Shell seeks FERC assistance to squash GreenHat Energy lawsuit in Texas court

MOSCOW (MRC) -- Shell Energy North America has asked the Federal Energy Regulatory Commission to step in to help resolve a breach-of-contract claim GreenHat Energy brought against it in a Texas state court, said S&P Global.

Shell is looking to FERC to interpret PJM Interconnection's rules for bilateral transfers of financial transmission rights to debunk GreenHat's "extraordinary claim that entering data into PJM's platform for reporting FTR transfers created additional separate, binding contracts, which Shell Energy allegedly breached," according to the petition for declaratory order (EL20-49) recently filed with FERC.

The commission, in a June 1 notice, set a June 29 deadline for comments in the proceeding. Shell asserts the matter could put every market participant that has ever entered data into FTR Center, PJM's reporting mechanism for FTR transfers, on the hook for "unknown terms of alleged contracts [they] never agreed to."

Left unresolved, GreenHat's claim could lead to widespread FTR market uncertainty and prompt countless legal disputes against PJM members associated with the 137,000 entries made into the platform at issue over the past six years, Shell said.

Prior to GreenHat's massive June 21, 2018, default in PJM's FTR market, Shell entered into three bilateral agreements with GreenHat between August 2016 and February 2017. Those agreements resulted in a transfer to Shell and back to GreenHat of a portion of the FTR portfolio upon which GreenHat later defaulted.

Shell, in its May 29 petition to FERC, likened the agreements to consignment deals under which Shell would pay a discounted cash value to GreenHat for FTRs that sold at auction, and could return the uncleared FTRs to GreenHat or pay an agreed-upon price based on the auction results for uncleared FTRs it elected.

As MRC wrote before, Pilipinas Shell Petroleum Corp said it will shut down its 110,000-barrel-per-day Tabangao refinery in the Philippines for one month from mid-May as the coronavirus pandemic has hammered oil demand.

We also remind that Shell Singapore restarted its naphtha cracker in Bukom Island this week following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Tropical Storm Cristobal has developed in the southern Gulf of Mexico, putting offshore drillers and Texas and Louisiana refiners on watch for potential impacts later in the week, reported S&P Global.

Major Mexican oil facilities such as the Dos Bocas marine terminal could face rain impacts or loading delays as the storm hovers over the Bay of Campeche. Other facilities in the potential path include the 280,000 b/d Villahermosa terminal, 230,000 b/d Campeche terminal and 234,000 b/d Progreso terminal.

The US National Hurricane Center on June 2 upgraded Cristobal from a tropical depression as it moved slowly over Mexico's Bay of Campeche. A tropical storm warning is in effect for Campeche to Puerto de Veracruz.

The storm is forecast to begin moving northward across the Gulf of Mexico by this weekend, the hurricane center said. "However it is too soon to specify the location and timing of any potential impacts along the US Gulf Coast," it said, urging these areas to monitor the storm throughout the week and have hurricane plans in place.

The 2020 Atlantic hurricane season, which officially started June 1, is expected to be an active one, with 13-19 named storms, including three to six major hurricanes at least category 3 or stronger, according to the US National Oceanic and Atmospheric Administration.

For US oil, natural gas and power markets, the annual risk of hurricanes comes on top of uncertainty this year caused by the coronavirus pandemic. US and global responses have recently wreaked havoc on product supply-demand balances and could affect how the domestic industry responds to landfall of a major storm this year.

Along the US Gulf Coast, elevated product inventory levels could cushion the supply chain in the case that flooding or winds cause infrastructure damage, shuttering operations at individual refineries or other facilities.

As MRC informed earlier, Total SA cut production at its Port Arthur, Texas, refinery to 70% of its 225,500 barrel-per-day (bpd) capacity with a reduction in the operating level of the large crude distillation unit (CDU), said Gulf Coast market sources in mid-May, 2020.

We also remind that Total has recently disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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's crude oil and natural gas production remained stable in April as the global coronavirus pandemic had a limited impact on output in Latin America's biggest producer, according to data released by the National Petroleum Agency (ANP) June 2, said S&P Global.

Companies operating in Brazil pumped 3.738 million b/d of oil equivalent in April, little changed from 3.739 million boe/d in March, the ANP said. April's total hydrocarbons output, however, advanced 12.8% from 3.314 million boe/d in April 2019, the ANP said.

Brazil's oil industry has emerged from the global outbreak relatively unscathed, with production temporarily halted at two offshore floating production units operated by state-led Petrobras until the ships were disinfected. Dommo Energia also suffered an outbreak onboard the FPSO OSX-3 in May, but reported no impact on output in a production report released June 1.

The Mines and Energy Ministry said June 1 it registered a total of 378 confirmed coronavirus cases, 842 suspected cases and 12 deaths in Brazil's energy industry, which includes Petrobras and other state entities.

In addition, Brazil has benefited from the gradual restart of economic activity in China, which is the country's biggest trade partner and a key buyer of crude, iron ore and soy products. Petrobras ramped up exports of crude and refined products when domestic demand cratered because of social distancing measures were implemented in mid-March, with about 60% of the company's record crude and bunker fuel exports headed for China.

Brazilian crude grades naturally contain less than 0.5% sulfur content, which makes them ideal for processing into bunker fuel under the International Maritime Organization's 2020 mandate. The mandate, which went into effect January 1, increased demand for Brazilian grades and supported prices for the crude despite recent volatility, according to industry officials.

The better-than-expected international demand forced Petrobras to walk back 200,000 b/d worth of production cuts announced in late March, with Petrobras targeting production of 2.26 million b/d in April. rather than 2.07 million b/d.

The country's overall crude output, however, retreated slightly month on month in April, the ANP data showed. Brazil pumped 2.958 million b/d in April, down 0.5% from 2.973 million b/d in March, the ANP said. April's output, however, was up 13.6% from 2.604 million b/d in April 2019, the ANP data showed.

The year-on-year production growth was driven by the continued ramp up of several new floating production units installed at subsalt fields over the past two years, including a fleet of four vessels that were installed at the Buzios Field starting in mid-2018. Output, however, is expected to drift lower in the second half of 2020 amid Petrobras' plan to carry out a wide-ranging maintenance program at subsalt fields.

As MRC informed earlier, Brasil's sole PP and PE producer, Braskem selects Charleston as new Global Export Hub location. Polyolefins and biopolymers producer Braskem has announced plans for a new Global Export Hub facility in Charleston, South Carolina, US.

The new Global Export Hub facility will be used for activities such as packaging, warehousing and export shipping services. Specifically, it will support the company’s US polypropylene (PP) production facilities.

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.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
MRC

MOSCOW (MRC) -- Nexeo Plastics has appointed Michael Modak as interim CEO, the US-based global thermoplastic resins distributor, said Chemweek.

Modak is operating partner at One Rock Capital Partners, the majority owner of Nexeo Plastics. He was previously CEO of PolyAd Holdings, a plastics additives manufacturer, and before that held executive roles with Honeywell, HB Fuller, and Momentive Performance Materials, among others.

Nexeo Plastics was until recently led by Shawn Williams. It did not comment on whether Williams left. The company also appointed Austin Nichols as vice president, product line and market management.

The appointments come as the company is realigning its North American sales organisation.

As MRC informed earlier, New York City-based Investment firm One Rock Capital Partners completed its acquisition of Nexeo Plastics, which is the plastics distribution business of Nexeo Solutions Inc., a subsidiary of Univar Inc.

MRC earlier said, Nexeo Univar Inc., has announced that it has completed the acquisition of Nexeo Solutions, creating a leading global chemical and ingredients solutions provider. The combined company will conduct business as Univar Solutions, reflecting a commitment to combining the 'best of the best' from each legacy organization.

As MRC informed earlier, Russia's output of products from polymers grew in April 2020 by 11.2% year on year due to quarantine restrictions. However, this figure increased by 3.4% year on year in the first four months of 2020. According to the Russian Federal State Statistics Service, April production of unreinforced and non-combined films decreased to 107,000 tonnes from 110,400 tonnes a month earlier. Output of films products grew in the first four months of 2020 by 12.5% year on year to 402,800 tonnes.

MRC

MOSCOW (MRC) -- Fujian Refining & Petrochemical (FREP) has undertaken an unplanned shutdown at its No. 3 polypropylene (PP) unit, according to Apic-online.

A Polymerupdate source in China, informed that, the company has halted operation at the unit for unplanned maintenance on June 1, 2020. The unit is likley to restart by this weekend.

Located in Fujian province, China, the No. 3 PP unit has a production capacity of 220,000 mt/year.

As MRC reported earlier, FREP restarted its No.3 PP plant in Fujian Province on November 2, 2019, following an unplanned outage. The unit was taken off-line on October 27, 2019. Located in Fujian province, China, the No. 3 PP plant has a production capacity of 220,000 mt/year.

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.

FREP is a joint venture between Fujian Petrochemical Co. (50%), ExxonMobil China Petroleum and Petrochemical Co. (25%) and Saudi Aramco Sino Co. (25%). Fujian Petrochemical is a 50:50 JV between Sinopec and the Fujian provincial government.
MRC