Polish refiner Lotos looks to buy upstream assets

MOSCOW (MRC) -- Poland’s second-biggest oil refiner Lotos is looking to buy upstream assets to boost its own oil production, a strategy made all the more important given recent problems with supplies from Russia, reported Reuters with reference to the company's deputy head of investment.

Most of the crude refined at Lotos’s refinery in the northern Polish city of Gdansk comes from Russia via the Druzhba pipeline, but flows via Druzhba were suspended last month due to contamination, sending shockwaves through global oil markets.

Lotos and its bigger rival PKN Orlen have said that their refineries are working normally thanks to supplies via sea and oil reserves. However, France’s Total suspended some units at its Leuna refinery in Germany for technical checks.

“We take advantage from our location at the seaside. We intensively use supplies by sea from Primorsk (in Russia) - this is the main element of our actions in this situation. We also use (Poland’s) mandatory oil reserves, but to a small extent,” Patryk Demski told Reuters on the sidelines of a conference in Katowice this week.

Lotos is expected to merge with Orlen under a government plan to create a bigger player capable of competing on international markets, although the plan needs EU approval and is not imminent.

The suspension of oil flows would not have a significant impact on Lotos’s second-quarter results, as margins at its refinery have not fallen drastically, he said.

The disruption caused by the contaminated Russian oil makes Lotos’s plans to acquire Norwegian oil assets and reduce its reliance on Russia all the more important, Demski said.

"The necessity to stop oil supplies from Russia confirms the legitimacy of our acquisition plans, which could help us increase our own upstream (business)... our continuous observation of what is happening in the market as well as the project of Norwegian assets acquisitions are an important element of building the diversification of our supply portfolio," Demski said.

Oil majors, including Exxon Mobil, BP and Shell, have scaled down their presence in Norway by selling or merging their assets in the mature region to focus on new growth opportunities elsewhere.

Lotos has been looking for acquisitions in upstream for years.

"We are looking at the oil majors’ exit strategy from the Norwegian Continental Shelf and we are considering potential acquisitions," Demski said, adding that Lotos is more interested in buying a structured part of a company’s upstream assets rather than a single field.

"All the time we are intensely looking around on the market and 50,000 barrels of daily output is a feasible goal for us," he said.

As MRC informed before, in November 2017, Lotos got its first shipment of crude oil from the United States on Thursday, part of its wider plan to diversify oil supplies and reduce reliance on Russian deliveries. State-run Lotos, like bigger rival PKN Orlen, refines mostly Russian oil but is aiming to diversify its supplies. As of late 2017, around 25% of the oil it refines comes from sources other than Russia.
MRC

MOSCOW (MRC) -- Brazilian state oil company Petroleo Brasileiro SA is shipping crude during June and July for storage in China to more quickly respond to demand from the country’s independent refiners, sources said, as per Hydrocarbonprocessing.

China is the world’s biggest oil importer driven partially by demand from its independent refiners, known as teapots, centered in the eastern province of Shandong. Petroleo Brasileiro, or Petrobras, is seeking markets for its rising crude output and hopes to expand market share in China, where Brazil was the fifth-largest supplier in the first quarter of 2019.

Storing the oil will enable Petrobras to sell smaller parcels of oil promptly to the teapots, which account for about a fifth of China’s crude import demand, and expand its customer base beyond state refiner China Petroleum and Chemical Corp, or Sinopec, the sources said.

“The idea for storage is to sell small parcels and to be more competitive in this market. The main thing is to have oil anytime,” one of the sources said, adding that this will allow Petrobras to react to prompt demand.

Petrobras inked an agreement with Qingdao Port International Co in December to lease storage tanks at its joint venture Qingdao Shihua Crude Oil Terminal Co that can hold about 2 million barrels of oil, according to the sources and media reports at the time.

To fill those tanks, Petrobras has chartered the very large crude carrier (VLCC) Maran Cleo which is scheduled to arrive at Qingdao in Shandong on June 24. The VLCC contains 2 million barrels of Lula crude, part of which has been sold while the rest will go into storage, one of the sources said.

The producer has another VLCC that will arrive between July 10 and 15 at Qingdao that contains about 1 million barrels of Buizos crude for storage, he added. Buizos is a new medium-sweet grade that was first exported late last year.

The sources declined to be named as they were not authorized to speak to the media. Petrobras did not respond to a request for comment.

Qingdao Port International could not be reached for comment.

As MRC informed before, in October 2017, Petrobras’ minority stakes in Braskem and Deten Quimica was excluded from Petrobras’s divestment program, according to a government decree published in Brazil’s Official Gazette. The decree prevents Petrobras from immediately selling its minority stake in Braskem, which had been announced last year. A new decree will be required to release the stock sale.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

MOSCOW (MRC) -- Kaofu Chemical is likely to undertake a planned shutdown at its polystyrene (PS) in Kaohsiung, as per Apic-online.

A Polymerupdate source in the Taiwan informed that the company has planned to start turnaround at the plant in June 2019 for a period of around one month. The exact date of shutdown was not available.

Located in Kaohsiung, Taiwan, the plant has a production capacity of 100,000 mt/year.

We remind, as MRC informed before, Shanghai SECCO Petrochemical conducted maintenance at its polystyrene (PS) plant in China from early-October to the fist week of December, 2018. Located in Shanghai, China, the PS plant has a production capacity of 300,000 mt/year.
MRC

MOSCOW (MRC) -- Air Liquide has announced that it has expanded its utilities supply agreement with LyondellBasell for its new propylene oxide (PO) and tertiary butyl alcohol (TBA) project in the Houston area, as per the company's press release.

This agreement comes in addition to the long-term contract already signed with LyondellBasell to supply oxygen for this project, which will be the world's largest PO/TBA plant. With this new long-term agreement and related investment Air Liquide reinforces its presence as a major supplier in the Gulf Coast.

The PO/TBA project is comprised of facilities in two sites, with the PO/TBA plant to be located in the LyondellBasell Channelview Complex in Channelview, Texas; and the associated ethers unit in the company’s Bayport Complex in Pasadena, Texas. With this newly expanded long-term utilities agreement, Air Liquide will supply steam, electricity, treated water and nitrogen to the PO/TBA project’s ethers unit.

In April 2018, Air Liquide signed a separate long-term agreement to supply oxygen to the PO/TBA project’s Channelview location. These two agreements confirm Air Liquide’s long-term partnership with LyondellBasell and Air Liquide’s presence as a major supplier of industrial gas and utilities to the project.LyondellBasell announced in July 2017 its decision to build the world's largest PO/TBA plant as part of its organic growth program. The project is designed to meet rising global demand for both urethanes and cleaner-burning oxyfuels. Start-up is expected in 2021.

As MRC wrote before, in September 2017, LyondellBasell announced the successful startup of a new 20 ktpy polypropylene (PP) compounding plant in Dalian, China. This is the company's third facility in China, strategically located to serve the region's growing automotive market.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

MOSCOW (MRC) -- Hyundai Chemical Co. has selected Univation Technologies' Unipol PE technology for a new high-density polyethylene (HDPE) facility to be built in South Korea, as per Apic-online.

The 300,000-t/y HDPE plant, which will be located at Hyundai's site in Daesan, will utilize Univation's broad range of HDPE product technology portfolio, including the Acclaim K-100 Catalyst series for advanced HDPE products. An expected completion date for the project was not given.

Additionally, Hyundai has taken advantage of the flexible design of their Unipol PE Reactor line by investing in future production capabilities for both linear low-density PE and metallocene PE products, Hyundai noted.

Hyundai will also implement Univation's latest process control system, Premier APC+ 2.0, which provides "state-of-the-art" process control specifically designed for Unipol PE technology to maximize production rates, facilitate product transitions and improve overall economic performance, Hyundai added.

As MRC informed before, in May 2018, South Korea’s major refiner Hyundai Oilbank Co. and petrochemical firm Lotte Chemical Corp. have joined hands to build a heavy-feed petrochemical complex (HPC) at a combined investment of KRW 2.7 trillion (USD 2.5 billion).
MRC