Enterprise SPOT project facing new delays

MOSCOW (MRC) -- Enterprise Products Partners' planned Sea Port Oil Terminal offshore of Houston is facing new delays now that the federal government has stopped the clock on the licensing process to allow Enterprise more time to answer questions and provide additional information, reported S&P Global.

The regulatory US Maritime Administration said it suspended the timeline for the SPOT project that is the leading contender to be the first deepwater Texas terminal built to export crude oil around the world.

"SPOT provided some responsive information but also notified the US Coast Guard that additional time would be needed to fully respond," MARAD noted in a new letter to Enterprise.

The delay is not particularly surprising because Enterprise said in late April that it no longer expected to receive federal approval for SPOT in 2020 amid the coronavirus pandemic and the global collapse in crude oil demand. Enterprise had previously planned to start construction as soon as this summer and open the terminal in 2022 after receiving its federal license no later than June. However, the two-year construction timeline now pushes the project's completion to at least 2023.

Enbridge partnered with Enterprise on the SPOT project in December - abandoning its competing Texas COLT project in the process - and Chevron already is signed on as the anchor customer.

SPOT is proposed to be built about 30 miles offshore of Freeport, which is due south of Houston. The deeper-water depths offshore are needed for Very Large Crude Carriers to load up to capacity. SPOT would be able to load 2 million b/d and simultaneously two VLCCs at a time.

Enterprise has remained committed to the project though.

"The company is working on addressing information requests from USCG/MARAD, reviewing submittals from the public comment period, as well as other input from landowners and public officials," Enterprise spokesman Rick Rainey said in a late June 8 statement. "This work includes evaluating options to meet our business needs while mitigating concerns that have been expressed. We are in regular communication with USCG/MARAD and other federal and state regulators to help assure that these considerations are integrated smoothly into the permitting process."

The project has faced opposition from environmental groups and some local communities.

As of early this year, there was a race to build the first deepwater oil exporting terminals offshore of the crude oil hubs near Houston and Corpus Christi. However, the coronavirus pandemic has put that race on hold -- if not canceling the race outright.

Multiple proposed offshore oil-exporting terminals already were shelved or merged with other projects even before the pandemic.

The only other project with substantial backing thus far is Phillips 66's and Trafigura's planned Bluewater terminal offshore of Corpus Christi.

Pearce Hammond, a midstream analyst with Simmons Energy, questioned on June 9 whether any of them will be built.

"The bigger issue at this point, in our view, is how needed is the terminal in light of the changed dynamics for the US oil market post COVID?" Hammond stated in a note. "Does the terminal get built because it is a much cheaper and more efficient means of exporting crude (and replaces existing less efficient crude export terminal capacity), or does the terminal not get built because the global need for higher US crude exports has been redefined lower post COVID? Time will tell."

Already, US crude exports in 2020 have fallen from a high of 4.38 million b/d for the week ending March 13 down to 2.79 million b/d for the week ending May 29, according to the US Energy Information Administration. And analysts project crude export volumes to further plunge in the coming months.

Only one Gulf of Mexico port, LOOP, can fully load VLCCs currently without lightering from smaller vessels. However, LOOP was built primarily for imports and has only more recently added crude-exporting capacilities.

As MRC reported earlier, Enterprise Products Partners LP (EPP), through one of its affiliates, has entered a long-term agreement with Marubeni Corp. of Japan, under which Marubeni will offtake polymer-grade propylene (PGP) produced from a second propane dehydrogenation plant (PDH 2) currently under construction at EPP’s operations in Mont Belvieu, Tex., for supply to global customers. Concluded on June 16, the PGP offtake agreement is part of a long-term collaboration between EPP and Marubeni that also includes the export of liquefied ethylene, the first 25-million lb vessel of which loaded and sailed from EPP and Navigator Holdings Ltd.’s 50-50 joint venture marine terminal at Morgan’s Point, Tex., in early January, EPP and Marubeni said on June 30.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

EU approves state aid to Toray battery separator film project in Hungary

MOSCOW (MRC) -- The European Commission says it has approved, under EU state aid rules, Hungary’s EUR46.5-million (USD52.5 million) investment aid to Toray Industries for a new lithium-ion (Li-ion) battery separator film (BSF) plant in the Kozep-Dunantul Region, said Chemweek.

The aid will contribute to the region's development while preserving competition, the Commission says. "The positive effects of the project on regional development clearly outweigh any distortion of competition brought about by the state aid," the Commission says.

The Commission says it would be impossible to carry out the project in Hungary or any other EU country without the public funding, that the aid is limited to the minimum necessary to trigger the investment in Hungary, and that it will contribute to job creation as well as economic development, and to the competitiveness of a disadvantages region.

The project started in 2019 and is planned to be completed in 2023. It will be Toray's first plant to produce BSF in Europe and is expected to create almost 200 direct jobs, the Commission says. The Kozep-Dunantul area is eligible for regional aid under EU law, the Commission notes.

The EU’s guidelines on regional state aid enable member states to support economic development and employment in less developed regions and foster regional cohesion in the EU single market.

BSFs are a key component of Li-ion batteries. They function as the separator of the two major building blocks of a battery, preventing short circuits while allowing the movements of ions, the Commission says.

The Commission launched the European Battery Alliance initiative in October 2017 to support the development of a competitive manufacturing value chain in Europe with sustainable battery cells at its core. There has been tangible progress in creating a European battery production industry, since the launch of the initiative, the Commission says.

As MRC informed earlier, Toray Industries, Inc., announced today that it will lift production capacity for Torayfan oriented polypropylene film for Automotive capacitors by 60% at its Tsuchiura Plant in Ibaraki Prefecture in 2022. The goal is to capitalize on an expanding market for electric vehicles. Torayfan is a lighter plastic film among other plastic films.

According to MRC's ScanPlast report, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

Eni and NextChem strengthen their partnership to develop circular district technologies

MOSCOW (MRC) -- Eni and NextChem, the Maire Tecnimont Group’s subsidiary for green chemistry, strengthen their partnership one year after their first agreement, as per Eni's press release.

This partnership will conduct research for a new project to be developed in Taranto, in addition to ongoing engineering studies for a waste-to-hydrogen production plant at the Eni bio refinery in Venice, Porto Marghera, and for a waste-to-methanol production plant at the Eni refinery in Livorno.

This phase is aimed at assessing the feasibility of a plant within the Taranto refinery for the production of new synthesis gas from plasmix and dry waste through a chemical recycling process. The gas produced will be then refined and produced through two separate channels: hydrogen, which can be used by the Eni refinery to assist the fuel hydrodesulphurization process; gas with a high carbon monoxide content which can be used by the steel mill both in blast furnace processes and the new Direct Reduced Iron technologies. These studies could make a significant contribution in terms of decarbonization or the steel industry.

NextChem is working on the industrial application of the project. An Eni-NextChem joint team will assess the technical and economic feasibility and plants’ streams. The involvement of local institutions will be crucial.

The agreement signed on 25 June is part of the long-term strategy which will make Eni a leader in the production and commercialization of decarbonized products. Eni is implementing a strategic plan which is unique in the industry and which will allow the Company to reduce absolute net GHG lifecycle emissions by 80% by 2050. Eni will increase its production of green energy, thus developing renewables. It will also produce gas, LNG and hydrogen from gas and from bio feedstocks, removing CO2 through sequestration and storage projects; and it will produce bio fuels from its bio refineries as well as bio fuels, methanol and hydrogen from waste. Furthermore, it will produce chemical products from renewables and first and secondary feedstocks. In particular, NextChem’s technological solution could lead to a significant CO2 reduction from a Life Cycle Assessment perspective, when compared with the available waste to energy treatments of plasmix and dry waste post consumption. Leveraging the principles of the circular economy, the projects are set to have a positive impact on the environment.

NextChem technological innovation is one of the most significant of its kind developed in last few years within the circular economy and energy transition fields and applies to the green recovery of brownfield sites of traditional and heavy industries. Chemical products with a circular origin based on this technology reduce the need for extraction of fossil origin resources and contribute to the decarbonization of relevant industrial sectors, supplying the transport sector – which is contributing significantly to global CO2 emissions - with low carbon fuels. This is one of the NextChem’s drivers for the energy transition, with over 30 innovative projects in its portfolio with proprietary technologies, international licenses and technological integration contracts and EPC.

As MRC informed earlier, Italian oil major Eni is planning to create a division to focus on new energy solutions which could be headed by its CFO, as it steps up preparations for a decarbonised future.

We remind that none of the big oil companies currently meet U.N. targets to limit global warming despite the most ambitious targets set by Royal Dutch Shell and Eni.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

Eni lowers price assumptions, expects to write off EUR3.5 billion in assets value

MOSCOW (MRC) -- Eni (Rome, Italy) says it expects to record a post-tax, noncash impairment charge of approximately EUR3.5 billion (USD3.95 billion) in its second-quarter 2020 results after revising downward its short- and long-term price assumptions for oil and gas following an assessment of the impact of COVID-19 on its trading environment, said Chemweek.

Up to EUR2.8 billion of the write-down relates to the value of its upstream assets, with the remaining amount to be recorded in its refining business, says Claudio Descalzi. The company’s long-term price of Brent crude oil has been lowered by USD10/barrel (bbl) from its previous assumption to USD60/bbl from 2023 onward in real terms, he says. The estimated impairment charge has a plus or minus range of 20%, with the estimation representing a drop of around 4% in the value of noncurrent assets, he adds.

The Brent price for the period 2020–22 is expected to be USD40/bbl, USD48/bbl, and USD55/bbl, respectively, compared with its previous assumptions of USD45/bbl, USD55/bbl, and USD70/bbl. The Italian spot gas price is estimated at USD5.5/million British thermal units (MMBtu) in 2023 real terms, compared with the previous assumption of USD7.8/MMBtu. Long-term refining margins in the Mediterranean area are confirmed at lower than USD5/bbl, it says.

Confirming the company’s strategy to become a leader in the market supplying decarbonized products, Eni is “assessing how to speed up our plans. This ongoing evolution will allow the company to achieve a better balanced portfolio, reducing the exposure to the volatility of hydrocarbon prices, while progressing toward our targets of sustainability and profitability,” Descalzi says. The revised long-term price assumptions “will be incorporated in our processes of capital allocation,” he says. “The market developments linked to the spread of the COVID-19 pandemic have made even more compelling the robustness of our strategic path and of our long-term choices,” he adds.

Eni is due to release its results, which include its Versalis (Milan) chemicals business, on 30 July. In April the company reported a first-quarter net loss of EUR2.93 billion, while Versalis reported an adjusted operating loss of EUR65 million. In March Eni had announced a cut in its planned capital expenditure for 2020 of about EUR2 billion due to the impact of the pandemic.

As MRC informed earlier, Italian oil major Eni is planning to create a division to focus on new energy solutions which could be headed by its CFO, as it steps up preparations for a decarbonised future.

We remind that none of the big oil companies currently meet U.N. targets to limit global warming despite the most ambitious targets set by Royal Dutch Shell and Eni.

We also remind that the ongoing transition to low-carbon energy sources may accelerate as economies recover from the impact of the coronavirus crisis, said the head of oil and gas company Royal Dutch Shell in the May statement.

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

South Korean PBR suppliers may eye other markets as India imposes duty

MOSCOW (MRC) -- South Korean polybutadiene rubber (PBR) suppliers may consider alternative markets after New Delhi on July 13 announced a 10% import duty on the product originating from the country, reported S&P Global with reference to sources.

South Korea is one of India's largest suppliers of PBR, which mainly goes into tire manufacturing.
"We are discussing with traders [In India] what the next steps could possibly be," a South Korea-based producer said. "We need some time. But yes, we will have to look at other markets for export."

South Korea became one of the largest exporters of PBR to India, after a duty-free trade agreement, the Comprehensive Economic Partnership Agreement, took effect between the two countries on Jan 1, 2010. According to the agreement, South Korean PBR exports to India were duty free.

"It will definitely affect the businesses of South Korean suppliers because now they have to factor in the duty," a Gurgaon-based industry expert said. "But the question is whether there is sufficient domestic supply."

It will raise costs for Indian importers and tire manufacturers because some imports will still be needed, he said.

Reliance Industries Ltd is the only rubber manufacturer in India. The company had earlier told the Directorate General of Trade Remedies that PBR imports from South Korea were harming the local industry.

About 70%-80% of PBR produced in India goes into making tires. The rest is used as an additive to improve the mechanical strength of plastics such as polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS).

India's annual PBR consumption is around 180,000-190,000 mt, of which around 60%-63% is met through domestic suppliers, according to industry sources.

According to MRC's ScanPlast report, Russia's ABS output was 780 tonnes in May 2020. Production of Russian ABS plastics totalled 4,240 tonnes in January-May 2020, down by 17% year on year.

Polybutadiene (PBR) is a synthetic rubber. Polybutadiene has a high resistance to wear and is used especially in the manufacture of tires, which consumes about 70% of the production. Another 25% is used as an additive to improve the toughness (impact resistance) of plastics such as PS and ABS.
MRC