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U.S. renewable fuel credits climb as EPA considers ruling on waiver program

June 03/2020

MOSCOW (MRC) -- U.S. renewable fuel credits have gained by more than a third over the last month as refiners have bought the credits while the Trump administration decides the future of a program that exempts smaller refineries from blending laws, traders said, as per Hydrocarbonprocessing.

Renewable fuel (D6) credits for 2020 traded at 50 cents each on Monday, up from 37 cents since the start of May, traders said. Under the Renewable Fuel Standard (RFS), refiners must blend billions of gallons of biofuels into the fuel pool or buy credits from those that do.

Small refineries that can prove the requirements would cause financial harm have been able to apply for exemptions from the mandate. The U.S. Environmental Protection Agency under President Donald Trump has granted a much higher number of waivers than in previous years.

However, in January the Tenth Circuit Court of Appeals said the RFS is worded in such a way that any exemption granted to a small refinery after 2010 must take the form of an extension. If applied broadly, the decision could effectively end the waiver program.

The EPA has not yet said how it will apply the decision. EPA continues to deliberate and engage with stakeholders over the broad ranging implications of COVID-19 for the implementation of the RFS program, an EPA representative said.

Since the court decision in late January, D6 credits have jumped 354% from 11 cents each. Biomass-based (D4) credits traded at 60 cents each, up from 52 cents each a month ago, traders said. They have risen 30% since the court ruling.

As MRC informed earlier, top oil exporter Saudi Arabia is expected to raise its official selling price (OSP) for all grades it sells to Asia in July, to track a jump in Middle East benchmarks although overall weak refining margins could cap price gains, industry sources said.

As MRC wrote earlier, in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.

Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.

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.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, petrochemistry.
Category:General News
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