US sanctions against Nord Stream 2

MOSCOW (MRC) -- The U.S. has little leverage to prevent the Nord Stream 2 gas pipeline project between Russia and Germany from being completed, two administration officials said, acknowledging the failure of a years-long effort to head off what officials believe is a threat to European security, as per Bloomberg.

The massive USD11-billion project is just weeks away from completion and has led President Donald Trump to call Germany “a captive to Russia.” He has criticized the European Union for not doing more to diversify imports away from the nation that supplies more than a third of its gas.

Senior U.S. administration officials, who asked not to be identified discussing the administration’s take on the project, said sanctions that passed Congress on Tuesday as part of a defense bill are too late to have any effect. The U.S. instead will try to impose costs on other Russian energy projects, one of the officials added.

The admission is a rare concession on what had been a top foreign-policy priority for the Trump administration and highlights how European allies such as Germany have been impervious to American pressure to abandon the pipeline. It also shows how the U.S. has struggled to deter Russia from flexing its muscles on issues ranging from energy to Ukraine to election interference.

The administration is hoping to sharpen its focus on Russia when Deputy Secretary of State John Sullivan, who was confirmed as ambassador to the country last week, heads to Moscow next month. The post has been vacant since early October, when former envoy Jon Huntsman stepped down, and ties between the two countries have only continued to sour.

On a visit to Poland in February, Secretary of State Michael Pompeo said the Nord Stream 2 project “funnels money to Russians in ways that undermine European national security.”

Trump has indicated that he’ll sign the legislation passed Tuesday. The penalties on companies building the project, led by Russian energy company Gazprom PJSC, would be effective immediately, according to a Senate Republican aide.

As MRC informed earlier, Gazprom Neft and the Abu Dhabi National Oil Company (ADNOC) have entered into a Framework Agreement on Strategic Cooperation. The companies will explore opportunities for implementing joint projects in the upstream and downstream sectors, as well as in information technologies, artificial intelligence, and other areas.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.
MRC

MOSCOW (MRC) -- Axens has signed an agreement with PKN Orlen for Vegan Technology License and Process Book Supply for the production of renewable diesel and jet fuel, through hydrotreating of vegetable oils in its Plock Refinery in Poland, said Hydrocarbonprocessing.

Based on a flexibility to operate either on diesel mode or kerosene mode, the new unit would be capable of producing Hydro-treated Vegetable Oils (HVO) for true drop-in high quality biofuels for diesel or jet fuel. This project falls into a commitment to address today’s environmental regulations entering the low-carbon energy sector in Downstream while ensuring diversification of feedstock.

“Investing in new technologies is among PKN ORLEN’s strategic objectives. Renewable energy sources are gaining prominence in transport. The RED II Directive, which raises targets for the use of next-generation biofuels, will have a major impact on the fuel market in the future. By investing in environmentally-friendly solutions in advance, we will be well-positioned to meet the ambitious EU targets”, states Daniel Obajtek, President of the PKN ORLEN Management Board.

Vegan technology is able to hydro-treat a wide range of lipids and to produce low-density and high cetane renewable diesel as well as renewable sulfur-free jet fuel. Backed by fifty years of experience in middle distillates hydro-treatment and hydrocracking/hydro-isomerization, Vegan® technology is using catalysts manufactured and provided by Axens.

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

MOSCOW (MRC) -- Levima Advanced Materials Technology Corp has planned to restart an Ethylene vinyl acetate (EVA) plant following a brief maintenance, as per Apic-online.

A Polymerupdate source in China informed that the company is likely to resume operations at the plant this weekend. The plant was shut on December 17, 2019.

Located at Tengzhou in Shandong provinces of China the EVA plant has a production capacity of 100,000 mt/year.

As MRC informed before, Shandong Levima New Material took its methanol-to-olefin (MTO) plant off-stream for maintenance in early-October, 2017. The plant remained off-line for around 6 weeks. Located in Shandong, China, the MTO plant has an ethylene capacity of 170,000 mt/year and a propylene capacity of 200,000 mt/year.

According to MRC's DataScope report, November EVA imports to Russia dropped by 8,9% year on year to 3,440 tonnes from 3,780 tonnes in November 2018, and overall imports of this grade of ethylene copolymer into the Russian Federation decreased in January-November 2019 by 18,9% year on year to 35,95 tonnes (44,330 tonnes in the first eleven months of 2018).
MRC

MOSCOW (MRC) -- Showa Denko has agreed to acquire Hitachi Chemical for yen (Y) 964bn (USD8.8bn), said Chemengonline.

Showa has formed a special-purpose company, HC Holdings KK, which “by around” February is expected to begin a Y4630/share tender offer for Hitachi’s shares.

The merged Showa-Hitachi would create a new leading materials producer in an age of increased competition, especially from China, and market changes because of digitalisation and the trend towards lightweight and composite materials in autos, Showa said.

Through its integration with Hitachi Chemical, Showa aims to become a one-stop, advanced materials partner, it said.

Showa’s move to acquire Hitachi had been expected. Last month a Japanese newspaper reported that the companies were in close talks about a deal.

Hitachi Chemical provides functional materials for the electronics sector as well as advanced components and systems for energy storage and life science industries.

As it was written earlier, in March, Hitachi sold its car navigation unit Clarion Co. to French auto parts maker Faurecia SA.

Hitachi and Honda Motor Co. said last month they will merge four auto parts suppliers under a new company to boost competitiveness.

Hitachi Chemical is currently engaged in the manufacturing, processing, and sale of functional materials, as well as advanced components and systems.

Showa Denko Group, which engages in the petrochemical, chemicals, electronics, inorganics, and aluminum businesses in Japan and overseas, pursuing business model innovation in order to become a solution provider beyond the manufacturing industry.
MRC

MOSCOW (MRC) -- Asia’s oil refiners are starting to see a surge in demand for cleaner fuels that is pushing up processing profits for very low sulfur fuel oil (VLSFO) and gasoil just weeks before new rules take effect for fuel products burned in ships, reported Reuters.

Most ships have to switch from high-sulfur fuel oil (HSFO) to cleaner fuels such as VLSFO and marine gasoil (MGO) when new sulfur emissions rules set by the International Maritime Organization (IMO), known as IMO 2020, start on Jan. 1.

Ships will have to use fuels containing not more than 0.5% sulfur, compared with 3.5% now, unless they are equipped with exhaust-cleaning "scrubbers".

The oil industry stocked up on IMO-compliant fuel, expecting high demand and a big boost in profits ahead of the rules taking effect, but ship owners kept their purchases to a minimum until this month, delaying a run-up in demand that refiners had expected earlier in the fourth quarter.

"Although the improvement (in margins) would not offset (overall) concerns in the fourth quarter, it could be a silver lining. It gives a stronger positive sign for next year," said a spokesman from SK Innovation, owner of South Korea’s top refiner SK Energy.

Refining margins or cracks for VLSFO rose above USD20 a barrel this month, while cracks for gasoil with a sulfur content of 10 parts per million (ppm) for January delivery were about USD1 higher than those for December, encouraging refiners such as South Korea’s Hyundai Oilbank to increase output in January.

A Singapore-based marine fuels trader estimated that VLSFO supplies may be enough to meet only half to 70% of the near-term demand, based on sales of about 8 million to 9 million tonnes of marine fuels in Asia and the Middle East per month.

The shortfall would have to be filled in with marine gasoil, boosting refiner profits for both fuels, the trader said.

Besides slower-than-expected demand for IMO-compliant fuels, weak domestic demand for gasoil in India and China pushed up export volumes, battering the fuel’s margins, which have shed 18% over the past couple of months.

But gasoil profits could rebound to about USD20 a barrel in the next few months as more ships switch to MGO and as simple refineries cut output on low HSFO margins, according to Goldman Sachs and energy consultancy FGE.

"Despite the ample availability of VLSFO, we still expect MGO demand to receive support in the coming weeks, when more vessels start switching to use compliant fuels," said Sri Paravaikkarasu, FGE’s director for Asia oil.

The new demand from ships could boost gasoil consumption by 1 million to 1.35 million barrels per day next year, according to Wood Mackenzie and Energy Aspects.

As MRC wrote previously, South Korea’s leading LPG supplier SK Gas Ltd. (part of SK Corporation) will spend KRW 2.02 trillion (~ USD 1.8 billion) to build a combined-cycle power plant and polypropylene (PP) plant in the southeastern industrial city of Ulsan, South Korea. The project will help provide stable electricity to Ulsan, one of Korea’s largest industrial clusters for automotive, shipbuilding and petrochemical industries. The port city is also home to SK Gas' LPG storage terminals, which are the world’s largest rock cavern storage facilities with a combined capacity of 270,000 tons. The company said it expects the new plants to play a central role in bolstering its gas chemical business. The PP manufacturing unit, with a projected capacity of 400,000 t/y, is to be set up in the nearby Yongyeon-dong area on a site of 150,000 square meters.

According to MRC's ScanPlast report, 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