Shell in talks to book tankers for crude floating storage

MOSCOW (MRC) -- Royal Dutch Shell is in discussions to charter at least three supertankers to store around 6 million barrels of crude oil at sea, reported Reuters with reference to shipping sources' statement.

Shell has provisionally booked the vessels, known as very large crude carriers (VLCCs), for storage options for at least three months, the sources said, adding that the fixtures were still to be concluded.

A Shell spokeswoman declined to comment.

If fully fixed, these would be the first tankers to be used for floating storage after the recent fall in oil prices.

The shipping sources said at least one of the vessels had an option to store oil in the United States.

Oil prices and the broader crude market pricing structure collapsed in recent days after OPEC and other major producing nations ended an output cut deal.

A glut of crude oil in global spot markets is forcing the price of oil for immediate delivery below forward futures costs, known as a contango structure, making it potentially profitable to buy oil, store it offshore onboard vessels and sell it later at higher prices.

Brent crude futures for nearby delivery are trading at their biggest discount to the November contract in over four years, according to Refinitiv data.

As MRC reported earlier, Shell Singapore restarted its naphtha cracker in Bukom Island in early December 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Linde reported a strong fourth-quarter as "solid operating leverage" from higher prices and cost savings offset modest volume gains, according to Chemweek.

The company reported fourth-quarter adjusted income from continuing operations of USD1.0 billion, up 22% year on year (YOY) on higher price and margin improvement. Sales were USD7.1 billion up 1% YOY; volumes were also up 1%. Excluding currency impact, sales for the quarter were up 3% YOY.

Reported earnings were USD1.89/share up 25% YOY and 4 cents/share above consensus estimates as reported by Zacks Investment Research.

Linde expects full-year 2020 earnings per share (EPS) in the range of USD8.00–8.25, up 10–13% YOY excluding currency impacts. "Looking ahead to 2020, we anticipate continued softening of macroeconomic conditions, but project double-digit EPS growth from our industry-leading backlog and continued efforts to optimize the business," says Linde CEO Steve Angel.

Americas segment operating profit was USD676 million in the fourth quarter, up 11% YOY. Segment sales were USD2.7 billion, up 2%. Volume gains were led by "the resilient end markets of healthcare, food, and beverage," Linde says.

Europe, Middle East, and Africa segment operating profit was USD353 million, up 19% YOY. Sales of USD1.7 billion were down 3% YOY. Excluding unfavorable currency and cost pass-through, sales increased 1%. Pricing was 3% higher but partially offset by negative volumes primarily due to weaker manufacturing activity, Linde says.

Asia Pacific segment operating profit was USD299 million, up 22%. Segment sales of USD1.4 billion were down 3% YOY. Sales were flat versus prior year excluding negative currency and cost pass-through. Price increased 2% but was offset by negative volumes driven by weaker economic conditions in South Pacific, lower electronics end market activity, and higher sale of equipment in the prior year, Linde says.

Engineering segment operating profit was USD93 million, up 21% YOY. Sales were USD770 million, up 8%. Operating profit grew due to strong project execution, productivity and better cost absorption, Linde says.

Linde also set out updated sustainability goals, including plans to lower its greenhouse gas emissions intensity 35% by 2028. Linde says it will invest at least USD1 billion in decarbonization projects and spend one-third of R&D budget on decarbonization initiatives through 2028. Linde also plans to double its purchase of renewable power by 2028.

As MRC wrote previously, in H1 February 2020, Linde PLC commissioned a new air separation unit (ASU) in Freeport, Texas, as part of a long-term agreement to supply MEGlobal Americas Inc.’s new monoethylene glycol (MEG) plant at Oyster Creek petrochemical complex in Freeport. The new ASU will supply oxygen and nitrogen to MEGlobal Oyster Creek for use in its MEG manufacturing process. The ASU also will supply Linde’s industrial gas pipeline system, adding new argon capacity, Linde said.

We remind that MEGlobal Americas officially began production at its 750,000 ton per year MEG plant in October last year to meet the growing demand for ethylene glycol products in the US and Asia-Pacific markets, as well as its strategy to expand globally.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to 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).
MRC

MOSCOW (MRC) -- State-owned PTT Global Chemical Public Co Ltd would be able to resume operation at its low density polyethylene (LDPE) units by 17 March 2020 following an emergency shutdown during mid of February 2020, reported CommoPlast.

The unit is designed to produce 400,000 tons/year and has been shut longer than expected, which players attributed to the draught issue in Thailand recently.

The maker is unable to supply LDPE cargoes to regional buyers throughout March due to the shutdown. Offers would be resumed for April shipment.

As MRC informed before, PTT Global Chemical (PTTGC) fully restarted its No. 2 cracker in Map Ta Phut last week after a planned turnaround. The company started resuming operations at the cracker by end-February, 2020. This cracker was shut for maintenance on January 20, 2020.

The company also operates No. 1 cracker at the same site with a capacity of 515,000 tonnes of ethylene and 310,000 tonnes of propylene per year, which was also shut on 23 January, 2020, for a 40-day turnaround.

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

According to MRC's ScanPlast report, Russia's January estimated LDPE consumption decreased to 43,110 tonnes from 50,910 tonnes a year earlier. On the back of the increased output, some domestic producers significantly raised their export sales in the first month of the year.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC

MOSCOW (MRC) - Contrary to the seasonal factor, Russian producers of unmixed polyvinyl chloride (PVC) have kept a high level of capacity utilisation during two months. Overall PVC output totalled 177,100 tonnes in January-February 2020, up by 5% year on year, according to MRC's ScanPlast report.

February production of unmixed PVC in Russia was 85,400 tonnes from 91,700 tonnes a month earlier, producers Bashkir Soda Company and RusVinyl decreased capacity utilisation. Nevertheless, despite the decline in production last month, the total polymer production in January-February increased to 177,100 tonnes against 169,500 tonnes a year earlier.

The structure of PVC production by plants looked the following way over the stated period.

RusVinyl (JV of SIBUR and SolVin) produced about 29,900 tonnes of PVC in February, with emulsion polyvinyl chloride (EPVC) accounting for 2,500 tonnes, compared to 32,400 tonnes a month earlier. Total SPVC production at RusVinyl increased to 62,300 tonnes in the first two months of this year, compared to 58,000 tonnes in the same period in 2019.

SayanskKhimPlast produced 26,500 tonnes of suspension PVC (SPVC) last month, whereas this figure was 28,200 tonnes in December. The Sayansk plant managed to produce about 54,800 tonnes of PVC in January-February, compared to 52,800 tonnes a year earlier.

Baskhir Soda Company produced about 21,900 tonnes of SPVC in February, against 23,600 tonnes a month earlier. Total SPVC production at Baskhir Soda Company increased to 45,500 tonnes in the first two months of this year, compared to 44,400 tonnes in the same period in 2019.

Kaustik (Volgograd) produced about 7,100 tonnes of SPVC in February, compared with 7,500 tonnes in January. The plant's overall production of PVC reached 14,600 tonnes over the stated period versus 14,200 tonnes a year earlier.


MRC

MOSCOW (MRC) -- Oil prices jumped by around 8% a day after the biggest rout in nearly 30 years as investors eyed the possibility of economic stimulus and Russia signaled that talks with OPEC remained possible, said Hydrocarbonprocessing.

U.S. President Donald Trump on Monday said he will be taking “major” steps to gird the U.S. economy against the impact of the spreading coronavirus outbreak, while Japan’s government plans to spend more than $4 billion in a second package of steps to cope with the virus.

Brent crude futures were up USD2.84, around 8%, to USD37.20 a barrel by 1228 GMT, after hitting a session high of USD38.22 a barrel.

West Texas Intermediate (WTI) crude gained USD2.53, or around 8%, to USD33.66 a barrel, after hitting a high of USD34.60.

Both benchmarks plunged 25% on Monday, dropping to their lowest levels since February 2016 and recording their biggest one-day percentage declines since Jan. 17, 1991, when oil prices fell at the outset of the first Gulf War.

Trading volumes in the front-month for both contracts hit record highs in the previous session after three years of cooperation between Saudi Arabia and Russia and other major oil producers to limit supply fell apart on Friday, triggering a price war for market share.

Saudi, the world’s biggest oil exporter, escalated tensions with plans to supply 12.3 million barrels per day (bpd) in April, well above current production levels of 9.7 million bpd, Saudi Aramco CEO Amin Nasser said on Tuesday.

April’s crude supply will be “300,000 barrels per day over the company’s maximum sustained capacity of 12 million bpd,” Nasser said in a statement received by Reuters. Price pared gains by over a USD1 on the news.

Russian oil minister Alexander Novak said he did not rule out joint measures with OPEC to stabilise the market, adding that the next OPEC+ meeting was planned for May-June.

But in response, Saudi Arabia’s energy minister told Reuters he did not see a need to hold an OPEC+ meeting in May-June if there was no agreement on what measures should be taken to deal with the impact of the coronavirus on oil demand and prices.

"I fail to see the wisdom for holding meetings in May-June that would only demonstrate our failure in attending to what we should have done in a crisis like this and taking the necessary measures," Prince Abdulaziz bin Salman said.

"Price wars and pandemics are nothing new to the commodity markets, but both occurring simultaneously is something we have yet to witness in our careers," RBC analysts said in a note.

"Such action will test the market’s self-balancing mechanism absent the backstop of OPEC, a mechanism that has not been tested since the U.S. shale boom was in its infancy," they added.

Sentiment was also lifted after Chinese President Xi Jinping visited Wuhan, the epicentre of the coronavirus outbreak, for the first time since the epidemic began, and as the spread of the virus in mainland China slows sharply.

China, the world’s second-largest oil consumer, is trying to get people in hard-hit Hubei province back to work by using a mobile phone-based monitoring system that will allow people to travel within the province.

Crude was also supported by hopes for a settlement to the price war and potential U.S. output cuts, although analysts warned gains may be temporary as oil demand continues to be hit by the virus outbreak, which has spread beyond China and prompted Italy to implement a nationwide lockdown.

U.S. shale producers rushed to deepen spending cuts and could reduce production after OPEC’s decision to pump full bore into a global market hit by shrinking demand. “When you look at the leverage the industry is in, at prices of around USD30, it’s not profitable,” said Jonathan Barratt, chief investment officer Probis Group.

As MRC informed earlier, global stocks plunged on Monday and prices for crude oil tumbled as much as 33% after Saudi Arabia launched a price war with Russia, sending investors already worried by the coronavirus fleeing for the safety of bonds and the yen. Saudi Arabia had stunned markets with plans to raise its production significantly after the collapse of OPEC's supply cut agreement with Russia - a grab for market share reminiscent of a drive in 2014 that sent prices down by about two-thirds.

We remind that, as MRC wrote previously, 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