U.S. crude stocks climb as production hits record, refineries cut output

MOSCOW (MRC) -- U.S. crude stocks rose last week as refineries cut output to the lowest level in nearly two years and production edged higher to a record of 12.6 million barrels per day (bpd), the Energy Information Administration said, as per Hydrocarbonprocessing.

Crude inventories rose by 2.9 million barrels in the last week, compared with analysts’ expectations for an increase of 1.4 million barrels. Production climbed by 200,000 bpd to a record of 12.6 million bpd, the data showed.

Refinery crude runs fell by 361,000 barrels per day (bpd), EIA data showed, while refinery utilization rates fell by 0.7 percentage point to the lowest level since October 2017, the data showed. Oil prices were little changed after briefly extending losses after the release of the data.

"Total crude oil production rose which I think is probably the key point in keeping gains at bay here. Despite rig counts being lower, production is being resilient,” said Tony Headrick, energy market analyst at CHS Hedging.

U.S. energy firms reduced the number of oil rigs for a record 10th month in a row through September as producers follow through on plans to cut spending on new drilling this year.

The drop in refining activity has helped contribute to the build-in oil inventories despite the drop in net imports, said Matt Smith, director of commodity research at ClipperData.

Net U.S. crude imports fell last week by 601,000 bpd while gross exports jumped 534,000 bpd to 3.4 million bpd, the highest since June 21, when exports hit a record 3.8 million bpd. “We are in the depths of fall maintenance but both strong exports and weak imports have helped limit the build,” Smith said.

Gasoline stocks fell by 1.2 million barrels, compared with analysts’ expectations in a Reuters poll for a 257,000-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 3.9 million barrels, versus expectations for a 2.1 million barrel drop, the EIA data showed.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 941,000 barrels, EIA said.
MRC

MOSCOW (MRC) -- Datang International Power Generation, the listed subsidiary of the nation's second largest power producer, China Datang Group, said yesterday it expects its profits to be helped by lower coal prices again this year, said Scmp.

However, analysts said its earnings outlook was uncertain, given a lack of output growth and weak profits from its non-power businesses.

Datang's vice-chairman, Cao Jingshan, said the company could see its average coal cost per unit of output drop by 3 to 5 per cent this year compared to last year. Some rivals have projected a 5 per cent fall.

Last year Datang saw its cost of coal per unit of output fall 3.6 per cent. The cost of coal took up 69.4 per cent of total operating costs in 2012. Those lower fuel costs helped the company more than double net profit to 4.06 billion yuan for last year, it revealed on Monday. Excluding non-recurring gains, pre-tax profit grew 72 per cent from 2011.

As MRC informed earlier, in September 2019, Datang International Duolun Coal Chemical, subsidiary of Datang International, restarted one PP unit 230,000 tonnes/year, whixh was shut in April 2018. Its another PP line resumed production on 1 October.

According to MRC's ScanPlast report, 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.

Datang International Power Generation Co., Ltd. is a power generation company. The principal activities of the Company are power generation and power plant development in the People's Republic of China (PRC). It is also engaged in activities, including the sale of electricity and thermal power, repair and testing of power equipment, power related technical services, coal trading, chemical products manufacturing and selling, coal chemistry, transportation and recycling.
MRC

MOSCOW (MRC) -- A rebound in profit this year has allowed Gunvor Group to cancel plans to sell its Ingolstadt refinery in Germany and stall the sale of a stake in a Russian products terminal, Chief Executive Torbjorn Tornqvist told Reuters.

The company has posted gross profit of USD800 million for the first three quarters of 2019 thanks to favorable market conditions and the overhaul of the firm that began last year.

"We actually covered all our losses from last year. We spent a lot of time overhauling the business ... We had a generational shift, lots of changes in corporate governance and risk policy. It’s the most fundamental change in the company since I started it," Tornqvist said.

"So we are seeing the fruits of that. I don’t deny that market conditions are better this year but the consistency in our performance is good. We did well in all our key offices in Geneva, London, the U.S. and Singapore, the best profits in years. The U.S. (office) is really ramping up. This year it’s performing up to our expectations and beyond."

Its liquefied natural gas (LNG) business continues to grow with shipments already surpassing the 2018 level of 176. Gunvor is the largest LNG trader and its traded oil and LNG volumes were 3.3 million barrels per day last year.

After suffering a loss of USD330 million in 2018, Geneva-based Gunvor came under pressure from banks and put two key assets up for sale - its 110,000 bpd German refinery at Ingolstadt and a 26% stake in a refined products terminal at Russia’s Baltic port of Ust Luga. But with the recovery, the firm is keen to keep the assets it sees as cash cows.

“At Ingolstadt, we were open to having a partner in this one. We had a process and received binding offers ... but we felt that this refinery is performing so well so we decided to put off the sale,” Tornqvist said, adding it was now looking to invest in more midstream oil assets including biofuels. "Ust Luga generates significant cash so we have slowed down the process."

Gunvor also expects a resolution this year with Swiss prosecutors over their investigation into the company’s dealings in Congo Republic between 2009 and 2011. It had already put aside funds in the event of a significant financial penalty last year.

In August 2019 oil trader Gunvor decided against signing a contract for oil products bought through tenders from Russia’s troubled Antipinsky refinery. SOCAR Energoresource, a joint venture between Russian lender Sberbank and a group of investors, holds an 80% stake in the refinery, which has debt exceeding USD5 billion and has filed for bankruptcy.
MRC

MOSCOW (MRC) -- Surhan Gas Chemical Operating Company and Shell Catalysts & Technologies have signed a technology licence agreement for the Mustakillikning 25 yilligi (25 years of independence) gas project in Uzbekistan, said the company.

As part of this deal, Shell Catalysts & Technologies will offer an integrated technology licence for the gas treating and sulphur recovery block.

The project, in Uzbekistan’s southerly Surkhandarya region, will process five billion cubic metres of raw natural gas a year that contains high levels of hydrogen sulphide, carbon dioxide and mercaptans. Cost-effectively removing these impurities and disposing of them safely or converting them into saleable by-products is critical to the project’s success.

The integrated gas treatment and sulphur recovery unit designed by Shell Catalysts & Technologies features several leading-edge Shell proprietary technologies that offer significant reductions in capital and operating costs compared with the alternatives.

The offer includes the use of Shell’s proprietary hybrid solvent technology: Sulfinol. Sulfinol is a market-leading mercaptan removal technology with more than 220 references worldwide. Unlike alternative technologies, the Sulfinol process removes contaminants, including mercaptans, in a single process step, which can help to reduce capital expenditure by up to 30%, operating costs by 10–30% and life-cycle costs by 15–30%.

The Shell Claus offgas treating (SCOT®) process will be used to enhance sulphur recovery, and the Shell sulphur degassing process will remove hydrogen sulphide from the liquid sulphur produced. In addition, to remove carbon dioxide, the unit’s design features Shell’s ADIP ULTRA process.

"We are seeing more and more gas projects having to contend with highly complex gas compositions. These are often beyond the capabilities of standard, off-the-shelf solutions, but, by tailoring our approach to their specific objectives, we are helping customers to meet stringent product specifications and emissions standards, and to reduce their capital and operating costs. Shell is pleased to offer its market leading and innovative gas processing and sulphur recovery technologies to Uzbekistan. We look forward to working with Surhan Gas Chemical Operating Company to push the boundaries of what is technically achievable,” says Andy Gosse, Vice President, Shell Catalysts & Technologies.

The project will be implemented in two stages. Stage 1 (2018–2022) will comprise geological exploration, well drilling, field infrastructure construction and gas processing plant construction. Stage 2 (2023–2025) will see the construction of a gas–chemical complex that will generate up to 500,000 t/y of polymer-based products.

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.

The investment consortium, which includes Gas Project Development Central Asia AG, Altmax Holding Ltd and Uzneftegazdobycha JSC (a member of Uzbekneftegaz), established Surhan Gas Chemical Operating Company to manage the field’s development.

Shell Catalysts & Technologies, part of Shell, is a leading technology licensor and brings owner–operator–innovator–licensor capabilities to the market. It has more than 1,200 references for gas processing technologies at gas plants and refineries worldwide.
MRC

MOSCOW (MRC) -- Italian oil and gas company Eni expects to boost gasoline production at Angola’s Luanda refinery to 470,000 tonnes within two years from the current 110,000 tons a year, reported Reuters with reference to a senior company official's statement.

Last year, Eni signed an agreement with Angola’s state-owned oil firm Sonangol to lift production at the 65,000 barrel per day plant, the only refinery in Africa’s second-largest oil producer which imports around 80% of its fuel products.

"The installation of a specific unit, which is called a platformer, (will allow the refinery) to increase production of reformate gasoline," said Andrea Giaccardo, Eni Angola’s managing director, in a country report to an African oil and power conference in Cape Town.

"The current capacity of the refinery is 110,000 tonnes per year and the target, once the platformer is installed, is to reach a production capacity of about 470,000 tonnes per year by 2021," he said.

Milan-based Maire Tecnimont S.p.A. said separately its Kinetics Technology subsidiary was awarded the engineering, procurement and construction contract worth USD200 million.

Eni operates the Luanda refinery under a joint venture with Sonangol.

As MRC informed earlier, Italy’s Versalis (part of Eni) took its cracker in Dunkirk, France offline in early September, 2019, due to a fire which broke out at the company’s petrochemical plant. It is not yet known how long the unit will remain shut. Local media sources also reported that the fire was brought under control with no reported injuries and the company is currently assessing the required repairs. The cracker has a production capacity of 380,000 tons/year of ethylene and 95,000 tons/year of propylene.

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.

Eni is an Italian multinational oil and gas company headquartered in Rome. It has operations in in 79 countries, and is currently Italy's largest industrial company with a market capitalization of 68 billion euros (USD 90 billion), as of August 14, 2013. The Italian government owns a 30.3% golden share in the company, 3.93% held through the state Treasury and 26.37% held through the Cassa depositi e prestiti. Another 39.40% of the shares are held by BNP Paribas.
MRC