Hess, Concho, Callon join Exxon in tightening budget amid oil crash

MOSCOW (MRC) -- U.S. producers Hess Corp, Concho Resources Inc and Callon Petroleum Co followed oil major Exxon Mobil Corp in cutting their spending for the year, as oil prices continued to trade below USD30 a barrel, said Hydrocarbonprocessing.

Oil producers are trying to shore up cash as a double-whammy from the Saudi-Russia price war and dwindling demand because of the coronavirus outbreak threatens to hold oil prices hostage for an uncertain period of time. Prices fell below USD30 per barrel on Tuesday, extending losses after shedding a tenth of their value on Monday, while most shale producers need oil prices at low USD40s to make a profit.

In a major reversal from just a few weeks ago, oil major Exxon said on Monday it would make “significant” cuts to spending in the face of the price slide that has sent its shares to a 17-year low.

Chevron Corp earlier said it was looking at ways to trim spending that could lead to lower near-term oil production. It originally expected 2020 organic capital expenditure of USD20 billion. Hess, Concho and Callon slashed their 2020 capital budget by about a quarter while Callon said it would cut its rig count to five from nine before the end of the second quarter.

Hess also lowered its 2020 average production by 1.5% to between 325,000 barrels of oil equivalent per day (boepd) and 330,000 boepd, excluding Libya. Kosmos Energy , listed on the London and New York Stock Exchange, on Tuesday suspended its dividend and said it was aiming to reduce 2020 capital spending by 30%.

Since last Monday, North American producers have slashed their spending by about 30% on average, according to data compiled by Reuters.

Reuters reported on Monday that Chesapeake Energy Corp , which once helped spearhead the U.S. shale revolution, had tapped debt restructuring advisers amid the rout in energy prices.

As MRC informed before, in September 2019, ExxonMobil announced plans to spend GBP140 million over the next two years in an additional investment program at its Fife ethylene plant, which has a capacity of more than 800,000 t/y.

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) - A fire occurred at the factory of the Ukrainian Polymer plant in Zaporozhye, the Voice of Zaporozhye reports.

Black puffs of smoke rise above the roofs of the building. Rescuers were called to the scene. Now the moment the cause of the fire is unknown.

Cossacks note the smell of smoke even in the city center.

According to a DataScope survey by Market Report, last month foreign supplies of PE to Ukraine grew to 20.5 against 19.4 thousand tons in January, local companies increased supplies for all types of ethylene polymers except for ethylene-vinyl acetate (EVA) . Thus, in January - February 2020, the total volume of external deliveries of polyethylene reached 39.9 thousand tons against 41.8 thousand tons a year earlier.

The company "Polymer" is engaged in the sale of secondary polymers. The company has three lines for the production of secondary low-pressure polyethylene, high-pressure polyethylene, polypropylene, polystyrene, polyamide and other types of plastics.
MRC

MOSCOW (MRC) -- Russia’s budget revenues from oil and gas sales are set to be 3 trillion roubles (USD39 billion) lower than previously expected this year due to the slump in crude prices, reported Hydrocarbonprocessing with reference to Finance Minister Anton Siluanov's statement.

Siluanov’s had initially estimated a 2 trillion rouble shortfall, with a deficit that could reach 0.9% of gross domestic product (GDP).

Oil prices fell for a third session on Wednesday to be down about 17% so far this week as the outlook for fuel demand darkened because of travel and lockdowns in place to curb the spread of the coronavirus epidemic.

Prices for Brent crude, a global benchmark for Russia’s main export, were down 1.25% at USD28.41 a barrel by 0832 GMT.

Despite the expansion of the deficit, Gazprombank analysts said the finance ministry has sufficient reserves to carry out its spending, including with its National Wealth Fund.

The Fund “has enough to cover for the shortfalls in income from lower oil prices for more than five years,” the bank said in a note.

As of March 1, the NWF held 8.2 trillion roubles, or 7.3% of GDP, according to the ministry.

The ministry has said that the country could weather oil prices of $25 to 30$ per barrel for between six and 10 years.

The Kremlin said last week that Russia’s economy had sufficient international reserves and was sufficiently robust to weather any temporary market instability.
MRC

MOSCOW (MRC) -- European oil refineries are ramping up precautionary measures as the coronavirus pandemic spreads around the continent and leads to national lockdowns, reported S&P Global.

Operations, for the time being, remain largely unaffected although many in the industry see run cuts and even closures on the horizon.

"Sooner or later they should shut down," a products trader said Tuesday.

Analysts agreed that refineries will need to curtail their throughput as demand slows.

"Run cuts are expected in Europe due to the demand effect from the coronavirus outbreak," S&P Global Platts Analytics said in a note. However, "refiners have not explicitly announced the degree of these cuts".

The reason refiners are putting off run cuts for the moment is because the recent sharp falls in crude prices has supported margins. But, as one crude trader said, "what margin exists does not matter if there is not a buyer for products".

Spain, which has been in lockdown since last weekend, has reduced all private travel to a minimum, while public transport and flights have been halved for a two-week period.

Italy has introduced unprecedented measures to combat COVID-19, banning residents from leaving their homes except for the most essential activities.

"Globally, we are looking at a pretty significant reduction in short-term oil demand, probably down 3-4 million b/d for several months," according to Stephen George, chief economist of energy consultancy KBC, who also saw the potential for "a general trimming of runs across the board in Europe".

As MRC wrote before, operations at Italian petrochemical producer Versalis have not affected by emergency quarantine measures in the country, a company spokesperson said last Thursday. "Versalis (Eni) confirms that operations are being carried on regularly. Since the emergency outbreak, the company has promptly put in place all necessary measures to protect its personnel's health," the company told S&P Global Platts in a statement. Versalis has three steam crackers in Italy, capable of producing 1.675 million mt of ethylene, 750,000 of propylene and 285,000 mt of butadiene a 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 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

MOSCOW (MRC) -- U.S. liquefied natural gas (LNG) company Cheniere Energy Inc said it does not expect the steps it has taken to protect employees against the coronavirus to impact production at its facilities, said Hydrocarbonprocessing.

"We have taken precautionary measures to encourage protection against transmission,” the company said in a statement. “We do not expect these measures to impact production at our facilities."

Those steps include reducing large group meetings and non-essential travel, and implementing work from home schedules to support business operations continuity.

The company also said it has developed robust preparedness and business continuity plans in order to minimize impacts to normal operations during critical events.

Cheniere is the biggest buyer of natural gas and biggest exporter of LNG in the United States and operates LNG export plants at Sabine Pass in Louisiana and Corpus Christi in Texas.

As MRC informed earlier, INEOS is enacting a series of ‘social distancing’ measures in order to protect its employees who play a vital role in the production of essential products.

As MRC informed before, in January 2019, INEOS announced Antwerp as the location for its new petrochemical investment. The EUR3 billion investment will be the biggest ever made by INEOS and is first cracker to be built in Europe in 20 years. The investment is a game changer for the chemical sectors and will bring huge benefits to the Belgium and wider European economies.

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