MOSCOW (MRC) -- Saudi Aramco expects the coronavirus impact on oil demand to be short-lived and for consumption to rise in the second half of the year, Chief Executive Amin Nasser told Reuters.
Oil prices have fallen this year as the rapid spread of the coronavirus in China, the world’s largest energy consumer, has dented demand. Prices fell again on Monday as the number of cases in countries outside China continued to climb.
“We think this is short term and I am confident that in the second half of the year there is going to be an improvement on the demand side, especially from China," he said. "I do not think it is going to have a long-term impact."
Nasser said that Aramco, the world’s biggest oil-producing company, has not evacuated its staff from China and that its key marketing staff have stayed to manage the company’s business in the Asian nation. The coronavirus has infected nearly 77,000 people and killed more than 2,500 in China, most of them in Hubei.
South Korea’s fourth-largest city, Daegu, became increasingly isolated on Monday after a rapid increase in the number of infections. Italy, meanwhile, reported a seventh death from the flu-like virus and 220 infections in Europe’s biggest outbreak.
Kuwait, Bahrain, Oman and Iraq on Monday recorded their first new coronavirus cases, all involving people who had been in Iran, which has had 61 cases and 12 deaths.
Saudi Arabia, OPEC’s de-facto leader, has held talks with other OPEC members and Russia to discuss potential deeper oil supply cuts to counter the impact on crude prices. But Russia has yet to announce its final position on the proposal.
OPEC and allies are due to meet over March 5-6 to decide on production policy.
As MRC wrote earlier, in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.
Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.
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).
Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
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