COVID-19 - News digest as of 13.04.2020

1. Refinery employees worried about response to virus cases

MOSCOW (MRC) -- Employees at Valero Energy Corp’s Port Arthur, Texas, refinery expressed worries about the company’s slow response to keep the coronavirus from spreading there after two workers tested positive, reported Reuters with reference to four people familiar with the matter. Valero, the nation’s second-largest refiner, started to cut non-essential work and related contractors only this week after starting temperature checks last week - much later than other major U.S. refiners, according to the people.



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MOSCOW (MRC) -- One worker was injured in a fire at Valero Energy Corp’s 125,000 barrel-per-day Meraux, Louisiana, refinery early Friday morning, reported Reuters with reference to a company spokeswoman.

Valero spokeswoman Lillian Riojas said the injured worker was taken to a local hospital. The extent of the person’s injuries was unknown. All other workers at the refinery were accounted for.

Energy industry intelligence service Genscape said the refinery was shut at about the time the fire broke out, shortly before 1 a.m. CDT (0600 GMT).

The fire broke out in the refinery’s hydrocracker, said sources familiar with plant operations. The hydrocracker converts gas oil into motor fuels, primarily diesel.

Riojas said the fire was contained to the area where it broke out.

WWL-TV in New Orleans reported that the fire began with an explosion that was felt up to 7 miles (11 km) away.

Valero is the second-largest refiner in the United States, operating 13 refineries with a combined crude oil processing capacity of 2.2 million bpd, 11.6% of the national total.

Valero has reduced production at at least seven of its US refineries. The company also operates a refinery in Quebec and one in Wales.

As MRC wrote previously, in late March 2020, an employee at Valero Energy Corp’s Meraux, Louisiana, refinery tested positive for the coronavirus.

We also remind that Valero Energy Corp restarted the small CDU at its Port Arthur refinery after repairing a valve on 25 September 2019. And in late October 2019, Valero Energy Corp shut the small crude distillation unit (CDU) at its Port Arthur refinery. The 75,000-bpd AVU 147 CDU was shut to repair a heat exchanger.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Marathon Petroleum has cut rates at its 26,000 b/d Gallup, New Mexico, plant to about 70%, reported S&P Global with reference to sources.

Thus, the nation's largest refiner cut rates across the board, the level at which fellow refiner HollyFrontier said it was running its inland and Rockies refineries, including its 110,000 b/d Navajo plant in Artesia, New Mexico.

Marathon Petroleum is the latest US refiner to cut runs to balance weak product demand with strong supply, temporarily shutting its New Mexico plant on April 15 as coronavirus pandemic destroys demand.

As MRC informed before, 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 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- A growing number of oil tankers across Europe have been unable to unload their cargo over the past month as refining demand crashes, turning them into de facto floating storage, reported Reuters with reference to shipping data and trading sources.

European refineries have had to cut runs after measures put in place to contain the coronavirus outbreak crushed fuel demand.

More than 25 tankers with roughly 18 million barrels onboard were anchored near European ports, with most them already there for over a week as of Thursday, Refinitiv Eikon shipping data showed.

Many oil cargoes scheduled for late March or early April arrival were bought by refineries before the coronavirus pandemic paralysed business and social activity in Europe, traders said. But now the volumes are not needed.

"The refinery tells us they can’t take a cargo now. And it’s not very clear when they’ll be able to. It could take a month," a source with a major oil company said.

Storage facilities in Europe are filling up fast, with traders saying nearly all tanks are already rented and leaving no option for the refineries other than to float the cargo until it can be offloaded.

Full tankers are floating all over Europe, but the Mediterranean region, where refining run cuts have been higher, is harder hit.

Italy’s Trieste port, a Mediterranean oil hub connected to refineries in Austria, Germany and the Czech Republic by the Transalpine pipeline (TAL), has six vessels waiting to discharge, traders said and the shipping data showed.

“Delays in Trieste are above two weeks now for some cargoes. Some vessels discharge, but many are floating. And we see more coming”, a Mediterranean trader told Reuters. He added that the slower oil intake by refineries connected to TAL was disturbing pipeline operations.

TAL pipeline did not respond to a Reuters request for comment.

A number of cargoes floating outside other Italian ports including Milazzo, Vado Ligure and Genoa have been waiting for several weeks, four cargoes are facing weeks-long discharge delays in France’s Fos and delayed cargoes are also anchored around Turkey and Greece, the data shows.

“We’ve been waiting for...nine days,” a trading source selling to Mediterranean refineries told Reuters.

In northwest Europe the situation is generally better, traders said, but several vessels have been delayed in the last two weeks in the Antwerp-Rotterdam-Amsterdam hub and traders fear the number could rise.

“OPEC+ can try to establish market balance in the future, but it can’t solve the issue of a currently oversupplied physical market in Europe, it will be tough this month,” a trader with a major oil company told Reuters, referring to the grouping of OPEC countries and allies including Russia.

As MRC informed earlier, Royal Dutch Shell will start large-scale maintenance of its Pernis refinery in the Netherlands in mid-April, more than two weeks earlier than previously planned. The maintenance would mean the 404,000 barrel per day refinery, Europe’s largest, would be shut temporarily. The previous maintenance plan involved starting on May 4 and was expected to last through May and June.

We also reminad 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 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Shell expects delays to a number of projects in the UK North Sea including the start-up of its Shearwater gas infrastructure hub, the centerpiece of a number of inter-linked investments, reported S&P Global with reference to a source close to the situation, as the company grapples with coronavirus and the turmoil in oil markets.

The delays also encompass a proposed development known as Jackdaw and progress on the Penguins oil project, and reflect last month's decision by the global major to slash its capital spending by 20% this year, as well as an issue with construction work in China.

Shell would not comment on the topic.

The Shearwater project aims to create a new infrastructure hub that will redirect gas and condensate to St Fergus in eastern Scotland from the Shearwater field, and from other fields being developed by Shell and other companies in the vicinity, such as the Arran, Fram and Columbus fields.

From St Fergus, natural gas liquids are to be sent on to the Mossmorran processing and petrochemical plant. The start-up of the new hub, first approved for development in 2018, is now deferred to 2021 from this year, the source said.

Shell also expects to delay until next year a Final Investment Decision on Jackdaw, a proposed gas and condensate development in the central North Sea, the source said. Approval had been expected in the current quarter.

And delays were expected in the redevelopment of the Penguins field in the far north of the North Sea, which was first developed in the early-2000s as a tie-back to the Brent field, itself now in the process of decommissioning.

Shell had not given an explicit schedule for Penguins. However there are believed to be hold-ups with construction in China of the floating production storage and offloading vessel, and some "rephrasing" of drilling was also expected, the source said.

Shell embarked on its current series of North Sea projects after hailing the success of the industry in reducing its costs in the wake of the 2014-15 collapse in oil prices.

Last June, Shell's UK and Ireland vice president, Steve Phimister, indicated the company expected to spend around $800 million annually in its UK upstream business for a number of years, and would be active in exploring for new resources.

The major has stakes in the three biggest West of Shetland fields operated by BP - Schiehallion, Clair and Foinaven - but its recommitment to conventional North Sea projects was seen as a sign of the UK oil and gas industry's reviving prospects.

Shell said on March 23 it was cutting its expected capex this year to USD20 billion or below, part of a wave of spending cutbacks by oil and gas companies around the world in response to plummeting commodity prices.

As MRC wrote before, Royal Dutch Shell will start large-scale maintenance of its Pernis refinery in the Netherlands in mid-April, more than two weeks earlier than previously planned. The maintenance would mean the 404,000 barrel per day refinery, Europe’s largest, would be shut temporarily. The previous maintenance plan involved starting on May 4 and was expected to last through May and June.

We also reminad 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 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

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.
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