Russia faces USD39 B budget gap in 2020 from lower oil, gas revenues

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

European refiners ramping up precautions against coronavirus as run cuts loom

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

Cheniere says steps to protect against coronavirus will not impact LNG production

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

MEGlobal reduces ACP for April 2020 by USD40 per tonne

MOSCOW (MRC) -- MEGlobal has announced its Asian Contract Price (ACP) for monoethylene glycol (MEG) to be shipped in April 2020, according to the company's press release.

Thus, on 16 March the company said ACP for MEG will be USD640/MT CFR Asian main ports for arrival in April 2020, down by USD40/MT from March.

The April 2020 ACP reflects the short term supply/demand situation in the Asian market.

As MRC reported earlier, MEGlobal announced its March ACP for MEG at USD680/MT CFR Asian main ports, down by USD60/tonne from February.

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

According to ICIS-MRC Price report, influence of two opposing trends sharply increased in the Russian market last week. On the one hand, a sharp rise in the dollar against the rouble put upward pressure on prices of Russian PET.
On the other hand, a decline in Asian prices had a downward effect, prices decreased significantly last week.

MEGlobal is a fully integrated supplier of monoethylene glycol (MEG) and diethylene glycol (DEG), collectively known as ethylene glycol (EG).
MRC

Lotte Fine postpones maintenance at caustic soda unit N. 1 in Ulsan

MOSCOW (MRC) -- Lotte Fine Chemical delays turnaround at its caustic soda unit No. 1 by two weeks, according to Apic-online.

A Polymerupdate source in South Korea informed that, the company is likely to start turnaround at the unit on March 19, 2020. The planned outage is expected to remain on force till end-April, 2020.

Located at Ulsan in South Korea, the caustic soda unit has a production capacity of 210,000 mt/year.

As MRC informed before, in December 2019, Lotte Chemical Corp., a major South Korean chemical company, said its merger with Lotte Advanced Materials Co. would be completed by 2 January 2020. The company announced the merger plans on 22 August 2019, when it unveiled its decision to merge with its wholly owned subsidiary as part of efforts to streamline its chemical business.

Lotte Chemical formerly owned a 90 percent stake in Lotte Advanced Materials after it acquired the company from Samsung Group in April 2016. It bought the remaining 10 percent stake from Samsung SDI Co. for KRW 279.5 billion (USD 231 million) on 30 July 2019.

Lotte Chemical said the move is intended to help boost the company's competitiveness by bringing specialty chemicals businesses under the same wing and maximizing efficiency in management. The merger will also boost its annual polycarbonate (PC) production capacity to 460,000 tons.

according to MRC's ScanPlast report, Russia's consumption of caustic soda increased to 1,071,500 tonnes in 2019, up 10% year on year (975,600 tonnes). Russia's imports of caustic soda were 32,300 tonnes in 2019, up 61% year on year (20,000 tonnes). Exports of caustic soda from Russia decreased to 245,400 tonnes in 2019, down 7% year on year (263,600 tonnes). Production of caustic soda in the country totalled 1,289,400 tonnes in the 2019, up 1% year on year (1,278,900 tonnes).
MRC