Middle East raises stakes in Southeast Asia oil market as US moves in

MOSCOW (MRC) -- Middle East oil producers are investing in more Southeast Asia energy projects to keep their market share as US crude exports grow in a region that is equivalent to India's USD3 trillion economy, reported S&P Global.

The most immediate project to come to fruition is Malaysia's Pengerang Refining and Petrochemical, or PREfChem, a joint venture between Saudi Aramco and Petronas in the Johor province adjacent to Singapore. Abu Dhabi National Oil Co., the UAE's biggest oil producer, also signed an agreement with Indonesia's Pertamina last year to explore opportunities. Potential investments between the two countries are estimated at USD10 billion, including the upgrade of Balikpapan refinery and LPG storage.

US crude exports are showing up in unusual places as the country takes advantage of its shale resources. The US became Australia's top crude supplier for the first time in November, according to government data. Last year, Indonesia's state-run Pertamina bought its first cargo of US crude oil and plans to triple purchases this year, officials have said. The Middle East currently accounts for at least half of southeast Asia's oil imports.

"It (US crude) gives Asian buyers more options and leverage," Alexander Yap, a senior analyst at S&P Global Platts Analytics, said. "They historically were locked in with the Middle East, now there are more options, which is a rationale for the Middle East to make these investments to secure market share."

The GDP of the 10-member Association of Southeast Asian Nations (ASEAN) grew 5.2% in 2018, reaching USD3 trillion, according to its statistics. These nations spent USD74.4 billion in 2018 on their oil imports, with Saudi Arabia and the UAE holding first and second place respectively, and accounting for nearly half of oil imports by value, according to its statistics. Kuwait, which has a refinery in Vietnam, was fourth, and Qatar took fifth place.

Oil product demand in southeast Asia is forecast to grow by over 12% during the next 5 years, the second highest growth rate in the world after sub-Saharan Africa. That compares with oil product demand growth of just over 10% in China in the next 5 years, according to Wood Mackenzie estimates.

"Most of these projects are not only supplying the domestic market, but there is also a degree of exports for some of these products," said Alan Gelder, vice president of refining, chemical and oil markets at Wood Mackenzie. "You have the opportunity for taking some of these products and putting them within their own trading organizations."

The refineries that Gulf states are investing in are geared toward the Middle East's medium sour crude versus US light sweet crude, which should allow Gulf countries to defend their market share.

The PREfChem Aramco project, set to start in the H2 of 2020, includes a 300,000 b/d refinery and 3 million t/year of petrochemical production. Aramco will supply 150,000 b/d, with an option for an additional 60,000 b/d and offtake rights for 50% of production.

Aramco is also looking at Indonesia, and in 2016 signed an agreement with Pertamina to own, upgrade and operate the Cilacap Refinery in central Java.

Abu Dhabi's Mubadala Investment Co., which manages assets of some USD230 billion, is also mulling an investment with Indonesia's PT Chandra Asri Petrochemical in a USD6 billion project.

Meanwhile, Gulf states political ties with ASEAN members, such as Indonesia, the world's most populous Muslim country, are also helping them expand.

"Within ASEAN, you have some of the most vibrant and fast growing economies in the world," said Giorgio Cafiero, the CEO of Gulf State Analytics. "Some of them are Muslim majority countries where countries like Saudi Arabia have maintained religious and cultural influence for many years."

As MRC wrote before, PRefChem abruptly shut down its cracker in Pengerang, Malaysia last Friday, 25 October 2019, due to an unspecified technical issue. The naphtha cracker produces 1.2 million tons/year of ethylene and 600,000 tons/year of propylene. Sources with knowledge of the matter said that it might take roughly ten days for the cracker to come back online. The company received commerical ethylene and propylene at its new cracker in Pengerang on 13 September, 2019.

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

MOSCOW (MRC) -- Nikkiso Cryogenic Industries’ Clean Energy and Industrial Gases Group (“Group”), a subsidiary of Nikkiso Co., Ltd (Japan), closed the acquisition of the Alternative Fuels Division from GP Strategies Corporation (Columbia, Maryland) for an undisclosed amount, said Bloomberg.

The GP Strategies’ Alternative Fuels Division (“AFD”) is a recognized leader focused on the design, fabrication and maintenance of Liquefied Natural Gas (LNG), Liquefied to Compressed Natural Gas (LCNG), Compressed Natural Gas (CNG) and Hydrogen (H2) facilities.

AFD will operate as part of the Group’s Integrated Cryogenic Solutions unit (“Solutions”), and will be renamed ICS. The Solutions unit is one of five functional business units of the Group and operates independently from the Group’s product companies. Solutions provide innovative specialty engineering, centralized project management, procurement, manufacturing and maintenance, focusing on supplying complete solutions.

"We are excited for AFD to join our Nikkiso family. AFD will broaden our offering of complete solutions. We now have an individual functional unit that can provide a solution to the customer in addition to the units that deliver products. This acquisition exemplifies our passion to provide, efficient, performance-based products and service,” according to Peter Wagner, CEO of Cryogenic Industries and President of the Group.

Mike Mackey, who will remain with ICS as a Senior Vice President said “The opportunity is exciting and we look forward to being part of Nikkiso. We will meet our customer's demand for the best quality, reliability, and return on their investment."

The acquisition was effective January 1, 2020.

As MRC informed earlier, 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. 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.

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

MOSCOW (MRC) -- Mubadala has no plans for now to sell Canadian plastics maker Nova Chemicals, according to its CEO for Petroleum and Petrochemicals Musabbeh Al-Kaabi, reported Bloomberg.

He spoke exclusively to Bloomberg's Manus Cranny at the Atlantic Council Global Energy Forum in Abu Dhabi.

As MRC informed earlier, Borealis AG and NOVA Chemicals Corporation has recently announced they have reached an agreement for Borealis to buy NOVA Chemicals’ 50% ownership interest in Novealis Holdings LLC (Novealis). Formed in 2018, Novealis is the joint venture between affiliates of Borealis and NOVA Chemicals, which subsequently formed a 50/50 joint venture with an affiliate of Total S.A. to launch Bayport Polymers LLC (Baystar) in Houston, Texas, US.

Closing of the acquisition is subject to customary regulatory approvals and other conditions but is not subject to any financing condition. The parties expect the transaction to close in the first half of 2020.

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.

NOVA Chemicals Corporation is a plastics and chemical company headquartered in Calgary, Alberta, Canada, and is a wholly owned subsidiary of the International Petroleum Investment Company (IPIC) of the Emirate of Abu Dhabi, United Arab Emirates.
MRC

MOSCOW (MRC) -- Clariant, a focused and innovative specialty chemical company, and Anhui Guozhen Group, a Chinese green energy company, and Chemtex Chemical Engineering, a multinational engineering company, signed a license agreement on sunliquid® cellulosic ethanol technology, said Hydrocarbonprocessing.

The Anhui Guozhen Group and Chemtex have agreed to form a joint venture with the aim of realizing a full scale commercial plant for the production of cellulosic ethanol from agricultural residues. In this framework, Clariant has granted a license for its sunliquid® cellulosic ethanol technology to the joint venture.

The project development and plant operation will be executed by the joint venture at a greenfield site in Fuyang city in the Anhui province, in the Yangtze-Huai River region in East China, utilizing available land, owned by the Anhui Guozhen Group, and existing infrastructure network in the surrounding. The annual plant production capacity is planned to be 50.000 tons of cellulosic ethanol, with an option to double the capacity in a second phase (50.000 tons in each phase), making it one of the largest in China so far. Detailed project evaluations and preparations for the engineering phase are well underway. The project execution is pending a final agreement of certain government contracts for the project.

"For Clariant, China represents a core growth market where we want to further strengthen our position. The country is aiming to achieve a 10% bioethanol content in transportation fuels nationwide in the next few years. These regulatory commitments offer substantial growth potential for our sunliquid® technology by spurring demand for advanced biofuels.”, said Hans Bohnen, Clariant’s Chief Operating Officer. “Hence, the signing of a sunliquid® technology license with two renowned Chinese players is an important strategic milestone to seize those promising business opportunities."

"Guozhen intends to be a pioneer and invest in the first commercial cellulosic ethanol plant in China. We are looking forward to work with Clariant and Chemtex, two well experienced companies to contribute to China’s environmental and ecological advance.", emphasized Li Wei, Founder and Chairman of the Board of Guozhen Group.

"As a global industrial solution provider in biofuels, chemicals, polymers, fibers and gas processing, Chemtex has extensive experience in partnering with reputed technology licensors particularly in the Chinese market. Through these partnerships Chemtex gained significant knowledge worldwide in first generation and cellulosic ethanol projects. In China, we have been active for more than 40 years and realized over 100 plants. This experience will make a major contribution to the collaboration between Anhui Guozhen, Clariant and Chemtex for the first Chinese commercial cellulosic ethanol project to succeed.", adds Sean Ma, Chairman and CEO of Chemtex.

For the Anhui region this signifies a noteworthy investment in green, sustainable technologies. The area is very much characterized by agriculture, which guarantees the abundance of feedstock for the cellulosic ethanol plant. By locally sourced feedstock, in that case wheat straw and corn stover, greenhouse gas savings can be maximized and additional business opportunities along the entire value and supply chain will arise.

The produced cellulosic ethanol will be utilized in the Chinese regional fuels market as blend into gasoline to fulfill the national blending mandate. Cellulosic ethanol produced with sunliquid® saves around 95% of greenhouse gases compared to gasoline.

As MRC informed earlier, Clariant announced that it has been awarded a contract by Dongguan Grand Resource Science & Technology Co. Ltd. to develop a new propane dehydrogenation unit in cooperation with CB&I. The Dongguan plant will be one of the largest single-train dehydrogenation units in the world. Clariant's technology partner CB&I will base the plant's design on its Catofin® catalytic dehydrogenation technology, which uses Clariant's tailor-made Catofin catalyst and Heat Generating Material (HGM).

Propylene is the main feedstock for producing polyprolypele (PP).

According to MRC's ScanPlast report, 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.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints. Clariant India has local masterbatch production activities at Rania, Kalol and Nandesari (Gujarat) and Vashere (Maharashtra) sites in India.
MRC

MOSCOW (MRC) -- Locked-out workers at the Co-op Refinery in Regina, Saskatchewan blockaded the facility, halting the movement of workers and trucks, the union and owner said, said Hydrocarbonprocessing.

Federated Cooperatives Ltd (FCL), which owns and operates the refinery, locked out 800 workers on Dec. 5 in a dispute over pensions, but has kept western Canada’s third-largest oil refinery operating with replacement workers and managers.

Unifor, which represents the workers, said that hundreds of union activists had surrounded the refinery, effectively shutting it down.

The lockout comes as western Canadian oil producers in Saskatchewan and Alberta struggle to move crude to U.S. refiners, their main market, due to congested pipelines.

FCL confirmed that blockades at the refinery’s entrances prevented people or trucks from passing in or out and said they violated a court injunction.

Brad DeLorey, a spokesman for FCL, said the actions were causing delays but the refinery remained fully operational.

The Co-op Refinery, which can process 135,000 barrels of oil per day, makes gasoline, propane and asphalt, among other products.

As MRC informed earlier, Russian oil major Rosneft said its oil refineries in the Samara region are increasing their level of environmental monitoring. Kazakhstan on Tuesday reduced oil supplies via the Atasu-Alashankou pipeline to China after tests carried out at the end of the last week showed a high content of organic chloride. Some oil transit from Kazakhstan to Russia goes via a pipeline which has a connection with the Russian pipeline system in the Samara region.

As MRC informed earlier, Rosneft said that its German subsidiary Rosneft Deutschland GmbH had completed the deal to acquire a 3.57% stake in Germany’s Bayernoil Raffineriegesellschaft mbH from BP.

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