South Korean demand for heavy naphtha pushes premiums to multi-year highs

MOSCOW (MRC) -- Premiums for heavy full-range naphtha have risen to multi-year highs as South Korean petrochemical companies have turned to the product to replace a shortfall in the condensates that they typically use to run in their units, reported Reuters with referece to five industry sources.

Hanwha Total Petrochemical has bought at least 250,000 tonnes of heavy full-range naphtha a month so far this year versus an average of 150,000 tonnes a month in 2017, said the sources who participate in the Asian naphtha market.

Meanwhile, SK Incheon Petrochem, a unit of SK Innovation, purchased 200,000 tonnes of the product for April delivery versus up to 125,000 tonnes a month previously, the sources said.

Heavy full-range naphtha has a higher content of compounds known as aromatics that are used as precursors for petrochemicals such as xylenes and paraxylenes.

The companies will likely keep purchasing more heavy full-range naphtha until June as a supply crunch in condensate, a type of light crude oil, has made it uneconomical for the buyers to switch back, the sources said.

"SK Incheon Petrochem's heavy full-range naphtha imports have increased because (it) is now more economical than using condensate," said a spokesman from SK Innovation but he did not elaborate on the volumes bought.

A spokesman for Hanwha Total declined to comment.

There has been less condensate available for Asian buyers as new splitters, or processing units that break down the condensate into different types of naphtha and some middle distillates, in South Korea, Singapore and the Middle East have started up.

However, the supply dent intensified when Iran cut its monthly shipments of South Pars condensate to South Korea by 3 million barrels, three sources that participate in the market told Reuters last month.

Premiums for condensate cargoes for April and May loading rose to as high as USD5 a barrel over Dubai quotes.

For the April cargoes of heavy full-range naphtha, Hanwha Total and SK both paid premiums of USD10.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis. For cargoes for the second-half of May, SK paid a premium of USD19 while Hanwha paid up to USD16, which is the highest premium the company has paid for any naphtha grades since April 2014.

Due to the shortage of condensate in Asia, competing South Korean refiners S-Oil and Hyundai Oilbank, which also operate condensate splitters in South Korea, have recently bought condensate from Norway.

However, not all condensate splitters can process heavy full-range naphtha.
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MOSCOW (MRC) - Bangladesh Petroleum Corp (BPC) issued an international tender to import up to 1.52 million tonnes of refined oil products in the second half of 2018, Hydrocarbonprocessing said.

The state-owned company is seeking 1.1 million tonnes to 1.28 million tonnes of 500ppm sulphur gasoil, 100,000 tonnes of jet fuel and 120,000 to 140,000 tonnes of 180-cst high sulphur fuel oil. The tender closes on April 11 and is valid for 75 days to June 24, 2018.

Delivery will be carried out in phases over the second half of 2018, a senior BPC official said. Some volumes will also be imported through separate term deals, he told Reuters, without giving details.

BPC resumed issuing tenders for long-term contracts in February 2016 after a 15-year hiatus, during which it negotiated directly with suppliers of fuel products. It wants to move away from direct deals as part of efforts to buy at cheaper rates through international tenders.

A shortfall in supplies of natural gas has forced the South Asian country to burn oil, a costlier option, to generate electricity. Bangladesh typically imports around 3.2 million tonnes of diesel and 2.5 million tonnes of fuel oil annually, making it one of the top 10 such importers in the region.

Currently, BPC has term contracts with 10 companies for refined oil product imports. Suppliers for Bangladesh’s middle distillates contracts include Kuwait Petroleum Corp, Malaysia’s Petronas, Emirates National Oil Company, Thailand's PTT, Indonesia’s Bumi Siak Pusako, PetroChina and Unipec.

Bangladesh has also signed a 15-year deal with India’s Numaligarh refinery to supply diesel, its first long-term contract with any Indian supplier. BPC also buys 700,000 tonnes of Murban crude from Abu Dhabi National Oil Co annually and another 600,000 tonnes of Arab Light from Saudi Aramco for its only refinery.

Bangladesh, with more than 160 million people, also plans to tap currently cheap and plentiful global natural gas'liquefied natural gas (LNG) supplies to fill a domestic supply shortfall.
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MOSCOW (MRC) -- Iraq has started work on expanding its oil refinery near the southern city of Basra by adding 70,000 barrels per day to processing capacity, the oil ministry said, as per Hydrocarbonprocessing.

The Shuaiba refinery's capacity should increase to 280 Mbpd by the end of the year, as a result of the expansion, the statement said.

Iraq, OPEC's second-largest oil producer, wants to build new refineries as its oil processing capacity was severely curtailed by damage to its largest plant in Baiji, north of Baghdad, when it was captured by Islamic State militants in 2014.

Baiji was retaken by Iraqi forces in 2015 and it should be brought back on line partially this year. Iraq now relies on the Doura refinery, in Baghdad, and Shuaiba.
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MOSCOW (MRC) -- ExxonMobil has announced that it has successfully completed the heavy lift of a new lubes reactor at its Singapore Refinery in Jurong, as per Hydrocarbonprocessing.

The reactor is a crucial piece of equipment tied to ExxonMobil’s ongoing expansion project to increase production of high-quality EHCTM base stocks, which are designed to meet new and upcoming finished lubricant specifications, including ILSAC GF-6, API SP and API CK-4/FA-4.

Enabling advantaged applications, particularly in the automotive sector, these quality improvements will help customers achieve short-term cost savings through blending optimization and long-term savings through reformulation.

"We are committed to meeting our customers’ requirements by offering industry-leading, reliable supplies of our CORETM Group I and EHC Group II base stocks," said Vipin Rana, Asia Pacific Basestocks and Specialties Sales Manager. "Our continued investment demonstrates our long-term focus on the business and commitment to meeting the growing demand in the Asia-Pacific region."

The new lubes reactor, weighing 800 tons, 46 meters long and four meters wide, was one of the largest and heaviest lifts in recent years at the Singapore Refinery. The lift was completed earlier this year using a 1,200-ton gantry crane and 600-ton tailing crane.

"The journey to the reactor’s final location within the refinery was not an easy path," said Brian Bade, Singapore Lubes Expansion Project Manager. "In order to complete the numerous 90-degree turns, we had to install a temporary bridge and support critical flare lines utilizing a unique telescopic jack design. The lift to install the reactor was an impressive milestone that was made possible by working closely with our contract partners and various Singapore government agencies."

Last October, transportation of the reactor began with a 5,500-kilometer journey from Larsen & Toubro’s facility in Hazira, India. ExxonMobil shipped the reactor from Adani Hazira Port to the Jurong-Hong Hang Port, where it arrived after nearly two weeks of land and sea travel.

After its arrival in Singapore, the reactor was sent by road to the refinery. Despite the short distance of just six kilometers, the entire land transport operation took six hours. The reactor operation was carried out in the middle of the night at just one kilometer an hour to minimize public disruption. This safe and flawless reactor lift operation, was the outcome of over a year of detailed engineering studies, planning, and nearly 10 months of site construction preparatory work by the project team.

The refinery expansion project continues to progress towards its scheduled completion in the second quarter of 2019. When completed, ExxonMobil will strengthen its global supply of EHC Group II base stocks, enhancing the Singapore site’s competitiveness.

As MRC wrote previously, in October 2017, ExxonMobil Chemical Company commenced production on the first of two new 650,000 tons-per-year high-performance polyethylene (PE) lines at its plastics plant in Mont Belvieu, Texas, said the producer on its site. The full project, part of the company’s multi-billion dollar expansion project in the Baytown area and ExxonMobil’s broader Growing the Gulf expansion initiative, will increase the plant’s polyethylene capacity by approximately 1.3 million tons per year.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
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MOSCOW (MRC) -- BASF announced the launch of Evolve, a proprietary new Fluid Catalytic Cracking (FCC) additive designed for butylene selectivity, as per Hydrocarbonprocessing.

Evolve provides measurable improvements in butylene yields while preserving unit conversion and valuable fuels yields when compared to existing technologies. Refiners worldwide are facing the effects of tightening fuel regulations as stricter sulfur fuels standards continue to be implemented globally.

In 2017, Tier 3 standards went into effect in the United States. Refiners are striving to find ways to reduce the sulfur content of their gasoline pool to meet the 10 ppm requirement. China implemented similar standards also in 2017. In the EU the 10 ppm requirement for Gasoline has already come into effect in 2009. Compliance with tighter sulfur requirements often led to octane loss. Alkylate has become a preferred gasoline blending component, as it contains no sulfur, no olefins, no benzene, and has a low vapor pressure and high-octane number. As a result, many refiners focus on maximization of alkylate production, but struggle due to a butylene shortage, which is important for keeping refineries operating as profitable as possible.

With long-term global fuel demand expected to favor clean, low-sulfur fuels and increasing use of high compression engines requiring higher octane gasoline, Evolve enables refineries to optimize the alkylation plant by increasing selectivity for butylene over propylene compared to conventional olefins additives. Refineries benefit from both the output of butylene and low sulfur, high-octane gasoline.

The technology is the result of a concerted R&D effort dedicated to the development of a new technology to provide a significant increase in butylene selectivity without negatively affecting unit operating yields.

"Cornerstones of this R&D effort were to create an additive that had increased selectivity to butylene over propylene when compared to conventional olefins additives. BASF’s solution provides an effective means for refineries with gas plant constraints to optimize their alkylation unit feedstock," said Jim Chirumbole, Vice President, BASF Refining Catalysts.

"We are very excited about the performance of this additive and the increased value it will bring to our refinery customers around the world," said Bilge Yilmaz, Director of Global Technology, BASF Refining Catalysts.

As MRC wrote previously, in November 2016, BASF SE (Ludwigshafen, Germany) announced that within the next five years, the company plans to invest globally more than EUR200 million in its plastic additives business, approximately half of which in Asia, focusing on capacity expansions and operational excellence.
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