ExxonMobil Baton Rouge refinery cuts production due to low demand

MOSCOW (MRC) -- ExxonMobil Corp cut production at its 502,500 barrel-per-day Baton Rouge, Louisiana, refinery as poor demand has pushed up inventories and filled storage tanks, reported Reuters with reference to sources familiar with plant operations.

The number of contract workers at the Baton Rouge refinery was cut by 1,800 people on Friday as Exxon begun informing service companies of planned spending cuts.

The refinery’s production was cut to about 440,000 bpd on Saturday, the sources said.

Exxon spokesman Jeremy Eikenberry said the spending cuts will be announced when final decisions are made.

“We are notifying contractors and vendors of our intended reductions, and they may be adjusting their staffing and budgets accordingly,” Eikenberry said.

The number of contract workers at the refinery is usually 2,000 and increases when major overhauls are underway, the sources familiar with operations said.

Contract workers are employed by the third-party service companies that Exxon has been informing of its spending plans.

Social distancing and working from home to prevent the further spread of the coronavirus in the United States has reduced demand for motor fuel across the country. At least three refineries in California have cut production as well.

Lyondell Basell Industries sent home about 500 contract workers from its Houston refinery last week on Wednesday.

Exxon’s Baton Rouge refinery restored full production on March 9 after it was shut by a Feb. 12 fire.

The Baton Rouge refinery is the second-largest in Louisiana and Exxon’s second-largest in the United States.

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 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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

PDVSA aims to restart gasoline production at refinery

MOSCOW (MRC) -- Venezuelan state oil company Petroleos de Venezuela is trying to repair the catalytic cracker at its 146,000-barrel-per-day (bpd) El Palito refinery in an effort to restart gasoline production at the facility after years of inactivity, three people familiar with the matter said, as per Reuters.

U.S. sanctions on PDVSA, part of a push to oust socialist President Nicolas Maduro from power, have made it more difficult for Venezuela to import fuel, resulting in widespread gasoline shortages. The OPEC country’s refineries, which can process up to 1.3 million bpd, are producing at a small fraction of capacity due to years of lack of maintenance.

A plunge in global oil prices as a result of falling demand due to the coronavirus pandemic, as well as a price war between producers Russia and Saudi Arabia, has also left cash-strapped Venezuela with even fewer funds to import goods like fuel.

The repairs at El Palito, which could use pieces and equipment from other domestic refineries, would seek to restore the facility’s ability to produce 91 octane gasoline using Venezuela’s light oil, according to the people, who spoke on the condition of anonymity.

The project, however, faces a number of obstacles, including the long-standing difficulties PDVSA faces in paying contractors. The sanctions on the company have largely cut it off from the global financial system. PDVSA did not immediately respond to a request for comment on the project.

Authorities have ordered many gas stations shut across Venezuela in recent weeks, as the country implements a nationwide quarantine to prevent the spread of the new coronavirus. The measures have contributed to less demand.

Those that remain open are under control of military personnel, allowing entrance only to “priority sectors” like food and medicine distributors, security forces and patients with urgent medical appointments, according to a document seen by Reuters and a source in Venezuela’s gasoline sector.

The sale restrictions come as the pace of fuel imports into Venezuela slows. So far in March, PDVSA has imported about 91,000 bpd of fuel, according to internal company documents and Refinitiv Eikon data, down from upwards of 165,000 bpd in January and February.

As MRC informed earlier, PDVSA and the Venezuelan government have missed billions of dollars in payments to creditors in recent years as the once prosperous OPEC nation’s economy unraveled, putting many of its overseas assets at risk of seizure.

As MRC informed before, in May 2019, Curacao’s state-owned Isla oil refinery received an exemption from US sanctions on PDVSA, the Caribbean island’s government said in a statement. The US Treasury Department slapped sanctions on PDVSA in late January in a bid to force out socialist President Nicolas Maduro, who has overseen a collapse in the OPEC member nation’s economy. The license for the refinery, along with two other related companies, will allow the facility to continue to do business with US companies through Jan. 15, 2020.

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

Indian top refiner cuts crude processing by 25%-30% on low fuel demand

MOSCOW (MRC) -- Indian Oil Corp, the country’s top refiner, has cut crude processing at its refineries by 25% to 30% as local demand for refined fuel is hit following complete lockdown to curb spread of coronavirus, it said in a statement, said Reuters.

India has imposed a sweeping lockdown of its 1.3 billion people on Wednesday for 21 days, and is only allowing the supply of essential commodities. The move prompted several industries to shut operations and some ports in the country to declare force majeure.

"In the wake of the COVID-19 outbreak in the country, the demand for petroleum products like petrol, diesel, fuel oil, bitumen, etc., have reduced substantially. The demand for ATF (Aviation Turbine Fuel) has also come down sharply due to suspension of flights,” it said, adding only demand for cooking gas is rising.

State-owned Indian Oil controls about a third of India’s 5 million barrels per day (bpd) refining capacity.

Other state oil refiners are also reducing crude processing as local fuel demand has tumbled.

As MRC informed earlier, India Bharat Petroleum Corp has deferred the shutdown of secondary units at its Kochi and Mumbai refineries due to shortage of manpower and material to carry out the turnaround job.

As MRC informed earlier, Bharat Petroleum Corporation Ltd (BPCL) will invest about Rs25,000 crore to set up an ethylene cracker plant at Rasayani, 50 kilometres from its Mumbai refinery, as the firm pushes further into the petrochemicals business to fuel growth.

BPCL will commission its Rs5,236 crore Propylene Derivative Petrochemical Project (PDPP) at Kochi refinery for manufacturing niche petrochemicals in the next six months. To expand its product portfolio further, BPCL is investing Rs11,130 crore to set up a facility in Kochi refinery for manufacturing Polyols, Propylene Glycol and Mono-Ethylene Glycol.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC

Saudi refuses to give extra April crude to at least three Asian refiners

MOSCOW (MRC) -- State-owned oil behemoth Saudi Aramco has rejected at least three Asian refiners’ requests for additional bargain-priced crude for April, despite a recent pledge by the kingdom to boost supplies to a new record, four sources told Reuters.

The refiners - one Korean, one Taiwanese and one Chinese, had requested extra barrels of Saudi oil in a so-called nomination process for April - on top of their long-term supply deals - following the steep price cuts announced by Aramco at the weekend, but were turned down by the producer.

However, Saudi Arabia did approve incremental supplies for its top Indian and Chinese customers, including Bharat Petroleum Corp (BPLC), Reliance Industries Ltd, at least one Chinese state refiner, and privately held Zhejiang Rongsheng Holding Group, to fend off market share threats in the top Asian oil markets - India and China, other sources told Reuters.

“We have got all we asked for,” one of the sources said of the nomination results.

Reliance, operator of the world’s biggest refining complex, and BPCL have each bought 2 million barrels of extra Saudi oil for loading in April, Reuters reported earlier on Thursday.

BPCL is taking a mix of Arab light and Arab medium grades.

Aramco did not immediately respond to a request for comment.

Saudi Arabia said on Tuesday it would increase supplies to a record 12.3 million barrels per day (bpd) in April, or 300,000 bpd above its maximum production capacity, indicating it may draw from storage.

Saudi’s increased supply was mainly for the lighter grades, while the increase in medium and heavy grades appeared to be limited, two of the sources said.

Some Saudi crude term contract holders believed the producer was playing a strategic game during its allocation of extra April crude barrels to beat competitors in targeted markets while taking care of its core clientele, some of the sources said.

“Saudis are trying to fight against Russia and shale producers in U.S,” said a trader with a North Asia refinery.

“India is a pretty big Russian barrel buyer for Urals. For the Koreans and Japanese they don’t buy much Russian (crude) except ESPO, and they will buy US (crude) anyway.”

Some Asian buyer that had their requests rejected were not pleased while a few were still trying to negotiate for extra barrels.

“(Saudi) did not give any explanation. So annoying,” said one of the sources, who was disappointed about its own nomination result.

Due to the hefty Saudi price cuts, many Asian buyers had asked to load more in April, while a contango market structure supports oil storage, creating competitions for the extra barrels.

Some buyers in Asia had asked for three times the usual amount of Saudi crude, said Lachlan Shaw, head of commodities research at National Australia Bank in Melbourne, noting that the discounts in official selling prices set last week were bigger for other areas outside Asia.

But at least three Asian refiners - one Chinese and two Japanese - did not seek more than their usual volume due to lingering concerns about limited storage space, weak demand and the downward price trend, three sources at the refineries said.

As MRC reported before, in November 2019, Reliance Industries has confirmed plans to invest 700 billion Indian rupees (USD9.75 billion) to establish a crude-oil-to-chemicals (COTC) complex at the company's Jamnagar, India. As part of a plan, Reliance intends to establish COTC units including a multi-feed steam cracker and multi-zone catalytic cracking (MCC) unit. The plan is also to convert the Jamnagar site's existing fluid catalytic cracking (FCC) unit to a high-severity FCC (HSFCC) or Petro FCC unit, to maximize ethylene and propylene yields.

And earlier last year, Reliance, owners of the world’s biggest refining complex at Jamnagar in western Gujarat state and a major buyer of Saudi oil, announced plans to sell a fifth of its petrochemical and refining business to Aramco in a multibillion dollar deal. Aramco has been a major and reliable supplier of crude oil for Reliance for more than twenty years, both in terms of volume of crude supply as well as the mix of various grades of crude oil.

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

U.S. ethanol plants cutting output due to crashing demand

MOSCOW (MRC) -- U.S. ethanol producers are on track to shut about 2 billion gallons of annualized output by the end of this week because of a slump in demand for fuel, the head of the Renewable Fuels Association trade group said, as per Hydrocarbonprocessing.

Biofuel producers are feeling the impact of an energy industry in crisis as countries including the United States take unprecedented steps to contain the coronavirus pandemic, curbing demand for products such as gasoline and jet fuel. “It looks to us like we’re nearing 2 billion gallons of capacity on an annualized basis that was operating as recently as a month ago that we think by the end of this week will be offline,” RFA President Geoff Cooper told Reuters.

The United States blends about 15 billion gallons of ethanol into the nation’s gasoline each year. Cooper said he was urging Congress and the Trump administration to help the industry and its workers. “We’re going to be advocating for measures that will help our producers retain their workers, period,” he said.

“We know a number of plants have already been forced to idle, we know more are coming and they don’t want to lose their workers,” he said. The profit margin for producing ethanol in the United States, as measured by Iowa State University’s Center for Agricultural and Rural Development (CARD), fell last week to minus 9.68 cents per gallon, a seven-year low.

U.S. Senators Chuck Grassley and Joni Ernst of Iowa have asked the Trump administration to help the industry by adhering to a court ruling that would slash the use of waivers exempting small refineries from their biofuel blending obligations.

They asked the administration not to appeal the January ruling, but had not heard back yet, Grassley said on Monday. “We haven’t been told one way or another officially,” he told reporters on a conference call. The Environmental Protection Agency and White House have declined to comment.

A group of Texas lawmakers has been urging the Trump administration to appeal the decision, arguing it could cost countless blue-collar jobs in the refining industry.

As MRC informed earlier, the U.S. Environmental Protection Agency will not appeal a court ruling that would sharply reduce its use of waivers exempting refineries from the nation’s biofuels regulation, a big win for the Corn Lobby, according to a Reuters case docket review.

As MRC informed earlier, US Senators Chuck Grassley and Joni Ernst of Iowa have asked the Trump administration not to appeal a court ruling that would slash the use of small refinery biofuel waivers, but have not heard back yet on its decision.

President Donald Trump said the United States would take advantage of low oil prices and fill the nation’s emergency crude oil reserve, in a move aimed to help energy producers struggling from the price plunge.

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