With Chevron, Citgo extensions, US preserves Venezuela oil sector options: analysts

MOSCOW (MRC) -- A push within the Trump administration to ramp up sanctions on Venezuela's oil sector has again been overcome by the argument that forcing US companies out of the South American nation's key industry would be detrimental to a post-Maduro government, according to S&P Global.

"There seems to be consensus within the administration that even if they want to be punishing the Maduro government that they shouldn't be punishing US companies," Risa Grais-Targow, the Eurasia Group's director for Latin America, said Tuesday. "In general, there seems to be a desire to continue to support US companies that want to work in Venezuela. They're trying to protect these assets and hold the line."

Early Saturday, the US Treasury Department announced that it had extended for three months a sanctions waiver to Chevron and four US oil services companies allowing them to continue to work in Venezuela with state oil company PDVSA. It also extended a waiver preventing creditors of PDVSA from taking control of US refiner Citgo as a result of missed payments on its 2020 bonds. Both waivers were extended until April 22.

Before the waivers were announced, sources said that administration officials had considered allowing at least the Chevron waiver to expire, in order to increase pressure on the Maduro regime after roughly a year of oil sector sanctions had failed to push him from office.

Some analysts claimed that Venezuela's oil output, which averaged 720,000 b/d in December, according to the latest Platts OPEC survey, could plunge below 300,000 b/d if the waiver was allowed to expire.

But voices for preserving a functioning oil system in Venezuela and maintaining a revenue stream for a potential, post-Maduro government won out, said Frank Verrastro, a senior vice president at the Center for Strategic and International Studies' energy and national security program.

"I think the waiver extensions are directed at preserving options," Verrastro said. "Forcing Chevron and service firms to leave, essentially cedes the space to Russia and to a lesser extent, China. It also doesn't preclude further sanctions, so the waiver extension was not a surprise."

The extensions allow the US to maintain a presence, at least through international oil companies, in Venezuela, and prevent assets from transferring to Russian and Chinese companies, said Paul Sheldon, S&P Global Platts Analytics' chief geopolitical adviser. "But with the 2020 election approaching, and no movement toward regime change, political pressure to ramp up sanctions will rise."

The extensions, at least for the moment, seemed to dampen the prospects of additional sanctions, such as potential actions against Russian state oil company Rosneft, which continues to receive Venezuelan crude as debt repayment and then resells it to China and India buyers.

Asked about potential sanctions on Rosneft during a visit in Colombia Monday, US Secretary of State Mike Pompeo declined to comment specifically, but indicated that further sanctions were coming.

"We don't talk about particular sanctions, but everyone can fully expect that the United States is not done," he said.

A senior Trump administration official told Platts in August that the US was prepared to sanction Rosneft if it continued to trade crude oil and fuel with PDVSA, but analysts said those sanctions have yet to be imposed because of the expected impact they may have on the global oil market.

"It's complicated to go after an economically significant target like Rosneft," said Kevin Book, managing director with ClearView Energy Partners.

Book said instead of broad sanctions, which could impact multinational banks and energy companies, the US may instead target a Rosneft subsidiary or affiliate.

"Doing this in a way that could potentially stop Rosneft from moving cargoes out of Venezuela without inhibiting commercially important operations for IOCs would be very difficult, but not impossible," Book said.

As MRC wrote before, US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

We also remind that in March 2018, Chevron Phillips Chemical Company LP, part of Chevron Corp, successfully introduced feedstock and commenced operations of a new ethane cracker at its Cedar Bayou facility in Baytown, Texas. At peak production, the unit will produce 1.5 million metric tons/3.3 billion lbs. per 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 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
MRC

BP appoints new finance chief as Looney prepares to take over

MOSCOW (MRC) -- BP’s finance chief Brian Gilvary is to step down in June after eight years in the role and will be replaced by a close ally of Bernard Looney who takes over as chief executive next month, reported Reuters.

Gilvary has been credited with overseeing BP’s financial recovery following the 2010 deadly Gulf of Mexico oil spill which has cost the company more than USD65 billion in fines, indemnities and clean up costs.

The London-based company saw its profits recover sharply in recent years, allowing it to remove the scrip dividend last year, an austerity measure on shareholder payouts.

However, in October, Gilvary appeared to backtrack on a previous hint that the company would boost its dividend payouts, angering investors.

His departure comes earlier than anticipated and as Looney, who will replace Bob Dudley as chief executive of BP after a decade, faces the tricky task of navigating the energy major through a rising tide of environmentalism and the move to a low-carbon economy.

"Gilvary’s departure may be associated with a more significant change in the company’s strategy including its financial strategy as the running of BP moves to a new top team," stockbroker Panmure Gordon said in a note.

It is also “likely to be associated with the problematic guidance over dividend”, Panmure Gordon said.

Gilvary, an avid triathlete who joined BP in 1986, will step down from the board on June 30. He is a non-executive director at Air Liquide (AIRP.PA), the Royal Navy Board and the Francis Crick Institute.

In his current role Auchincloss worked with Looney, who until being appointed CEO was head of BP’s oil and gas production division, known as upstream. Auchincloss oversaw a broad cost-cutting drive across the division in the wake of the 2014 oil price crash.

"I have worked side-by-side with Murray for many years and have the utmost confidence in his ability to step into this critical role," Looney said in a statement.

As MRC informed previously, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies had agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC

Gaz Sintez chooses SynCOR Methanol for plant near Saint Petersburg

MOSCOW (MRC) -- Gaz Sintez has nominated Haldor Topsoe as licensor of its methanol plant in the Leningrad Region, Russia, said the producer.

The plant will produce 1.6 million tons per year of АА grade methanol based on Topsoe’s SynCOR Methanol™ technology.

Gaz Sintez is developing the methanol plant project at the port of Vysotsk in the Leningrad Region of Russia. As announced earlier, Hyundai Engineering has started the development of the FEED-package, and NIIK has been awarded the Russian general designer contract. The plant is expected to be completed in 2023.

SynCOR Methanol™ features single-stage oxygen reforming, a methanol synthesis loop and rectification. It is the most cost-efficient large-scale methanol technology in industrial operation today. Capacities can be up to 10,000 tons per day of methanol. It also offers considerable environmental advantages, leaving a smaller CO2 footprint, and lower water consumption compared to traditional licensed technologies.

As MRC informed earlier, in August 2019, Haldor Topsoe, Mitsubishi Heavy Industries Engineering, and GTM ONE have signed a licence agreement for the design, construction, and operation of a 3000 tpd methanol plant based on Topsoe’s SynCOR MethanolTM technology. The plant will be erected at the Khimprom site in Volgograd, Russia.

In January 2020, Topsoe announced the official opening of the world’s only natural gas-to-gasoline complex in Turkmenistan. The complex includes the world’s largest methanol plant based on autothermal reforming (ATR), using Topsoe’s SynCOR Methanol solution, with methanol production capacity of 5225 MTPD.

We remind that, as MRC wrote previously, the sale of polypropylene (PP) and high-density polyethylene (HDPE) from a new gas chemical complex began in the export trades of the State Commodity and Raw Materials Exchange of Turkmenistan on 3 September, 2018. The new gas chemical complex for production of HDPE and PP with the capacity of 386,000 tonnes/year and 81,000 tonnes/year, respectively, was built by the consortium TOYO Engineering (Japan) and LG and Hyundai (South Korea). The total cost of the project was about USD3.4 billions.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Based on 70 years of experience within synthesis gas, all SynCOR™ solutions offer more than 99% availability and unsurpassed economy of scale. SynCOR™ solutions are suitable for large-scale grassroots ammonia, methanol, hydrogen, CO, TIGAS™, and gas-to-liquid (GTL) plants, as well as syngas hubs producing multiple products.
MRC

Mitsubishi Chemical Advanced Materials acquires c-m-p GmbH

MOSCOW (MRC) -- Mitsubishi Chemical Advanced Materials AG (MCAM), a leading global manufacturer of high-performance materials, announced that it has entered into an agreement for the acquisition of c-m-p GmbH (c-m-p) through its German subsidiary Mitsubishi Chemical Advanced Materials GmbH, said the company.

The transaction is expected to close in early March 2020.

With the addition of c-m-p, both companies can further strengthen their market position in the composites world, as well as developing future composite materials. The acquired entity had been a 50:50 partnership between the original founders of c-m-p GmbH and DowAksa B.V. Through this acquisition, MCAM acquires 100% of the shares of c-m-p.

"Within Mitsubishi Chemical Advanced Materials (MCAM), the acquisition enhances our ability to produce prepreg solutions for customers in Europe, a further step in our mission of metal to plastic conversion which began more than 80 years ago," says Michael Koch, CEO Mitsubishi Chemical Advanced Materials. "MCAM, a fully owned subsidiary of Mitsubishi Chemical Corporation (Tokyo, Japan), identified c-m-p GmbH (c-m-p) as a leader in its areas of expertise and plans to preserve and enlarge c-m-p's unique market identity. Strategic corporate development activities, such as the c-m-p acquisition, contribute to MCAM's ability to grow rapidly and consistently while maintaining quality and innovation."

Following the acquisition, c-m-p can benefit from Mitsubishi Chemical's world-wide network of industry partners, customer relationships and technology developments, while bringing new technologies, specialized skills and market expertise into the group. Through the Mitsubishi Chemical network, new materials and applications will be further developed for the aviation industry, as well as automotive, sports equipment and utility services. With the acquisition of c-m-p, Mitsubishi Chemical will become capable of producing prepreg materials (resin-coated carbon fabric) in Europe, in addition to Mitsubishi Chemical's capabilities in Asia and USA.

As MRC informed earlier, Asahi Kasei Mitsubishi Chemical Ethylene Corp plans to restart ethylene cracker in Mizushima, Japan on 24 January.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Mitsubishi Chemical Advanced Materials is a leading global manufacturer of high-performance materials in the form of semi-finished products and finished parts. The company has locations in 20 countries and more than 2'800 employees. Its specialty engineering thermoplastics and composites are superior in performance to metals and other materials and are used in a wide range of applications, primarily in the capital goods industry.
MRC

Asahi Kasei Mitsubishi to restart naphtha cracker in Mizushima

MOSCOW (MRC) -- Asahi Kasei Mitsubishi Chemical Ethylene, a joint venture of Asahi Kasei Corp and Mitsubishi Chemical Corp, said it will restart operation at its naphtha cracker in Mizushima, Okayama prefecture on 24 January, after completing planned repair of the unit’s troubled refrigeration system, reported Kemicalinfo.

The naphtha cracker automatically shut down on 14 January after it detected a malfunction in the refrigeration system. Inspection remains underway and the venture plans to complete repairs by 24 January.

The unit’s closure has also forced some derivatives units to halt operations at the Mizushima plant. The venture is planning to gradually restart those closed derivatives units after restarting the naphtha cracker.

Japanese petrochemical firms Asahi Kasei and Mitsubishi Chemical launched the joint venture in April 2016 to operate the naphtha cracker, after integrating their operations in Mizushima.

The naphtha cracker has a production capacity of 567,000 tonnes a year without any turnaround and 496,000 tonnes with turnaround, the firm said.The venture continues to assess the impact from the closure of the naphtha cracker, while maintaining regular shipments.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC