Husky Energy cuts 2020 spending by USD1 bn

MOSCOW (MRC) -- Husky Energy is taking a series of actions to fortify its business in response to challenging global market conditions, said the company.

These initiatives reflect the Company’s commitment to capital discipline, which includes maintaining the strength of its balance sheet while protecting value in an extended low commodity price environment. Husky’s drive to improve process and occupational safety is unaffected and remains a top priority.

"Husky has three important advantages: a strong balance sheet, an Integrated Corridor which includes a sizeable downstream and midstream segment, and Offshore operations that include long-term gas contracts in the Asia Pacific region not linked to the price of oil," said CEO Rob Peabody.

Given current market conditions Husky will commence the safe and orderly reduction, or shut-in, of production where it is cash negative on a variable cost basis at current prices.

As MRC informed earlier, Husky Energy continues to make steady progress towards a return to full operations at the Superior Refinery. The Company has received the required permit approvals to begin reconstruction activities at the site and work is expected to begin immediately. Demolition of damaged equipment resulting from a fire in April of 2018 is now largely complete and the rebuild will take place over the next two years with an expected return to full operations in 2021.

Total liquidity is USD4.9 billion, comprised of USD1.4 billion in cash and USD3.5 billion in unused credit facilities. In line with its committed credit facilities, Husky is required to maintain debt to capital of no more than 65%, and is well below this threshold with a ratio of 27% with no long-term debt maturities until 2022.
MRC

US energy guru Yergin sees no easy way out of oil price collapse

MOSCOW (MRC) -- US energy historian Daniel Yergin said it could be a long time before pressure is eased on sinking oil markets as the coronavirus causes public events and schools to close while global oil producers flood markets with crude, reported Reuters.

"It’s a problem of an oil price war in the middle of a constricting market when the walls are closing in," Yergin, who is also vice chairman of IHS Markit, told reporters at the US Department of Energy’s headquarters.

With global oil demand already sinking due to the spread of coronavirus, Saudi Arabia and Russia launched a war for market share, flooding global markets with crude. Oil traded in New York was trading at USD30.76 a barrel in aftermarket hours on Thursday, down more than 2%.

Trump administration officials have been mulling several ways to support energy producers including buying oil at current low prices to stash in the Strategic Petroleum Reserve, which is held in caverns along the Texas and Louisiana coasts.

But Yergin, who occasionally advises US officials on energy matters, was skeptical.

"I don’t see how you can use the SPR," he said. "With the amount of oil coming into market this is really going to lead to swollen inventories, it’s going to take a long time to bring down."

He also discounted efforts to lay out a case that Saudi Arabia and Russia were dumping oil on global markets. Harold Hamm, the executive chairman of Continental Resources Inc , has said that those countries are undertaking a "direct attack" on US drillers by increasing the oil supply, according to local media.

Hamm, a supporter of President Donald Trump, is the chairman of the Domestic Energy Producers Alliance, which is petitioning the Department of Commerce to pursue the anti-dumping case.

Yergin said it would be hard to prove that anyone was putting out oil below market value, and in any case it would not be an overnight fix.

Yergin, speaking minutes after the states of Ohio and Maryland announced public schools would shut, saw no quick relief.

"Normally demand would solve the problem in a way, because you would have lower prices that act like a tax cut and it would be a stimulus," he said. "But not in this case because of the freezing up of economic activity," he said.

"Low gasoline prices ... don’t do much when schools are closed, people are cancelling all their trips, and people are working from home," he said.

He expected energy company consolidation to accelerate. "Consolidation will be one way people will have to get their costs down."
MRC

Asian refiners may curb jet fuel output as coronavirus dents airline demand

MOSCOW (MRC) -- Asian refiners may curtail jet fuel output by partially reducing processing as the fuel's value versus diesel plunged after the United States said it would ban European travellers to prevent the spread of the coronavirus, reported Reuters.

The regrade, which is the price difference between jet fuel and diesel with a sulphur content of 10 parts-per-million (ppm), fell to a discount of USD3.86 a barrel on Thursday, the lowest since Aug. 13, 2015, according to data from S&P Global.

US President Donald Trump on Wednesday banned travel from 26 European countries for 30 days. On the same day, India said it will suspend the granting of visas to travel to the country.

As a result of the US ban, jet fuel demand may drop by between 200,000-250,000 barrels per day, split between the US and European markets over the 30-day ban, said Mark Williams, principal analyst, refining, at Wood Mackenzie.

"Refiners are also likely to lower jet yields and blend more jet fuel into the distillate pool to accommodate lower jet demand, adding further pressure to already weak distillate cracks," he said.

Refiners may deal with the lower jet fuel value by cutting their processing runs to make less of the fuel, which is typically produced during the initial distillation of crude into products.

Companies have already been cutting rates to deal with surplus aviation fuel because airline travel has declined as countries ban travel to halt the coronavirus spread.

"This (the US travel ban) is the end of jet (fuel) market and there will likely have to be run cuts from Europe," said a source from a South Korean refinery.

"This will have a spillover effect into Asian markets and refiners will likely have to consider run cuts," he added.

Jet fuel typically cannot be stored for long periods as its quality could degrade, increasing the incentive for refiners to produce less of the fuel.

As MRC informed previously, BP has recently said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent 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 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.
MRC

GN Thermoforming appoints new sales manager for Mexico, Central and South America

MOSCOW (MRC) -- Chester, N.S.-based GN Thermoforming Equipment has appointed Alberto Capodicasa as its new sales manager for Mexico and Central and South America, said Canplastics.

Based in Nova Scotia, Capodicasa is a native of Venezuela and fluent in English, Spanish, and Italian, has many years of experience in various sales positions, most recently as regional sales manager with LED Roadway Lighting Ltd.

"Alberto will travel extensively and work on the ground with our local agencies in the Mexican, Central and South American markets,” said Paul Phillips, GN’s sales and marketing manager. “GN has a lot of thermoforming machines in the region and Alberto is well equipped to support our agents and customers as we continue to grow."

As MRC informed earlier, extrusion machinery maker Davis-Standard LLC has acquired Thermoforming Systems LLC (TSL), a manufacturer of thermoforming equipment for the North American food packaging industry. The terms of the deal have not been disclosed.

As per MRC' DataScope, overall imports of PC granules to Russia (excluding shipments from Belarus) grew in the first month of 2020 more than by 3 times year on year to 2,590 tonnes. Imports of material into the country were 740 tonnes in January 2019. December 2019 imports of material to Belarus reached 2,850 tonnes. Extrusion grade PC accounted for the greatest increase in January imports. Their share rose significantly in the total imports of material into the Russian Federation to 82% (2,100 tonnes) from 44% (32,000 tonnes) in January 2019.

GN manufactures roll-fed thermoformers for the production of high-quality plastic packaging, and has installed more than 1,500 thermoformers in total. The company’s operation also includes a technical service and sales centre in Jihlava, Czech Republic.
MRC

Libyan oil production down to 97,508 bpd

MOSCOW (MRC) -- Libya’s National Oil Corp (NOC) said the North African state’s current levels of oil production are down to 97,508 barrels per day as of March 11, reported Reuters with reference to a statement on the state-owned company’s Facebook.

The decline in output, it said, resulted in losses exceeding USD3 billion since Jan. 17, following a blockade of ports and oilfields by groups loyal to eastern-based commander Khalifa Haftar.

As MRC wrote before, Eni’s oil production in Libya halved to around 160,000 barrels per day, according to the Italian major’s chief executive's February statement. Eni is the biggest foreign oil producer in Libya.

We also remind that in H1 September 2019, Italy’s Versalis (part of Eni) took its cracker in Dunkirk, France offline due to a fire which broke out at the company’s petrochemical plant. Local media sources also reported that the fire was brought under control with no reported injuries and the company is currently assessing the required repairs.The cracker has a production capacity of 380,000 tons/year of ethylene and 95,000 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.
MRC