Ovintiv lays off 25% of workforce after oil demand slumps

MOSCOW (MRC) -- Ovintiv Inc said it laid off 25% of its total workforce this month as the oil and gas producer grapples with plunging fuel demand and lower prices due to the COVID-19 crisis, said Hydrocarbonprocessing.

The company said it now has around 2,100 employees and contractors. Ovintiv, formerly known as Encana, completed a change of base from Calgary to Denver in January, which Chief Executive Officer Doug Suttles had reasoned would allow the company access to a deeper capital market.

However, that vision was shattered as the pandemic eroded oil demand, while prices tumbled further after Saudi Arabia and Russia in March threatened to flood the market with more oil. Many shale producers have lately reduced their workforce, slashed budgets and cut dividends in efforts to save enough cash for survival as investors turn their backs on the industry.

Ovintiv’s shares have more than halved in value so far this year, while U.S. oil prices have fallen about 38%. The company in May cut bit.ly/3hIwrAc its second-quarter planned capital spending by 60%, or USD500 million, and estimated to have curtailed net volumes of about 65,000 barrels of oil equivalent per day (boepd).

Chevron Corp, the second-largest U.S. oil producer, and oilfield services providers Schlumberger NV and Halliburton Co are some of the biggest names among many that have announced job cuts.

Ovintiv, once among Canada’s largest companies, bought Texas-based Newfield Exploration Co for USD5.5 billion last year to boost acreage in the United State, as it prepared to move away from Canada.

A company spokeswoman had earlier said the job cuts would be equally spread across its offices in Calgary, Denver and The Woodlands, Texas.

As MRC informed earlier, Chevron Corp restarted the 112,229 barrel-per-day (bpd) Pasadena, Texas, refinery night after completing a multi-unit overhaul that was extended because of the COVID-19 pandemic.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Ferric chloride has leaked from Kem One’s (Lyon, France) polyvinyl chloride (PVC) production site at Berre, France, into the Mediterranean Sea and emergency services are assessing the damage, reported Chemweek with reference to local press reports.

Several reports quote a Kem One spokesperson, who confirmed that the leak came from a storage tank and that the liquid was discharged into the sea via a storm sewer. The company says the incident caused no injuries.

Local maritime authorities are investigating the extent of the spill, which took place at about 1.50 am on Thursday, and have sealed off a stretch of coastline to boating, fishing, and swimming. “Those responsible will have to address any damage that is found,” France’s environment minister Barbara Pompili has said on Twitter. Press reports say the accident has caused a slick of about 6 hectares.

Kem One has 290,000 metric tons/year of suspension PVC capacity at Berre, according to its website.

As MRC wrote before, the company conducted a scheduled maintenance at this plant from the first week of September, 2018, to 20-21 October, 2018.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia totalled 13,800 tonnes in the first half of 2020, up by 5% year on year, whereas exports grew by 7% year on year.

Kem One, a fully integrated vinyl production company, was established mid-2012 following the acquisition of Arkema's vinyl products division by the Klesch Group. The company employs 2,600 people at 22 manufacturing sites, primarily in Europe but also in Asia and North America. Europe’s second-largest producer of PVC with revenues in excess of one billion euros, Kem One continues to grow and build on its numerous strengths with a view to becoming market leader for integrated vinyl solutions.
MRC

MOSCOW (MRC) -- Brazilian petrochemical giant Braskem has received a letter from state and federal Brazilian authorities noting a wider area than previously identified that has incurred geological damage linked to the company's former salt mining operation, reported S&P Global with reference to Braskem's statement.

The expanded area that state and federal prosecutors and public defenders say require more properties to be vacated with residents relocated will cost an additional Real 850 million (USD158 million) in possible payments to those residents, the company said.

Braskem also said it expects an additional Real 750 million in expenses to "definitively" shut down the salt mining operation. Braskem announced in November that the company would permanently cease salt mining at the site.

The issue emerged in March 2018 when neighborhoods in Maceio, the capital city of the Brazilian state of Alagoas, experienced a mild earthquake. The Brazil Geological Survey investigated that as well as fissures and other geological damage that had appeared, and in May 2019 released a report that said Braskem's salt mining operation in Maceio was responsible.

Braskem shut the salt mine, as well as a chlor-alkali facility and a downstream ethylene dichloride plant. Salt is a key chlor-alkali feedstock, and subsequent chlorine production feeds EDC, a precursor to construction staple polyvinyl chloride.

In January, Braskem reached a deal with state and federal prosecutors and public defenders on permanent closure of the salt mine and relocations of about 17,000 people. In exchange, the prosecutors and public defenders agreed to release about Real 3.7 billion to implement a compensation and relocation support program, and another Real 1 billion for costs to close certain wells associated with the salt mining operation.

The costs noted in the July 9 announcement are on top of those previous costs.

Braskem said further July 9 that the company is negotiating with those authorities "to define possible measures to be adopted by mutual agreement, although it is not automatically obligated to assist in the vacation of these new areas" pursuant to the January agreement.

Braskem is working toward restarting the shut plants. The chlor-alkali facility has a capacity of 400,000 mt/year of chlorine, and 460,000 mt/year of caustic soda, a byproduct of chlorine production. The EDC plant has capacity of 520,000 mt/year.

The closures left Braskem dependent on imports of caustic soda to supply customers and EDC to maintain downstream PVC production.

Braskem in February received its first 35,000 mt shipment of salt from Chile, and once the plants have been running for up to four months, the company will replace 50% of its Chilean salt imports with salt from Brazil's Rio Grande do Norte state, north of Alagoas.

The company had aimed to restart the plants in May. But Braskem had to slow work to replace a chlorine pipeline and associated racks as well as install a permanent substation to provide power to the chlor-alkali facility to implement safety protocols to prevent coronavirus pandemic spread and meet additional inspection standards.

A new timeline for restart has not been announced.

Brazil is the top export market for US caustic soda. US caustic soda exports in the first five months of 2020 fell 3.6% to 2.3 million mt compared with the same span in 2019, the latest US International Trade Commission data showed. Shipments to Brazil rose 55% to 1.18 million mt in the January-May period, or half of all outflows, year on year.

Brazil became the top market for US EDC exports upon Braskem's shutdown of its sole EDC plant. US ITC data show Brazil was the top recipient of US EDC in 2019 with 299,567 mt, nearly 21% of 1.4 million mt shipped out, supplanting China as the top export market in 2018.

In the first five months of 2020, Brazil received 183,635 mt of US EDC, up from 53,543 mt in the same span in 2019 when the EDC plant was operating for four months, the data showed.

As MRC reported before, Braskem USA is planning to startup its new polypropylene (PP) plant in the third quarter this year. Based in La Porte, Texas, United States, the plant has a production capacity of 450,000 tons/year.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia totalled 13,800 tonnes in the first half of 2020, up by 5% year on year, whereas exports grew by 7% year on year.

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) -- China's Jiangsu Sailboat Petrochemical, also known as Jiangsu Shenghong, is only able to restart its around two acrylonitrile (ACN0 plants on July 31, followed an unplanned shutdown of these production units on July 16, reported S&P Global.

Thus, the company shut down both their two 260,000 mt/yr ACN plants along with its methanol-to-olefin unit at the same time.

As MRC informed before, in March 2018, Honeywell announced that Jiangsu Sailboat Petrochemical Company, Ltd. had accepted a new methanol-to-olefins (MTO) unit provided by Honeywell UOP, and that the plant was operating and had met all guarantees. With a production capacity of 833,000 metric tons per year, the unit is the largest single-train MTO unit in the world. Honeywell UOP, which pioneered MTO technology, started its first MTO unit for China's Wison Clean Energy in 2013.

ACN is a feedstock for the production of acrylonitrile-butadiene-styrene (ABS).

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.

Jiangsu Sailboat Petrochemical, part of the Shenghong Holding Group, is a major petrochemical manufacturer in China, including polyethylene (PE) and ethylene-vinyl-acetate (EVA). The company's production facilities are located in the new Xuwei Industrial Park in Lianyungang City, Jiangsu Province.
MRC

1. Dow swings to loss, announces 6% workforce cut

MOSCOW (MRC) -- Dow reports a second-quarter net loss of USD217 million, down from income of USD90 million in the year-ago period, reported Chemweek. Sales totaled USD8.354 billion, down 24% year-over-year (YOY) from USD11.014 billion. COVID-19 lockdowns cut into demand and low energy values weighed on prices, says the company. Citing the prospect of a gradual and irregular recovery, Dow says it will soon begin a restructuring program aimed at USD300 million in annualized EBITDA benefit by the end of 2021. Measures include a 6% reduction in the company’s global workforce and plans to exit uncompetitive assets.





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