Iran adding gasoline storage capacity as COVID-19 curbs demand

MOSCOW (MRC) -- Iran is adding gasoline storage capacity as the coronavirus pandemic curbed gasoline demand and the Persian Gulf Star refinery is being expanded, reported S&P Global.

The country moved 770,000 barrels of crude oil out of storage to make room for gasoline stockpiles, the oil ministry's news service Shana reported May 31. The crude was moved from the oil terminals at the northern Neka port to the Tehran oil refinery, Arsalan Rahimi, director of the Oil Pipelines and Telecommunication Co. for the northern region, said, according to Shana. The transfer occurred over the past few days, creating new capacity for gasoline at the Neka oil terminals, he said. After dredging by the Oil Terminals Co., the gasoline transfer and storage through the Rey-Sari-Neka pipeline will begin, he said.

Iran has been one of the hardest hit nations in the Middle East from the coronavirus pandemic. Gasoline demand has dropped to about 55 million liters/day from 70 million to 75 million liters/day in November. Iran doesn't report gasoline stockpiles publicly but Rahimi said the country is intentionally adding capacity to store oil products as a domestic policy matter.

The increased capacity is coming as the Persian Gulf Star refinery is being expanded, adding even more pressure for increased storage space. The refinery which uses gas condensates from the offshore South Pars gas field has been pivotal to help Iran cut millions of liters of gasoline imports.

Capacity is being expanded to meet cleaner gasoline requirements but an oversupply has been created by the drop in driving and gasoline demand. And available storage tanks are in the north and the refinery is in the south. The 420,000 b/d gas condensates refinery produces 45 million liters of gasoline and 17 million liters of gas oil daily and plans to boost products output by 20% by October, or to 54 million liters of gasoline/day.

The southeast region has created 120 million liters of storage for gasoline from the refinery, ISNA reported on May 9, citing Ali Ahmadipour, deputy head of operations affairs at the Oil Pipelines and Telecommunications. A crude oil tank in Tehran's Moghanak region has been emptied to make room for 40 million liters of gasoline storage capacity, and the Sari region in the north is also preparing to allocate space for gasoline storage, Ahmadipour said.

"It seems that in summer the conditions will improve and possible increased traffic and higher gasoline consumption will lessen the concern over gasoline storage," he said, adding that the coronavirus pandemic hasn't disrupted operations.

"Fortunately, in the current year (2020-2021) gas oil and other products didn't have any problem regarding storage and transfer," he said.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- Brazil state-controlled oil Petroleo Brasileiro SA said that a fire at its Duque de Caixas refinery left the facility operating with only half of its installed capacity, said Hydrocarbonprocessing.

But Petrobras, as the company is known, said in an email late on Monday that the fire would not affect deliveries, helped by its inventory. The company also did not provide a date on when production will return to normal levels.

As MRC informed earlier, 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 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

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.
MRC

MOSCOW (MRC) -- The director general of the Algerian state hydrocarbon company Sonatrach, Toufik Hakkar, revealed on Friday that he has started a negotiation with the Spanish energy company Naturgy on the price of gas and said he is not concerned if the lack of agreement leads to arbitration in late July international, said Cincodias.

In statements to the local press during a visit to the town of In Amenas, on the border with Libya, he recalled that "relations with Spanish companies regarding gas commercialization exceed 50 years", and insisted that "the contractual clauses between both parties they allow the periodic revision of the prices based on the evolution of the energy market ".

"There are other clauses that allow finding solutions to disputes through bilateral negotiations, but also recourse to international arbitration if an understanding is not reached at the end of the deadlines set for the negotiations. It is not a fatality, but rather one of the solutions enshrined in the contracts, to resolve disputes, "explained the senior officer of the Algerian company.

If we go to this extreme "we will give our reasons and we will enforce them. We are not afraid of this process which we will reach in a position of strength," Hakkar stressed before warning that Sonatrach has already been successful in this type of procedure in the past.

In line with this argument, the manager reiterated that this type of contract is signed for periods of up to 30 years, but it includes a degree of flexibility that allows the quantities supplied to be reviewed, as well as the prices. "The clauses are systematically reviewed every 2 to 3 years, to allow both parties to adapt to the new market data," as well as each of them to "defend their economic interests and their achievements," he said.

Naturgy is a partner of Sonatrach in the Med-Gaz gas pipeline -which unites the two countries- and Sonatrach has been able to buy back the shares of the Spanish company, which in Hakkar's opinion "shows the will of both parties to preserve their good relations".

"We have had nine negotiation meetings since Naturgy asked to revise down the prices of Algerian gas, this is not a short-term controversy that will lead us to the breakdown of these relations," he concluded. Algeria is mired in a serious economic crisis since the abrupt drop in oil and gas prices in 2014, which it mistakenly considered to be circumstantial.

The crisis has been exacerbated by the collapse of prices as a result of the coronavirus health crisis, which has sunk the price of oil and gas, materials that account for 95 percent of Algerian exports.

As MRC informed before, in January 2020, Turkey and Algeria announced that they will jointly establish a petrochemicals plant in Adana on the Mediterranean coast. Turkey’s Ronesans Holding and Algeria’s state-owned energy company Sonatrach will take part in the project, Arkab said on the margins of the Turkey-Algeria Business Forum. The petrochemical facility is estimated to cost around USD1.4 billion, according to the Algerian minister, who also said stakes of Ronesans Holding and Sonatrach in the project will be 66 percent and 34 percent, respectively. The facility is planned in Seyhan industrial zone for petrochemical development and will have production capacity of 450,000 tons per year of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- Crude oil prices rose with the stock markets on June 15 after the US Federal Reserve offered additional economic support following a morning of mostly negative trading amid coronavirus resurgence fears from Beijing to Texas, reported S&P Global.

After crude prices fell by about 4% to start the day, they eventually jumped back into positive territory.
Despite new lockdowns amid outbreaks in Beijing, Chinese officials insisted things are under control and another Wuhan is not developing. Also, US President Donald Trump has not shown signs of supporting new lockdown measures as coronavirus cases rise in several states, including Florida, Texas and Arizona.

Meanwhile, the Federal Reserve said it would start buying individual corporate bonds as part of its emerging lending program to help boost the economy. The Fed previously was only purchasing exchange traded funds.

Front-month NYMEX WTI rose 86 cents/b to USD37.12/b and ICE August Brent traded up 99 cents/b to USD39.72/b.

As for refined products, NYMEX July RBOB jumped 4.14 cents/gal to USD1.1657/gal and July ULSD ticked up by 3.56 cents/gal to USD1.1370/gal.

"Crude has moved back up to the price level where it's more linked to all the other stuff in the markets," said Dan Pickering, the founder of Pickering Energy Partners, an energy investment firm. "Oil has moved from dramatically oversold to closer to fair, and now we're in a holding pattern waiting to see how the world recovers."

Barring any specific shocks to oil markets, crude priced from USD35/b to USD40/b will move largely at the whims of the stock markets, he added. "We had really awful prices, and then a really impressive recovery to what's still a dismal price."

Bullish sentiment also emerged from reports that Iraq is finally living up its part of the OPEC+ production cuts as Baghdad signaled it would sharply cut back on oil exports in June. OPEC's second-largest oil producer has been one of the biggest violators of the production quotas.

While crude oil was buoyed by the ongoing OPEC+ efforts to keep more barrels off the market, prices are still sitting below USD40/b out of concerns of an extended first wave and eventual second wave of the coronavirus pandemic.

"Oil prices will remain very sensitive to the evolving COVID situation, despite the best efforts of producers around the world to rebalance the market," said Craig Erlam, senior market analyst for OANDA.

The question now is whether the continued presence of the coronavirus thus far during the summer will weigh more on oil prices and global crude demand, said Bjornar Tonhaugen, Rystad Energy's head of oil markets.

"Now, amid a spike in new confirmed cases in the US and Asia, the thought has started sinking in for many traders: 'Hey, COVID-19 is not really gone, what happens now with demand?' " Tonhaugen said.

"Markets move in waves of fear and greed and, after greed has enjoyed a long joy ride, fear has started sprouting again," he added.

With OPEC+ doing its part to balance global supply and demand, arguably the biggest wild card is what happens next with US shale as producers begin to undo well shut-ins that were implemented in April and May.

While US oil production has plunged from record highs by close to 2 million b/d and the US drilling rig count is at its lowest level in more than a decade, Tonhaugen said, "We believe there will be a gradual reactivation of shut-in production, which will be sufficient in the coming months for US production to stabilize and grow from its current levels."

That is true in areas such as the Bakken Shale, but especially in Texas and the Permian Basin.

In fact, the pandemic has triggered a large spike in drilled-but-uncompleted wells, called DUCs, in the Permian, according to a new Rystad analysis.

The US has added more than 750 DUCs in the last three months, including nearly 500 just in the Permian, Rystad said. At the current pace of hydraulic fracturing, those roughly 750 wells would take about two years to all come online, the analysis said, potentially adding more oil volumes just as crude prices are fighting to recover.

US DUC totals exceeded 5,700 wells at the end of May 2020, the highest level since late 2017, Rystad said.

"In the second half of 2020 we might see a modest rebound in fracking without extra drilling," said Artem Abramov, Rystad head of shale research, in the report.

As for Pickering, he said oil priced over USD30/b means that some shut-in wells will come back online, and when and if NYMEX WTI rises above USD40/b, some DUCs will bring on more barrels.

"It's definitely a risk that at these prices oil is coming back on the market," Pickering said.

As MRC informed previously, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- An unexpected outage occurred at BASF Total Petrochemical’s joint-venture (JV) olefins unit at Port Arthur, Texas, on Thursday afternoon, according to Chemweek.

The cause of the outage is being investigated, with a compressor shutdown cited as a possible factor, according to a Texas Commission on Environmental Quality filing.

Total’s refinery near the olefins plant has also drastically reduced rates. The outage had little effect on Friday’s US spot ethylene market.

Few olefins plants are shut but many have reduced rates. Overall operating rates for the US Gulf Coast region are estimated at around 85%. Against this backdrop, ethylene exports are scheduled to be taking more than 75,000 metric tons out of the US market this month from the Houston Ship Channel, with seven cargoes scheduled to leave the Enterprise export terminal during June and one cargo scheduled to lift from Targa’s export terminal, all bound for Asia.

The JV’s steam cracker at Port Arthur has a production capacity of more than 1 million metric tons/year of ethylene and 544,000 metric tons/year of propylene, according to IHS Markit data.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC