Russian oil flow contamination roils European refiners

MOSCOW (MRC) -- The quality of Russian oil flowing to northern and central Europe has deteriorated significantly in recent days, reported Reuters with reference to traders and Russian officials, roiling the continent’s refining industry.

Oil flows via the Baltic port of Ust Luga and via the Druzhba pipeline to Belarus, Poland, Germany, Hungary and the Czech Republic have been contaminated with high levels of organic chloride since April 19.

The material is used to help boost oil output but must be separated from oil before shipment as it can destroy refining equipment.

According to traders with several European majors, levels of organic chlorine have fluctuated at 150-330 parts per million (ppm) instead of the 10-ppm maximum norm and the usual level of around 1-3 ppm.

The Russian energy ministry confirmed there were quality issues and said pipeline monopoly Transneft was trying to fix the problem as soon as possible, giving no timeframe.

A Russian energy source familiar with the situation said the problem could be fixed by the end of the week.

Crude contamination is rare in Russia. Traders said oil was last contaminated with high levels of organic chlorine around 10 years ago, but on a lower scale.

This time the problem has become so big that refiners in Poland and Germany belonging to PKN Orlen, BP, Total and Shell are considering suspending purchases of Russian oil along the Druzhna pipeline, which constitutes much of their imports.

From the port of Ust Luga, at least five contaminated tankers have sailed belonging to oil firms Rosneft, Surgut and Kazakh producers and bought by traders and majors such as Equinor, Vitol, Trafigura, Glencore and Total.

Buyers have filed pre-claims to Russian oil sellers, indicating they may seek compensation, two traders familiar with the developments said.

“Russian oil sellers have in turn sought explanations from Transneft but so far have not heard any guidance,” one of the sources said. Transneft declined to comment.

The energy ministry said it was working with Transneft to resolve the issue including by supplying oil to Belarus via alternative routes. It did not comment on the problems in Poland, Germany or Ust Luga.

It was not clear which Russian producer caused the contamination.

Traders said a failure by Transneft to fix the problem quickly could prompt refineries to stop buying Russian oil or suspend operations to clear pipelines of unwanted crude.
MRC

MOSCOW (MRC) -- Overall imports of polyethylene (PE) into Belarus decreased by 11% year on year in the first two months of 2019, reaching 18,000 tonnes. Local companies reduced their purchasing of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased, according to MRC's DataScope report.

According to the National Bureau of Statistics of Belarus, February 2019 PE imports to Belarus dropped to 8,900 tonnes from 9,200 tonnes a month earlier. Local companies reduced their HDPE purchasing in Russia and Ukraine. Overall PE imports were slightly over 18,000 tonnes in January-February 2019, compared to 20,200 tonnes a year earlier. Demand for HDPE and LLDPE subsided significantly, whereas demand for high density polyethylene (HDPE) increased.

The structure of PE imports to Belarus by grades looked the following way over the stated period.

February 2019 total LDPE imports rose to 3,200 tonnes from 2,800 tonnes a month earlier, local companies increased their purchasing in Russia and Azerbaijan. Overall imports of this PE grade into Belarus totalled 6,100 tonnes in the first two months of 2019, up by 5% year on year.

February HDPE imports were 2,900 tonnes, compared to 4,300 tonnes a month earlier. Local companies reduced their purchasing of film grade PE in Russia and Ukraine. Thus, HDPE imports totalled 7,200 tonnes over the stated period, down by 28.3% year on year.

Overall LLDPE imports reached 4,700 tonnes in January-February 2019, whereas this figure was about 6,400 tonnes a year earlier.

MRC

MOSCOW (MRC) - Imports of polypropylene (PP) into Belarus increased to about 16,000 tonnes in first two months of this year, up 7.6% year on year, compared to the same period of 2018. The greatest increase in imports occurred for homopolymer PP, according to MRC DataScope.

February PP imports to Belarus were about 8,200 tonnes, compared to 7,800 tonnes a month earlier, local companies raised their purchasing of propylene homopolymers (homopolymer PP) in Russia. Total PP imports into the country reached 16,000 tonnes in January-February, compared with 14,900 tonnes year on year. The demand for homopolymer PP increased significantly, but demand for propylene copolymers grew slightly.

The structure of PP imports by grades looked the following way over the stated period.

February imports of homopolymer PP to the Belarusian market increased to 6,000 tonnes from 5,300 tonnes a month earlier, shipments of homopolymer PP from Russia increased. Overall imports of homopolymer PP reached 11,300 tonnes in the first two months of the year, up by 10.8% year on year. Russian producers with the share of about 88% of the total shipments were the key suppliers.

February imports of propylene copolymers to Belarus were 2,200 tonnes versus 2,400 tonnes a month earlier, local companies decreased their procurement of injection moulding statistical copolymers (PP random copolymers) in Russia. Total imports of propylene copolymers in the country reached 4,600 tonnes in Jan-Feb 2019, up 0.5% year on year.

MRC

MOSCOW (MRC) -- W. R. Grace & Co. announced that it has signed an agreement with TechnipFMC to jointly develop improved catalyst and process technology related to TechnipFMC Deep Catalytic Cracking, as per Hydrocarbonprocessing.

TDCC is a high-severity fluid catalytic cracking process licensed by TechnipFMC and designed to produce very high yields of propylene and other petrochemical feedstocks. The collaboration will leverage Grace’s knowledge as the leading supplier of FCC catalysts and light-olefins additives as well as TechnipFMC’s significant experience in Deep Catalytic Cracking including process and mechanical know-how.

"As the demand for petrochemicals grows, processes specifically designed to provide pathways to convert crude oil to petrochemical feedstocks, like TDCC, will become imperative for refiners," said Tom Petti, Grace’s President, Refining Technologies. "Grace is very excited to partner with TechnipFMC, which is the technology leader in this area having licensed seven units with greater than 18 wt% propylene yields."

Stan Knez, TechnipFMC’s President, Process Technology, stated, "Grace is the world leader in FCC catalysts and more specifically, catalyst solutions for the max propylene segment. We look forward to our collaboration and expect our joint efforts to deliver significant value to current and future licensees."

As MRC reported earlier, in April 2018, W. R. Grace & Co. completed the USD416 million acquisition of the Polyolefin Catalysts business of Albemarle Corporation.

A leader in polyolefin catalysts and licensing, Grace has the world’s broadest portfolio of polypropylene and polyethylene catalyst technologies used to produce thermoplastic resins for a variety of applications. A leading innovator and strategic partner to its customers, Grace supplies catalyst solutions for all polyolefin processes, as well as polypropylene process technology and process controls. Grace employs approximately 3,700 people in over 30 countries.
MRC

MOSCOW (MRC) -- Dow Inc locked 226 employees out of its Houston-area chemical plant in Deer Park, Texas, after United Steelworkers union (USW) workers rejected the latest labor contract proposal, said Reuters.

"Our Deer Park site will continue to operate in the safe and reliable manner our neighbors, employees and customers have come to expect of us; but it will be without the United Steelworkers after 2 p.m. on April 22nd," Dow spokeswoman Ashley Mendoza said.

Dow has twice made contract proposals it called “last, best and final.” The first was rejected by 96 percent of the membership and the second by 98 percent, said Lee Medley, president of Local 13-1, which represents the Dow workers.

USW District 13 Director Ruben Garza said overtime distribution, as well as fatigue and safety due to understaffing, were at the heart of the dispute.

"The USW is committed to making sure that we have consistent and safe staffing levels,” Garza said in a statement. “These negotiations are about more than just money. We also must consider the safety and well-being of the workers and the entire community."

Mendoza said Dow and the USW had reached an impasse.

"Although we have made progress on many elements, we have come to an impasse on others," she said. “Harmonization of collective bargaining agreements within Dow across North America is critical."

As MRC wrote before, in 2012, three major chemical companies: Dow Chemical, Formosa Plastics, and Chevron Phillips Chemical had unveiled their expansion plans in North America basing on deposits in the Marcellus Shale Formation in New York, Pennsylvania, and Ohio. One of the upcoming projects of Dow Chemical basing on attractive price of shale gas is propylene project in Freeport, Texas.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC