US ethane consumption, exports to increase as new petrochemical plants come online

MOSCOW (MRC) -- Over the next two years, EIA’s Short-Term Energy Outlook (STEO) projects growth in US consumption of ethane in the petrochemical industry will exceed increases in consumption of all other petroleum and liquid products - such as motor gasoline, distillate, and jet fuel - combined, according to Hydrocarbonprocessing.

EIA also projects that ethane exports will continue increasing, as ethane is exported both by pipeline to Canada and by tankers to more distant destinations.

Ethane is separated from raw natural gas at natural gas processing plants along with other hydrocarbon gas liquids(HGL) such as propane, normal butane, isobutane, and natural gasoline. Ethane is mainly used as a petrochemical feedstock for the production of ethylene, which is a building block for plastics, resins, and other industrial products.

As U.S. natural gas production has increased, the amount of ethane contained in raw natural gas production streams has exceeded domestic demand or the ability to export it abroad. This situation has led producers to leave some of the ethane in the natural gas stream, up to allowable limits set by natural gas pipelines and distribution systems, and to sell it as natural gas, rather than recover and market ethane as a separate product.

Nonetheless, ethane is increasingly being recovered from the natural gas stream, and US ethane consumption is increasing as existing ethylene crackers have expanded and new plants have begun operating. In addition, expanding pipeline networks and two new ethane export terminals have allowed US ethane exports to increase.

In 2017, construction was completed on the first three of a series of new ethylene crackers - two early in the year and a third in late December, all on the Texas Gulf Coast. These crackers expanded the capacity to consume ethane in the United States by 210 Mbpd, and EIA expects ethylene plant capacity to continue to expand: six ethylene crackers, collectively capable of consuming 380 Mbpd of ethane, are planned to be completed by the end of 2019. EIA expects annual U.S. ethane consumption to grow from an estimated 1.2 MMbpd in 2017 to 1.4 MMbpd in 2018 and 1.6 million MMbpd in 2019 as these new plants and related infrastructure ramp up operations.

EIA also projects continued growth in ethane exports, with average annual exports increasing from 180 Mbpd in 2017 to 290 Mbpd in 2018 and 310 Mbpd in 2019. Ethane exports by pipeline to Canada are expected to increase in early 2018 as shipments on the Utopia pipeline that crosses the US-Canada border near Detroit begin to flow and as an ethylene plant in Sarnia, Ontario, expands capacity.

Ethane is also exported by tanker from terminals at Marcus Hook, Pennsylvania, and Morgan’s Point, Texas, which both opened in 2016. Ethane shipments from these facilities currently supply petrochemical feedstock to countries including the United Kingdom, Norway, Sweden, India, and Brazil. By the end of 2019, ethane exports from the United States may also reach China when a new ethylene plant there begins operation.
MRC

MOSCOW (MRC) -- It's the burning question in the oil industry: when will Saudi Arabia pull the trigger on the Aramco stock market listing? Many industry experts are focusing on the current level of oil prices. However another key consideration for Saudi officials in floating up to 5 percent of the state oil producer is where they see prices in one to two years' time, reported Hydrocarbonprocessing with reference to two sources close to the IPO.

The Riyadh government is carefully analyzing the future price curve structure in oil markets because it regards prices further out as an important element in achieving a high valuation in what could be the biggest initial public offering in history, the sources told Reuters.

Ideally, so-called long-dated prices for one and two years ahead need to move at least USD10 higher - to around USD70 per barrel - for the government to be happy to launch the listing, said the sources, who declined to be named as the information is confidential.

"When will the ideal moment come?" said one of the sources. "Maybe you should also look at the forward curve for oil as the forward curve will be key for investors valuing Aramco."

The Saudi energy ministry and Saudi Aramco did not immediately respond to a request for comment.

Many considerations are likely to influence the IPO timing, and the final decision may rest with Crown Prince Mohammed bin Salman. But if long-dated prices at around USD70 are an important factor, this could indicate a listing may be some way away.

Brent oil futures for March 2019 are valued now at USD60.60, about a USD4 discount to the USD64.50 current - spot - price, and for two years away at USD57.70.

Saudi officials have given few clues about the IPO, with energy minister Khalid al-Falih and finance minister Mohammed al-Jadaan saying only that the government will proceed when "the time is right".

Spot and long-dated prices often do not move together. Immediate prices are more influenced by developments such as politically driven supply outages or natural disasters, while prices further down the curve are more affected by broader expectations of supply and demand, factoring in issues such as OPEC output policy and the rise of electric vehicles.

Spot prices rose to a three-year high above USD70 in January but have since slid nearly 15 percent together with a broader decline in the stock markets due to fears about global inflation as well as renewed concerns about rising U.S. oil production.

The concern about long-dated prices could also cast OPEC kingpin Saudi Arabia's oil-supply policies in a new light. The kingdom has orchestrated a global oil output cut deal to support prices, a move which Reuters has previously reported was partly driven by a desire to maximise Aramco's valuation for the IPO.

Falih has repeatedly said he sees OPEC cuts lasting until the end of 2018 and even then that the exit would be very gradual - comments that helped support not only near-term but also longer-dated prices.

The Saudi government says Aramco is worth USD2 trillion and aims to list on one or more foreign stock exchanges in addition to Riyadh.

Saudi sources have said the listing on a local bourse could happen before the international listing. It is not clear if the forward oil price indicator will be a key consideration for the timing of a local listing.

The IPO is a central part of the crown prince's reform drive aimed at restructuring the kingdom's economy and reducing its dependence on oil revenue. The prince is also one of the architects of the output production pact between OPEC and Russia.

While Saudi officials think USD60 per barrel is a reasonable price for oil in the long term, the rally at the start of 2018 has provided an incentive to bump up the Aramco valuation, according to a third source close to the IPO.

"USD60 is a sweet spot. But now they are making hay while the sun shines," the source said. He added however that, inside Aramco, concerns were also rising that a prolonged rally could again spur U.S. shale production too much and lead to a loss of Saudi market share. "A rally to the USD70s carries the seeds of its own destruction," the source said.

As MRC informed earlier, Saudi Arabia wants to complete talks with strategic investors such as China, Japan and South Korea before deciding where to list shares in state oil company Saudi Aramco, reported Reuters in early February with reference to three sources familiar with the discussions.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
MRC

MOSCOW (MRC) -- On January 16, Sinochem Quanzhou Petrochemical’s atmospheric and vacuum units produced qualified products, marking the company’s successful completion of a plant-wide overhaul 6 days ahead of schedule. Using current petrochemicals market price, a benefit in excess of 120 million yuan could be realized, as per Hydrocarbonprocessing.

The established plan for the overhaul cycle was 50 days. The overhaul involved 5,307 activities, 7,000 management tashs and various types of operating personnel participated. On-site operation covered a wide range. A wide range of machinery and equipment types were used in large quantities.

Specifically, the overhaul included inspecting 1,800 pieces of pressure vessels and 775 km of pressure piping; overhauling 40 towers, 130 pumps and 8 units; extracting 800 heat exchanger cores; overhauling 10 substations plus electrical lines, two separate DCS systems, 5,000 valves; and welding a total amount of 110,533 inch diameters. In addition, there were 237 technical renovation projects and 190 second-phase projects that were reserved for later development projects.

During the overhaul, Sinochem Quanzhou Petrochemical strictly implemented HSE management principle and did a good job in every operation link. In the end, it reported zero safety accidents, zero environmental accidents, zero major accidents, proudly accomplished the set goal of a "Gas won’t go up into the air and oil won’t fall onto the ground (zero discharge of pollutants)” overhaul.
MRC

MOSCOW (MRC) -- On behalf of the Abu Dhabi Government, the Abu Dhabi National Oil Company (ADNOC) today signed an agreement with Cepsa, a Spanish integrated oil and gas company, awarding it a 20% stake in Abu Dhabi’s offshore Sateh Al Razboot (SARB) and Umm Lulu concession, as per company's press release.

The choice of Cepsa, which is wholly-owned by Abu Dhabi’s Mubadala Investment Company and operates across the entire oil and gas value chain, underpins ADNOC’s strategy to maximize returns from its resources, expand its Downstream business, and retain value for the UAE.

The concession area is made up of two main fields under development, Umm Lulu, which is part of the former ADMA offshore concession, and SARB, as well as two smaller fields, Bin Nasher and Al Bateel. The ADMA concession has been split into three new concessions to maximise commercial value, broaden ADNOC’s partner base, expand technical expertise, and enable greater market access.

Cepsa contributed a participation fee of AED 5.5 billion (USD1.5 billion) to enter the concession, which also takes into account previous ADNOC investments in the concession area. ADNOC retains a majority 60% stake in the concession that will be operated by ADNOC Offshore, a subsidiary of ADNOC.

The agreement, which has a term of 40 years and an effective date of March 9, 2018, was signed by His Excellency Dr Sultan Ahmed Al Jaber, ADNOC Group Chief Executive Officer, and Pedro Miro, Vice Chairman and CEO of Cepsa.

H.E. Dr Al Jaber said: "This long-term agreement is a milestone in the development of Abu Dhabi’s integrated oil and gas sector and in the delivery of ADNOC’s 2030 smart growth strategy. This partnership ensures we continue to maximise value from our hydrocarbon resources, in line with the leadership’s directives, by capturing that value and financial return here in the UAE.

"The agreement also reflects ADNOC’s new partnership approach, as we expand and diversify our partner base across ADNOC’s integrated value chain. Reflecting our strategic approach, we are also working with Cepsa as we explore expansion opportunities in our downstream business in the UAE and overseas, that will deliver competitive returns and long term growth opportunities for both parties, and for the UAE."

Cepsa, which has been operating in the energy sector since 1929, has businesses in over 20 countries across five continents. Its operations span exploration, production, refining, distribution and marketing, chemicals, gas and power, trading, bunkering and renewable energy sources. It is the world’s largest producer of Linear Alkyl Benzene (LAB) and also the leading producer of cumene and the second in phenol and acetone, thanks to its seven chemical plants, in Europe, Asia and the Americas. In 2016 it produced 35.4 million barrels of oil, distilled 158.7 million barrels of crude oil and sold 28.3 million tons of petroleum products.

Miro said: “This concession agreement marks an important moment for Cepsa and our close relationship with ADNOC, with whom we are working with on a number of projects in the upstream, downstream and petrochemical sectors. It will add substantial reserves, in a concession with relatively low production cost, to our portfolio, and will enable us to make considerable strides towards achieving our objectives, as set out in our 2030 Strategic Plan”.

In November 2017, ADNOC and Cepsa signed a framework agreement to evaluate a new world-scale Linear Alkyl Benzene complex in Ruwais, Abu Dhabi. LAB is the most common raw material in the manufacture of biodegradable household and industrial detergents. It is also used in house cleaners, fabric softeners, and soap bars.

The companies plan to progress the basic engineering of the proposed LAB complex in 2018. It is envisaged the facility will be integrated with the Ruwais refinery complex, and will incorporate DETAL-PLUSTM technology.

According to Cepsa, the offshore concession agreement strengthens its energy model and long-term strategy, and is in line with the company’s forecasts as outlined in its Cepsa Energy Outlook 2030 report for world demand for oil growth in the coming years.

The agreement increases Cepsa's presence in the UAE, a strategic country for the company where it has operated in both exploration and production and bunker activities since 2013.

The concession award is the first to be announced for the second of three new offshore concession areas, which have been created from the former ADMA offshore concession. On February 10, ADNOC announced the award of a 10% interest in Abu Dhabi’s offshore Lower Zakum concession to an Indian consortium, led by ONGC Videsh.

In support of its expanded 2030 strategy, ADNOC plans to grow its crude refining capacity by 60 per cent and more than triple its petrochemical production, to 14.4 mtpa by 2025, through a staged expansion plan aimed at initially optimizing its existing assets to grow and diversify its products portfolio, as it delivers its strategic imperatives of a more valuable Upstream, more profitable Downstream and an economic and sustainable supply of gas.

ADNOC is finalizing concession agreements with potential partners for the remaining stakes in the SARB and Umm Lulu, the Lower Zakum and the Umm Shaif and Nasr concession.
MRC

MOSCOW (MRC) -- The Board of Directors of Westlake Chemical Corporation has declared a regular dividend distribution of USD0.2100 per share, as per the company's press release.

The dividend will be payable on March 13, 2018, to stockholders of record on February 27, 2018.

This is the 54th successive quarterly dividend that Westlake has declared since completing its initial public offering in August 2004.

As MRC informed previously, Westlake Chemical Corporation has recently announced that it will expand capacities for the production of polyvinyl chloride (PVC) and vinyl chloride monomer (VCM) at three of its chemical facilities. Two of the plants are located in Germany (Burghausen, Gendorf) and one is located in Geismar, Louisiana. The expansions in Burghausen and Geismar are expected to be completed in 2019. The Gendorf expansions are expected to be completed in 2020 and 2021.

Westlake Chemical Corporation is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, chlor-alkali and derivative products, PVC suspension and specialty resins, PVC Compounds, and PVC building products including siding, pipe, fittings and specialty components, windows, fence, deck and film.
MRC