Braskem signs five-year naphtha supply deal with Petrobras

MOSCOW (MRC) -- Braskem announced today that it has signed agreements with Petrobras for the supply of naphtha feedstock to Braskem's units in Bahia and Rio Grande do Sul, said Chemweek.

The deal, which covers five years after the expiry date of the current agreement at the end of this year, provides for the supply of a minimum volume of 650,000 metric tons/year, at an option for Petrobras to supply an additional volume of up to 2.8 million metric tons/year, at a price equivalent to international ARA reference price.

In addition, to guarantee access to the naphtha logistics system in Rio Grande do Sul, Braskem has renewed the storage agreement with Petrobras and the transport and storage agreement with Petrobras Transporte S.A.

At a results conference call with analysts earlier this month, Braskem’s CFO Pedro Freitas, said that Braskem is facing some uncertainty as Petrobras is in the process of divesting refineries as part of a major restructuring program. “We anticipate that there will be different owners in the two refineries that are closer to our plants in the south and in the north of Brazil.” The new naphtha contract will be split “so that we have a contract in the south and another in the north, so that whenever Petrobras sells the refineries, we already have that contract structure arranged for the new configuration in the future,” Freitas said.

As MRC informed earlier, Braskem's 450,000 mt/year polypropylene (PP) plant under construction along the Houston Ship Channel is nearly complete. The company said construction was 98.4% complete by the end of the first quarter of 2020, with USD634 million spent. Braskem's US arm, Braskem America, imported 8,000 mt of PP from the parent company's Brazilian operations in Q1 to continue the new facility's pre-marketing activities.

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.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

1. BP to slash operating costs by USD2.5 billion, cut almost 10,000 jobs

MOSCOW (MRC) -- BP says it will reduce its operating costs by USD2.5 billion in 2021 and cut close to 10,000 jobs, mostly before the end of this year, due to the collapse in oil demand because of COVID-19 and as part of its strategy to become a lower-carbon company, said Chemweek. The UK major in early April announced a cut of around 25%, approximately USD2.5 billion, in its planned capital expenditure (capex) to USD12.0 billion for 2020. BP’s CEO Bernard Looney now says those capex cuts will total around USD3.0 billion. It will also now reduce its operating costs, currently USD22 billion, by USD2.5 billion. The company has not specified any specific business divisions that will be affected. “It was always part of the plan to make BP a leaner, faster-moving and lower-carbon company. That is how we will deliver on our net zero ambition. And that is how we will seize opportunities throughout the energy transition. Then the COVID-19 pandemic took hold,” he says. Flagging the widespread economic fallout of the pandemic, Looney says the oil price has plunged “well below the level we need to turn a profit. We are spending much, much more than we make – I am talking millions of dollars, every day.” The company’s net debt rose by USD6 billion in the first quarter of this year as a result, he says, adding, “We have to spend less money.”

MRC

MOSCOW (MRC) -- Petroleos Mexicanos (Pemex; Mexico City) is advancing a refinery rehabilitation program that will enable it to process 1.2 million b/d of crude oil by the end of 2020 and evaluating a reconfiguration of its petrochemical facility at Cangrejera, Mexico, into what would be its eighth refinery, said Chemweek.

The state-owned company will conclude viability studies in the coming weeks for the building of a 200,000-b/d crude processing train at Cangrejera, Pemex CEO Octavio Romero Oropeza said during a webcast at the weekend. Pemex is close to defining construction times, costs, and profitability, as well the availability of light crude oil over the lifetime of the project, Romero said.

Reconfiguring Cangrejera is an idea that has been explored for decades, with the potential project discarded by Pemex in 2008 and brought out again by trading group Vitol in 2016 under a joint venture. Vitol proposed the project, but Pemex wasn't interested at the time, according to local media.

Cangrejera currently has a 12,000-b/d crude processing unit to produce naphtha as a petrochemical feedstock and other components, for the production of gasoline at Pemex’s 285,000-b/d Minatitlan refinery, said Romero. Pemex currently imports 25,000 b/d of naphtha to operate Cangrejera, he added.

Mexican president Andres Manuel Lopez Obrador said that the reconfiguration was an attractive brownfield project, with multiple advantages such as a low environmental impact and the ability to use existing infrastructure. If the decision is taken to reconfigure Cangrejera, Pemex must complete the work no later than 2023, the year the current presidential term ends, Lopez Obrador said. This would ensure the project is completed and not abandoned by future administrations, he added.

Crude oil availability will be a challenge for this project amid the reluctance from Mexico to import light crude oil. The government expects to refine 1.6 million b/d of crude oil by 2022. Pemex has a goal of producing 2.4 million b/d of crude oil by 2024. However, IHS Markit forecasts Mexico’s crude output will be 1.5 million b/d by that year.

Mexico’s energy secretary, Rocio Nahle, said that Mexico expects to process 1.2 million b/d of crude oil by the end of 2020, a level last reached during a handful of months in 2014, according to Pemex data. The country is moving to boost its crude processing levels despite having negative refining margins in the last two quarters: minus USD2.64/bbl in the fourth quarter of 2019 and minus USD12.51/bbl during the first quarter of 2020.

Pemex CEO Romero said works are also moving ahead for the rehabilitation of the Minatitlan refinery, which will allow the facility to reach a reliable processing level of 170,000 b/d by the end of the year, a significant recovery from 26,000 b/d processed in 2018 and 96,000 b/d in 2019. Minatitlan only operated for five months in 2018 and four months in 2018.

Pemex currently has two ethane-based steam crackers, at Cangrejera and Morelos. Mexico has been a net importer of ethane since 2018, with its domestic ethane production for 2020 put at around 77,000 b/d, according to a recent IHS Markit North American Light Olefins monthly report. A total of approximately 67,000 b/d is required to feed its own two crackers, while Pemex must also fulfil its long-term contract requirements to Braskem-Idesa of 66,000 b/d.

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) -- Westlake Chemical is issuing new senior bonds, which will be used to redeem USD254 million in tax-exempt revenue bonds issued by a Louisiana economic development authority on behalf of Westlake, said Chemweek.

The bonds to be redeemed have three tranches: a USD100-million tranche due in 2029; an USD89-million tranche due in 2035; and a $65-million tranche also due in 2035. All three tranches carry an interest rate of 6.5%.

The timing, exact size, and interest rate of the new debt offering has yet to be determined. The new bonds will be subject to optional redemption at Westlake’s discretion at par on or after 1 August 2020.

The move indicates a return of liquidity to debt markets, as the US Federal Reserve has taken steps to shore up liquidity in the wake of the COVID-19 pandemic. Interest rates are currently quite low, with Westlake being the latest chemical company to take advantage of the situation to refinance.

In February 2018, as MRC informed before, Westlake Chemical announced plans to expand its capacities for the production of PVC and VCM at three of its chemical facilities. Two of the plants are located in Germany (Burghausen, Gendorf) and one is located in Geismar, Louisiana. The expansions in Burghausen and Geismar are expected to be completed in 2019. The Gendorf expansions are expected to be completed in 2020 and 2021.

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.

Westlake Chemical Corporation is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, chlor-alkali and derivative products, PVC suspension and specialty resins, PVC Compounds, and PVC building products including siding, pipe, fittings and specialty components, windows, fence, deck and film.
MRC

MOSCOW (MRC) -- Indorama Ventures Public Company Limited (IVL) announced that the company has, through its indirect subsidiary Indorama Ventures Polimeros S.A., acquired 100% equity stake of AG Resinas Ltda. (AG Resinas), a limited liability company incorporated under the laws of Brazil and completed thetransaction on June 8, 2020, said Chemweek.

AG Resinas is a PET recycling facility in Juiz de Fora, Brazil and processes post-consumer PET into Recycled Polyethylene Terephthalate (rPET) flakes and pellets with a combined capacity of approx. 9,000 tonnes/annum. The facility is close proximity to a large supply of recovered PET bottles, bringing benefits through logistics advantage.

This acquisition is strategically in-line with the IVL’s long-term sustainability objectives and will complement IVL’s PET business in Brazil and provide a unique opportunity to create an immediate recycling presence with further expansion opportunity.

As MRC informed earlier, Indorama Ventures Company Ltd (IVL) plans in June to carry out planned preventive work on the line for the production of purified terephthalic acid (PTA) in Map Ta Phut (Map Ta Phut, Thailand). It is expected that repairs on this line with a capacity of 771,000 tonnes of PTA year will continue for about 10 days.

As per MRC's ScanPlast, Russia's PET imports decreased by 35% in April to 11,200 tonnes against 17,400 tonnes in March; last April material imports amounted to 22,900 tonnes. Imports of Chinese injection moulding PET chips in Russia increased by 16% in January-April, compared with the same period a year ago and reached 40,400 tonnes. The same indicator in January-April 2019 amounted to 48,200 tonnes.
MRC