BP emissions pledge'sets the pace for Big Oil, but details still murky

MOSCOW (MRC) -- British oil giant BP PLC has left its rivals in the dust when it comes to planned emission cuts, setting an ambition to reduce the climate impact of its own oil and gas production to net-zero by 2050 - a clear step above what other supermajors have committed to, reported S&P Global.

The targets, announced by new CEO Bernard Looney on Feb. 12, mark a substantial shift for BP. All of the majors face growing pressure from environmental groups and their own shareholders, but BP had long lagged other large integrated oil and gas companies when it comes to action on climate change.

Under its last CEO, Bob Dudley, the company maintained until recently that the carbon generated by its customers was not the company's responsibility.

Now, BP has said it will eliminate all emissions from its own operations, known as scope 1 and 2, as well as those caused by the use of its own oil and gas production, known as scope 3. Although the company has released almost no detail on how it plans to get there, analysts and investors say the ambition puts it ahead of its largest peers.

The new target is "a step-change in the company's approach to climate change and sets the pace and direction of travel for the industry at large," Steve Waygood, chief responsible investment officer at Aviva Investors, an asset manager with ?457 billion under management, said in a statement.

"The onus will now be on BP to reshape its portfolio in light of a shrinking carbon budget," Waygood said.

Royal Dutch Shell PLC, TOTAL SA and Equinor ASA have already set long-term scope 3 targets but only plan to reduce the emission intensity of the products they sell.

This means they would be able to maintain or even increase oil and gas production and still hit their carbon intensity targets by adding low-carbon alternatives like solar and wind farms to their portfolio — a key point of criticism from environmental groups, who demand a cut in baseline emissions instead.

BP plans to do the same but, unlike the others, wants to also slash emissions on an absolute basis, specifically cutting out around 55 million tonnes of CO2-equivalent from its own operations, as well as 360 million tonnes released by the fuels it pumps out of the ground.

"Does that mean we'll be producing and refining hydrocarbons in 2050? Yes, very likely," Looney said in his speech. "[But] you can expect oil and gas production to decline gradually over time."

The company still targets only a 50% cut in carbon intensity for its entire scope 3 emissions, since the net-zero ambition does not cover carbon contained in the products BP sells but does not pump itself.

Those make up a larger share of the total, thanks to the company's large supply and trading operation: BP sold 8.6 million barrels of oil equivalent per day in 2018, but its own production totaled only 3.7 million barrels.

During his speech, Looney said BP's annual scope 3 emissions amounted to around 1,000 tonnes, leaving roughly 640 million tonnes unaccounted for. Analysts say not including volumes from third-party producers makes sense.

"It is appropriate to look at those emissions as external to BP," Pavel Molchanov, an analyst at Raymond James, said in an email. "Those emissions are certainly meaningful in scale, and they should be addressed by the companies supplying those fuels."

Spain's Repsol SA, a much smaller company than BP, has gone further and pledged to fully offset its scope 3 emissions, including those from fuel it buys from third parties. The company's CEO, Josu Jon Imaz, told S&P Global Market Intelligence in January that larger oil companies would face an uphill battle in emulating that level of ambition.

What BP pledged is "definitely a step ahead of Shell," said Andrew Grant, head of oil and gas at Carbon Tracker Initiative, a London-based think tank. "It's more similar to Repsol."

Environmental groups and investors demanded more detail on the plans since BP has not said how it will get there or how much it will spend to do so. Looney said concrete measures would be provided at a capital markets day in September.

BP will likely rely on carbon sinks, such as planting trees, and carbon-capture technology to decarbonize its remaining barrels. Berenberg said in a note that it was still unclear how the company would measure its reduction, including what kind of offsets would be included.

Natasha Landell-Mills, head of stewardship at UK asset manager Sarasin & Partners, called BP's announcement "disappointing" because it did not include a commitment to align spending with the goals of the Paris Agreement on climate change, as many activist shareholders demand.

So far, spending on clean energy has made up only a fraction of total investment for even the most active oil companies. A spokesperson for the company reaffirmed BP's capital expenditure plan of USD15 billion to USD17 billion per year, presented earlier this month, suggesting that there is unlikely to be an immediate shift in spending priorities.

Some also pointed out that only time will tell how much of the ambition turns into reality.

As MRC reported before, 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).

BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.
MRC

MOSCOW (MRC) -- Zhejiang Weitai Rubber, has restarted its styrene butadiene rubber (SBR) plant following an extended Lunar New Year holidays, according to Apic-online.

A Polymerupdate source in China informed that, the company has resumed operations at the plant in mid-February, 2020. The plant was shut on January 15, 2020.

Located in Zhejiang province, China, the plant has a production capacity of 100,000 mt/year.

SBR has an excellent combination of functional properties in various applications. This rubber is considered the best general purpose rubber due to the excellent properties of high abrasion resistance and a high percentage of filling.

Butadiene is one of the main feedstocks for the production of acrylonitrile-butadiene-styrene (ABS).

According to MRC's DataScope report, last year's ABS imports to the Russian market decreased by 4% year on year to 33,700 tonnes. This figure was at the level of 35,200 tonnes in January-December 2018.
MRC

MOSCOW (MRC) -- Ukraine's polypropylene (PP) imports totalled about 9,900 tonnes in January of this year, up 22% year on year.
The greatest increase in imports accounted for homopolymer PP, according to MRC DataScope.

January PP imports to Ukraine grew to 9,900 tonnes against 8,100 tonnes and 8,600 tonnes in January and December a year earlier, local companies increased their purchases of homopolymer PP in the Middle East and in Russia. Overall PP imports reached 132,000 tonnes in 2019 versus 132,300 tonnes a year earlier.

The structure of PP imports by grades looked the following way over the stated period.

January external deliveries of propylene homopolymers to the Ukrainian market increased due to an increase in purchases of homopolymer PP raffia in the Middle East and Russia despite the low demand in the domestic market, whereas in January and December a year earlier these figures were about 8,100 tonnes and 8,600 tonnes, respectively. Overall homopolymer PP supply reached 100,200 tonnes in 2019.

Last month's imports of block propylene copolymers (PP block copolymers) were 890 tonnes, compared to 1,100 tonnes and 925 tonnes in January and December 2019. Overall, about 14,000 tonnes of block propylene copolymers were imported last year.

January PP random copolymers imports fell to 1,000 tonnes from 1,100 tonnes and 1,300 tonnes in January and December 2019, respectively. Overall imports of PP random copolymers totalled 16,000 tonnes last year year.

Overall imports of other propylene copolymers were about 141 tonnes over the stated period.

MRC

MOSCOW (MRC) -- Guangxi Huayi New Material Co. (Huayi) has selected LP Oxo Selector 10 technology, licensed through Dow and Johnson Matthey (JM), for a new butanol facility planned in China, according to Apic-online.

The project, to be built at Huayi's integrated petro-chemical complex in Qinzhou Port, China, will have 300,000 t/y of butanol capacity. An expected start-up date was not given.

LP Oxo Selector 10 technology "enables the efficient production of butanol with low capital investment and operating cost," Dow and JM noted.

The technology partners provide its licensees customized plant designs, performance warranties, technical support pre- and post-plant start-up, ongoing technology updates, and more.

As MRC reported earlier, Dow plans to install a new furnace in its steam cracker at Fort Saskatchewan, Alberta, Canada, increasing its ethylene capacity, currently 1.42 million metric tons/year (MMt/y), by 130,000 metric tons/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 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) -- Singapore?Mitsubishi Chemical Corp. (MCC) will merge its three group companies in Singapore into one consolidated company, Mitsubishi Chemical Asia Pacific Pte. Ltd., on 1 Apr. 2020, as per Apic-online.

The three businesses to be consolidated include Mitsubishi Chemical Performance Polymers Asia Pacific Pte. Ltd., Mitsubishi Chemical Asia Pacific Pte. Ltd. and Nippon Gohsei Asia Pacific Pte. Ltd.

Combining the three companies "will contribute to the mutual sharing and consolidation of know-how and resources, with which we aim to improve on our comprehensive business prowess," MCC noted.

As MRC informed earlier, Mitsubishi Chemical has a steam cracker in Kashima with an ethylene production capacity of 564,000 mt/year. It shut one steam cracker there in 2014 - which has an ethylene production capacity of 375,000 mt/year -- following a sluggish petrochemical demand in the country.

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).

Mitsubishi Chemical with headquarters in Tokyo, Japan, is a diversified chemical company involved in petrochemicals, polymers, agrochemicals, speciality chemicals and pharmaceuticals. The company's main focus is on three business pillars: petrochemicals, performance and functional products, and health care.
MRC