China approves USD20 bln mega petchem complex in Shandong oil hub

MOSCOW (MRC) -- China is reviving a USD20 billion petrochemical project in eastern Shandong province as part of efforts to dial up infrastructure spending to support an economy struggling with the impact of the coronavirus pandemic, reported Reuters with reference to two China-based industry sources.

The 400,000 barrel-per-day (bpd) refinery and 3 million ton-per-year ethylene plant in Yantai, Shandong, the country’s hub for independent oil refineries, was proposed years ago but approval has been slowing in coming because of China’s struggle with excess refining capacity.

China’s state planner, the National Development & Reform Commission (NDRC), gave initial approval on Monday for the project, allowing Shandong province to start planning for construction, said the sources with knowledge of the approval.

The investment in the project will be nearly 140 billion yuan (USD20 billion), according to one of the sources. China business registration data seen by Reuters showed Shandong Nanshan Group, a private aluminium smelter based in Yantai, will be the venture’s lead investor, and other investors include chemical group Wanhua and the Shandong provincial government.

A representative for the project, Shandong Yulong Petrochemical, did not immediately comment. The NDRC did not immediately respond to a Reuters’ request for comment.

The two sources declined to be named as they are not authorised to speak to the media.

The project could help cut China’s petrochemical imports but would likely worsen its surplus of refined fuel products.

Analysts expect the massive project to be operational around end of 2024, with revenue underpinned by petrochemicals, demand for which is more resilient than for transportation fuels that has been hit hard by the coronavirus.

"2024 is a good market entry point for Yulong as the global petrochemical industry starts to rebound from a downcycle resulting from previous overbuilds," said Harry Liu, consultant for downstream business for IHS Markit.

The Yulong project will be the latest addition to China's recent wave of petrochemical investments, which have been led by the private sector and drawn global giants like BASF and Exxon Mobil to build complexes in the world's top petrochemical consumer and importer.

A newcomer in the field of oil refining and petrochemicals, Yulong hired in 2018 Luo Qiang, a refinery veteran previously with state giant Sinopec, as its general manager who now heads a project team of over 500 staff, said the source.

Last month Yulong also awarded Sinopec Engineering a 170 million yuan contract for overall design for the complex, the two sources added. Sinopec Engineering declined to comment.

Yulong costs billions more than similar-sized plants, as some 20 billion yuan of the total cost will go to fund closures of small, inefficient plants Shandong province aims to mothball over the next few years to make room for Yulong, said the source.

The Shandong provincial government did not respond to requests for comment.

Shandong - home to more than 60 small plants known as "teapots" and more than one-fifth in China’s total crude oil imports - has become less competitive in recent years after the start-up of large integrated petrochemical projects like Hengli Petrochemical’s Dalian plant and Zhejiang Petrochemical Corp’s Zhoushan complex.

The giant Yulong project too faces headwinds.

"Yulong faces a tremendous challenge of disposing transport fuels... and that challenge could intensify if consolidation does not take place or falls short of expectation," said IHS’ Liu.

As MRC reported previously, Sinopec's greenfield 200,000 b/d Zhongke Petrochemical will not contribute notable throughput until July, although it officially came on stream on June 16, 2020. The Sinopec venture, situated in coastal city of Zhanjiang, comprises a 200,000 barrel per day (bpd) crude oil refinery and an 800,000 tonne-per-year ethylene facility, built at a cost of 44 billion yuan (USD6.2 billion). The cracker is expected to start production in August, 2020.

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) -- W. R. Grace has announced the opening of a new colloidal silica plant at its Worms, Germany site, said Chemweek.

The facility doubles the worldwide production capacity of LUDOX, Grace’s colloidal silica product, and significantly enhances the company’s offering to customers in Europe, the Middle East and Africa, and APAC.

Manufacturers in diverse industries use LUDOX colloidal silica in a wide range of applications as a functional ingredient and as a processing aid. Grace’s proprietary manufacturing process produces an extremely narrow particle size distribution and allows the colloidal silica particles to be chemically customized for use in a wide range of challenging applications, the company says.

The new facility expands Grace’s manufacturing center at Worms adding approximately 25 new manufacturing jobs bringing employment at the site to approximately 950. The company’s East Chicago, Indiana colloidal silica plant continues to supply customers in the Americas.

As MRC informed earlier, W. R. Grace & Co. completed the USD416 million acquisition of the Polyolefin Catalysts business of Albemarle Corporation. The acquired business primarily develops and manufactures proprietary and custom-manufactured single-site catalysts as well as metallocenes and activators used in the production of plastic resins. The transaction also includes a comprehensive series of highly optimized Ziegler-Natta catalysts for polyethylene production.

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) -- Navigating our current health crisis offers frequent reminders of the critical role petrochemicals, particularly plastics, play in daily life — whether in the masks and gloves that protect our frontline health care providers, the containers that hold our takeout food, or the wrapping that keeps our groceries fresh and clean, said Hydrocarbonprocessing.

Much of the value of these and other similar products is derived from the fact that they significantly lessen contamination concerns, since they can be discarded after use. However, petrochemical manufacturers are working on novel “molecular” recycling solutions to give new life to plastic products — including many single-use plastics — so they can safely provide value over and over again.

Plastic products are made from big, long-chained molecules called polymers. Polymers are made up of many individual units of repeating smaller molecules called monomers. These monomers are made from a small number of building block molecules called base petrochemicals. Six of the most important base petrochemicals are ethylene, propylene, butylenes, benzene, toluene and xylenes. In other words, petrochemicals make monomers that make polymers that make plastic products.

Traditional “mechanical” recycling systems sort, shred and melt certain plastics down to their polymer level — a process that can be repeated only a limited number of times before polymer chain degrades and the recycled plastic loses strength. But in recent years, petrochemical manufacturers have been advancing molecular recycling, also known as chemical recycling, which can break a wider variety of plastics all the way down into their smaller monomers — and plastics can go through this process over and over again. Breaking used plastics all the way down to their fundamental monomer units offers a wider range of possibilities for re-use — whether the monomers go into fuel products, chemicals or new plastic products.

The U.S. petrochemical industry, with the full force of its engineering expertise and creative problem-solving, is driving molecular recycling advancements for a more sustainable future. Here are just a few examples of how:

Eastman has developed carbon renewal technology, or CRT, which breaks down waste plastic feedstocks into carbon molecules, like a 3-D printer in reverse. Then, just like carbon in a 3-D printer, that former waste material can become an infinite number of new products. Through this process there is no degradation of quality so it can be repeated over and over again. In addition, Eastman is pushing its polyester renewal technology, or PRT, which involves taking waste polyesters from landfills and other waste streams and transforming them back into a raw material that is indistinguishable from traditional polyester.

In February, SABIC supplied Avery Dennison, the label design and manufacturing company, with a material for label-making that was made, for the first time, from recycled polypropylene. “We have come a very long way with adding recycled- and sustainably sourced products to our portfolio and polypropylene is a very important addition,” said an Avery Dennison representative.

In January, Dow signed a deal to buy recycled polyethylene pellets from Avangard Innovative, a Houston-based waste-optimization specialist. The move enables Dow to provide recycled content plastic to its North American customers. “This collaboration combines AI's waste collection and sortation technology with Dow's materials science expertise, application expertise, and operational scale,” said a Dow representative. "We’re giving our customers the tools they need to supply consumers with products made from recycled plastic, like the liners they place into their waste bins and the shrink wrap they use to bundle and ship packaged goods."

Some petrochemical makers operating in the U.S. are also progressing molecular recycling technology elsewhere across the globe. INEOS and Plastic Energy are building a new chemical recycling plant to come on stream at the end of 2023. “It is very important to us to constantly increase amount of plastic which is recycled in line with the INEOS pledge: By 2025, we will incorporate at least 325,000 tons/year of recycled material into products,” said an INEOS representative.

As MRC informed previously, global oil consumption cut by up to a third. 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) -- Exxon Mobil Corp is restarting the hydrocracker at its 560,500 barrel-per-day (bpd) Baytown, Texas, refinery, said sources familiar with plant operations, said Reuters.

Exxon spokesman Jeremy Eikenberry declined to comment. The 25,000-bpd hydrocracker was shut by a malfunction on Monday caused by a heavy thunderstorm, the sources said.

Hydrocrackers convert gas oil into diesel and other motor fuels through use of a catalyst under high heat and pressure in the presence of hydrogen.

As MRC informed before, in September 2019, ExxonMobil announced plans to spend GBP140 million over the next two years in an additional investment program at its Fife ethylene plant, which has a capacity of more than 800,000 t/y.

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

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.
MRC

MOSCOW (MRC) -- Iraq and Kazakhstan have submitted their plans to the OPEC+ alliance on how they will implement deeper oil production cuts in the coming months, following through on pledges to make good on violating their quotas in May, reported S&P Global.

However, Nigeria, Angola and other members who also overproduced have yet to declare their plans and have been given until June 22 to submit them, according to a monitoring committee tasked with tracking compliance with the OPEC+ production cut accord and assessing market conditions.

"The committee stressed that the attainment of 100% conformity from all participating countries is not only fair and equitable, but vital for the ongoing and timely rebalancing efforts and helping deliver a sustainable oil market stability," the OPEC+ Joint Ministerial Monitoring Committee said in a draft statement seen by S&P Global Platts after meeting online June 18.

The statement did not detail the exact schedule of cuts for Iraq and Kazakhstan. The deal calls for the compensatory cuts to be made over July-September. Ministers for both countries did not immediately respond to requests for comment.

Kazakh energy minister Nurlan Nogayev had said June 9 that his country pumped 3.13 million barrels over its quota over May 1-12.

Iraq produced nearly 600,000 b/d over its quota in May, according to Platts latest survey of OPEC output, and oil minister Ihsan Ismaael said June 15 that crude exports in June had already been slashed in an effort to comply with the deal.

The OPEC+ alliance's overall compliance with the cuts was 87% for May, the committee said.

OPEC and 10 allies are in the midst of a 9.7 million b/d production cut agreement aimed at speeding the oil market's recovery from the coronavirus pandemic. The cuts are set to run through July, with the JMMC meeting monthly to adjust the quotas as needed.

No decisions were made on August cut levels, delegates said, with the market outlook still uncertain.

"We are committed to a common goal -- balancing the global oil market," Russian energy minister Alexander Novak said in his opening remarks at the JMMC meeting ."Everyone understands that we are not yet close to reaching a sustainable recovery."

Saudi Arabia, the UAE, Kuwait and Oman have agreed to implement an additional voluntary 1.2 million b/d cut for June but have said they do not plan to continue those in July.

The nine-country JMMC is co-chaired by Saudi Arabia and Russia, the OPEC+ coalition's largest producers.

We remind that, as MRC informed before, in late May, 2020, Borealis said it will not proceed with the development of a multi-billion-dollar integrated steam cracker and polyethylene (PE) project in Kazakhstan. “The decision to discontinue this project is based on a thorough assessment of all aspects of the prospective venture and impacted by the effects of the COVID-19 (coronavirus disease 2019) pandemic as well as the increased uncertainty of future market assumptions,” Borealis states.

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.
MRC