Glencore head of oil, Alex Beard, retires amid US probes

MOSCOW (MRC) -- Glencore’s head of oil, Alex Beard, who helped make the firm one of the world’s top three oil trading houses, will retire this month, the company said in yet another management shake-up amid US probes into its activities, reported Reuters.

Glencore, founded by trader Marc Rich, has come under US scrutiny in the past year over its business in the Democratic Republic of Congo, where it produces cobalt and copper, and in Venezuela and Nigeria, where it trades oil and refined products.

Beard, 52, will be replaced by the head of oil marketing, Alex Sanna, 37, who was key in expanding Glencore’s refined products trading in recent years.

Beard’s move follows the retirement of other top allies of Glasenberg - Chris Mahoney, the long-serving head of Glencore’s agricultural business, and Aristotelis Mistakidis, the head of copper.

Glencore is worth USD44 billion and Mistakidis held a 3.2% stake in the company, worth USD1.4 billion at current prices, while Beard held a 2.5% stake worth USD1.1 billion.

Glasenberg is the largest shareholder of Glencore, with 8.8%, and built the firm from predominantly a trading house into a mining giant via its merger with Xstrata in 2012. He has said he may retire within the next three to five years.

Glasenberg, 62, revealed his retirement plans a few months after news broke about US investigations into Glencore.

Last July, Glencore said it had received a subpoena from the Department of Justice (DOJ) requesting documents and records on compliance with the U.S. Foreign Corrupt Practices Act and money-laundering statutes.

A previous US probe nearly destroyed Marc Rich in the 1980s when the United States accused the company of "trading with the enemy", Iran. It indicted Rich, who was pardoned years later by President Bill Clinton in 2001 during Clinton’s last days in office. Rich died in 2013.

Sources told Reuters the current DOJ investigation was focusing on the role of intermediaries and how they helped Glencore obtain contracts, including in oil trading.

In April, Glencore said the US Commodity Futures Trading Commission was also investigating whether the company and its units may have violated certain regulations through “corrupt practices".

The company said that probe was at an early stage and had a scope similar to that of the DOJ investigation.

Oxford-educated Beard joined Glencore in 1995 from BP, the biggest trading desk at that time, and became head of oil in 2007.

He embarked on expanding the firm into upstream, something trading houses had rarely done before, but the venture into Chad and Equatorial Guinea led to writedowns of over USD700 million.

Glencore’s traded oil volumes fluctuated between 4.5 and 6.0 million barrels per day in recent years - on par with rival Trafigura but behind the world’s top trading house, Vitol.

Last year, Glencore’s volumes shrank 17% because of unfavorable market conditions.

Sanna’s trading division will continue to report to chief executive Ivan Glasenberg, but oil assets, previously under Beard, will be transitioned to Peter Freyberg, the head of industrial assets, Glencore said on Monday.

Sanna, who studied economics in France, holds a master’s degree in international trade from Pantheon-Sorbonne University in Paris.

As MRC wrote before, in September 2018, South Africa’s competition watchdog approved Glencore’sroughly USD900 million bid for Chevron’s local and Botswana assets on Thursday, bolstering its chances of scuppering a rival bid from China’s Sinopec. Chevron agreed in 2017 to sell its stake to state-owned Sinopec before miner and commodities trader Glencore swooped in after reaching a deal with minority shareholders, who backed it and exercised preemptive rights on the sale.
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MOSCOW (MRC) -- US production of hydrocarbon gas liquids (HGLs) reached 5 million barrels per day (Mbpd) in 2018, an increase of more than 0.5 Mbpd (13%) over 2017 levels. HGLs accounted for over a quarter of total US petroleum products output in 2018, as per Hydrocarbonprocessing.

The increase in HGL production since 2010 is largely a result of growing domestic natural gas production. In 2018, US natural gas production, measured as gross withdrawals, averaged 101.3 billion cubic feet per day (Bcf/d), a 38% increase over 2010 levels and the highest volume on record. As natural gas production has grown, an increasing share of HGLs are produced at natural gas processing plants, from about 75% in 2010 to nearly 90% in 2018.

HGLs produced at natural gas processing plants are called natural gas plant liquids (NGPL), which include ethane, propane, normal butane, isobutane, and natural gasoline. A smaller share of HGLs are produced at petroleum refineries, which include refinery olefins and refinery liquefied petroleum gases (LPG). HGL production has been relatively flat at petroleum refineries since 2010, averaging about 630,000 b/d.

Ethane and propane account for two-thirds of HGL production. Ethane production reached 1.71 million b/d in 2018, a 20% increase over 2017 levels. Ethane, the lightest NGPL, can (within some limits) be left in the processed natural gas stream at natural gas processing facilities—a process called ethane rejection—or it can be recovered from natural gas if ethane’s value is sufficient to cover the additional costs to produce and distribute the ethane to markets.

Demand for ethane in 2018 was driven by increased use in the petrochemical sector, which converts ethane into ethylene for use in the production of plastics, resins, and fibers that go into the production of many consumer goods. Several new petrochemical crackers were commissioned in the United States in 2018. Chevron Phillips Chemicals and ExxonMobil each commissioned facilities that process an estimated 90,000 b/d of ethane as feedstock. Indorama Ventures commissioned a smaller petrochemical cracker estimated to consume 20,000 b/d of ethane as feedstock.

International demand for ethane also increased, and new export infrastructure—the 50,000 b/d Utopia pipeline to Canada—has increased the capacity to ship ethane abroad.

Besides the petrochemical sector, where demand growth has been robust, the capacity of the U.S. domestic marketto consume HGLs has not expanded at the pace of growing supply. The international market has become the preferred destination for most of the incremental growth in US HGL production. HGL exports have been growing rapidly, particularly for propane, increasing 14% over 2017 levels. In 2018, nearly a third of U.S. HGL production was exported.

Propane production grew from 1.54 million b/d in 2017 to 1.70 million b/d in 2018, a 10% increase. Changes in domestic demand for propane, which is used in the residential and commercial sectors as a heating and cooking fuel and in the industrial sector as a petrochemical feedstock, are mostly driven by weather and consumption. Propane demand has been fairly flat on an annual basis in recent years.

US production of butanes, natural gasoline, and refinery olefins also increased in 2018. Domestic markets for normal butane, isobutane, and natural gasoline have experienced relatively slow growth, meaning much of the production increase has been exported.
MRC

MOSCOW (MRC) -- South African petrochemicals firm Sasol Ltd said that a second unit at its US ethane cracker project came online last week, reported Reuters.

The company’s Lake Charles Chemicals Project (LCCP), which will convert natural gas into plastics ingredient ethylene, said the plant started producing ethylene oxide on May 31.

As MRC informed before, in March 2019, Sasol Ltd., the world's biggest maker of fuel from coal, said the cost of its giant Lake Charles chemicals project in Louisiana will balloon to as much as USD12.9 billion, or about 50% more than initially planned.
MRC

MOSCOW (MRC) -- Norwegian oil workers and their employers have extended their pay talks past a midnight deadline in a bid to avert a strike that would reduce the country’s oil and gas output, reported Reuters with reference to negotiators.

The Lederne trade union has threatened to strike at offshore fields operated by Equinor, Aker BP and others, which the oil firms said would curb production by some 440,000 barrels of oil equivalents per day.

The deadline for the wage talks had originally been set to midnight on Monday (2200 GMT).

As MRC informed before, in March 2018, Norway’s Statoil announced plans to change its name to Equinor, reflecting its commitment to become a broad energy company rather than one focused only on oil.
MRC

MOSCOW (MRC) -- France’s Total declared force majeure on the production of jet fuel at its Leuna refinery in Germany following the supply of contaminated crude from Russia, reported Reuters.

"We have declared Force Majeure on the jet fuel from the Leuna refinery," a Total spokeswoman said.

The spokeswoman said that due to ongoing problems with crude supply through the Druzhba pipeline, the Leuna refinery was still operating at a reduced rate using crude oil from stocks and alternative supply routes via Gdansk port."

"Total is making its best efforts to limit the effect on the supply of petroleum products to customers and service stations thanks to additional supply channels."

As MRC informed previously, in December 2017, Total inaugurated the new units at its Antwerp integrated refining & petrochemicals platform, which had progressively started up in the previous few months.
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