Italian oil service group Saipem, in the Black Sea at the end of December.

Eni has three licences with Rosneft in the Black Sea and Barents Sea.

As MRC wrote before, in May 2017, Rosneft and Eni S.p.A. entered into a Cooperation extension agreement in the areas of upstream, refining, marketing and trading during the visit of an Italian delegation to Russia. The Agreement provides for the development of cooperation between Rosneft and Eni in Russia and abroad in the following areas: exploration and production of hydrocarbons, refining, trading, logistics, marketing and sales, petrochemicals, technology and innovation. The document reinforced the previous agreements between the two companies, specifically in offshore to drill exploration wells as part of joint projects in the Black and Barents seas.

Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.
MRC

MOSCOW (MRC) - Imports of polypropylene (PP) into Belarus increased to about 63,800 tonnes in first eight months of this year, up 5.1% year on year, compared to the same period of 2016. Demand for all PP grades increased, as per MRC DataScope.

August PP imports into Belarus increased to 9,600 tonnes from 7,700 tonnes a month earlier, local companies cut their purchasing of propylene copolymers in Russia. Total PP imports into the country reached 63,800 tonnes in January - August, compared with 60,600 tonnes year on year. Demand for all PP grades increased, but propylene copolymer accounted for the greatest growth.

The structure of PP imports by grades looked the following way over the stated period.

August imports of homopolymer PP to the Belarusian market decreased to 5,600 tonnes from 6,000 tonnes a month earlier, shipments of injection moulding homopolymer PP decreased. Total imports of homopolymer PP into Belarus were 42,700 tonnes in the first eight months of this year, compared with 41,200 tonnes year on year. The key suppliers of homopolymer PP were Russian producers, with their share in the total supply around 88%.

August imports of propylene copolymers into Belarus grew to 4,000 tonnes against 1,700 tonnes a month earlier, the local companies increased procurement of PP random copolymers in Russia. Thus, overall imports of propylene copolymers reached 21,000 tonnes in January-August 2017, whereas this figure was 19,400 tonnes a year earlier.
MRC