Crude pipeline woes boost European refining profits

MOSCOW (MRC) -- A string of European refinery outages after contamination forced the shutdown of Russia’s Druzhba crude pipeline has constrained fuel supply across the continent and delivered an unexpected boost to profit margins, reported Reuters.

But the Russian supply woes, the worst in decades, coupled with unplanned North Sea oilfield outages have also raised prices for the crude refiners use to make products such as diesel and gasoline, curbing their margin gains.

Several refineries across Germany and eastern Europe have been forced in recent weeks to slow down their operations after high levels of organic chloride were found to have contaminated Urals crude pumped via the Druzhba pipeline to the Baltic port of Ust-Luga and to other European countries.

At the same time, North Sea crude prices have risen on demand from refiners looking to offset the disrupted Russian supply at a time of field and pipeline outages in the region.

The Forties North Sea crude stream reached its highest since early 2016.

The refinery outages have also led to a sharp drop in stocks of gasoline and diesel in the region, boosting prices but also creating logistical difficulties for traders hunting for alternative sources of crude and products.

Total suspended operations at some units of the 230,000 barrel-per-day Leuna refinery in Germany last week for technical checks due to the contamination as it awaits alternative supplies of feedstock from the Polish port of Gdansk, it said.

Roughly 250,000 barrels per day (bpd) in European refining capacity, or just under 2% of the continent’s product demand, will be impacted in the second quarter of the year by the Druzhba outage, the International Energy Agency estimates.

"The market is all over the place: field outages, refinery issues, Urals, geopolitics, all at the same time," a European trading source said.

Overall refining profit margins have been buoyed with Europe’s overall Ekofisk refining margin reaching a seven-week high on Friday.

European gasoline profit margins have hit an 8-month high of more than USD13 per barrel since the pipeline outage. Diesel refining margins at around USD15 per barrel are near a 2-month high.

The impact has been particularly acute in Germany, Europe’s largest economy, where traders have been forced to import gasoline and diesel from the Amsterdam-Rotterdam-Antwerp (ARA) refining hub on barges or tankers in recent days, traders said. Germany is typically an exporter of gasoline components to ARA.

BP’s decision to start maintenance at its 400,000 bpd refinery in Rotterdam - one of Europe’s biggest and most complex - in mid-May rather than October, as initially planned, exacerbated the supply crunch. It will be out for four to six weeks, traders said.

Trader Gunvor also shut down one of its two crude units at its Rotterdam refinery in early May. The unit resumed operations on May 18, industry monitor Genscape said.

"It seems likely that European gasoline and diesel supplies will be tight over the next 4-6 weeks at least," said Robert Campbell, head of oil products at consultancy Energy Aspects.

ARA gasoline stocks fell by more than 5 percent in the week to May 16 to their lowest since August 2018, data from Insights Global showed. Seasonally, gasoline stocks are at their lowest since 2015.

The drop in gasoline stocks and subsequent price rise have also made exports from the region to the US East Coast uneconomic, tightening the supply outlook in North America, Campbell added.

Gasoil stocks, which include diesel and heating oil, were also below their five-year average though still higher than last year’s levels, the data show.
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BASF invets in Longwater Advanced Materials Fund

MOSCOW (MRC) -- BASF Venture Capital GmbH (Ludwigshafen, Germany) is investing in the Longwater Advanced Materials Fund, said Chemengonline.

This private equity fund is managed by Longwater Investment (Shanghai, China), a pioneer growth capital investor in advanced materials and chemistry-related technologies. BASF Venture Capital is one of several Limited Partners; other investors include Xiamen C & D, CICC Genesis and Tsinghua Redbud.

The Asian market plays an important role in BASF’s growth strategy. “This investment underlines our commitment to further expanding BASF’s innovation capabilities in China,” said Markus Solibieda, managing director of BASF Venture Capital. “Longwater’s experts are well versed in China’s chemical industry. Involvement in Longwater’s network will support BASF’s aim to engage with fast-growing companies and develop jointly with them innovations for its customers."

BASF Venture Capital generates new growth potential for BASF by investing in young companies and funds. One of its strategic focus areas is new chemical technologies and materials. Longwater, a leading specialist in China, has built a strong network with competent start-ups and is therefore a powerful partner in this field.

"We are happy to welcome BASF Venture Capital as a Limited Partner in our network,” says Xuesong Shi, managing director of Longwater. “BASF is a widely respected global market leader in the chemical and materials sector. BASF Venture Capital, which supplements BASF’s innovation initiatives, has extensive access to and insights into various related segments and shares a common philosophy and vision with Longwater Investment as regards smart energy, sustainability, chemical-industry digitalization, and much more. The partnership will facilitate synergetic collaboration between BASF Venture Capital and Longwater Investment."

Longwater’s network spans a variety of industrial verticals and comprises multiple global and domestic market leaders in the chemical field as strategic investors, as well as other external strategic partners that can provide insights and resources to Longwater’s investment activities and create synergies among stakeholders.

As MRC informed before, in December 2016, AkzoNobel finalized the acquisition of BASF’s global Industrial Coatings business, which supplies a range of products for industries including construction, domestic appliances, wind energy and commercial transport, strengthening its position as the global number one supplier in coil coatings.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of about EUR58 billion in 2016.
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US lawmaker wants EPA use of biofuel waivers investigated

MOSCOW (MRC) -- Democratic Senator Tammy Duckworth asked the US Environmental Protection Agency’s Office of Inspector General to investigate why the agency vastly expanded its use of waivers to exempt small refineries from the nation’s biofuel law, reported Reuters.

The request, made in a letter from Duckworth’s office to Acting Inspector Charles Sheehan, follows a May 16 Reuters report that the EPA decided to expand the waiver program months before a 2017 court decision it has often cited to justify the move to the corn lobby.

Oil refiners say the Small Refinery Exemption (SRE) program is crucial to help limit regulatory compliance costs, but the corn industry has said it suspects President Donald Trump’s EPA is using the program as a political tool to help allies in the energy industry at the expense of farmers.

"Recent document disclosures reveal that the EPA misled Members of Congress, industry and the public in regard to the agency’s motivations and justifications for its SRE policy,” the letter stated. “This deception by EPA political appointees may indicate improper motives and conflicts of interest and it warrants a thorough review by the EPA OIG."

The US Renewable Fuel Standard requires refineries to blend billions of gallons of biofuels like corn-based ethanol into their fuel each year, but small facilities that can prove compliance would cause financial hardship can seek waivers.

The Trump administration’s EPA granted 35 such waivers for 2017, up sharply from seven in the final year of the Obama administration - saving the refining industry hundreds of millions of dollars but infuriating the corn lobby, which argues the waivers have threatened demand for ethanol.

Some of the waivers granted by Trump’s EPA have gone to small refineries owned by oil giants like Exxon Mobil and Chevron Corp as well a facility owned by billionaire investor Carl Icahn, who had briefly advised Trump on environmental regulation.
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Refineries must agree division of tainted oil to clear pipeline

MOSCOW (MRC) -- Poland will not be able to get clean oil from a Russian pipeline until refineries have agreed how to divide tainted crude still in the system, reported Reuters with reference to the chief executive of Polish refiner PKN Orlen.

Flows through the Druzhba pipeline were suspended last month due to contamination, sending shockwaves through global oil markets. Russian pipeline operator Transneft is set to compensate buyers for any proven losses.

PKN, fellow Polish refiner Lotos, and German refineries Schwedt and Leuna, will have to agree how much of the tainted oil left in the system they will accept, said PKN Chief Executive Daniel Obajtek.

"It is known that in this pipeline there is a certain amount of contaminated oil ... as a result of this there is a division which must be determined," Obajtek said.

He added PKN’s refineries were safe and working at full capacity.

"There is no danger of a lack of fuel due to the diversification process and other processes which we are implementing. We are safe," Obajtek said, referring to oil PKN has brought in from other sources.

A quarter of Russian export flows has been disrupted since April when high levels of organic chloride were found in crude pumped via the Druzhba pipeline to the Baltic port of Ust-Luga, as well as to central Europe and Germany.

The pipeline splits in Belarus into a northern spur to Poland and Germany and a southern leg via Ukraine to Slovakia, Hungary and the Czech Republic.

Ukraine’s UkrTransNafta said that hours after resuming transit of Russian oil to the European Union last Monday it suspended flows again after Hungarian oil company MOL informed it of technical problems on the Hungarian side.

UkrTransNafta said it would resume supplies after the Hungarians confirmed they were ready to receive them.

While Russia and other countries are trying to find a way to clean the pipeline, trading companies Vitol and Unipec are sending around 700,000 tonnes of contaminated Russian oil to Asia in an attempt to sell barrels rejected by buyers in Europe, according to trading sources and ship tracking data.

Vitol and Unipec are mainly targeting Chinese independent refiners, or so-called teapots, that have shown an interest in taking the oil which could be mixed with other crudes to make it usable, traders said.

Total and Eni, two major buyers of Russian oil, have stopped payments to Russian firms that sold them contaminated oil and say they will only pay when compensation is agreed, trading sources said.

Last week, Total’s 230,000 barrel-per-day Leuna refinery in Germany, which usually receives Urals crude via Druzhba, declared force majeure on refined product shipments as a result of the contamination.

Belarus, Ukraine and Kazakhstan have all said they plan to seek compensation from Russia for the tainted oil.

Meanwhile, Swedish oil refiner Preem said on Monday it had reached a compensation deal with the supplier of Urals it imported via the Baltic sea port of Ust-Luga. Preem did not say who would compensate it, nor how.

As MRC wrote before, clean Russian oil should have reached Czech refiner Unipetrol’s Litvinov plant around May 27, reported Reuters last week with reference to head of the Czech state reserves body Pavel Svagr, who told CTK news agency on Friday. Shipments of Russian oil through the Druzhba pipeline are being restarted after suspension last month due to contaminated crude in the system.
MRC

Dupont announces new additions to 3d printing materials portfolio

MOSCOW (MRC) -- DuPont Transportation & Advanced Polymers, a global business unit of the DowDuPont Specialty Products Division, is launching at RAPID + TCT 2019, new additions to the company’s portfolio of 3D printing materials, including six new Zytel polyamide and Hytrel thermoplastic polyester elastomer (TPC-ET) pellets and two new Hytrel filaments, as per Chemengonline.

DuPont’s new pelletized materials for pellet extrusion modeling were developed to help increase 3D manufacturing agility and cost-effectiveness by allowing customers to switch seamlessly from prototyping to small-series, pre-series and mass production—while maintaining similar polymer properties. The new pellets and filaments offer a range of hardnesses, fiber reinforcement options and colors.

The company’s R&D programs manager, Jennifer L. Thompson, Ph.D., will give a technical presentation on these new materials, titled “High Performance Materials for 3D Printing” on Thursday, May 23, at 10:15 a.m. EDT as part of the Material Development and Characterization conference session. Thompson will highlight new engineering materials for industrial use, describe alternative 3D printing methods such as pellet extrusion modeling and discuss tailored testing programs for printing materials.

"As 3D printing capabilities advance beyond traditional prototyping and small-volume production, the industry is looking to scale up and accelerate production while driving down costs,” said Christophe Paulo, strategic marketer, EMEA, DuPont. “By delivering our products as pellets as well as filaments, DuPont gives customers the flexibility to use the same material across different processes. For instance, they can create prototypes with fused layer modeling and final parts with pellet extrusion modeling – or even injection molding for very high volumes – while maintaining consistent properties. The addition of pelletized materials to our offering supports the trend toward mass customization using 3D printing."

At RAPID + TCT, DuPont is exhibiting automotive ducts and structural components, and a variety of other 3D-printed parts that showcase the diversity and capabilities of its Zytel and Hytrel 3D pellets and filaments.

As MRC informed earlier, rising demand for DuPont’s Tyvek nonwoven materials has prompted DuPont Safety and Construction, a business unit of DowDuPont Inc., to invest more than USD400 million to expand capacity for the materials at its facility in Luxembourg. The expansion will include the addition of a new building and third operating line at the site. The new capacity will come on stream in 2021


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