Total Q3 oil and gas output hits record high in volatile environment

MOSCOW (MRC) -- Total's oil and gas production hit a record-high 3.04 million b/d of oil equivalent in the third quarter, up more than 8% on the year, with a 46% jump in gas output for LNG production, according to S&P Global.

As with other big producers, Total's profits were hit by lower prices for its upstream production. They were also dented by depreciation, depletion and amortization of newly producing projects.

"The environment remains volatile, with uncertainty about hydrocarbon demand growth related to the outlook for global economic growth and in a context of geopolitical stability," Total noted in a results statement.

It reiterated it is able to break even at oil prices below USD25/b, excluding dividend payments.

"The group continues to high-grade its portfolio," CEO Patrick Pouyanne said, referring to Total's upstream division.

Total's adjusted profit was down 24% at USD3.02 billion, while its net debt ratio, or gearing, was up half a percentage point compared with the end of the second quarter, at 21.1%, it said.

However, the company noted half its gas production had been priced with a link to oil prices, providing some cushion against recent gas market weakness.

In the upstream, adjusted profits were down 29% at USD1.73 billion, while its downstream segment was buoyed by strong refining margins, offset by maintenance at its Normandy refinery and repairs to a pipeline at its Grandpuits refinery that lasted into July.

The surge in Total's upstream oil and gas production followed 9% year-on-year growth in both Q1 and Q2, and the company affirmed plans for an overall increase of 9% in 2019. It expects its output to grow by 5%/year on average in 2018-21, followed by a flattening in 2022-23 and then further increases.

Total's oil output was up by 7% on the year, at 1.72 million b/d, on the back of projects such as Egina, offshore Nigeria, and the Kaombo field offshore Angola, which came on stream in July last year and is now producing from two floating production, storage and offloading vessels. A further boost should come from the expected start of oil production in Brazil's sub-salt Iara area this year.

The company's gas production increased by 13% to 7.40 Bcf/d. Out of this total, gas production within its LNG division increased by 46% to 2.75 Bcf/d, reflecting rising volumes from the Yamal LNG project in northern Russia, operated by Novatek, and Ichthys, offshore Australia. Its LNG sales were up 20% at 7.4 million mt and sales from its own production were up 50% at 4.2 million mt.

In the downstream, Total's refining throughput was down 12% on the year at 1.72 million b/d, with a 23% drop in France due to work at the Normandy and Grandpuits facilities. But firm margins meant adjusted operating profit from refining and chemicals was up 1% at USD952 million.

The company's return on average capital employed for the 12 months to the end of September was 9.6%.

As MRC informed earlier, Total has decided to double the production capacity of its affiliate Synova to meet growing market demand for high-performance recycled materials. By early 2021, Normandy-based Synova, a French leader in its sector, will produce 40,000 tons per year of recycled polypropylene (PP) that meets the demanding quality standards of automotive OEMs and carmakers.

According to MRC's ScanPlast report, the PP consumption in the Russian market was 909,260 tonnes in January-August 2019, up by 10% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
MRC

Xinfengming partially starts up new 2.2 million mt/year PTA unit

MOSCOW (MRC) -- China's Dushan Energy Ltd., a subsidiary of Xinfengming Group Co., Ltd, has partially started up its new 2.2 million mt/year purified terephthalic acid unit at Zhejiang Wednesday, reported S&P Global with reference ot sources familiar with the matter.

The unit consists of two trains with 1.1 million mt/year each, and the raw material paraxylene was fed into one of the trains on Wednesday morning, the sources added.

There is continuous flaring at the moment, indicating operation of the oxidation unit, one of the sources added.

The company should be able to produce some PTA materials by Thursday if the operation continues to run well, they said.

The new 2.2 million mt/year PTA unit will be the first phase of the company's Yuan 7 billion (USD1 billion) investment project, which includes another PTA line with the same capacity that will be in the second phase, the company announced in its official website earlier.

Phase two of its PTA line is expected to be online in the third quarter of 2020, sources close to the company said.

We remind that, as MRC wrote before, China's Hengli Petrochemical took off-stream its No. 1 PTA plant for a two-week turnaround on October 7, 2019. Located in Dalian, China, the No. 1 PTA plant has a production capacity of 2.2 million mt/year.

PTA is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's DataScope report, Chinese bottle grade PET deliveries to Russia increased 34% in the first eight months of 2019 to 95,600 tonnes. China accounted for 90% of the total imports, compared to 85% a year earlier.
August imports of material from China decreased by 41% to 7,600 tonnes from 12,800 tonnes in July. Jiangsu Sanfangxiang, Yisheng, Wankai and Sinopec were the leading Chinese suppliersof material to the Russian market.
MRC

Arkema Q3 profit fell, earnings increased

MOSCOW (MRC) -- Arkema’s third-quarter net profit fell year on year despite an increase in earnings amid an ongoing trend of customer destocking in a challenging demand environment, said the company.

Company earnings before interest, taxes, depreciation and amortisation (EBITDA) rose year on year as a stronger performance from its core adhesives and advanced materials division offset a weaker quarter for its industrial specialties operations.

Net profit fell over the same period as a result of start-up costs during the quarter, expenditure on the consolidation of specialty surfactants firm ArrMaz, which it acquired in July, and unfavourable currency effects.

The first half of the year was characterised by industry adjustments across many of the company’s end markets, and Arkema had expressed hopes in August that those headwinds would dissipate through the second half of the year, but this has yet to occur, according to CEO Thierry Le Henaff.

Despite weaker profitability for the quarter, group earnings remain resilient and are expected to match the €1.39bn earnings posted in 2018 this year.

Third-quarter high-performance materials division EBITDA rose over 12% year on year on the back of an improved product mix and more favourable raw materials pricing, while industrial specialties earnings fell 8%, with fluorogases volumes “strongly penalised” by illegal imports into Europe.

As it was infromed earlier, Arkema is to divest its Functional Polyolefins business to South Korea’s SK Global Chemical for EUR335m. Functional Polyolefins produces ethylene copolymers and terpolymers for the food packaging, cable, electronics and coatings markets.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,436,390 tonnes in the first eight months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the PP consumption in the Russian market was 909,260 tonnes in January-August 2019, up by 10% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Arkema is a leading European supplier of chlorochemicals and PVC. Kynar and Kynar Flex are registered trademarks of Arkema Inc.
MRC

EQUATE reports 65% decrease in net income for Q3-2019

MOSCOW (MRC) -- EQUATE Group announced its Q3-2019 unaudited earnings, reporting USD264mn in EBITDA, a 52% decrease from USD547mn in Q3-2018, and $811mn in revenue, a 35% decrease from USD1,247mn in Q3-2018, said Refiningandpetrochemicalsme.

Net income after tax stood at USD143mn in Q3-2019, a 65% decrease from $406mn in the same period last year.

Commenting on the results, Dr Ramesh Ramachandran, CEO and president of EQUATE Group, said: “We continue to see steady demand in the market but are experiencing compressed margins due to uncertainty related to tariffs notably in Asia. EQUATE’s lowest cost position at all of its assets across the globe allows us to continue to run at maximum rates.

Dr Ramachandran added: "We are very pleased to announce the start-up of the MEGlobal Oyster Creek, TX, site in October 2019, ahead of schedule and in line with budgets, once again demonstrating EQUATE’s operational excellence and ability to deliver on its commitments to customers and shareholders."

EQUATE, a joint venture between Kuwait’s Petrochemicals Industry Company (PIC), Dow, Boubyan Petrochemical Company and Qurain Petrochemical Industries Company, opened a new monoethylene glycol in the US. The Oyster Creek, Texas, site has a production capacity of 750,000 tonnes/year.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

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

MRC

Shell buys out Brunei deepwater block from Total for USD300 million

MOSCOW (MRC) -- Shell has agreed to buy Total's majority stake in a large exploration block off Brunei in the South China Sea for USD300 million, according to S&P Global with reference to the French oil major's statement Wednesday.

Total holds a 86.95% interest in 5,850 sq km Block CA1, which is located 100 km off the coast of Brunei in water depths ranging from 1,000 to 2,500 meters. Total currently operates the block alongside partners Murphy Oil (8.05%) and Petronas (5%).

"This transaction fits with our strategy of actively managing our portfolio and will contribute to our program to dispose of USD5 billion of non-core assets over the period 2019-2020," Total's upstream head Arnaud Breuillac said in a statement.

Total said the transaction is subject to approval by the local authorities and is expected to close by December.

As MRC reported previously, in mid-October, Royal Dutch Shell Plc restarted the hydrocracker at its 225,300 barrel-per-day (bpd) Norco, Louisiana, refinery. The 40,000 bpd hydrocracker was shut on Sept. 9 for a planned month-long overhaul. A longer than expected restart of the unit stretched the outage to six weeks.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,436,390 tonnes in the first eight months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the PP consumption in the Russian market was 909,260 tonnes in January-August 2019, up by 10% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC