Oil up after three-day plunge but coronavirus curbs gains

MOSCOW (MRC) -- Oil prices bounced nearly 7% after a three-day selloff drove them to their lowest in almost two decades as demand plummeted due to the coronavirus and supplies surged in a fight for market share between Russia and Saudi Arabia, said Hydrocarbonprocessing.

Benchmark Brent, which has lost half its value in less than two weeks, got some respite as investors across financial markets assessed the impact of massive central bank stimulus measures. Brent crude LCOc1 jumped USD1.43, or 5.75%, to USD26.33 a barrel by 1045 GMT, after plunging to USD24.52 on Wednesday, its lowest level since 2003.

U.S. crude CLc1 gained $2.40, or 11.8%, to USD22.77 after dropping nearly 25% in the previous session to an 18-year low. But analysts said gains were likely to be temporary, as tumbling demand was compounded by the collapse this month of a deal on supply curbs between OPEC and other producers.

The drop in demand, particularly in transportation, is also leading to a rapidly growing glut in refined products such as jet fuel and gasoline. Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, which kicked off a price war with Russia that sent prices into tailspin, is planning to keep pumping at a record rate of 12.3 million barrels per day (bpd) for months.

"From April 1, about 4 million bpd could flood the markets, potentially pushing down crude oil prices into the teens,” Jefferies said in a note. “Unless somebody intervenes, no oil producer benefits from the current environment." But analysts have still been slashing growth forecasts for China, where the disease erupted, to the lowest levels in decades.

In the United States, where dozens of shale oil and gas drillers and services companies risk bankruptcy, senators on Wednesday urged Saudi Arabia and Russia to stop the price war during talks with the kingdom’s envoy to Washington.

The senators urged President Donald Trump to impose an embargo on oil from the two countries. Meanwhile, the spread of the virus elsewhere is showing no sign of abating, with governments resorting to lockdowns in a bid to contain the disease, hammering economies and raising the prospect of a global recession.

Central banks have moved to mitigate the spiraling economic and financial fallout, with the European Central Bank kicking off a 750 billion euro (USD820 billion) emergency bond purchase scheme after an unscheduled meeting on Wednesday.

“While the spreading of the virus has further to go and oil prices further to drop, we are now probably getting very close to peak fear in western and global financial markets,” said Bjarne Schieldrop, chief commodities analyst at SEB.

As MRC informed earlier, Saudi Arabia has stepped up efforts to squeeze Russia’s Urals oil grade out of its main markets by offering its own cheap barrels instead after their long-standing deal to support global oil prices fell apart, reported Reuters with reference to seven oil sources. Cooperation between Moscow and Riyadh dramatically collapsed last week after Russia refused to support deeper oil output cuts desired by Saudi Arabia to fight falling oil demand as a result of the spread of the coronavirus outbreak.

As MRC informed before, in October 2018, Saudi Aramco and Total launched engineering studies to build a giant petrochemical complex in Jubail. Announced in April 2018, the world-class complex will be located next to the SATORP refinery, operated by Saudi Aramco (62.5%) and Total (37.5%), in order to fully exploit operational synergies. It will comprise a mixed-feed cracker (50% ethane and refinery off-gases) - the first in the Gulf region to be integrated with a refinery - with a capacity of 1.5 million tons per year of ethylene and related high-added-value petrochemical units. The project represents an investment of around $5 billion and is scheduled to start-up in 2024.

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) -- Clariant’s Additives business and Floreon-Transforming Packaging Limited announce an exciting new collaboration to further extend the performance properties and market potential of biopolymers, whilst preserving their environmental benefits, as per the company's press release.

By integrating the benefits of Clariant’s additives with Floreon’s proprietary material solutions, the collaboration aims to open up additional possibilities for plastic manufacturers and brand owners to consider biopolymers as a viable, low carbon footprint alternative to fossil-based plastics for both single-use and durable applications. Markets set to benefit from the new enhanced grades include rigid and flexible Packaging, Electrical & Electronic equipment (E&E), Hygiene products, Consumer goods and Automotive.

Floreon develops and markets proprietary compounds based on PLA and containing 70-90% renewable, plant-based raw materials, thus containing carbon sequestered from the atmosphere by plants. They are typically mechanically tougher than traditional PLA and can deliver significant energy savings in processing. Floreon compounds are recyclable and they can also be composted via industrial composting. That makes Floreon’s materials viable for applications where, at this stage, contamination with food waste and organic matter make mechanical recycling unfeasible.

Clariant’s industry-leading portfolio of sustainable additives includes a wide range of bio-based additives, which reliably deliver both high performance and sustainability to the plastics value chain. Introduced at the K 2019 Plastics Trade Fair under the Exolit® OP Terra, Licocene® Terra and Licocare® RBW Vita trade names, they help to reduce fossil resource intensity and enable more sustainable material choices. Clariant’s experts will support the Floreon development team to enhance the performance possibilities and processing characteristics of bioplastics.

The scope of benefits is vast. Examples include achieving less energy use and faster cycle times by increasing the processing efficiency or adding completely new properties to the material. Product manufacturers will have the possibility to tailor compounds to suit specific processing technologies and applications, including in some cases those where bioplastics have so far not been able to meet the challenges of demanding conditions or environments.

Shaun Chatterton, CEO, Floreon-Transforming Packaging Limited, said: "Brand owners and plastic converters are seeking more sustainable material solutions to offer their customers, driven by goals ranging from recyclable solutions and improving waste management to lowering carbon footprint and reducing resource use. Floreon can really contribute towards these goals. As a small business, our team is very excited to be able to take the benefits of biopolymers to new heights by drawing on Clariant’s extensive capabilities in developing additives focused on the performance needs of the plastics industry. Floreon has the potential to transform not just packaging but many industries, and we expect to launch our first product from this collaboration into market during the first half of 2020."

Stephan Lynen, Head of Business Unit Additives, Clariant, commented: "We are excited to be working together with Floreon using the advantages of our range of sustainable additives to close the performance gap between biopolymers and other materials. This is just another way we can contribute to giving the plastics value chain a greater choice of options for meeting sustainability targets and consumer demands, and in doing so, support the transformation to a circular economy. For society, our environment, and future generations, it is our responsibility to continuously improve sustainability performance and reduce carbon footprint and waste."

Clariant’s collaboration with Floreon constitutes together with Clariant’s EcoCircle, a corporate-wide initiative supporting the transition from a one-way plastics value chain to a circular plastics economy, another step forward to jointly develop new circular materials and technologies together with partners from the entire value chain to enable a circular economy.

As MRC reported earlier, in early March 2020, Sabic announced that it has purchased additional shares in Clariant, increasing its holding in the company from 24.99% to 31.5%.

We remind that SABIC Europe, an affiliate of SABIC, conducted a maintenance work at its cracker No.3 at Geleen site in the Netherlands last autumn. The planned maintenance started in September and lasted around 2 months. The company operates two steam crackers in Geleen which are capable of producing 1,250,000 tons/year of ethylene and 675,000 tons/year of propylene in total.

Earlier last year, SABIC took off-stream its SABIC Olefins 4 cracker owing to technical issues on May 10, 2019. Further details on duration of the shutdown could not be ascertained. Located in beek, the Netherlands, the cracker has an ethylene production capacity of 690,000 mt/year and a propylene production capacity of 360,000 mt/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.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.
MRC

MOSCOW (MRC) -- Trading house Glencore has chartered the 3 million barrel crude carrier ‘Europe’ to store oil at sea for at least 6 months, reported Reuters with reference to trading sources' statement.

The vessel is one of two so-called ultra large crude carriers (ULCC), the largest tankers in the world.

Glencore booked the vessel at a rate of USD37,000 a day for the first six months, according to the sources.

A Glencore spokesman declined to comment.

Sources told Reuters last week that Royal Dutch Shell had provisionally booked at least three supertankers to store crude oil at sea for at least three months as traders brace for a sharp rise in global stocks after OPEC and its allies abandoned a production cut deal.

Each of these vessels can each carry a maximum of two million barrels of oil.

The glut of oil in world markets has prompted efforts by oil players to find storage options including both on land and offshore on tankers.

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.
MRC

MOSCOW (MRC) - California's largest oil refinery began cutting production on Wednesday as the push to end the spread of coronavirus destroyed demand for motor fuels in the Los Angeles area, according to sources familiar with plant operations, said Hydrocarbonprocessing.

Marathon Petroleum Corp MPC.N expects to make a dramatic cut in production at its Los Angeles Refinery, the sources said, to bring costs in line with reduced demand. The exact amount of the planned cut was unknown on Wednesday night.

A Marathon spokesman was not immediately available for comment on Wednesday night.
The 363,000 barrel-per-day (bpd) refinery, located in two adjoining plants in the Los Angeles suburbs of Carson and Wilmington, was the first U.S. refinery to report a coronavirus infection.

An employee at the refinery tested positive for the virus and, along with those who worked close by, went into quarantine on March 11.

On Wednesday, Marathon told California environmental regulators it was utilizing the safety flare system at the refinery, indicating a change in the level of production. The safety flare system is used to burn off excess hydrocarbons when units are shut or malfunction.

Marathon maintained regular production in the week after the worker went into quarantine.

The coronavirus has infected more than 200,000 people worldwide and over 8,700 of those have died. In the United States, more than 8,000 people have been infected and over 150 people have died.

As MRC wrote previously, a portion of Marathon Petroleum Corp’s 363,000 barrel-per-day Carson refinery in California was shut in late February 2020, following a fire.

We also remind that the gasoline-producing unit at Marathon Petroleum Corp’s 585,000-barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas, remained shut for six weeks for repairs in late Juney-early August 2019. The 140,000-bpd gasoline-producing Fluidic Catalytic Cracking Unit 3 (FCCU 3) was shut on June 29 2019 to repair a leak. The refinery’s 65,000 bpd reformer, called Ultraformer 4, was also shut down.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, 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) -- Russia’s Moscow Refinery, owned by oil producer Gazprom Neft, has launched a new crude oil processing unit with an annual capacity of 6 million tons, said Eco-petrol.

The unit, which was launched on March 16, would allow the refinery to maintain oil processing levels which otherwise were on track to fall by 600,000 tonnes next month due to planned maintenance works, the sources said.

Gazprom Neft did not immediately reply to a Reuters request for comment.

As MRC informed earlier, Gazprom Neft and the Abu Dhabi National Oil Company (ADNOC) have entered into a Framework Agreement on Strategic Cooperation. The companies will explore opportunities for implementing joint projects in the upstream and downstream sectors, as well as in information technologies, artificial intelligence, and other areas.

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.

Gazprom Neft is a vertically integrated oil company, primarily involved in oil and gas exploration and production, refining, and the production and sale of oil products. The Gazprom Neft’s corporate structure comprises more than 70 production, refining and sales subsidiaries throughout Russia, the CIS, and abroad.
The company’s proved and probable reserves (SPE-PRMS) are estimated at 2.78 billion tonnes of oil equivalent (btoe), making Gazprom Neft one of the top-20 largest oil and gas companies in the world, and one of Russia’s top three largest companies in terms of production and refining volumes. Total production in 2017 reached 89.75 million tonnes of oil equivalent (mtoe), with refining volumes of 40.1 million tonnes.
Gazprom Neft products are exported to more than 50 countries worldwide, and sold throughout the Russian Federation and abroad. The company’s filling station network totals more than 1,850 outlets throughout Russia, the CIS and Europe.
MRC