Pemex aims for splash in shallow waters, retreats from the deeps

MOSCOW (MRC) -- Mexican state-run oil giant Petroleos Mexicanos will focus on existing shallow water assets and refining next year at the expense of riskier, deepwater projects under a new government that has vowed to turn around the ailing company, reported Reuters.

The 2019 budget blueprint presented on Saturday by officials of leftist President Andres Manuel Lopez Obrador calls for some USD23 billion (465 billion pesos) in discretionary spending for the company known as Pemex, up about 14 percent from this year.

Almost half the Pemex budget is earmarked for exploration and production, mostly in shallow water and some onshore areas.

Setting out his plans on Saturday, Pemex Chief Executive Octavio Romero said two previous governments had little to show for putting 41 percent of exploration funding into deep waters: "At best we’d have the first drop of oil by 2025," he said.

Mexican crude output has fallen for 14 straight years. Pemex aims to increase production by almost 50 percent by the end of the six-year term of Lopez Obrador, who wants to reduce Mexico’s dependence on imported fuels.

To that end, the budget projects Pemex spending almost USD2.5 billion on an oil refinery Lopez Obrador is building at the southern Gulf coast port of Dos Bocas. The facility aims to be able to process 340,000 barrels per day (bpd) of heavy crude.

"Pemex’s E&P unit and refining will total 98 percent of all capital expenditures. All other subsidiaries will get scraps," said Gonzalo Monroy, a Mexico City-based oil analyst.

Another USD245 million in funding is planned for upgrades to Pemex’s six existing domestic refineries.

The plan cuts funding for units focused on fertilizers, ethylene, drilling services and its corporate offices.

The budget also provides for about USD6.2 billion in so-called non-discretionary spending to cover costs like debt servicing. Pemex has financial debts of some USD106 billion, among other hefty obligations, fueling concern over its credit rating.

Pemex is government-owned and the senior management is hand-picked by the president, including the chief executive and the chairman of the board, who is also the energy minister.

Monroy identified two planned exploration and production outlays as "potential headaches" due to their complexity and cost: Chicontepec, a tight oil onshore project, and Lakach, a mostly natural gas deepwater scheme budgeted for USD673 million.

pez Obrador firmly opposed the 2013 constitutional overhaul championed by his predecessor, who ended Pemex’s decades-long monopoly and allowed foreign and private producers to bid on developing oil and gas projects for the first time.

The shakeup also allowed Pemex to form joint ventures, a common practice in the industry aimed at sharing risks and rewards that Lopez Obrador has yet to embrace - or reject.

Earlier this month, Energy Minister Rocio Nahle said two onshore auctions scheduled for February would be canceled.

Mexico’s oil regulator later said auctions due at the same time for the right to partner with Pemex on seven onshore contracts had been postponed until next October.

In the past three years, Pemex has inked three joint ventures, including one with Australia’s BHP Billiton for the deepwater Trion project.

While Pemex cedes control on these projects, it attracts significant investment from partners without having to pledge much of its own funding during the initial phase.

Lopez Obrador will need to authorize more Pemex joint ventures, also known as farm-outs, to reach his goal of boosting crude output to 2.6 million bpd in six years from 1.8 million now, said Raul Feliz, an economist at the CIDE think tank.

"If Pemex has to do it all by itself with this level of funding, it won’t be enough," he said.

As MRC informed previously, Mexican national oil company Pemex is currently processing about 9 percent more crude oil at its domestic refineries than it did in 2017, said Chief Executive Officer Carlos Trevino in April 2018.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).
MRC

MOSCOW (MRC) -- Celanese Corporation, a global specialty materials company, has increased list and off-list selling prices for Vinyl Acetate Monomer (VAM) sold in Asia Outside China (AOC), as per the company's press release.

The price increase below is for orders shipped and is effective as of 21 December 2018, or as contracts otherwise allow, and is incremental to any previously announced increases.

Thus, Celanese raised VAM list and off-list selling prices by USD50/mt for AOC.

As MRC reported earlier, Celanese last increased its prices for VAM sold in Asia on 5 October, 2018, as follows:

- by RMB200/mt for China and by USD50/mt for AOC.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,600 employees worldwide and had 2017 net sales of USD6.1 billion.
MRC

MOSCOW (MRC) -- China, the world’s top oil importer, is set to start 2019 buying little or no crude from the United States despite a three-month truce in a trade scrap between the two nations, with relatively high freight costs and political uncertainty choking demand, reported Reuters.

That muted appetite means the United States, which became the world’s top oil producer this year as its shale output hit record levels, will continue to hold only a sliver of China’s market even as a wave of new refining capacity starts up there.

It also suggests that China is unlikely to use crude purchases to help plug a widening trade gap with the United States, which remains a core source of tensions between the world’s top two economies.

The US trade deficit with Beijing hit a record USD43 billion in October as its firms stockpiled inventory from China to avoid higher tariffs that may kick in next year.

"Chinese companies have little incentive to buy U.S. crude due to the wide availability of crude supplies today from Iran and Russia," said Seng Yick Tee, an analyst at Beijing-based consultancy SIA Energy.

"Even though the trade tension between China and the U.S. had been defused recently, the executives from the national oil companies hesitate to procure US crude unless they are told to do so."

China stopped US oil imports in October and November after the trade war intensified. It resumed some imports in December, but purchased just 1 million barrels, a minute portion of the more than 300 million barrels of total imports, Refinitiv data showed.

Chinese refineries that used to purchase U.S. oil regularly said they had not resumed buying due to uncertainty over the outlook for trade relations between Washington and Beijing, as well as rising freight costs and poor profit-margins for refining in the region.

Costs for shipping U.S. crude to Asia on a supertanker are triple those for Middle eastern oil, data on Refinitiv Eikon showed.

A senior official with a state oil refinery said his plant had stopped buying US oil from October and had not booked any cargoes for delivery in the first quarter.

"Because of the great policy uncertainty earlier on, plants have actually readjusted back to using alternatives to U.S. oil ... they just widened our supply options," he said.

He added that his plant had shifted to replacements such as North Sea Forties crude, Australian condensate and oil from Russia.

"Maybe teapots will take some cargoes, but the volume will be very limited," said a second Chinese oil executive, referring to independent refiners. The sources declined to be named because of company policy.

A sharp souring in Asian benchmark refining margins has also curbed overall demand for crude in recent months, sources said.

Despite the impasse on US crude purchases, China’s crude imports could top a record 45 million tonnes (10.6 million barrels per day) in December from all regions, said Refinitiv senior oil analyst Mark Tay.

Russia is set to remain the biggest supplier at 7 million tonnes in December, with Saudi Arabia second at 5.7-6.7 million tonnes, he said.

China’s Iranian oil imports are set to rebound in December after two state-owned refiners began using the nation’s waiver from US sanctions on Tehran.
MRC

MOSCOW (MRC) -- The Lubrizol Corporation has announced its Engineered Polymers business will extend its North American distribution channel with the appointment of Osterman and Company, Inc.as a distributor for its thermoplastic polyurethane (TPU) portfolio, as per the company's press release.

Osterman joins Entec, who currently represents the Estane TPU portfolio in North America. The move will provide customers with greater access to consultative sales engineers, faster response time and is well aligned with market trends that favor engineered plastics and more sustainable product solutions. Osterman, based in Cheshire, CT, distributes engineering and other plastics with significant territory coverage throughout North America. Osterman has a strategic infrastructure in place that is well suited to support North American customers.

The agreement, which was effective November 19, 2018, includes the following key product lines which are well-suited for today's innovative and demanding applications:

- Estane TPU polymers, the standard by which others are measured, bridge the gap between flexible rubber and rigid plastics, and can be utilized in high performance film and sheet, extrusion, blow molding, injection molding, over molding, calendaring and solution coating processes.
- Pearlthane(TM) TPU and Pearlthane(TM) ECO TPU products are ideal for extrusion, injection molding and compounding applications such as flexible films, abrasion resistant hoses, soft touch injection molded parts and more. Derived from renewable resources, Pearlthane(TM) ECO TPU delivers superior performance, even more sustainably.
- Pearlbond(TM) TPU includes products for Hot Melt Adhesives (HMA) and Reactive Hot Melts (HMPUR), typically used in automotive interior parts, textiles and footwear, bookbinding and furniture, with the ability to join a wide range of materials enabling new, innovative design freedom.
- Carbo-Rite(TM) conductive compounds provide permanent electrostatic dissipative (ESD) solutions, with high consistency from lot to lot, for today's demanding applications where reliability, value and safety matter most.
- Stat-Rite inherently static dissipative compounds set the new standard for test and design engineers requiring permanent ESD properties without compromising cleanliness, and enabling low pigment loading color options without affecting other properties.

Jim Harbert, North American sales manager for Lubrizol Engineered Polymers, comments, "It is exciting to work with Osterman. They bring in-depth knowledge of the engineering plastics markets in North America, as well as a knowledgeable salesforce and technical support team. Combined with Lubrizol's innovative and durable TPU solutions for specialized wire and cable, consumer, industrial and automotive applications, this further enhances our ability to work closely with customers, helping them solve difficult problems to drive innovation and growth."

As MRC reported before, in early 2018, Lubrizol announced the selection of Apta, Vinmar Group, as new distributor for its TPU portfolio throughout Brazil.

The Lubrizol Corporation, a Berkshire Hathaway company, is an innovative specialty chemical company that apart from its production develops and supplies technologies to customers in the global transportation, industrial and consumer markets. Lubrizol is providing innovative solutions for its customers high-performance application needs and remains committed to ongoing investment in its CPVC capabilities that support future growth. With headquarters in Wickliffe, Ohio, Lubrizol owns and operates manufacturing facilities in 17 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 8,000 employees worldwide.
MRC

MOSCOW (MRC) -- Thyssenkrupp Industrial Solutions and Jastrzbska Spolka Wglowa (JSW), one of the largest European coke producers based in Poland, have entered into a long-term strategic alliance, said Hydrocarbonprocessing.

Under the technological agreement, thyssenkrupp will support JSW’s strategy to improve the sustainability and efficiency of its coking plants and to enable the production of environmentally friendly by-products.

The agreement was signed during the 2018 United Nations Climate Change Conference (COP24) in Katowice, Poland, in mid-December. Dr. Uwe Boltersdorf, CEO of the business unit Industrial Specialties of thyssenkrupp Industrial Solutions: “We are very happy to collaborate with JSW and to support them to further develop their coking plant facilities. Due to increasing environmental awareness and regulation, it will become more and more important for coke producers to minimize the impact on their natural environment.

Based on our extensive expertise in the coke plant industry, we enable operators to optimize existing plants by applying the latest technologies and integrated operation concepts.” Combining more than 140 years of experience, thyssenkrupp Industrial Solutions is a market leader in coke plant technologies. The plant engineering and construction specialist has continuously developed solutions to make coke production more efficient and sustainable. These include, for example, technologies for the reduction of emissions like nitrogen oxides (NOx), sulphur oxides (SOx) and aromatic compounds as well as solutions to lower both investment and operating costs.

In recent years, thyssenkrupp continued its developments to optimize the cleaning of coke oven gas in order to facilitate the cogeneration of clean byproducts such as hydrogen, sulfur derivatives and aromatic hydrocarbons.As one of the leading European coke producers, JSW is continuously strengthening its environmental efforts. Therefore the company intends to modify its existing assets base in Poland to improve both production efficiency and capacities as well as its environmental footprint.

In order to diversify its portfolio, JSW is taking intensive actions to implement technologies for the production of high value by-products such as for the separation of hydrogen from coke-oven gas. Under the terms of the agreement, both companies will cooperate to apply thyssenkrupp’s technologies and knowledge to the assets of JSW in Poland in order to support the strategic transformation of JSW.

The agreement will enable the implementation of pioneer technological solutions that will set new standards in coke plants operated by JSW.
MRC