National Oilwell Varco warns virus fallout could hit supply chain

MOSCOW (MRC) -- US oilfield equipment supplier National Oilwell Varco called the coronavirus a "wildcard" in the oil industry’s outlook, with an extended outbreak potentially hurting access to Chinese-make materials and foreign sales, reported Reuters.

The Houston-based company said further shutdowns at its Chinese suppliers could limit its production of certain products such as fiberglass resins and drilling pipe.

For now, National Oilwell has the latitude to make up lost ground, executives added, noting it has a diversified supply chain.

“(There is) still a lot of uncertainty related to the extent to which this will impact operations," Jose Bayardo, chief finance officer, said on an earnings call with investors.

China also is a growing market for its products, he said.

Chief Executive Clay Williams added that he was equally concerned about the virus’ impact on global oil demand, which could affect its oil and gas customers. National Oilwell is one of the largest suppliers of oil drilling equipment.

An outbreak of the coronavirus in China has roiled commodity markets in recent weeks. The Organization of the Petroleum Exporting Countries and its allies are weighing additional output cuts as demand for crude oil falls.

US crude futures were trading around $50.46 a barrel on Friday, on track for their fifth consecutive weekly decline.

Shares of National Oilwell were up 11% on Friday afternoon after it beat analysts forecasts for quarterly earnings.

"National Oilwell Varco has done a masterful job of controlling what it can control," analysts for Tudor, Pickering, Holt & Co wrote in a note on Friday, pointing to cost savings and working capital efficiencies.

As MRC informed earlier, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40% this year, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We also remind that 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 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 polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
MRC

MOSCOW (MRC) -- Linde PLC has received a contract to provide technology for PJSC Sibur Holding’s cracker at Amur gas chemical complex (GCC), reported Kemicalinfo.

GCC is an integrated 1.5 million tons per year polyethylene and polypropylene production complex to be built near Svobodny in Russia’s far-east Amur region.

The contract was awarded to Linde under a consortium with Sibur subsidiary and project contractor NIPIgazpererabotka (Nipigaz).

As per the agreement, Linde will deliver engineering, procurement, and site services based on its proprietary technology for the GCC’s cracker.

Financial terms and details regarding the specific technology it will provide for the project were not disclosed.

As MRC wrote before, in June 2017, the heads of TAIF Group and Linde AG, the German holding, signed a memorandum of strategic cooperation for the period up to 2025 and a total investment of up to EUR12 billion. The document implies contracts on gas separation, industrial gases, but most importantly - on four stages of the construction of a new ethylene complex in Tatarstan.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.
MRC

MOSCOW (MRC) -- As waste management and sustainability issues take center stage in the policy debate, the spotlight is on the petrochemical and plastics industry, and the industry’s social license to operate, said Chemweek.

Stakeholders are collaborating and stepping up their efforts. They are supporting initiatives that improve waste collection value chains and reduce plastics leaking into the environment, as well as R&D activities developing more scalable recycling routes.

Governments in Europe, Asia, and Canada, under pressure from NGOs and public opinion, are setting very aggressive recycling targets for plastics packaging. Bans on single-use plastics have also increased. In the meantime, plastics demand continues to expand worldwide, at 3.5–4%/year, tracking the demographic trends, according to IHS Markit data.

The Alliance to End Plastic Waste (AEPW) was launched up to encourage such collaboration. AEPW consists of more than 40 companies—different stakeholders—which to date have committed over USD1.5 billion to help develop solutions that address plastic waste.

As the circular economy approach emerges, however, the significant gap between the extent of plastics supply around the world and the circular value chain infrastructure in place becomes evident. At present, plastics recycling relies mostly on mechanical processes that remain comparatively small in scale.

“Until now, markets had not offered strong enough incentives for recycling. But new recycle technologies—along with displacement initiatives by governments and consumer brands—could result in an important change in demand for virgin plastics," says Dewey Johnson, vice president/basic chemicals insights at IHS Markit.

Investment in the development of scalable chemical and biological recycling routes could address the need to deploy more efficient plastic waste management processes. From an environmental perspective, chemical and biological recycling could handle larger volumes and a broader spectrum of acceptable plastic waste. The quality of the recycled output would also be more consistent.

From a producer perspective, these routes would mitigate the risk of post-consumer resin replacing virgin product. As an added advantage, these recycling routes could reduce investment needs on feedstocks, monomers, and polymers as well as diminish energy needs, creating an endless recycling loop aligned with the drive toward a circular economy, Johnson notes.

“However, access to abundant, low-cost feedstock provides extreme competitiveness to the industry in the near term. This feedstock availability could limit the industry’s incentives to devote the resources needed to develop and scale up chemical and biological recycling to quickly reduce the volumes of plastics leaking into the environment,” Johnson says.

As MRC wrote previously, Russia's output of chemical products dropped by 3.2% in November 2019 month on month. However, production of basic chemicals increased by 3.6% in the first eleven months of 2019, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, the largest increase in production volumes on an annualized basis accounted for mineral fertilizers and polymers in primary form. Last month, 255,000 tonnes of ethylene were produced versus 210,000 tonnes in October; by November, Russian producers had completed all their scheduled works. Thus, 2,721,000 tonnes of this olefin were produced in January-November 2019, up by 0.3% year on year.
MRC

MOSCOW (MRC) -- Haldor Topsoe has appointed Roeland Baan as its new CEO, effective 1 June, the Danish chemicals, engineering and technologies company said.

Baan joins Topsoe from Finnish stainless steel company Outokumpu, where he has been president and CEO since 2016.

Roeland Baan has since 2016 been President and CEO of the global stainless steel company Outokumpu, listed on the Finnish stock exchange. Throughout his career, Mr. Baan has held a wide range of global CEO and Executive Vice President (EVP) positions at Aleris International, Arcelor Mittal, SHV NV and Shell.

Mr. Baan is Vice Chairman of the International Stainless Steel Forum and member of the Executive Committee of Eurofer. He also serves as a supervisory board member of SBM Offshore NV and as an independent board member of Norsk Hydro ASA. Mr. Baan is a citizen of The Netherlands and holds a MSc in Economics from Vrije Universiteit Amsterdam.

As MRC informed earlier, Nizhnekamskneftekhim (NKNH, part of the TAIF group) and Haldor Topsoe signed a memorandum of intentions for the implementation of the methanol production project.

Earlier it was written, Nizhnekamskneftekhim (NKNH) has not yet decided on the final configuration of the olefin complex project.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
MRC

MOSCOW (MRС) - Borealis, one of the leading European manufacturers of polyethylene (PE) and polypropylene (PP), has released a new brand of polyethylene for cable production, the company said.

Borealis has announced the commercial launch of HE1355, a low-pressure polyethylene (HDPE), for the production of cables for the telecommunications industry. It is noted that this is the first chemically foamed material in the world that does not contain azodicarbonamide (ADCA).

The high voltage direct current (HVDC) cable compound based on Borealis Borlink™ technology is being used in crosslinked polyethylene (XLPE) power cables qualified for the tender of the “German corridor projects“. This enormous undertaking will transport renewable energy from wind farms off the north coast of Germany to southern areas of the country. Borealis Borlink is a crucial component in XLPE high-voltage power cables enabling HVDC technology transmitting electricity over longer distances with minimal losses. What is more, the material XLPE offers the additional sustainability benefit of being recyclable.

As a responsible supplier of value-adding polymers, Borealis has laid out key objectives in its overall sustainability strategy: to enhance sustainable development in all aspects of company operations as well as in the entire supply chain; and to identify business growth opportunities which promote greater sustainability. In practice, this means innovating and collaborating with partners in order to develop polyolefins-based solutions that enhance energy efficiency, reduce carbon emissions, and accelerate the uptake of renewable energy sources on the largest possible scale. XLPE made with Borealis Borlink extruded HVDC technology is one prime example of how these objectives have been successfully realised in practice.

One Borealis partner, the leading power cable provider NKT, recently announced that it is one of the first cable manufacturer to use recycled XLPE in the production of cable drums. NKT was able to contribute thereby to the circularity of polyolefins in the power cable industry. It is further estimated that this process saves approximately up to around two tonnes kilos of CO2 for every tonne kilo of recycled XLPE. “Borealis is contributing to decarbonisation in multiple ways,” says Lucrece Foufopoulos, Borealis Executive Vice President Polyolefins and Innovation & Technology. “The successful qualification of Borlink technology for the tender of an infrastructure project like the German Corridor projects shows that we have come full circle. Our polyolefin-based innovations have become crucial links to the energy transition. This is just one of many examples of Borealis’ contribution to a “greener future for all” through innovation and collaboration.

Earlier it was reported that Borealis plans to stop the production of phenol and acetone on April 12 at a site in Porvoo (Porvoo, Finland) for scheduled repairs. This enterprise with a capacity of 195 thousand tons of phenol and 120 thousand tons of acetone per year will be closed for repairs until May 27.

According to MRC's ScanPlast, Russia's HDPE production amounted to 868,500 tonnes in 2019, down 10% year on year. All manufacturers reduced operating loading, primarily due to long repair shutdowns.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With its head office in Vienna, Austria, the company currently has around 6,800 employees and operates in over 120 countries. Borealis generated EUR 8,3 billion in sales revenue and a net profit of EUR 906 million in 2018. Mubadala, through its holding company, owns 64% of the company, with the remaining 36% belonging to Austria-based OMV, an integrated, international oil and gas company. Borealis provides services and products to customers around the world in collaboration with Borouge, a joint venture with the Abu Dhabi National Oil Company (ADNOC).