Ethan supply to Petro Rabigh expected to be cut by 20%

MOSCOW (MRC) -- Saudi Arabia's Rabigh Refining and Petrochemical Company, or Petro Rabigh, might face a further curtailment of feedstock supplies, as per the company's press release.

In a filing to the Saudi Stock Exchange or Tadawul, the company said that "based on the latest developments, the supply of ethane will be reduced by 20%".

Earlier this week, Petro Rabigh said it sees ethane gas supply cut by 8% and crude oil by 12.5%.

At present, the company is evaluating the final impact, any significant developments will be disclosed later.

As repported earlier, attacks on Saudi Aramco's Abqaiq processing facility and the Khurais field on Saturday morning have led to production cuts of around 5.7 million b/d, representing about half of the company's production capacity.

Petro Rabigh has a refinery in Rabigh with a crude processing capacity of 400,000 b/d. The company also has an ethane cracker which is able to produce 1.6 million mt/year of ethylene. Its downstream units can produce 600,000 mt/year of monoethylene glycol and 1.06 million mt/year of polyethylene.

Saudi Aramco supplies ethane and crude oil to Petro Rabigh and also owns a 37.5% stake in the company. Japan's Sumitomo Chemical owns another 37.5% stake in Petro Rabigh.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

PetroRabigh, a joint venture between Saudi Aramco and Japan's Sumitomo Chemical, has an annual output capacity of 18 million tonnes of refined products and 2.4 million tonnes of petrochemicals.
MRC

MOSCOW (MRC) - Exports deliveries of injection moulded PET chips from China to the Russian market increased by 34% in January-August, according to MRC DataScope survey.

Thus, exports of bottled PET from China to Russia in eight months increased by 34% to 95,600 tonnes. The share of exports of PET from China increased to 90% against 85% in the same period last year.
Imports of Chinese PET to Russia in August decreased by 41% to 7,600 tonnes against 12,800 tonnes in July. The leading Chinese suppliers to the Russian market were producers Jiangsu Sanfangxiang, Yisheng, Wankai and Sinopec.

As it was earlier said, supply of imported material in July decreased by 7% compared to July 2018 and amounted to 15,580 tonnes of PET.
Imports of PET to Russia increased to 117,840 tonnes in seven months of 2019, up 19% year on year.
MRC

MOSCOW (MRC) -- Shutdown of the Abqaiq and Khurais crude oil processing facilities in Saudi Arabia has not only taken 5.7 MMb/d of crude oil production offline - about 7% of global production - but has also cut deeply into the country's supply of petrochemical feedstocks, as per Chemweek.

The ethylene chain, particularly polyethylene (PE) and ethylene glycol (EG), will be most affected, according to analysts at IHS Markit.

The two facilities, owned by Saudi Aramco, were attacked by drones or missiles early on 14 September and subsequently shut down to limit damage.

"Shale has created a sense that there is security - we have too much supply, that there’s abundance, and so on," says Roger Diwan, vice president/financial services at IHS Markit. "We have lost that. It’s back to risk. We need to think of oil in the age of drones and missiles, and that any facility can be hit in the Middle East….We have basically no facilities in the Middle East that are safe now. Abqaiq was a very well-defended piece of infrastructure, and it’s gone."

Multiple Saudi chemical producers have already reported sharp cutbacks in feedstock supply, including Sadara (16%), Yansab (30%), Saudi Kayan (50%), Tasnee (41%), and Sipchem (40%).

"It's a little uncertain on the prioritization of where the feedstocks will go, in terms of how much to chemicals versus meeting other domestic needs," says Dewey Johnson, vice president/base chemicals market research at IHS Markit. “If you pro-rate the production outage at 50%, and said at the moment that 50% of Saudi capacity is hampered, the largest impacts would be in ethylene, polyethylene, and ethylene glycol."

Saudi Arabia has 18 million metric tons/year (MMt/y) of ethylene production capacity, or about 10% of the global total, Johnson noted. "Ethylene is only a few percentage points away from being balanced to tight," notes Johnson. "So how much of that capacity is available or taken off line is critically important."

Saudi Arabia is likewise a major producer of ethylene derivatives, with about 6% of the world's capacity to produce PE, and 16% of the world's capacity to produce EG, key feedstock for polyethylene terephthalate (PET), used to make polyester and PET resin. The country's influence on the global market for these derivatives is further amplified by its export position. In 2018, Saudi Arabia supplied nearly 8% of the world's PE requirements and a whopping 23% of its EG requirements.

The country holds 5% of global propylene production capacity and, downstream, about 9% of the world's polypropylene (PP) capacity. It also accounts for about 5% of global methanol capacity.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.
MRC

MOSCOW (MRC) -- Saudi Arabia will restore its lost oil production by the end of September and has managed to recover supplies to customers to the levels they were at prior to weekend attacks on its facilities by drawing from its huge oil inventories, as per Hydrocarbonprocessing.

Energy Minister Prince Abdulaziz bin Salman said on Tuesday that average oil production in September and October would be 9.89 million barrels per day and that the world's top oil exporter would ensure full oil supply commitments to its customers this month.

"Over the past two days we have contained the damage and restored more than half of the production that was down as a result of the terrorist attack," Prince Abdulaziz told a news conference in the Red Sea city of Jeddah.

He said the kingdom would achieve 11 million bpd capacity by end of September and 12 million bpd by end of November.

"Oil supplies will be returned to the market as they were before 3:43 a.m. Saturday," he said, adding that state oil giant Aramco had emerged "like a phoenix from the ashes" after the attack.

He was referring to attacks on Saturday on state-owned oil company Saudi Aramco's plants in Abqaiq and Khurais, including the world's largest oil processing facility, which shut down 5.7 million barrels per day, which is more than half of Saudi Arabia's production, or 5% of global output.

Aramco's Chief Executive Amin Nasser said the company, which is preparing for an initial public offering (IPO), was still in the process of estimating repair work but that it was "not that significant," given the company's size.

"We should be at our production (level) before the attacks on our facility by the end of September," Nasser told the same news conference.

Aramco had put out 10 fires in the span of seven hours after the "huge" assault, Nasser said.

He said the company was in the process of bringing back oil refining to full capacity and that there were enough crude products to supply the local markets. Aramco's crude oil inventories are more than 60 million barrels, he said.

Speaking at the same news conference, Aramco's Chairman Yasser al-Rumayyan, said Aramco's IPO would be ready within the coming 12 months and that the kingdom was committed to the listing.

Rumayyan said the IPO would "continue as it is" despite weekend attacks and that timing would depend on market conditions.

Prince Abdulaziz said Riyadh did not yet know who carried out the strikes or why, adding Saudi Arabia would keep its role as a secure supplier of global markets. He said stricter measures needed to be taken to prevent further attacks, but did not elaborate.

The foreign ministry has said that preliminary investigations indicated Iranian weapons were used in the assault, which authorities initially said involved drones.

As MRC reported before, a number of Saudi Arabia's companies, such as Tasnee, Sadara, Advanced Petrochemical and Saudi Kayan, announced a curtailment of feedstock to their petrochemical plants, including polyethylene (PE) and polypropylene (PP) facilities, by an average of 30-50% due to the attacks on key Saudi Aramco facilities on Saturday.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.
MRC

MOSCOW (MRC) - ZapSibNeftekhim, owned by SIBUR, has launched a pyrogas compressor, which resulted in flaring, Fedpress reports citing the SIBUR press service.

The company said that ZapSibNeftekhim began to launch pyrogas compressor from 12 September. This process can be accompanied by short-term intense combustion in a pyrolysis flare unit. As part of the commissioning, a test start-up of the compressor was carried out in May; last week a start-up was carried out on raw materials for running equipment on process media. The final stage of commissioning is the launch of equipment in accordance with the working scheme.

According to the press service, for the safe course of the process of setting up the equipment, the pyrolysis flare unit operates. Torch burning is necessary to prevent contingencies at work.

“In the process of burning, industrial gases are converted into carbon dioxide and water, and to prevent soot formation, water vapor is supplied to the flare. We measure the level of carbon monoxide, nitrogen dioxide, sulfur dioxide, dust. All indicators are within normal limits, " said SIBUR.

It was noted earlier that SIBUR completed the construction of its largest project, the ZapSibNeftekhim petrochemical complex in April, and began commissioning it. It is planned to bring the plant to full capacity after 2021.

The ZapSibNeftekhim project is expected to add 2m tonnes of polymers – 1.5m tonnes/year of PE and 500,000 tonnes/year of polypropylene - 2m tonnes of olefins and 100,000 tonnes/year of C4. The cracker at the site is in the process of being commissioned.

The project budget for the construction of the Zapsibneftekhim petrochemical plant in 2018–2020 will amount to USD2.7 bn.

It was also reported that SIBUR could conduct an IPO after the launch of ZapSibNeftekhim and aimed at doubling the company's business.

In September, the Director General of SIBUR, Mikhail Karisalov, said that SIBUR intends to complete the commissioning and start up ZapSibNeftekhim early next year.

OAO SIBUR Holding is the largest petrochemical company in Russia and Eastern Europe with full coverage of the industry cycle from gas processing, production of monomers, plastics and synthetic rubbers to plastics processing.
MRC