Devon Energy announces agreement with Dow to develop STACK Acreage

MOSCOW (MRC) -- Devon Energy has agreed with chemicals major Dow to jointly develop a portion of Devon’s STACK oil and gas acreage in central Oklahoma, said US energy company.

Under the agreement, Devon will monetise half of its working interest in 133 undrilled locations in exchange for about USD100m, over the next four years, it said.

"Devon’s returns associated with this agreement are expected to be enhanced by lower well costs from focused infill development drilling and midstream incentive rates that lower per-unit operating costs for each new well brought online," it added.

"Dow is a world-class organisation and this mutually beneficial agreement will help us bring forward value in the STACK, while delivering carry-enhanced returns that compete effectively for capital within our portfolio," added Devon CEO Dave Hager.

Devon anticipates no change to its production targets or capital spending outlook in 2020 as a result of this agreement. Activity in 2020 will start with the development of two drilling units in northern Canadian County, where drilling operations are expected to commence mid-year.

With this agreement, Devon will retain 100 percent of its production and cash flow from existing operations in the STACK play. Devon will serve as operator and is responsible for capital allocation and project timing with this agreement.

Vinson & Elkins LLP acted as legal advisor to Devon. Latham & Watkins LLP acted as legal advisor to Dow.

As MRC reported before, Dow Chemical's propylene dehydrogenation (PDH) unit in Freeport, Texas, was offline in October - November, 2019, for a turnaround, said US olefin market participants. Sources said the PDH unit went offline for scheduled maintenance September 26, and the work was expected to last 45-60 days. Originally, sources expected the turnaround to begin in early September, but then learned it had been delayed.

Propylene is a feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PP production rose to about 1,163,200 tonnes in the first ten months of 2018, up by 1.3% year on year. Three producers out of seven reduced the capacity utilisation.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.

Devon Energy Corporation is a leading independent oil and natural gas exploration and production company. Devon's operations are focused onshore in the United States.
MRC

Saudi Aramco shares to start trading December 11

MOSCOW (MRC) -- Saudi Aramco shares will start trading on Dec. 11, the Saudi securities exchange Tadawul said in a statement on Friday, reported Reuters.

Saudi Arabia’s state oil giant priced its initial public offering at 32 riyals (USD8.53) per share on Thursday, raising USD25.6 billion and beating Alibaba Group Holding Ltd’s record USD25 billion listing in 2014.

The Aramco IPO was launched to raise funds to help diversify the kingdom away from reliance on oil and create jobs for a growing population.

Aramco shares will trade using the symbol 2222 and will have a daily 10% plus or minus fluctuation limit, Tadawul said on its website.

"On the first day of trading only, the opening auction for the Saudi Arabian Oil Company (Saudi Aramco) will be extended for 30 minutes," it added.

As MRC informed before, Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, is running its local refineries at full capacity and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia next year. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.

The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
MRC

PKN Orlen olefin plant extension nearer at hand

MOSCOW (MRC) -- PKN Orlen's Petrochemicals Development Programme is about to reach another milepost. As part of the project to extend the olefin complex in Plock, a contract has been signed for technical consultancy and Project Management Contractor (PMC+) services, as per the company's press release.

It is expected to optimally prepare the project for successful delivery within the allocated budget and schedule.

"We have taken another major step towards the key milestone in our plans to develop the petrochemical business, which is the olefin plant extension. Petrochemicals have enormous potential we are determined to make the most of. Our capital projects to develop the petrochemical area will solidify our position on the European market while providing tangible benefits to the Polish economy, turning it from an importer into a net exporter of petrochemicals," says Daniel Obajtek, President of the PKN Orlen Management Board.

The technical consultancy and PMC+ contract has been signed with Fluor, one of the world’s leading providers of engineering & design services. It guarantees proven, tailored-to-fit solutions designed to support complex projects in the en’ergy and fuel sector. The services will involve end-to-end project management across all functional areas – from managing its timescales, costs, contractors and risks, through ensuring work safety, technical support and supervision of technical design standards, to managing procurement and actual execution. The works will engage a fully integrated team, made up of PKN Orlen employees and a PMC+ consultant.

"Given the scale of our venture, we have decided to deploy a consulting service within the PMC+ framework. In the case of particularly large projects, such as the olefin plant extension, this solution is a globally applied standard. Our contract with Fluor will fully integrate the project management, offering potential synergies and facilitating knowledge flows between PKN ORLEN and the contractor," stresses Zbigniew Leszczynski, Member of the PKN ORLEN Management Board, Development.

Thanks to the PMC+ collaborative work model, PKN Orlen will gain know-how in managing integrated capital projects. The model will also help develop and enhance the company’s in-house capabilities to benefit its further projects. In addition, by effectively employing the industry’s best business practice, it will allow PKN ORLEN to strengthen its competitive advantage on the market.

The value of the petrochemicals and base plastics market is forecast to double by 2030. Demand for petrochemicals is set to rise, fuelled by the world’s expanding population, economic growth, and shifts in demand for industrial raw materials. Therefore, PKN ORLEN is poised to take full advantage of its potential in petrochemicals.

Investments under the Petrochemicals Development Programme are expected to add some 30% to PKN Orlen’s existing capacity, while ensuring a marked improvement in Poland’s overall trade balance in petrochemicals. The programme will be pursued\\until the end of 2023. Next year will witness the launch of a Research & Development Centre to generate a range of proprietary technologies. The ongoing projects to expand the phenol capacity and construct an aromatic derivatives plant are also at an advanced stage. Once they are completed, PKN Orlen’s annual EBITDA is estimated to grow by PLN 1.5bn, translating into measurable benefits for the company and its shareholders.

As MRC reported earlier, in H1 September 2019, Honeywell announced that PKN Orlen had 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 polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.
MRC

Primary plastics machinery shipments in North America down in Q3

MOSCOW (MRC) -- The shipments value of primary plastics processing machinery in North America decreased in the third quarter of 2019, according to the Committee on Equipment Statistics (CES) of the Plastics Industry Association, said Canplastics.

Compared to Q2 2019 shipments, total Q3 2019 shipments dropped by 0.5% to US$293.7 million. One bright spot was extrusion machinery shipments, which increased in the third quarter, with single and twin-screw extruder shipments rising 5.3% and 13.9%, respectively. Shipments of injection molding equipment fell 1.9%.

Shipments for Q3 were down 15.9% from the same quarter in 2019. The shipments value of twin-screw extruders fell by 29.3% and single-screw extruders decreased by 5.6%. Injection molding machinery shipments were down 15.5% in value from the third quarter of 2018.

"The plastics industry is a mature industry and its growth will continue to track gross domestic product (GDP),” Perc Pineda, PhD, chief economist at the Washington, D.C.-based Plastics Industry Association, said in a statement. “The third quarter numbers moving sideways are in sync with weaker manufacturing activity in the economy this year."

Internationally, exports of plastics machinery totalled USD378.4 in the third quarter, a 0.1% decrease from the second quarter. Mexico, Canada, and Germany remained the largest U.S. export markets. These three countries combined represented 48% of U.S. plastics machinery exports in the third quarter.

China was the fourth largest market in Q3, with plastics machinery exports totalling USD22.2 million, a 27.6% drop from the second quarter. Despite uncertainty surrounding Brexit, the UK remained one of the top 10 export markets for plastics machinery in the third quarter. Imports of plastics machinery decreased 0.9% in the third quarter to USD785.7 million. Fewer exports and imports have caused the plastics machinery trade deficit to decrease by 1.7%.

"The challenges and concerns of the business sector of the economy today – and the plastics industry is no exception – are largely driven first by external factors – weak global economic growth and ongoing trade disputes – feeding into the U.S., which is largely an open economy,” Pineda said. “It is safe to say, that it is unlikely that the ongoing trade disputes will be resolved this year."

As MRC informed earlier, Global plastics and rubber machinery industry sales are projected to drop 10% this year and 5% in 2020. That’s according to European and German plastics and rubber machinery industry trade associations, speaking at K 2019. The Euromap association, an umbrella group of nine national European plastics and rubber machinery trade groups, projected that global sales for the machinery sector will drop 10% to EUR33.1bn this year, with a further 5% fall to EUR31.5bn in 2020.

As MRC informed earlier, Russia's output of products from polymers rose in September by 5.2% year on year. However, this figure increased by 1.7% year on year in the first nine months of 2019. According to the Russian Federal State Statistics Service, September production of unreinforced and non-combined films was slightly over 107,300 tonnes, compared to 110,000 tonnes a month earlier. Output of films products grew in January-September 2019 by 9.1% year on year to 893,000 tonnes.
MRC

China launches long-awaited National Pipeline Company Dec 9

MOSCOW (MRC) -- China launched its long-awaited national pipeline company Monday, state-owned Xinhua news agency reported, a move that is set to expand infrastructure access to energy industry stakeholders, reported S&P Global.

The new company is expected to break up long-existing monopolies in China's oil and gas sectors, with the ultimate goal of enhancing supply security and lowering the cost of the country's energy consumption, market sources said.

"(This is) a key step towards deepening China's oil and gas reforms by increasing suppliers and supply channels of upstream resources and building a more efficient and competitive pipeline transportation system across the supply chain," an official close to the National Pipeline Company was quoted as saying by Xinhua.

The company will break up the country's oil and gas pipeline transportation, from upstream production and downstream sales, and will facilitate third-party access to oil and gas infrastructure, helping boost market competition and efficiency of resource allocation, the official said.

It will be responsible for building and interconnecting oil and gas trunk pipelines, gas storage and peak shaving facilities, transporting crude oil, oil product and natural gas through the pipelines, as well as disclosing pipeline and storage capacity availability to third parties, and enabling them to apply for access, he said.

Sources said some LNG receiving terminals under the three national oil companies will also be put under the new company, but this could not be confirmed.

Local media said the new entity would be controlled by the state-owned Assets Supervision and Administration Commission of the State Council, which holds 40% share, and jointly managed and operated by PetroChina (30%), Sinopec (20%) and CNOOC (10%).

Three main business departments - crude, natural gas and oil products - will be set up to operate the different pipelines and facilities, local media reported. Two PetroChina and CNOOC sources had earlier said that the three major companies - PetroChina, Sinopec and CNOOC - would send senior officials to assist in the management of the new company.

We remind that, as MRC wrote before, Sinopec Guangzhou Petrochemical, part of China's petrochemical giant - Sinopec, has resumed operations at its cracker following a turnaround. The company has restarted the cracker on December 5, 2019. The cracker was shut for maintenance on October 12, 2019. Located in the Guangzhou province of China, the cracker has an ethylene production capacity of 260,000 mt/year and propylene production capacity of 150,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.
MRC