Pertamina, CPC sign head of agreement for USD8 billion integrated petrochemical complex

MOSCOW (MRC) -- Pertamina and CPC (Taipei) signed a head of agreement (HOA) to develop a previously announced integrated petrochemical complex at Balongan, West Java, Indonesia with an investment of up to USD8 billion, said Chemweek.

The accord was signed by Pertamina's president director Nicke Widyawati in Jakarta and vice president of CPC Corp. Ming-Huei Chen via teleconference in Jakarta and Taipei. Pertamina and CPC will each hold a 45% stake in the joint venture (JV). The remaining 10% will be reserved for potential participants in the deal.

Work to develop the project was first initiated by the two companies in 2018. This led to the subsequent signing of a framework agreement and joint feasibility studies carried out since mid-2019. The Indonesia Investment Coordinating Board (BKPM; Jakarta) said it is pleased that the HOA was signed despite the global COVID-19 pandemic. "This cooperation is formed over a long and deep negotiation process…The project is a government priority and we will support it. We confirmed the tax holiday yesterday,” said Bahlil Lahadalia, head of BKPM.

As a national oil and gas company, Pertamina is committed to creating a strong petrochemical industry in Indonesia so that it can meet domestic needs and help reduce imports of petrochemical products,” said Nicke Widyawati. "This project is an important milestone to strengthen the petrochemical business portfolio so that in the next 10 years Pertamina can become a major player in the petrochemical business in the Asia Pacific region," Nicke said.

The petchems complex, slated for commercial operation in 2026, represents the third phase of expansion of the Balongan oil refinery. The refinery, which will supply naphtha feedstock to the petchems complex, will be expanded by 20% to 150,000 b/d. The Balongan naphtha cracker will be designed to produce 1 million metric tons/year of ethylene, which will be used to feed downstream facilities.

Development of the Balongan refinery forms part of Pertamina’s six refinery development master plan which aims to double the company’s refining capacity to around 2 million b/d. The six projects are Cilacap, Balikpapan, Balongan, Dumai, Tuban, and Bontang. The company was planning to develop the Cilacap refinery and aromatics project together with Saudi Aramco but last month said that it will go ahead alone with the project after failing to agree a deal with Aramco.

Meanwhile, the Tuban project is being developed by a JV between Pertamina and Rosneft (Moscow). The companies said earlier this year that they plan to make a final investment decision in 2021. The Tuban refinery is expected to have a throughput capacity of 15 million metric tons/year (MMt/y) of crude oil, while the downstream units will be designed to produce 1 MMt/y of ethylene and 1.3 MMt/y of aromatics. Commissioning is due in 2025. The company said on Friday it had put its $10 billion refinery project at Bontang, East Kalimantan on hold.

Development of the Balongan petchems project began when CPC was trying to relocate its fifth naphtha cracker at Kaohsiung, Taiwan which was closed in 2015 under the country’s scrap-and-build program, to Indonesia. That deal fell through, but the companies decided to extend their collaboration into a new investment project in Indonesia.

As MRC informed earlier, PT Pertamina will develop its Cilacap refinery in Central Java “independently”, the state energy company said, dropping a plan to boost capacity through a joint venture with Saudi Aramco. The two companies have been in talks to upgrade the Cilacap refinery since 2016 and last year said that they would finalise a joint venture plan in the first quarter of 2020.

As MRC informed earlier, Pertamina carried out planned maintenances at the liquid catalytic cracking unit in Balongan (Balongan, West Java, Indonesia). Repair work on this installation with a capacity of 180,000 tonnes/year of propylene started on 19 March of this year and ended on 19 April.

Propylene is a feedstock for producing of PP.

According to MRC's ScanPlast report, 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.

Pertamina is an Indonesian state-owned oil and natural gas corporation based in Jakarta. It was created in August 1968 by the merger of Pertamin (established 1961) and Permina (established 1957). Pertamina is the world's largest producer and exporter of liquefied natural gas (LNG).
MRC

MOSCOW (MRC) -- Toray Composite Materials America (CMA) on Friday announced a major realignment of its US operations and the corresponding reduction in headcount to better position for an extended downturn in its commercial business streams, said Chemweek.

CMA will immediately suspend operations in its Spartanburg, South Carolina plant and significantly reduce capacity in its Tacoma, Washington prepreg facility. These actions will result in a reduction of roughly 25% of the workforce across CMA’s facilities in the US.

"Decisions that directly impact our associates and their livelihood are never ones that we take casually. But these actions are absolutely necessary to reduce our costs and position the company for the future," said Dennis Frett, president and CEO. Due to COVID-19 and the corresponding collapse of global air travel, demand for passenger aircraft has been significantly reduced. Furthermore, global macro-economic conditions are reducing the demand for industrial products.

"Considering industry analysts and recent actions by other aerospace companies, we see a three-to-five-year timeline until we return to a sales volume that resembles anything pre-pandemic," says Timothy Kirk, vice president/aerospace sales. These urgent actions will enable CMA to reduce its costs to partially mitigate the immediate downturn in business.

CMA’s Tacoma plant supplies a diverse customer base both domestically and internationally. It uses carbon fiber supplied by Toray Carbon Fibers America’s Decatur, Alabama facility. CMA’s Spartanburg plant is an integrated facility producing precursor, carbon fiber and prepregs.

Last month Solvay said it will permanently close two composite materials plants as it accelerates restructuring measures to cope with lower customer demand due to the COVID-19 pandemic. The composite materials business supplies Airbus and Boeing, among others.

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) -- Spanish integrated producer Repsol said June 8 it has begun to offer very low sulfur fuel oil for loading into trucks at 15 of its Spanish ports, said S&P Global.

The company said the service is available from June at the southern ports of Huelva, Cadiz, Algeciras, Tarifa, Sevilla, Malaga, Motril and Almeria and the northern ports of A Coruna, Ferrol, Vilagarcaa de Arousa, Marin, Vigo, Aviles and Gijon.

Previously the VLSFO (with 0.5% sulfur content) was made available via barge at the Mediterranean ports of Algeciras, Valencia and Barcelona as well as internationally at Callao, Peru, as well as Singapore and Panama.

Three of the company's Spanish refineries -- A Coruna, Bilbao and Tarragona -- have the capacity to process low sulfur crude and produce VLSFO in significant quantities, while its trading unit is used to optimize production and operations. The company also offers marine diesel (MGO) which is compatible with IMO 2020 regulations, it said.

As MRC wrote previously, in Q1 2016, Repsol completed the construction work of its new metallocene polyethelene plant at its Tarragona site. Repsol started up the plant and began production and marketing of this new product during Q2 2016.

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.

Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.
MRC

1. China recovery raises hopes for US, Europe polyolefins, says LyondellBasell CEO

MOSCOW (MRC) -- Bob Patel, LyondellBasell's CEO, says polyolefins demand in China is recovering rapidly from the economic chaos created by the coronavirus disease 2019 (COVID-19) pandemic, reported Chemweek. He is optimistic that both the US and European markets will return at a similar pace, and that the company's capacity utilization could near previous levels by the end of 2020. "Demand is improving very well in China," Patel said during a webcast this morning with Lyn Tattum, vice president/events at IHS Markit and publisher of Chemical Week. "I read recently that oil consumption in China is back to almost 90% of the pre-pandemic level, and we see that in the demand for our products."


MRC

MOSCOW (MRC) -- LyondellBasell CEO Bob Patel says COVID-19 has cast uncertainty over both short- and long-term plans. Although he is optimistic about the overall economic outlook, he believes the pandemic could leave a deep imprint on the energy markets and global trade, challenging basic assumptions about project returns, supply, and demand, said Chemweek.

Patel discussed business conditions last week during a webcast with Lyn Tattum, vice president/events at IHS Markit and publisher of Chemical Week. "Near term, [we're] preparing for recovery and working through scenarios," Patel says. "Could there be a reduction in activity again? It's hard for me to imagine that we would go back to a complete lockdown like we just went through around the world, but we have to contemplate scenarios of a second wave and what might happen."

The company's medium-term planning revolves around finishing its large capital projects, particularly the propylene oxide/tert-butyl alcohol (PO/TBA) facility at Channelview, Texas. The project was originally slated for completion during the second half of 2021, but in late March, LyondellBasell announced that it would push the date back one year in response to the pandemic.

A new 550,000 metric tons/year high-density polyethylene (HDPE) plant at La Porte, Texas, the first to employ LyondellBasell's Hyperzone dual-reactor technology, has been online since February. "I think by July/August we should be running the operation very well and producing the grades we intended," says Patel.

LyondellBasell's longer-term planning has been complicated by the crude oil price collapse, which has significantly undercut the cost advantage of ethane-based polyethylene production in the US.

"We're thinking through feedstock scenarios," says Patel. "I believe that there will be advantage in the US, but the thing that we're really trying to assess is how wide that advantage will be. And then the implications on end-use demand--will people fly less, drive more? Will there be more work from home? And other market trends. What are the implications of all of that on demand for our end products? So we're also thinking through strategically what we need to do long-term." Patel says 2-3 years are likely to pass before the company decides to pursue another PE project.

Another major question is the effect of the pandemic on trade flows. "For the last 10-15 years, global trade has increased, [but] I do think that as a scenario we should contemplate whether what has happened in the last 90-120 days could slow that down," says Patel. "I don't think we significantly go backwards, but I could see that in China, for example, more of the local growth is met with local production."

LyondellBasell's polyolefins joint venture with China's Liaoning Bora, announced in September 2019, could play a key role in responding to such a shift. Patel says the project, which includes a steam cracker and downstream polyethylene (PE) and polypropylene (PP) units, is expected to begin production during the fourth-quarter of 2020.

"This could be a platform for us for future investment in China, in terms of adding onto the existing facilities over the next decade or so," says Patel. "While we didn't predict something like this at the time we undertook the Bora project, we were firmly of the mind that we want to be [both] where the market is and where the feedstock is. We wanted to kind of have diversity of investment, and I think it will prove out to be quite a good investment."

Patel points to the August 2018 acquisition of plastics compounder A. Schulman to illustrate the benefits of LyondellBasell's diversification strategy. "Our legacy compounding business was 95% automotive, and with the acquisition of A. Schulman, we're able to get into applications like food packaging, medical, other durable goods, and some other products in areas that are not just polypropylene based," he says. "With the slowdown in automotive in our compounding business, it's actually the A. Schulman part that's doing quite well, so I think this notion of diversifying our participation in end-use has really paid off."

As MRC reported earlier, global petrochemical producer LyondellBasell has reduced rates across its system to accommodate lower demand wrought by shutdowns around the globe to stem the spread of the coronavirus pandemic, said the company's CEO Bob Patel. LyondellBasell's overall global petrochemical and refining assets were expected to operate at 60% to 80% of nameplate capacity through the second quarter, Patel said during the company's first-quarter earnings call. European crackers were seen running at 80% to 85%, while US crackers were expected to run at about 75%, he said.

We also remind that to further aid in the fight against the COVID-19 pandemic, LyondellBasell (LBI) donated a key ingredient to Huntsman Corporation to produce hand sanitizer for US first responders.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC