S-Oil sees IMO 2020 stock build supporting refining margins

MOSCOW (MRC) -- S-Oil, South Korea’s third-largest refiner, said it expects refining margins to strengthen in coming quarters, supported by demand for new low-sulfur marine fuels and the US driving season, reported Reuters.

The International Maritime Organization’s (IMO) new rules on marine fuels are set to take effect from January 2020, reducing the sulfur content of fuel oil to 0.5% from the current 3.5% to combat pollution.

S-Oil, whose top shareholder is Saudi Aramco, said suppliers had already started building stocks of the low-sulfur fuel and the trend is expected to support margins in the third and fourth quarters.

The current quarter should also see solid demand for the US summer driving season, it said in an earnings statement.

"Refining margins will strengthen from the fourth quarter, driven by inventory build-up demand for compliant fuels in advance of IMO 2020," S-Oil said.

The refiner was hurt by low margins in the second-quarter, reporting an operating loss of 90.5 billion won (USD76.8 million) for the April-June period, compared with an operating profit of 403 billion won a year earlier.

Asia’s benchmark Singapore refining margins DUB-SIN-REF - the profits from processing a barrel of Dubai crude into refined products - have jumped since late June, reaching their highest since September 2017 at USD9.37 a barrel in mid-July.

Singapore sales of low-sulfur marine fuels hit a record 299,000 tonnes in June, up by 10% from the previous high of 272,000 tonnes in May and more than double the 140,000 tonnes sold in June last year.

S-Oil, which runs a 669,000 barrels-per-day (bpd) refinery in the southeastern city of Ulsan, also said it plans to shut down its No.1 residue fluid catalytic cracker (RFCC) for maintenance in the third quarter.

The refiner’s gasoline making unit, its 73,000-bpd RFCC, would be offline for maintenance from September to October, according to sources familiar with the matter.

We remind that, as MRC wrote earlier, in January 2019, S-Oil Corp said that refining margins are expected to improve in 2019, boosted by growing diesel demand.
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MOSCOW (MRC) -- Curacao’s prime minister and Venezuela’s oil minister discussed the possibility of Venezuelan state oil company PDVSA remaining as the operator of the Caribbean nation’s 335,000 barrel-per-day (bpd) Isla refinery, reported Reuters with reference to Curacao’s government.

PDVSA’s contract will expire at year-end, and the government-owned refinery has been searching for a business partner to replace it. A lack of crude shipments has left the facility largely idle.

In the statement, Prime Minister Eugene Rhuggenaath’s office said he and Venezuelan Oil Minister Manuel Quevedo, who also serves as PDVSA’s president, during a meeting at the refinery "spoke about the startup of the refinery and the interest of PDVSA to remain as the operator after 2019."

Refineria di Korsou, the state company that owns the facility, said last week that would start evaluating up to 10 proposals from energy companies interested in becoming a partner at the refinery. Its current schedule calls for the negotiations to start by October and for a deal to be reached by November.

The company said in a statement on Monday that it would not divulge the names of the parties that have delivered proposals.

When asked at a press conference whether PDVSA had submitted a formal proposal to continue operating the refinery, Quevedo said the company had "manifested publicly and in a formal manner our desire to continue operations."

"We have no intention to leave," Quevedo said.

OPEC member Venezuela’s crude production has fallen since the United States slapped sanctions on PDVSA in January as part of the Trump administration’s effort to pressure socialist President Nicolas Maduro to leave office amid a hyperinflationary economic collapse.

Venezuela suffered widespread blackouts on Monday in areas across the country, including the capital Caracas.

As MRC informed before, in May 2019, Curacao’s state-owned Isla oil refinery received an exemption from US sanctions on PDVSA, the Caribbean island’s government said in a statement. The US Treasury Department slapped sanctions on PDVSA in late January in a bid to force out socialist President Nicolas Maduro, who has overseen a collapse in the OPEC member nation’s economy. The license for the refinery, along with two other related companies, will allow the facility to continue to do business with US companies through Jan. 15, 2020.
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MOSCOW (MRC) -- China National Offshore Oil Co (CNOOC) has signed an agreement with Abu Dhabi National Oil Co (ADNOC) on upstream exploration and development, oil refining and liquefied natural gas trade, reported Reuters with reference to ADNOC's statement.

The agreement was signed during a three-day state visit to China by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed.

Under the agreement, the companies will share the latest know-how in developing ultra-acidic natural gas fields, according to ADNOC’s statement.

They will consider using CNOOC’s engineering arms, Offshore Oil Engineering Co Ltd and China Oilfield Services Ltd, as contractors for design, purchase and construction as well as oilfield service providers for ADNOC.

The two firms will also look at potential opportunities to work with both these companies on offshore oil and gas field assets in Abu Dhabi, the statement said.

They will look into working together on LNG marketing and purchasing.

In oil refining and petrochemicals, ADNOC will consider opportunities for investing in CNOOC’s existing refineries, and potential collaborations in new integrated refining and petrochemical assets in China, the statement said.

As MRC informed previously, in May 2018, ADNOC unveiled plans to invest AED 165 billion (USD45 billion) alongside partners, over the next five years, to become a leading global downstream player, enabling it to further stretch the value of every barrel it produces to the benefit of ADNOC, its partners and the UAE.
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MOSCOW (MRC) -- ExxonMobil said ot started production on a new high-performance polyethylene line at its Beaumont, Texas polyethylene (PE) plant, as per Hydrocarbonprocessing.

The expansion increases plant production capacity by 65 percent or 650,000 tons per year, bringing site capacity to nearly 1.7 million tons per year.

This expansion builds upon supply advantages created by ExxonMobil’s two new performance PE lines which began production in 2017 at the company’s manufacturing site in Mont Belvieu, Texas. Together, these multi-billion dollar investments will help meet strong global demand growth for polyethylene, particularly high-performance products used for liquid and food packaging, construction liners and agricultural films.

"The availability of new supplies of domestically produced natural gas liquids provides us with a significant advantage when expanding polyethylene production to meet worldwide demand growth," said Karen McKee, president of ExxonMobil Chemical Company. "Our unique polyethylene products offer enhanced performance benefits to our customers, including strength and ease of processing, compared with commodity products."

The project created 2,000 jobs during peak construction and currently supports approximately 40 permanent jobs. Operations associated with the Beaumont expansion are expected to increase regional economic activity by USD20 billion in the first 13 years, according to research completed in 2015 by Impact Data Source.

Beaumont’s polyethylene plant expansion is part of ExxonMobil’s 2017 Growing the Gulf initiative, which included plans to build and expand manufacturing facilities along the U.S. Gulf Coast, creating more than 45,000 high-paying jobs across the region.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

MOSCOW (MRC) -- Celanese Corporation, a global specialty materials company, has increased July list and off-list selling prices for Vinyl Acetate Monomer (VAM) sold in Asia outside China (AOC), as per the company's press release.

The price increase was effective for orders shipped on or after 19 July, 2019, or as contracts otherwise allow, and is incremental to any previously announced increases.

Thus, July VAM prices rose by USD50/mt - for AOC.

As MRC reported earlier, Celanese last raised its VAM prices for AOC on 20 March, 2019, by USD100/mt.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,600 employees worldwide and had 2017 net sales of USD6.1 billion.
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