JXTG to seek spot barrels for any shortfall in July after OPEC+ cuts

MOSCOW (MRC) -- Japan's largest refiner JXTG Nippon Oil & Energy said June 8 it will supplement any shortfall in July term crude oil requirements as a result of the near 10 million b/d OPEC+ production cut extension by purchasing cargoes from the spot market, said S&P Global.

"Even in the event of facing supply cuts from our direct term contracts, we intend to procure our crude requirements from spot markets so that we do not foresee a major obstacle," a company spokesman told S&P Global Platts.

Japan sources roughly 90% of its crude imports from the Middle East, of which 70%-80% of the supplies are based on term contracts.

OPEC and its allies have agreed to maintain their record oil cuts through July -- albeit without Mexico -- to help steer the market through its nascent recovery from the coronavirus pandemic.

Ministers on June 6 approved a one-month rollover of their now 9.6 million b/d production cut accord, brushing aside Mexico's defection from the pact and receiving pledges of improved compliance from Iraq, Nigeria, Angola and Kazakhstan. The cuts -- originally 9.7 million b/d including Mexico -- had been scheduled to taper to 7.7 million b/d in July through the rest of the year.

For June loadings, Japanese refiners have received "larger-than-expected cuts" to their term crude supply from OPEC producers, keeping them balanced against plummeting domestic demand due to the coronavirus pandemic, Tsutomu Sugimori, president of the Petroleum Association of Japan, said May 22.

Saudi Aramco has informed at least one Japanese refiner that it will reduce its June-loading crude allocations by 20%-40%, with the cuts being made across all grades and larger cuts to heavier grades.

As mRC informed earlier, JXTG Nippon Oil and Energy brought on-stream its cracker following a turnaround. The company resumed operations at the cracker on April 28, 2020. The cracker was shut for maintenance on February 27, 2020.

Ethylene and propylene are feedstocks for producing PE and 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.
MRC

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