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

Rosneft tenders to sell up to 500,000 t of jet fuel for Apr-Dec delivery

MOSCOW (MRC) -- State-owned Russian oil major Rosneft has launched a tender to sell up to 500,000 tons of jet fuel TS-1 for delivery in April-December 2020, reported Reuters with reference to the company's statement on its web-site.

Buyers were invited to bid for jet fuel originated from the Rosneft refineries for delivery on a following basis: FOB any port of Black/Baltic/White/Barents/Japan Sea, CPT any port, DAP any port.

The tender closes on March 26, and results are expected on Apr. 13.

As MRC informed earlier, in late January, Rosneft said its oil refineries in the Samara region were increasing their level of environmental monitoring. Kazakhstan earlier reduced oil supplies via the Atasu-Alashankou pipeline to China after tests carried out at the end of the last week showed a high content of organic chloride. Some oil transit from Kazakhstan to Russia goes via a pipeline which has a connection with the Russian pipeline system in the Samara region.

We also remind that in January 2020, German subsidiary Rosneft Deutschland GmbH completed the deal to acquire a 3.57% stake in Germany’s Bayernoil Raffineriegesellschaft mbH from BP.

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).

Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.
MRC

Shell, other oil companies seek less Saudi crude in April due to weaker demand

MOSCOW (MRC) -- Several European and Nordic oil refiners are taking less crude from Saudi Arabia in April, industry sources said, suggesting a lack of demand for the extra supplies the country has offered as it seeks to boost market share, said Hydrocarbonprocessing.

The world’s top oil exporter is planning to boost exports sharply after a three-year supply-cut deal between the Organization of the Petroleum Exporting Countries and other producers led by Russia collapsed earlier this month.

But with demand also collapsing due to government restrictions to contain the coronavirus outbreak, oil companies have been reducing refinery processing rates and are not in a rush to nominate extra Saudi barrels, the sources said.

“There are definitely refinery run cuts,” a trade source, speaking on condition of anonymity, who has discussed the issue with oil companies said. “So then it is hard to nominate a lot."

Shell is among the major oil companies taking less Saudi crude, two industry sources said. One source said companies were seeking to cut their April allocations of Saudi crude by as much as 25%. Shell declined to comment.

Saudi state oil company Aramco also declined to comment.

As MRC informed before, a contractor working at Shell's Pulau Bukom manufacturing site in Singapore has contracted the new coronavirus. The Bukom manufacturing site in Singapore houses Shell's biggest wholly-owned refinery. The company said earlier it had sent some staff home from its main office at Metropolis in western Singapore after discovering another employee had been in contact with a carrier.

We also remind that 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

Shell, Total cut spending, share buybacks in response to oil price slump

MOSCOW (MRC) -- European oil majors Shell and Total announced Monday plans to cut capital expenditure by around 20% and suspend their share buybacks as part of a raft of measures to strengthen balance sheets in response to collapsing oil prices and the economic impact of the global coronavirus pandemic, reported S&P Global.

Shell said it would cut its cash spending by USD5 billion from planned levels to USD20 billion "or below" in 2020 and reduce its operating costs over the next 12 months from 2019 levels. Separately, Total announced a "USD30/b action plan,” under which it will cut more than USD3 billion, or over 20%, mostly from its organic capex this year, taking its net investments to less than USD15 billion.

"The combination of steeply falling oil demand and rapidly increasing supply may be unique," Shell CEO Ben van Beurden said in a statement to the London Stock Exchange. "But Shell has weathered market volatility many times in the past."

The oil major said the measures, which include reducing underlying operating costs by up to USD4 billion, would together contribute up to USD9 billion to its free cash flow over the year.

Total said it also planned to trim a further USD500 million from operating costs this year compared with 2019, instead of the USD300 million previously announced. It said its capex cuts would come mainly in the form of short-cycle, flexible spending, "which can be arbitrated contractually over a very short time period."

Shell and Total's spending announcements follow similar moves by BP and Eni. The Italian major became the first European major to bow to the oil-price rout by flagging heavy spending cuts last week. BP has said it has the flexibility to cut spending by 20% this year from its USD15.3-billion capex last year but it has yet to revise its guidance.

Oil prices have more than halved since the start of the year to below USD30/b caused by the economic impact of coronavirus around the world and the breakdown of the OPEC+ deal. Cash flow break-evens for European majors average around USD50/b, however, and analysts have predicted a wave of heavy spending and dividend cuts to balance books as revenues collapse. Brent crude was trading around USD26/b in midday European trade Monday.

Equinor on Monday joined its oil major peers by suspending share buybacks but gave no new capex guidance.

Global oil demand could fall by over 12 million b/d on the year in April and May and result in an annualized fall of as much as 3.2 million b/d in 2020, the head ofS&P Global Platts Analytics Chris Midgley has warned.

In January, van Beurden had said the average breakeven oil price for projects approved by Shell for development last year was under USD30/b.

International oil companies are being forced to review upstream investment commitments in response to the crisis, but Shell made no reference Monday to its previous pledge to maintain upstream investment at around USD11 billion-USD13 billion a year.

Shell said it remained committed to its divestment program of more than USD10 billion of assets in 2019-20 but said the timing would depend on market conditions. It said it also continued to ensure it has a robust balance sheet to manage volatility, with around USD$20 billion in cash and cash equivalents, and USD10 billion of undrawn credit lines.

As MRC informed before, a contractor working at Shell's Pulau Bukom manufacturing site in Singapore has contracted the new coronavirus. The Bukom manufacturing site in Singapore houses Shell's biggest wholly-owned refinery. The company said earlier it had sent some staff home from its main office at Metropolis in western Singapore after discovering another employee had been in contact with a carrier.

We also remind that 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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
MRC

Eni cuts 2020, 2021 capex to mitigate coronavirus hit

MOSCOW (MRC) -- Italian oil and gas group Eni said on Wednesday it would reduce its capital expenditure this year by around EUR2 billion (USD2.17 billion) to mitigate the impact from falling commodity prices following the coronavirus emergency, reported Reuters.

Planned capex will be cut by around EUR2.5-3.0 billion next year, it added.

"We are taking these actions in order to defend our robust balance sheet and the dividend while maintaining the highest standards of safety at work," Eni CEO Claudio Descalzi said in a statement.

Eni expects 2020 output of between 1.8 and 1.84 million barrels of oil equivalent per day and the same for next year.

As MRC informed earlier, Italian energy group Eni said last week all its refineries in Italy were working normally except for two which had partially cut their volumes for maintenance work.

Besides, operations at Italian petrochemical producer Versalis (part of Eni) have not affected by emergency quarantine measures in the country. Italian Prime Minister Giuseppe Conte extended its emergency coronavirus measures Wednesday evening and announced the closure of "non-essential" commercial businesses. This follows the announcement of a nationwide lockdown on Monday, limiting movement for around 60 million people. Under these measures people will only be allowed to leave their homes for work or health reasons. 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