Saudi Arabia cuts March crude supply to some Asian buyers

MOSCOW (MRC) -- The world’s top oil exporter Saudi Arabia has reduced crude supplies to some Asian buyers in March after refiners cut output following the coronavirus outbreak and for regular maintenance, four sources with knowledge of the matter said, as per Reuters.

The drop in supplies comes after state oil giant Saudi Aramco cut March official selling prices (OSPs) more than expected. Buyers’ overall nominations for March-loading cargoes were lower, but so far the virus has not had a big impact, a source familiar with Aramco oil exports said, adding that seasonal maintenance in Asia in the second quarter had made more difference.

Two of the sources declined to say how much lower the volumes were at their refineries, but said Saudi Aramco may have allowed some Chinese buyers to reduce their volumes by more than 10% as their situation was an exceptional case. Another of the sources said its refinery’s March loading reduction was caused by scheduled maintenance.

China’s refiners, including state-owned Sinopec Corp, PetroChina, China National Offshore Oil Company, and independent refiners such as Hengli Petrochemical and those in Shandong have cut their crude processing rate in February.

The spread of the coronavirus in China has killed more than 1,100 people and slowed the world’s second largest economy.

Saudi oil contracts allow the seller or the buyer to adjust loading volumes by plus or minus 10% of contracted volume, depending on demand and shipping logistics under a contractual clause known as operational tolerance.

As MRC informed earlier, Saudi Arabia, the world’s biggest oil exporter, may cut the prices of its light crude grades sold to Asia in February on signs of slowing demand ahead of the region’s peak refinery maintenance season.

Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.

As MRC wrote before, Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, has been running its local refineries at full capacity since November 2019 and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia in 2020. 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 1,904,410 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

ZPC operates refinery in east China at full rates

MOSCOW (MRC) -- Zhejiang Petrochemical Corp (ZPC), a privately controlled refiner, maintains full operations at its 400,000-bpd refinery in east China, reported Reuters with reference to a senior source with knowledge of the firm’s operations.

The firm, based in Zhoushan of Zhejiang province, is operating one 200,000-bpd unit at above 100% and a second slightly below full rates, said the source.

Calls to ZPC went unanswered.

As MRC wrote previously, Zhejiang Petroleum & Chemical Co Ltd, one of two new major refineries built in China in 2019, has recently started up the remaining units in the first phase of its refinery and petrochemical complex. The complex, in east China’s Zhoushan city, is now producing oil products and chemicals to commercial specifications, Zhejiang Petrochemical said on its website.

The company, 51% owned by private chemical group Zhejiang Rongsheng Holdings, said it has started test production at ethylene, aromatics and other downstream facilities, without giving further details.

Zhejiang Petrochemical started a first 200,000 barrels per day (bpd) crude processing unit in late May 2019, following on from the start of a 400,000-bpd refinery owned by another private chemical major Hengli Petrochemical.

The newly started units at Zhejiang Petrochemical should include a second 200,000-bpd crude unit, a 1.2 million tonnes per year (tpy) ethylene unit and a 2 million tpy paraxylene unit.

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

Svante, Chevron Technology Ventures launch study for carbon capture pilot unit

MOSCOW (MRC) -- Svante Inc. (formerly Inventys Inc.) announced that Chevron Technology Ventures (CTV) commissioned a pre-front end engineering design (pre-FEED) study that will explore the potential for trialing Svante’s technology in Chevron’s operations, said Hydrocarbonprocessing.

The study will evaluate the feasibility and design of a 10,000 tonne-per-year carbon capture unit in one of Chevron’s California facilities and is expected to be complete in the first half of 2020.

"We are thrilled to be working alongside one of our earliest investors towards a solution that will contribute to a low carbon future,” said Claude Letourneau, President and CEO of Svante Inc. “We have a demonstration plant in Saskatchewan capturing 10,000 tonnes per year from an industrial natural gas steam boiler. This project will take the learnings from our demonstration plant to design and build an improved second-of-a-kind facility using our state-of-the-art proprietary nano-filter technology.’"

Chevron has been an active supporter in developing carbon capture, utilization and storage technologies. One example of this is CTV’s investment in Svante. CTV first invested in Svante in 2014.

“At Chevron, we believe our industry is well-positioned to help commercialize carbon capture, utilization and storage technologies that will be essential for the energy transition,” said Barbara Burger, President of Chevron Technology Ventures. “We have leveraged venture capital and trial capabilities, our experience, and our operations to support the development of low carbon solutions."

"Demonstrating this technology in the field is an important step in advancing a technology towards commercialization and scale,” Burger said. “Commissioning this study reflects our commitment to advance breakthrough innovation that will be important in a low carbon economy and help Chevron deliver on our mission to produce and provide affordable, reliable and ever-cleaner energy."

CTV invested in Svante through Fund V, which supports early to mid-stage companies developing emerging technologies that have the potential to improve Chevron’s core business. In 2018, CTV established a separate fund, the Future Energy Fund, to invest solely in breakthrough technologies that enable the energy transition. Chevron also participates in the Oil and Gas Climate Initiative’s (OGCI) USD1 billion + investment fund, Climate Investments LLP. Climate Investments, which also invested in Svante, supports the development of technologies that will lower the carbon footprints of the energy and industrial sectors and their value chains.

Svante, a global carbon capture technology leader, offers companies in industries with hard-to-abate emissions a commercially viable way to capture large-scale CO2 emissions from existing infrastructure at half the capital cost of traditional solutions.

We remind that in March 2018, Chevron Phillips Chemical Company LP 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.

Besides, 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.

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

Hengli Petrochemical cuts refinery operations

MOSCOW (MRC) -- China’s private chemical giant and refiner Hengli Petrochemical has cut to 90% from this week its crude oil processing rate at a northeastern plant, down from 109%, as a spreading coronavirus hits demand, reported Reuters with reference to a spokesman's statement.

The cuts at the 400,000-barrel-per-day refinery and petrochemical complex in Dalian will be equivalent to 17%, or 76,000 bpd, Reuters’ calculations show.

Hengli also shut in a 3.2-million-tonne-per-year reforming unit, one of three it operates, because of a mix of technical and market problems.

"We’ve been planning to shut down the unit for maintenance to fix some technical issues," the spokesman told Reuters.

"And now it seems the right time, as we are also worried about falling demand for both refined fuel and petrochemicals because of the epidemic."

As Hengli typically pre-markets fuel for more than two months, its refined fuel sales so far have been smooth, another company source said.

In face of weakening demand for petrochemical products, Hengli also cut back operations at a newly started plant making purified terephthalic acid, or PTA, to half its capacity, from 80% earlier, the spokesman said.

The facility has an annual capacity of 2.5 million tonnes of PTA, a chemical used to make polyester fiber.

PTA is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

As per MRC's ScanPlast report, the estimated consumption of polyethylene terephthalate (PET) in Russia decreased by 16% year on year in December 2019. Russia's overall estimated PET consumption totalled 696,810 tonnes in 2019, up by 1% year on year (690,130 tonnes in 2018).

Hengli Petrochemical Co., Ltd. manufactures chemical fibers. The Company researches, produces, and sells polyester filament and chips for consumer and industry products. Hengli Petrochemical markets it products worldwide.
MRC

Petrobras hits new production record amid 'pre-salt' boom

MOSCOW (MRC) -- Brazil’s Petrobras hit a new production record in the fourth quarter, of over 3 million barrels of oil equivalent per day (boepd), thanks largely to the ramp-up of platforms in the prolific pre-salt formation, said Reuters.

In a securities filing, Petroleo Brasileiro SA, as the company is formally known, said it produced 3.025 million boepd, up 5.1% from the third quarter and 13.7% from the fourth quarter last year. In December, the company said, it hit 3.8 million boepd, an all-time monthly record for the firm.

In the filing, the company attributed the monthly records to the ramp-up of several platforms, including the P-67 and P-69 platforms in the Lula field. More generally, the company has benefited from a shift in focus to the offshore “pre-salt” formation, where billions of barrels of oil are located beneath a layer of salt under the ocean floor.

Oil and natural gas production in the pre-salt reached 1.533 million barrels per day (bpd) in the fourth quarter, the company said, up 12.1% from the third quarter and up some 46.4% from the year-ago period.

In the filing, Petrobras maintained its guidance for 2020 production at 2.7 million boepd. The firm has said that reflects expected maintenance stoppages and sagging production at some legacy fields, though the market widely viewed that production target as surprisingly low when it was divulged in November, given the company’s current output.

Petrobras produced an average of 2.77 million boepd in 2019, up 5.4% from 2018.

As in previous quarters, production at onshore and shallow-water fields, as well as deepwater “post-salt” fields, fell sharply, thanks to divestments and a shift in investments to the pre-salt.

Post-salt oil production fell 14.2% in the fourth quarter from the year-ago period to 680 million bpd, while shallow-water production fell 29.8% to 59 million bpd.

As MRC wrote earlier, the chief executive of Brazilian state-run oil firm Petroleo Brasileiro said in December 2019 he wants to sell the company's stake in petrochemical company Braskem within 12 months.

We also remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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 Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC