August prices of European PE did not increase for CIS markets in spite of rising ethylene prices

MOSCOW (MRC) -- August contract price of ethylene in Europe was agreed up by EUR10/tonne from July level.
However, some European producers announced a decrease in export PE prices for August shipments to the CIS markets, according to ICIS-MRC Price report.

Negotiations on August prices of European PE began last week. All market participants said that European producers have actually kept export prices of ethylene polymers for shipments in the current month at the level of July despite the increase in the price of monomer in the region.

At the same time, some producers, on the contrary, cut their export prices by EUR20/tonne, and in some cases, the price reduction reached EUR35/tonne. Deals for August LDPE were negotiated in the range of EUR950 -1,020/tonne FCA. July deals were agreed in the range of EUR970 -1,020 per tonne, FCA.

Deals for August deliveries of high density polyethylene (HDPE) were done in the range of EUR975-1,040/tonne FCA, for film and blow moulding polyethylene, while in the first half of July prices were in the range of EUR1,010 -1,060/tonne FCA.

August prices for injection moulding HDPE decreased to EUR970-1,000/tonne FCA, versus EUR995-1,020/tonne FCA, a month earlier.

Because of current and upcoming scheduled maintenance shutdowns, export quotas for some producers were limited, but these restrictions were not critical for most buyers.
MRC

Asia jet fuel premiums at highest seasonal peak since 2013, but may soon fade

MOSCOW (MRC) -- Asian jet fuel buyers are paying the highest cash premiums for this time of year since 2013 amid a short-term supply shortage, but the values are likely to fade as late summer travel demand slumps in coming weeks and refiners ramp production back up, said Hydrocarbonprocessing.

The premium for jet fuel cargoes in the Asian trading hub of Singapore JET-SIN-DIF rose to as high as 38 cents a barrel above benchmark quotes last week, taking the differentials to their strongest levels for July-August since 2013. The premiums were at 23 cents a barrel on Tuesday.

Asian refiners cut output during the second quarter as usual for scheduled plant maintenance, while heavy demand for summer air travel provided a seasonal boost to the region’s already-thriving aviation market, trade sources said.

“We had around 2.5 months of heavy (refinery) run cuts from May. Runs were still recovering in July ... (and) refineries are not likely to be on max runs until (later in) August,” said Nevyn Nah, an analyst at consulting firm Energy Aspects.

Lower runs at refineries in Europe and the United States also helped to tighten jet fuel supplies, he said. “The tightening of supplies in the second quarter prior to the uptick in (air travel) demand in the third quarter means Europe, for instance, is not going to get its re-supply from the East until late-August.”

This has resulted in a supply-driven jet fuel market as demand growth is taking a hit amid the increasing signs of a global economic slowdown, traders and analysts said.

Most of the remaining summer air travel demand will come from Europe and the United States as Asia’s major festivals, such as Ramadan, and its school holidays are over, said a Singapore-based jet fuel trader.

“We also need to take note of the flight cancellations that are happening in Hong Kong and ... the latest status on the Japan-Korea relationship,” she said, with both having at least a short-term effect on jet demand.

More than 200 flights have been canceled in Hong Kong amid the escalating anti-government protests in the Asian financial center, while South Korea and Japan are currently in the middle of a deepening trade dispute that is disrupting business ties.

The Asia-Pacific region accounts for about 37% of the global aviation market. Its contribution has grown in recent years due to expanding economic growth, new airports and terminals, cheap fares and increased development of airlines’ flight networks.

Asia-Pacific airlines carried 1.6 billion passengers in 2018, up 9.2% from the preceding year, the latest data from the International Air Transport Association (IATA) showed last week.
MRC

India raises cost of refinery project with Aramco by 36%

МОСКВА (МRC) -- India has increased the cost estimate of a giant refinery and petrochemical project to be jointly built with Saudi Aramco and Abu Dhabi National Oil Co by more than 36%, after protests by farmers forced the relocation of the plant, said Reuters.

The 1.2 million barrels-per-day (bpd) coastal refinery in the western state of Maharashtra is now expected to be built at Roha in the Raigad district, about 100 km (62 miles) south of Mumbai.

The new cost estimate of $60 billion for the refinery was given to Saudi Arabia’s energy minister Khalid al-Falih at a meeting with Indian Oil Minister Dharmendra Pradhan last month in New Delhi, said the four sources familiar with the talks between the two ministers.

“The $60 billion is a preliminary estimate that was told to Saudi Arabia. The final number will be decided on the basis of a detailed feasibility study,” said a source present at the meeting.

The project cost at the signing of a deal with Saudi Aramco in 2018 was pegged at $44 billion. The four sources requested anonymity because of the sensitivity of the matter.

Despite the cost expansion, the project is still expected to be commissioned in 2025, the sources said. Global oil producers are vying to gain entry into India to establish a stable outlet for their output and to earn profit from the South Asian nation’s strong gasoline and petrochemical demand prospects due to the rising disposable income of its 1.3 billion population.

The world’s third-largest crude oil importer aims to raise its refining capacity by 77% to 8.8 million bpd by 2030.

The state government suspended land acquisition at the previous site in Ratnagiri - about 400 km south of Mumbai - after thousands of farmers refused to surrender their land, fearing the project could damage a region famed for its Alphonso mangoes, cashew plantations and fishing hamlets that boast bountiful catches.

“It is a huge escalation in cost. But since the project is of a mega scale, we expect the investment to be staggered,” said Sri Paravaikkarasu, director at Singapore-based consultancy FGE, adding that her firm was doubtful the 2025 timeline of the project would be met.

The sources said the cost escalation is mainly due to the delay in land acquisition for the project and that all calculations need to be reworked.

State run companies - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum - own 50% of the Ratnagiri Refinery & Petrochemicals Ltd (RRPCL), the company building the project.

Saudi Aramco and ADNOC hold the remaining half. B. Ashok, chief executive of RRPCL, declined comment on the increased cost estimate, and there was no immediate response from India’s national oil ministry.

Saudi Arabia’s Energy Ministry and Saudi Aramco also did not respond to a Reuters request for comment.

The Maharashtra state government has promised that land at the new site would be acquired by end-December.

A consortium led by Russia’s Rosneft acquired a controlling stake in Nayara Energy in 2017, illustrating the interest in India refining sector.

Saudi Aramco is also in talks to buy a minority stake in Reliance Industries’ refining, marketing and petrochemical business, and analysts say any further delay in land acquisition may force it to take a harder look at the private Indian refiner’s assets.

Investment in a new west coast refinery is a better option as this would give Aramco more say in the operation and configuration of the project, said Paravaikkarasu.

“But if land acquisition is not completed within this year, then Reliance appears to be a better option as this is a running project and they can monetise the investment from day one."
MRC

Officials bet on petrochemicals investment to diversify oil and gas-dependent economy

MOSCOW (MRC) -- Azerbaijan is betting on petrochemicals investment to diversify its oil and gas-dependent economy, industry and government officals told Reuters.

Plummeting global oil prices five years ago sent the former Soviet energy producer’s economy into decline, devalued its currency and led to bankruptcies among its commercial banks. But lessons appear to have been learned as Azerbaijan has sought additional sources of revenue, investing in petrochemical plants at home and abroad as it chases the bigger margins from turning crude oil into plastics rather than oil products.

Construction has been completed on three new petrochemical plants in Azerbaijan over the past 12 months. The plants are producing polypropylene, carbamide and high-density polyethylene.

Azerbaijan also produces methanol and other petrochemicals and plans to begin construction of a new petrochemicals plant in Turkey to produce various materials in partnership with British oil major BP at the end of 2020, aiming to complete the project within three years, said BP and state-controlled Azeri oil and gas company SOCAR.

Plans to construct a second carbamide plant in Azerbaijan with Tekfen will also boost the South Caucasus country’s potential as a petrochemicals exporter.

“Azerbaijan is deliberately conducting a policy of non-oil sector development,” Vahit Akhmedov, a member of Azerbaijan’s parliamentary economic policy committee, told Reuters.

“Development of petrochemicals is one of the priorities as this sector will bring good profits and provide the country with these products.”

Oil and gas account for about 95% of Azeri exports and 75% of government revenue, with the hydrocarbon sector also generating about 40% of the country’s economic activity, making the Caspian Sea republic particularly vulnerable to a downturn in gas and crude prices.

“Rapid development of the petrochemicals sector will help us to support economic growth if the oil price falls,” said SOCAR vice president Suleyman Gasimov.

Oil output in Azerbaijan, led by BP and SOCAR’s Azeri-Chirag-Guneshli oilfields (ACG), has been stable over the past couple of years. BP and SOCAR say that ACG, which has so far produced 3.5 billion barrels of oil, has the potential to pump a further 3 billion barrels by 2050. Azerbaijan is also a major producer of gas in the region, aiming to export supplies to Europe.

“Azerbaijan’s oil and gas reserves are enough for rapid and successful development of the petrochemicals industry,” an industrial source told Reuters.

New enterprises have allowed the country to satisfy domestic petrochemicals demand while boosting exports, with Azeri officials saying total petrochemical exports are projected to reach USD241 million this year, up from USD190 million in 2018.

Its export markets for petrochemicals include Georgia, Turkey, Russia, Ukraine, Europe, China, Egypt and Israel. Other non-oil exports, including the agriculture and mining sectors, are projected to grow to USD2 billion in 2019 from USD1.7 billion last year, Azeri officials said.
MRC

Shell considers solar panels to power Singapore refinery site

MOSCOW (MRC) -- Royal Dutch Shell is considering to install solar panels to power its Bukom refining site in Singapore, a company spokeswoman told Reuters.

“We are exploring the potential of installing solar panels at our Pulau Bukom Manufacturing Site,” she said, without providing further details. The Bukom manufacturing site includes a 500,000 barrels-per-day refinery, which is Shell’s largest wholly owned refinery.

The oil and gas company has been exploring solar installations for its other sites in Singapore as part of its plans to improve energy efficiency and reduce carbon footprint.

Globally, Shell is installing solar photovoltaic panels on the roofs of seven lubricant plants in China, India, Italy, Singapore and Switzerland.

It has so far identified three manufacturing and logistics sites in Singapore’s western regions of Tuas, Jurong Island and Pandan to install a solar photovoltaic (PV) power generation system, with a combined peak capacity of about three megawatts.

The first and largest of the three Shell solar farms, which will go live next month, will have more than 6,500 panels placed above a lubricant plant in Tuas. The solar farm is expected to produce about 3,300 megawatt hours of renewable energy every year.

The generated solar energy will be used to help power operations at the Tuas lubricants plant, the company said, adding that this can result in the avoidance of a third of the greenhouse gas emissions from the plant’s electricity use which is equivalent to taking about 700 cars off the road for one year.

Installations at Shell’s sites in Pandan and Jurong Island are expected to start in late 2019 and early 2020 respectively, the company said.

Shell said as part of its efforts to try low carbon solutions, the company has signed a Memorandum of Understanding (MoU) with the Energy Market Authority of Singapore to jointly work on energy storage systems.

“This could include piloting commercially viable business models with innovative solutions that integrate storage systems and solar power to Shell’s sites in Singapore,” Shell said, declining to provide more details citing commercial confidentiality reasons.
MRC