Zhejiang Petroleum Trading set to secure China's crude import license

MOSCOW (MRC) -- Zhejiang Petroleum Trading Co. is set to become the first company with a foreign investment to win a crude oil import license in China, signaling the country further opening up its oil industry, reported S&P Global.

The Ministry of Commerce, or MOFCOM, said in a statement late Tuesday that Zhejiang Petroleum Trading in eastern China's Zhejiang Free Trade Zone meets the requirements to apply a license for importing crude oil.
The final approval will come after a public review, which could last until October 17.

With the license, Zhejiang Petroleum Trading will become the first company with a foreign investment to be allowed to import crude oil into China directly for refineries having permission to process imported barrels, Chinese policy observers said.

Zhejiang Petroleum Trading is a joint venture set up in April last year between Zhejiang Petroleum Co. Ltd., with a 71% stake, and the Singapore-based commodities trading house Glencore Asian Holding Pte. Ltd., owning the remaining 29%.

The company would also be the second non-state-owned trading firm to win the license in the Zhejiang Free Trade Zone, following China granting it to Zhejiang Material Industrial Zhongda Petroleum Ltd. in March.

Separately, MOFCOM is set to award a crude oil import license to the new greenfield independent refinery Zhejiang Petrochemical & Chemical Co. Ltd. in the same region after a public review ending on October 14, the ministry said in a second statement late Tuesday.

The license will enable the 400,00 b/d refinery to import crude directly, rather than asking a license holder -- either a trading company or a refinery -- to import on its behalf.

Without the license, the refinery is more likely to import through its indirect subsidiary Zhejiang Petroleum Trading. ZPC is a stakeholder of Zhejiang Petroleum, Zhejiang Petroleum Trading's parent company.

Taking into account a pending approval for ZPC, the ministry has granted a total of 33 refineries the crude import license since August 2015, when China began allowing independent refineries to directly import crude.

ZPC has been approved with a crude quota of 20 million mt/year by the country's top economic planner, the National Development and Reform Commission.

The refinery is expected to start full operations in Q4.

As MRC wrote previously, China's greenfield Zhejiang Petrochemical will use a range of process technology from Honeywell UOP for the second phase of its integrated refining and petrochemical complex in Zhoushan, Zhejiang province. The second phase of the complex by itself will process 20 million tons per year of crude oil and produce another six million tons per year of aromatics when completed. With an overall project cost of Yuan 160 billion (USD25.8 billion), Zhejiang Petrochemical plans to ultimately build up 40 million mt/year of crude processing capacity on Yushan Island of Zhoushan city in eastern China's Zhejiang province.

Phase I, revolving around 20 million mt/year of primarily crude processing capacity, will be able to produce 4 million mt/year of paraxylene, along with 8.5 million mt/year of gasoline, gasoil and jet fuel. Zhejiang Petrochemical has plans to start trial operations in February on its crude distillation unit and vacuum distillation unit at the phase I project, a source close to the company said this week. Construction of the second phase will begin after the full start-up of phase I.

Paraxylene is a raw material for the synthesis of terephthalic acid (PTA) - an intermediate for the production of polyethylene terephthalate (PET).

According to MRC's ScanPlast report, Russia's overall estimated PET consumption reached 62,540 tonnes in August, up by 9% year on year. The estimated PET consumption increased to 493,240 tonnes in Russia in January - August 2019, up by 12% year on year.
MRC

MOSCOW (MRC) -- Chambroad Zhongju New Materials is to add new facilities with the capacity to produce 150 kilotonne per annum (ktpa) of bromobutyl rubber (BIIR) at its plant in Binzhou, Shandong, said European-rubber-journal.

The project’s phase 1, with a nameplate capacity of 70ktpa for BIIR production, passed environmental regulatory approval in July, said the company’s website.

Spanning 63,000 square metres and also featuring a 100ktpa plant for isbutene production, the first phase is slated to come on stream in October 2020.

Chambroad Zhongju currently has a 50ktpa capacity for butyl rubber (IIR).

It is also planning a €55 million (430 million yuan) project for modified catonic styrene-butadiene latex used as an emulsifying agent for asphalt. The project will make 5ktpa of liquid emulsifyer and 3ktpa of powder emulsifier each year.

“High performance modified emulsifier has great market prospects with the development of China’s highway construction and maintenance markets,” said the project’s environmental filing.

In September 2019, LyondellBasell announced that Shandong Chambroad Petrochemicals Co. Ltd., (Shandong Chambroad), has selected the LyondellBasell Hostalen "Advance Cascade Process" (Hostalen ACP) technology. The low-pressure slurry process technology will be used for a 350KTA high-density polyethylene (HDPE) unit to be built in their petrochemical complex in Binzhou city, Shandong province, P.R. China.

As MRC informed earlier, Chambroad Zhongju New Material plans to invest USD490 mln to construct a 600,000 tonne/year polypropylene (PP) plant at Binzhou in Shandong province.

According to MRC's ScanPlast report, the estimated consumption of PP in the Russian market totalled 694,210 tonnes in January-June 2019, up by 14% year on year. The supply of propylene block copolymers (PP-block) and propylene homopolymers (PP-homo) increased.

Chambroad Zhongju was set up in 2016 in Binzhou’s Boxing Economic Devleopment Zone. It is a fully owned subsidiary of privately held Chambroad Petrochemicals.
MRC

MOSCOW (MRC) -- Hengyi Industries Sdn Bhd, a joint petrochemical venture between China and Brunei, on Wednesday inked commercial agreements with Brunei Shell Petroleum Company (BSP) and Brunei Shell Marketing Company (BSM) for the supply of crude oil to Hengyi and selling of fuel products in Brunei market, said Xinhuanet.

Hengyi Industries is a joint venture between China's Zhejiang Hengyi Group and Damai Holdings, a wholly-owned subsidiary under the Brunei government's Strategic Development Capital Fund. They own 70 percent and 30 percent of the shares respectively.

Farida Talib, BSP's commercial director, said in her speech at the signing ceremony that the new commercial agreements would allow for improvements within the domestic oil and gas value chain with BSP supplying crude oil to Hengyi's oil refinery and petrochemical project at Pulau Muara Besar (PMB), a 955-hectare industrial park on an island at the Brunei Bay.

Hengyi in return will supply refined fuel products to BSM for distribution to the local market. BSM said this will meet domestic product demand, support downstream retail and industrial development in Brunei and enable significant associated economic benefits.

Chen Liancai, CEO of Hengyi Industries, also highlighted that the agreements serve another milestone for Hengyi Industries' petrochemical project.

Chen said that Hengyi will purchase part of its needed crude oil from BSP, and supply petroleum products to BSM including gasoline, diesel and jet oil. Hengyi will also work closely with BSJV (Brunei Shell Joint Ventures) companies to ensure smooth transition and supply of petroleum products to the domestic market from the current refinery to its new refinery at PMB.

As MRC informed earlier, in September Hengyi Industries produced qualified petrochemical (PC) products at its new refinery and petrochemical complex at Pulau Muara Besar in Brunei. The project includes a 160,000 barrels/d crude oil refinery, a 1 M tonnes/y aromatics facility and a 500,000 tonnes/y benzene unit.

Hengyi Petrochemicals is targeting to start up its new 1.5m tonne/year PX unit in late October.

Paraxylene is a raw material for the synthesis of terephthalic acid (TFA) - an intermediate for the production of polyethylene terephthalate (PET).

As per ICIS-MRC PRice Report, Plant of New Polymers Senege, one of the Russian producers of PET chips, shut production of polyethylene terephthalate (PET) for scheduled repairs on 1 October. According to a source in the company, the shutdown will take about a month. The exact date of the completion of the turnaround was not reported. Senege cut the spot prices to the level of Rb87,000-89,000/tonne CPT Moscow, including VAT this week. Spot prices of PET from the producer in September were at the level of Rb87,000-89,000/tonne CPT Moscow, including VAT.

Hengyi Industries is a joint venture of Zhejiang Hengyi Group (70%) and Damai Holdings, a subsidiary of the Brunei government's Strategic Development Capital Fund (30%).
MRC

MOSCOW (MRC) -- Philippine Propylene Inc. (PPI) has extended the maintenance at its polypropylene (PP) unit at Mariveles in Bataan province to October 15, reported NCT with reference to sources close to the company.

The company experienced an unplanned outage in mid-September due to a technical issue and had earlier planned to restart the plant last week.

The unit has an initial capacity of 160,000/tons/year which could be increased 225,000 tons/year, according to the company website.

Meanwhile, as MRC informed before, another Philippines producer - JG Summit - has started maintenance at its PP and polyethylene (PE) units at Batangas. The company produces 190,000 tons/year of PP and 325,000 tons/year of high density polyethylene (HDPE)/linear low density polyethylene (LLDPE) at its facilities. The plants will be offline for two months from October to the end of November.

According to MRC's ScanPlast report, the estimated consumption of PP in the Russian market totalled 694,210 tonnes in January-June 2019, up by 14% year on year. The supply of propylene block copolymers (PP-block) and propylene homopolymers (PP-homo) increased.
MRC

MOSOCW (MRC) -- Poland’s pipeline operator PERN expects that its system will be completely cleared of contaminated Russian oil by July 2020, reported Reuters with reference to its Chief Executive Igor Wasilewski's statement.

Buyers including Polish state-run refiners PKN Orlen and Lotos discovered in April that supplies of Russian crude had been contaminated with organic chloride, a chemical used in oil recovery that can damage refining equipment.

PERN halted Russian oil imports via the Druzhba pipeline after the contamination was detected. Flows were partially restarted in June.

"A few weeks ago I was an optimist and I thought that removing the chlorided oil from the system would take half a year," Wasilewski told reporters.

"Now I know that PKN Orlen and Lotos are checking how their refineries behave and carefully blending the Russian oil. I think that we will finally get rid of this oil from PERN’s stores in July 2020 at the earliest."

As MRC wrote previously, in September 2019, Honeywell announced that PKN ORLEN licensed the UOP MaxEne™ process, which can increase production of ethylene and aromatics and improve the flexibility of gasoline production. The project, for the PKN ORLEN facility in Plock, Poland, currently is in the basic engineering stage. Honeywell UOP, a leading provider of technologies for the oil and gas industry, first commercialized the UOP MaxEne process in 2013. The process enables refiners and petrochemical producers to direct molecules within the naphtha feed to the processes that deliver the greatest value and improve yields of fuels and petrochemicals.

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.

PKN Orlen is a major Polish oil refiner and petrol retailer. The company is a significant European publicly traded firm with major operations in Poland, Czech Republic, Germany, and the Baltic States. It currently (2015) ranks 353, with a revenue of over USD33.8 billion.
MRC