COVID-19 - News digest as of 24.04.2020

1. Turkish Tupras cuts refinery runs due to weak demand

MOSCOW (MRC) -- Turkish refiner Tupras has cut runs at its Izmir refinery by 50% due to weak fuel demand because of the coronavirus outbreak, four trading sources familiar with the matter told Reuters. Tupras has also cut runs at its Izmit refinery by 20% and its Kirikkale refinery by 50%, the sources said.





MRC

Borealis lifts force majeure at Swedish steam cracker

MOSCOW (MRC) -- Austria-based petrochemical producer Borealis has lifted force majeure on operations at its Stenungsund steam cracker in Sweden, the company told S&P Global Thursday.

"The FM on operations of our steam cracker in Stenungsund, Sweden, was lifted on April 19, 2020. We also returned to normal operations on this date and informed affected customers accordingly," a Borealis spokesperson said.

The company declared FM on April 8 due to a technical incident, while before that Borealis had had lowered its steam cracker operating rates as a result of the recent slump in oil prices and the coronavirus lockdowns in Europe.

"Our steam crackers are ...operating at reduced rates due to the COVID-19 impact as overall demand is lower," Borealis said in early April, without giving further details.

Borealis' cracker in Stenungsund can produce 625,000 mt a year of ethylene. The company's other cracker in Porvoo, Finland, can produce 400,000 mt/year of ethylene. Both crackers are able to process a mix of feedstocks including liquids, LPG and ethane.

As MRC informed earlier, in early October 2019,, Austrian polyolefin supplier Borealis AG lifted a force majeure declared in the previous months at its production site in Kallo. On 2 Sep, 2019, the company declared force majeure on refinery grade propylene and propane from its production site in Kallo, Belgium, as a consequence of “unforeseen technical issues."

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.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
MRC

Eni cuts output target, slashes 2020 capex 30% over COVID-19

MOSCOW (MRC) -- Italy's Eni on Friday lowered its production guidance for 2020 and announced at least a 30% cut in planned capex for 2020 and 2021, in response to the collapse in oil prices and the economic impact of the coronavirus pandemic, reported S&P Global.

The Rome-based major said it expects oil and production to average between 1.75 million–1.80 million b/d of oil equivalent in 2020, down from initial forecasts of around 1.9 million boe/d for the year.
Eni said it will also cut Eur2.3 billion from 2020 capex, 30% lower than the initial targets, and anticipates further reductions of 30%-35% lower than original plans in 2021.

"(The lower production guidance) is due to capex curtailments, COVID-19 effects, a lower global gas demand also impacted by the pandemic effects and finally extension of force majeure in Libya for the entire first half of the year," Eni said in a quarter earnings statement.

The new production guidance for 2020 does not take into account the possible impacts of the recently announced OPEC+ cuts totalling 9.7 million b/d that are to be implemented on a "field-by-field basis," it said.

Eni's capex cuts will be focused in the exploration and production segment with the "re-phasing" of some projects. However, the projects are "expected to resume quickly once market fundamentals improve, thus recovering any lost production volumes," it said.

Eni is planning three oil and gas field startups in 2020 along with seven FIDs, four of which are in the UAE. Mozambique's giant Rovuma LNG development is also on the cards.

The company could also pare back drilling on the 2.5 billion boe of resources it is targeting with exploration wells over the next three years and slow its downstream projects.

Halting share buybacks - which Eni has announced - and cutting dividends are other key levers.

For the first quarter of 2020, Eni reported average production of 1.77 million boe/d, 3.6% lower than the first quarter of 2019.

The company reported adjusted net earnings of Eur59 million for the period, down from Eur992 million in the year-ago period on sharply weaker prices, lower production and the negative impacts associated with the COVID-19 crisis.

Eni reported a Eur2.93 billion net loss for the period, from a profit of Eur1.1 billion in the first quarter of 2019, reflecting major price-related writedowns of its oil and gas inventories.

As MRC informed before, Italian energy group Eni said in early April that most of its oil refineries in Italy were working at around 60% of their capacity as the coronavirus emergency continues. The pandemic has shut down large parts of economies across the globe and prompted many governments to slap tough restrictions on travel, triggering a steep fall in the demand for refined oil products. In emailed comments, Eni said its biggest refinery Sannazzaro, in northern Italy, was running at around 50% of its capacity since it was also impacted by planned maintenance work.

Earlier, in mid-March, the company said all its refineries in Italy were working normally except for two which had partially cut their volumes for maintenance work.

At the same time, operations at Italian petrochemical producer Versalis (part of Eni) have not affected by emergency quarantine measures in the country at that period. Italian Prime Minister Giuseppe Conte extended its emergency coronavirus measures in mid-March and announced the closure of "non-essential" commercial businesses. This follows the earlier announcement of a nationwide lockdown, limiting movement for around 60 million people. Under these measures people werel only 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 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

Sasol reverses fiscal 2020 earnings expectations of Louisiana petchem complex to a loss

MOSCOW (MRC) -- Sasol has reversed its fiscal 2020 earnings expectations from its vastly expanded Louisiana complex as the global coronavirus pandemic weakened demand and prices in 2020, reported S&P Global with reference to the company's statement in a business update Thursday.

Sasol had said its Lake Charles Chemical Project was expected to contribute USD50 million-USD100 million to the company's EBITDA for the financial year 2020. That guidance has been reversed to a USD50 million-USD100 million drain on the company's balance sheet for the period "as a result of the decline in oil prices and the COVID-19 global demand reduction," the company said.

That decline in demand prompted Sasol's South Africa operations to initiate a phased shutdown of a refinery, ammonia, nitric acid and chlor-vinyl plants and cut rates by 25% at a synfuels operation. The company has not seen significant impact on industrial chemical demand, and said chemicals production would be prioritized.

The company also said Thursday that an expanded plan to sell assets as part of an initiative to raise USD6 billion by the end of 2021 has "yielded good interest" despite economic shocks from widespread shutdowns around the world to stem the spread of the pandemic.

In March, Sasol said the company was exploring the sale of stakes in several new plants at the Louisiana complex as part of its overall fundraising plan. Units for which the company could seek partners include a new 1.5 million mt/year steam cracker that started operations in 2019 and a legacy 464,000 mt/year cracker at the Lake Charles site.

Also included is a 470,000 mt/year linear low density polyethylene (LLDPE) plant that started up in February 2019 and a 420,000 mt/year low density polyethylene (LDPE) unit that was damaged by fire during commissioning in January and remains shut for repairs.

Beneficial operation for the LDPE unit, which Sasol defines as 72 hours of continuous on-spec production, remains on track for the third quarter of the calendar year. Startups of the last new units in the Lake Charles project – a 173,000 mt/year Ziegler alcohols and a 30,000 mt/year Guerbet alcohols facility – are expected to come online in late June, the company said Thursday. Those units had been expected to start up in the July-September period.

"The acceleration of this timeline will ensure that Sasol captures the additional contribution margin above ethylene, given the current low ethylene prices achieved in the market," the company said.

Sasol 's USD12.6 billion-USD12.8 billion Lake Charles project has experienced lengthy delays and cost increases. In February 2019, the company announced the cracker and derivative units would start up months later than planned because of incomplete engineering work, inclement weather and worker absenteeism, after the cracker and new LLDPE plant had been slated to start up by December 2018.

In 2016, Sasol revised the project cost to USD11.1 billion from USD9 billion and later to USD11.6 billion to USD11.8 billion before the final increase exceeding USD12 billion.

The company said it was assessing the impact of diminished economic outlooks on value of its assets ahead of wrapping up the fiscal year.

In addition to reduced cost risks of some higher-than-expected inventories, Sasol has increased efforts to cut expenses including suspension of short-term bonuses to employees, a freeze on hiring and "drastic" curtailment of spending on supplier meetings to renegotiate prices and reduced services, the company said.

Sasol also will cut director fees by 20% to 40%; senior executive pay by 20%; and middle to junior management pay by 10% to 15% for up to eight months. CEO Fleetwood Grobler will donate 33% of his salary for three months to a South African fund to combat the pandemic and then 20% from August to December.

As MRC wrote previously, in mid December 2019, Sasol announced that the LCCP Ethane Cracker was increasing production rates following the successful replacement of the acetylene reactor catalyst. Sasol’s Ethane Cracker with a nameplate capacity of 1.54 million tons per year achieved beneficial operation in August 2019 but has run approximately 50-60% of nameplate capacity due to underperformance of the plant’s acetylene removal system. The company stated that the issue had been resolved then.

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.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

Wittmann, Engel restart production in Austria

MOSCOW (MRC) -- Two of the biggest Austrian machinery and equipment makers in the plastics industry are now bringing production back online after having shut down due to COVID-19 fears, said Canplastics.

On April 20, the Wittmann Group restarted production at its plant in Kottingbrunn, Austria, which had temporarily been shut down due to the pandemic. Also, the company’s three production plants in Vienna and Wolkersdorf are now working “without any limitation,” officials said in a statement. Wittmann officials also said that the company’s production plants in Hungary and China are fully open.

Injection molding machine maker Engel Holding GmbH has reopened its manufacturing plants in Schwertberg and Valentin, Austria, as well as its Dietach facility, which makes robots and automation systems. The company had closed those sites on March 21 in response to the COVID-19 pandemic. In a statement, Engel officials said the company has provided employees with masks, modified work hours, staggered employee breaks, and is disinfecting and cleaning its facilities more frequently.

As it was written earlier, Engel had added the extra space at its Center for Lightweight Composite Technologies, which works to speed up introduction of new technologies on the market. The official opening of the new hall took place during the two-day Engel trendscaut 2017 conference at the end of June, which was attended by 500 automotive industry leaders.
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