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Petrobras begins halting operations of 62 platforms

April 20/2020

MOSCOW (MRC) -- Brazil's state-owned oil firm Petroleo Brasileiro SA said on Wednesday it had begun suspending operations of 62 shallow water platforms in the Campos, Sergipe, Potiguar and Ceara basins, reported Reuters, adding that the cuts will amount to 23,000 bpd..

Petrobras said earlier that as part of a global effort to support oil prices, it would cut some 200,000 bpd from its daily production, an earlier Reuters report said.

OPEC+ agreed last week to reduce its combined production by 9.7 million bpd. This was less than most traders expected and a lot less than the slump in demand, which could be as much as 30 million bpd. However, with cuts from non-OPEC+ partners such as Brazil, Norway, Canada, and the United States, the total reduction in supply could reach 20 million bpd.

The bad news is this wont be enough. The International Energy Agency (IEA) said in its latest monthly Oil Market Report that the coronavirus outbreak has so far caused a record drop in oil demand, at 9.3 million bpd from 2019 levels. In April alone, demand fell by 29 million bpd. Over the second quarter, the IEA said, demand would recover somewhat, to 23 million bpd below 2019 levels, and then further down the road, it could recoup most of the losses, ending the year 2.7 million bpd below 2019 levels.

It is clear to everyone that the cuts are necessary, but it also seems clear that they will not be enough to offset the demand decline fully. Whats worse is that global oil storage is filling up, and it will continue filling up despite the cuts. This seems to be the only thing that could force additional production cuts from most, if not all, oil producers.

Brazil, too, may have to cut deeper. The country was on course to a new oil boom in its presalt zone offshore when the crisis hit and persistently low prices could be the death of this oil boom. Currently, the country is producing around 3 million bpd but had plans to increase this substantially. According to OPECs February MOMR, Brazils production was expected to grow by 310,000 bpd in 2020.

As MRC wrote previously, the chief executive of Brazilian state-run oil firm Petroleo Brasileiro said in December 2019 he wants to sell the company's stake in petrochemical company Braskem within 12 months.

Besides, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, LLDPE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, Braskem, Petrobras, Brazil, Russia, USA.
Category:General News
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