Russian petrochemical group Sibur in talks with Saudi Aramco venture

MOSCOW (MRC) -- Russian petrochemical group Sibur is in talks with Saudi Aramco to set up a venture to produce synthetic rubber, its chief said in a move highlighting growing cooperation between OPEC leader Saudi Arabia and Russia, the biggest non-OPEC oil exporter, reported Reuters.

Russia and Saudi Arabia have forged closer ties in the past two years as part of efforts to prop up oil prices by curbing output.

The deal between OPEC and Russia has opened the door to political dialogue and has also encouraged talks on broader bilateral investment in the energy sector.

"The Saudi-Russian dialogue has probably accelerated the project, even though we started discussion some four years ago," Sibur head of management board Dmitry Konov told reporters.

The two companies signed a cooperation memorandum last year when Saudi King Salman visited Russia but so far have not disclosed project details.

Konov said Sibur was looking to export its synthetic rubber technology because of low feedstock availability in Russia and low domestic demand growth.

Good feedstock availability in Saudi Arabia and growing Asian markets could make the project attractive, Konov said.

He said the venture would likely involve other companies as it would require technologies which Sibur or Aramco do not possess.

Sibur focuses mainly on serving clients in the former Soviet Union but its exports of polymers are set to rise with the launch of a new USD9 billion plant in Tobolsk in Siberia over the next couple of years.

It also wants to build a major complex in east Siberia in the next decade to serve Asian markets as part of a broader plan by gas export monopoly Gazprom to supply gas to China.

Konov said he saw global competition rising steeply due to the U.S. shale oil boom, which provides cheap feedstock to the local petrochemical industry.

The International Energy Agency raised its outlook for U.S. shale oil growth this week, saying the country was poised to grab market share from rival OPEC and further develop its chemical industry.

The IEA also said petrochemicals would become one of the main sources of global oil and gas demand growth.

Konov said that despite rising U.S. output, global demand for polymers was set to grow faster than U.S. capacity additions, meaning the market was unlikely to face a significant glut anytime soon.

"People are more concerned about having not enough projects rather than having too many," he said.

As MRC informed before, SIBUR Tobolsk, Russia's largest PP producer, manufactured 47,700 tonnes in January 2018 versus 46,400 tonnes and 46,700 in January and December 2017, respectively. Overall PP production at the Tobolsk plant exceeded 510,500 tonnes last year.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.
MRC

MOSCOW (MRC) -- CB&I has announced it has been awarded a contract valued at approximately USD70 million by JG Summit Petrochemical Corporation (JGSPC) for the Stage 1 Expansion project in Batangas City, Philippines, as per Hydrocarbonprocessing.

CB&I's scope of work includes the engineering, fabrication and construction of ten traditional field erected storage tanks, one double-wall liquefied petroleum gas storage tank and three spheres. Additional scope of work includes technical evaluation to service multiple tanks on the project.

"CB&I has a long-standing relationship with JGSPC and more than 45 years of experience in the Philippines," said Richard Heo, CB&I's Executive Vice President of Fabrication Services. "CB&I previously provided a technology license, basic engineering package and heater supply to the project. This award underlines JGSPC's confidence in CB&I's vertically integrated capabilities and further strengthens our presence in the region."

As MRC wrote before, in March 2017, Clariant was awarded a contract by Dongguan Grand Resource Science & Technology Co. Ltd. to develop a new propane dehydrogenation unit in cooperation with CB&I. The project includes the license and engineering design of the unit, which is to be built in Dongguan City, Guangdong Province, China. The Dongguan plant will be one of the largest single-train dehydrogenation units in the world.
MRC

MOSCOW (MRC) -- Investment in new projects to produce liquefied natural gas (LNG) fell sharply in 2016 and 2017: the industry-sanctioned under 10 million tons of annual capacity in two years, an 80 percent reduction relative to 2011–2015, as per Hydrocarbonprocessing.

This slowdown raises many questions. Is the industry investing enough to meet future demand, and if not, will that lead prices to spike later? Governments are asking whether they should offer concessions to support projects; and if so, how far should they go, especially given pressures from constituents who were promised jobs, investment, and revenue from projects that are now stalled. And at a geopolitical level, strategists are asking what places will win and what places will lose—and with what consequences? What might the world’s energy map look like in 10 or 20 years.

To answer these questions, we must first understand why investment has slowed down. In part, this is just a cycle: periods of high investment are often followed by periods of low investment. This cycle is amplified by a mismatch between prices and costs—prices have fallen by much more than costs, and so, many projects in the development queue are not profitable enough to be sanctioned. Some projects have even been cancelled outright, a rarity in LNG where projects usually just languish. This is how bad the market has been in recent years.

But this is not just a cyclical correction. There are three broad forces that further hinder investment. The first is price uncertainty. Historically, gas prices in much of the world have been linked to oil. The uncertainty in oil prices has thus meant uncertainty for gas prices. More importantly, there is a slow move away from oil-indexed prices: in 2005, 63 percent of the gas that crossed a border was priced in relation to oil; in 2016, it was 49 percent. This move is welcome—gas should have its own price. But this is a planning nightmare: how to forecast a price with less history and more unknowns? In a world with tight margins, even modest price uncertainty can be a big obstacle.

The second uncertainty is demand. This is partly demand writ large: how much gas will the world use, especially given competition from coal and renewables? But demand is also uncertain at the company level since many markets are opening up. In Europe, incumbents lost significant market share due to liberalization. No Asian market is that far advanced in its liberalization schedule or quite as far-reaching in its liberalization ambitions. But companies that buy LNG from a new project are placing 25-year bets, which is long enough to make any planner think twice.

Third, the market is becoming more liquid (even though, from 2012 to 2016, the spot and short-term market for LNG did not grow). Companies are becoming more comfortable relying on the short-term market, and there is a growing market for reselling gas on a long-term basis. All this means that buyers are not just thinking whether they might need gas in the future; they are also wondering whether they should commit to buy that gas today or wait to buy it later from the secondary market.

There is, in other words, a cyclical correction, as the industry digests high levels of investment during 2011–2015. But this cyclical correction is amplified by an imbalance between prices and costs and by deep uncertainty about prices, demand, and future liquidity. When might this drought end? We do not know, but three concurrent forces will lead investment to restart.
MRC

MOSCOW (MRC) -- Dongming Hengchang Petrochemical has selected Spheripol polypropylene (PP) technology from LyondellBasell for implementation at a plant in Heze City, Shandong Province, China, as per Chemicals-technology.

The plant will be capable of producing 200,000mt of PP per year. Grades of PP produced using the Spheripol process are often used to make film for the safe storage of food and plastic pipes for the delivery of drinking water, as well as wastewater removal and sterile syringes in the healthcare sector.

LyondellBasell global manufacturing, refining, projects and technology executive vice-president Dan Coombs said: “The Spheripol process is recognised globally as the benchmark in polypropylene process technology.

"It provides our customers with an elegant and economical method to efficiently and reliably produce a wide range of premium-quality polypropylene grades. "

The new technology includes numerous process improvements that are intended to further increase operational efficiency. It also supports the production of a number of homopolymers, random copolymers, heterophasic and specialty impact copolymers, in addition to terpolymers.

PP products produced by Spheripol are thin-walled and commonly used for light and rigid packaging items, packaging containers that preserve food and polypropylene pipes for the safe transportation of water.

Dongming Hengchang Petrochemical Company Strategic Planning and Engineering general manager Zhang Juchao said: "LyondellBasell is the global leader in polyolefins technology and we value the company‘s long-term commitment to its clients, continuously investing in its technologies."

LyondellBasell’s Spheripol PP process technology has more than 22 million tonnes (Mt) of licensed capacity.
MRC

MOSCOW (MRC) - Strong global demand for oil and gas will shift in the next five years towards petrochemicals and away from motor fuels gasoline and diesel, the International Energy Agency (IEA) said, as per Reuters.

Demand for products ranging from fertilisers to plastics and beauty products will drive roughly a quarter of the expected oil demand growth to 2023, the IEA said in its five-year outlook. The shift represents a major challenge to the oil industry, as many of the petrochemicals will be produced using gas, cutting out refineries. At the same time, growth in gasoline and diesel usage will be held back by fuel efficiency improvements and declining consumption in the developed world, the IEA said.

World oil demand is expected to rise by 6.9 MMbpd to 2023, it said, with a quarter of this growth, or 1.7 MMbpd, coming from demand for petrochemical feedstocks ethane and naphtha. "Global economic growth is lifting more people into the middle class in developing countries and higher incomes mean sharply rising demand for consumer goods and services," the IEA said.

"A large group of chemicals derived from oil and natural gas are crucial to the manufacture of many products that satisfy this rising demand," it added. Naphtha is made by oil refineries processing crude, but other petrochemical feedstocks - ethane or liquefied petroleumgas (LPG) - are processed outside traditional oil refineries.

"Ethane, liquefied petroleum gases and naphtha, pose a bigger threat to the refiners' market share than electric vehicles and gas-powered transportation combined," the IEA said, estimating refiners would see just 4.8 MMbpd of the demand growth to 2023, missing out on 30 percent of it.

The boom in U.S. shale oil has dramatically expanded the availability of ethane, and a string of new projects on the U.S. Gulf Coast is underway to process it. In total, the world is expected to add 1.4 MMbpd in new petrochemical-producing steam crackers to 2023, the IEA said.

Demand for ethane will expand at the fastest pace in the next five years, rising by 885 Mbpd followed by naphtha with growth of 495 Mbpd and LPG with growth of 40 Mbpd, it forecast. Jet fuel, supported by growing demand for air travel, will grow by 1.2 percent to 2023, the IEA added.

But it said demand for gasoline and diesel would rise by just 0.7 percent each, with expansion slowed by fuel efficiency standards that now cost two-thirds of the world's top car markets. More than 80 percent of global car sales are now in markets covered by efficiency standards, including China, India the United States and Europe. The IEA said this "will impact strongly on future oil demand."

Partially as a result, the IEA warned that refinery additions totalling 7.7 million bpd would outstrip growth in demand for refined products by 2023 by some 3 million bpd.
MRC