BP says biofuel to add to rather than replace gasoline in Brazil

MOSCOW (MRC) -- BP does not expect supply from additional biofuel capacity in Brazil - where it is combining its unit with U.S. grain trader Bunge’s - to replace diesel and gasoline demand, BP’s head of Alternative Energy, Dev Sanyal, told Reuters.

Through the deal BP will increase its biofuel production to 22 million tons from 10 million tons a year, firmly focusing on Brazil as its biofuels production and consumption hub.

To grow, BP expects to squeeze more out of the existing assets of the combined entity, rather than buy more land to plant sugarcane, Sanyal said.

A BP spokesman said it was too early to talk about possible job cuts.

As MRC informed earlier, British oil and gas company BP will increase investment in the United States after the lowering of tax rates under President Donald Trump, Chief Executive Bob Dudley said in February 2018.
MRC

Bank drops objection to financing request by bankrupt Philadelphia Energy Solutions

MOSCOW (MRC0 -- A bank dropped its objection to Philadelphia Energy Solutions Inc’s initial bankruptcy requests after the two sides struck an agreement over the terms of new financing reported Reuters.

PES filed for Chapter 11 bankruptcy protection on Sunday after a fire last month prompted it to close the largest refinery on the US East Coast.

ICBC Standard Bank Plc, which finalized an intermediation agreement to buy PES’s crude and refined products last month, initially objected to the terms of the debtor-in-possession financing sought by PES because it did not give the bank priority over any insurance payouts stemming from the June fire that destroyed a section of the refinery.

ICBC Standard, a joint venture between a South African bank and Chinese bank, said PES owes it more than $300 million in early termination fees and other costs, according to filings with the U.S. Bankruptcy Court for the District of Delaware. But the two sides struck a deal on the terms of the financing during a hearing on Tuesday in federal bankruptcy court in Delaware, according to a spokesman for the bank.

The hearing, which largely dealt with less complicated requests, was the first since the refiner filed for bankruptcy protection.

The fire tore through an alkylation unit at the Girard Point section of the refinery, scattering debris across nearby highways. PES said days later that it would have to shut the complex and lay off about 1,000 workers.

Nobody died in the blaze, which is currently under investigation by at least three federal agencies.

At the time of the fire, ICBC Standard said it had USD1.6 billion worth of crude and products stored at the 335,000 barrel-per-day Philadelphia plant, and the bank has not been able to gain access to all of it.

PES in recent weeks attempted to tap in to USD1.25 billion in property damage and loss of business insurance coverage, but its request was denied, the company said in court filings.

The refinery said that refusal forced it to enter Chapter 11 bankruptcy over the weekend. With the infusion of funds, PES said it could have kept the facility open, but instead it is in the process of draining the 1,300-acre site of its inventory and idling the facility.

"These insurance proceeds are the very heart of these Chapter 11 cases: the sooner the debtors (PES) can recover, the sooner the business can complete its recovery," PES said in a filing, signed by its chief restructuring officer, Jeffrey Stein.

By the time PES filed for bankruptcy, the company had only USD45 million of cash in deposit accounts, which was ICBC collateral. The funds were not enough to pay for the extraction of inventory or wind down the facility, PES said.

Instead of receiving an advance on its insurance payout, PES is seeking USD100 million in debtor-in-possession financing from its current lenders to pay for the shutdown process, bankruptcy and other obligations.
MRC

World only natural gas-to-gasoline plant in operation in Turkmenistan

MOSCOW (MRC) -- A grand event marked the official opening of the world’s only natural gas-to-gasoline plant close to Ashgabat, the capital of Turkmenistan, as per Hydrocarbonprocessing.

His Excellency President Gurbanguly Berdimuhamedov and a large number of dignitaries attended the event.

Start-up of the plant has proceeded according to plan and the initial product meets the agreed specifications. During the coming months, the performance test run is expected to be completed. At full capacity, the plant will produce 15,500 barrels of gasoline per day.

"We are proud to be part of this forward-thinking and ambitious project. It sets a new world standard for monetizing gas resources in a very effective way and will be a model for other nations and companies around the globe. This is the definitive demonstration that TIGAS is a technologically and financially viable way to produce gasoline from natural gas," says Bjerne S. Clausen, CEO of Haldor Topsoe.

The plant is an important step forward in Turkmenistan’s plan to monetize the country’s huge natural gas resource - the fourth-largest in the world – and diversify its export potential. In addition, the production will supply the Turkmen home market with synthetic gasoline that complies with the highest environmental standards, contains no sulfur and very little unwanted byproducts.

The contract to build the plant has been awarded by the national gas company Turkmengas and is based on Topsoe’s proprietary end-to-end technology TIGAS. The TIGAS solution is based on industry-proven Topsoe technologies and catalysts, among those the proprietary SynCOR technology. Utilization is very high with gasoline making up more than 85% of the product stream and 11-13% valuable liquefied gases (LPG). The TIGAS process can produce gasoline in compliance with varying national specifications.

Topsoe has supplied license, engineering, catalysts and hardware such as ATR burner, reactors and boilers for the plant. Kawasaki Heavy Industries was the EPC contractor, and Ronesans was responsible for erection.

As MRC informed before, test operations at a new gas chemical complex (GCC) for processing natural gas and producing polyethylene (PE) and polypropylene (PP) in the village of Kiyanly started back in August 2018. An official launch of production took place on 17 October, 2018.
MRC

Duqm refinery completes more than 25% of multi-billion dollar project

MOSCOW (MRC) -- Oman’s Duqm Refinery has completed more than 25% of a USD6 billion refinery project that will be able to process 230,000 barrels of crude per day when finalized, reported Reuters with reference to Duqm Refinery and Petrochemical Industries Co’s chief executive.

The Duqm refinery is run by a joint venture between Oman Oil Company and Kuwait Petroleum International and occupies 900 hectares in Oman’s Duqm industrial zone.

"More than 25 percent of the project has been completed and we will conduct a test run by the end of 2021," Duqm refinery CEO Salem al Huthaili was quoted as saying by local al-Wisal radio.

The project was financed by 29 financial institutions from 31 countries, al Huthaili said.

Duqm industrial zone is Oman’s biggest single economic project and part of the Gulf Arab Sultanate’s efforts to diversify its economy away from oil revenues.

We remisnd that, as MRC wrote previously, in H1 July, 2019, Iraq and Oman signed a memorandum of understanding to cooperate in the oil and gas sector, including the possibility of building a shared refinery in Oman for processing imported Iraqi crude.
MRC

China exports gasoline to Mexico, Nigeria amid overflowing output

MOSCOW (MRC) -- China will ramp up gasoline exports in July and August to near record levels with cargoes moving to Mexico and Nigeria as refiners seek outlets for their fuel amid a wave of new production and slowing domestic demand, reported Reuters.

The surge in Chinese shipments will fill a supply gap caused by refinery outages in the United States and the Middle East but are likely to accelerate a plunge in Asian gasoline margins, which have dropped 50% since July 12, when they clawed back to a three-month high.

China's refineries, led by PetroChina Co, the country's second-largest, will export about 1.5 million tonnes of gasoline a month in July and August, said two senior traders with knowledge of China's gasoline exports. That is up from June exports of 1 million tonnes and near the record of 1.69 million tonnes exported in March, according to Chinese customs data.

The export surge is a result of the start up of two large-scale refineries owned by Hengli Petrochemical and Zhejiang Petrochemical that will each add about 4 million tonnes per year of new gasoline output when fully operational.

The surge will reverse the trend of falling gasoline exports in 2019, for the first half of 2019 they are down 9% from the same period a year ago.

"Gasoline was overflowing (in China) as Hengli shocked the market...companies took the advantage of stronger demand in Latin America and West Africa," said one of the traders.

PetroChina was granted gasoline export quotas of 4.7 million tonnes in the second batch of quotas issued in May, more than half of the quotas given. As a result, the company is placing cargoes to Mexico, Chile and Nigeria, according to the traders.

"Gasoline surplus in China is exacerbated by slowing demand growth, given weakening consumer confidence as the trade war continues, reflected also in slumping car sales," said Michal Meidan, director of the China energy programme at Oxford Institute of Energy Studies.

Chinese refiners have loaded 1.2 million tonnes of gasoline for export as of July 23, after a record 1.6 million tonnes in June, according to data from Refinitiv.

One PetroChina-run plant, West Pacific Petrochemical Corp, sold 900,000 barrels of gasoline to Mexico in July, in three different shipments.

China's refiners have tried to lower the so-called diesel/gasoline production ratio to produce less diesel and more of the motor fuel, causing the excess of gasoline, said Wang Yanting and Shi Linlin, analysts at Shandong-based consultancy JLC.

The shift in production was aimed initially at easing the overhang of diesel as demand for the industrial and truck fuel has fallen amid a slowing economy.

Top refiner Sinopec, for example, squashed that ratio to a historic low to 1.01 in the first quarter this year, versus 1.33 in the same period in 2015, according to company reports.

As a result, China's gasoline output in the first half of 2019 rose 2.9% from a year earlier while diesel dropped 7.8%, according to the National Bureau of Statistics.

Gasoline demand growth is also sliding as Chinese automobile sales, consisting mainly of petrol-consuming passenger vehicles, fell for a 12th month in June, with 2019 annual sales set to fall for the second year in a row.

Seng-Yick Tee, senior director at consultancy SIA Energy, forecasts China's gasoline demand to rise 5.4% this year, the slowest pace since 2015, as the falling auto sales reduce consumption.

As a result of the petrol glut, plants that make mixed aromatics, petrochemicals used to raise the octane rating in gasoline, in eastern China's Shandong province have closed.

Shandong-based consultancy JLC estimates about 30 plants with annual output of 5 million tonnes have shut for months this year as demand for mixed aromatics has declined.

"Our plant was losing money in a big way...We wish we had shut down earlier," said a mixed aromatics plant manager in the city of Zibo, Shandong, which has closed its 8,000 barrels per day facility since March.
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