Mexican President rebuts delay to flagship refinery

MOSCOW (MRC) -- Andres Manuel Lopez Obrador denied a delay to a flagship refinery project after the deputy finance minister was quoted as saying USD2.5 billion for its construction will be moved to state oil firm Pemex, said Hydrocarbonprocessing.

The planned investment for the Dos Bocas refinery “can go to exploration and production” for Pemex, Arturo Herrera told the Financial Times in an interview during a trip to London for meetings with investors. However, Lopez Obrador stood by his plan to build the refinery within three years, saying the tender could be unveiled next week. In answer to a question about whether the $2.5 billion would be spent this year on the refinery, said "Yes."

The president’s plans to fast-track construction of the new refinery in Tabasco, his home state, have concerned investors that it would take away much-needed resources from Pemex, which is creaking under USD106 billion of debt. His energy minister, Rocio Nahle, said she understood Herrera’s budget concerns but said the project was on track.

“The faster we do this project, the cheaper it will be,” she said on Mexican radio. The conflicting statements appeared to confuse investors. Mexico’s benchmark stock index reversed gains and weakened 0.7 percent after Lopez Obrador’s rebuttal of Herrera’s comments, while the peso pared gains.

“Contradictions within the federal government do not help financial markets,” said James Salazar, an economist at bank CI Banco. The government is under growing pressure to dispel doubts Pemex can successfully manage more than USD16 billion of debt payments due by the end of next year, halt the firm’s extended oil output slide and avert a threatened credit rating downgrade to "junk."

Finance minister Carlos Urzua said last week the government would announce new measures to support the ailing company, after unveiling a USD3.9 billion bailout in February that failed to impress ratings agencies. Herrera said the government was in talks with the International Monetary Fund and other multilateral organizations about structuring a fresh capital injection for Pemex, though he noted that those discussions were technical and no borrowing was involved, according to the Financial Times.

Lopez Obrador said it was very likely the government would make an announcement about tenders for the refinery on March 18, a national holiday that celebrates the 1938 nationalization of Mexico’s oil industry. He also predicted Pemex would reverse its output decline by next year, with “new wells” coming on line by December under a production plan that allows Pemex to hire service companies to help explore mature fields.

He repeated that the refinery would cost between USD6 billion and USD8 billion, and said that work for now was focused on preparing the ground at the refinery site and readying the framework for the tender.

The refinery has already hit obstacles after the proposed construction site was cleared of protected mangrove without the correct environmental permits. The government has yet to present an environmental impact assessment for the wildlife-rich site.

Herrera said the tender framework was being prepared but said the finance ministry needed to see a solid financial plan before releasing funds.
MRC

MOSCOW (MRC) -- The polypropylene unit at ZapSibNeftekhim, a deep hydrocarbon conversion plant under construction, is 99.8% complete, said the company.

Construction and installation works on the process unit are over, and commissioning is underway. In particular, systems are undergoing functional testing and safety systems are being checked for proper performance.

During commissioning, the unit produced a pilot batch of polypropylene granules from third-party feedstock. The technology enables production of all polypropylene types that enjoy demand in all market segments.

"We have only produced several tonnes of polypropylene as part of a test run," comments Andrei Germashev, Head of Production at ZapSibNeftekhim. "However, it confirms that the facility with the total capacity of 500 ktpa is ready for operation."

After the launch of ZapSibNeftekhim, polypropylene production at SIBUR’s facilities in Tobolsk (including the existing polymer production facility of SIBUR Tobolsk) will total 1 mtpa. This represents the biggest production capacity in Russia and one of the largest in the world.

ZapSibNeftekhim's polypropylene will be used to manufacture a wide range of polymer goods, from medical products and personal hygiene items to geotextiles, hot water supply pipes, containers and packaging.

Overall, ZapSibNeftekhim will play an important role in substituting 85–95% (depending on the product) of current polymer imports – mainly from China and Europe.
MRC

MOSCOW (MRC) -- PT Bukit Asam (PTBA), Chandra Asri Petrochemical (CAP), Pertamina and Pupuk Indonesia have launched a new coal gasification project in the Bukit Asam Coal Based Special Economic Zone, Tanjung Enim, Indonesia, as per Apic-online.

The project will include four new plants based on gasification technology, a coal to syngas unit, a 500,000-t/y urea plant, a 450,000-t/y polypropylene facility and a 400,000-t/y dimethyl ether unit.

Operations are scheduled to begin in November 2022.

As MRC informed before, Indonesian state energy company PT Pertamina signed an engineering, procurement and construction (EPC) contract to upgrade Balikpapan refinery in December, 2018. Balikpapan refinery upgrade was expected to start construction in early 2019.
MRC

MOSCOW (MRC) -- Exports of suspension polyvinyl chloride (SPVC) into Russia totalled about 37,900 tonnes in the first two months of 2019, up 5% year on year. Whereas import volumes fell five times, according to MRC DataScope.

Russian producers have been maintaining fairly high export volumes since the end of last year amid low demand for SPVC. February SPVC exports from the country (excluding exports to the Customs Union) were about 19,900 tonnes, compared with 18,000 tonnes in January.

Thus, overall exports of PVC to Russia totalled about 37,900 tonnes in the first two months of 2019, compared to 36,000 tonnes a year earlier.
But since March, some producers have reduced export volumes. The main foreign importers of Russian PVC this year were buyers from India.

Sufficient supply of PVC from domestic producers and low demand from converters led to a multiple decrease in import volumes. February SPVC imports were slightly less than 766 tonnes, against 26 tonnes in January. Total SPVC imports in Russia were less than 800 tonnes in January-February 2019 against 4,100 tonnes year on year.
MRC

MOSCOW (MRC) -- Russia's production of high density polyethylene (HDPE) totalled 155,800 tonnes in the first two months of 2019, up by 1% year on year. Only two producers out of four increased their output, according to MRC's ScanPlast report.

February total HDPE production in Russia decreased to 70,200 tonnes, whereas this figure was 85,600 tonnes a month earlier. Gazprom neftekhim Salavat and Stavrolen shut down their production capacities for short maintenance works. However, overall HDPE output reached 155,800 tonnes in the first two months of 2019, compared to 154,600 tonnes a year earlier. Only Gazprom neftekhim Salavat and Kazanorgsintez raised their output.

The structure of polyethylene (PE) production by plants looked the following way over the stated period.

Kazanorgsintez's total HDPE production dropped to 42,000 tonnes in February from 44,000 tonnes a month earlier. The Kazan plant's overall HDPE output reached 90,600 tonnes in January-February 2019, up by 5% year on year.

Stavrolen produced 18,200 tonnes last month versus 26,800 tonnes in January, the plant shut its production capacities for a one-week turnaround in early February. The plant's overall output reached 45,100 tonnes over the stated period, up by 9% year on year.

Gazprom neftekhim Salavat also took off-stream its production for a short period of time in February, the plant produced 9,300 tonnes versus 10,800 tonnes a month earlier. The Baskhir plant's total HDPE output exceeded 20,100 tonnes in the first two months of 2019, up 4% year on year.

Nizhnekamskneftekhim produced exclusively linear low density polyethylene (LLDPE) over the stated period.

MRC