US crude oil refining capacity nears 19 MMbpd

MOSCOW (MRC) -- US crude oil refining capacity grew by nearly 1 percent in 2019, or 173,650 barrels per day (bpd) to nearly 19 million bpd (MMbpd), a new record, reported Reuters with reference to a report released by the US Energy Information Administration (EIA).

The report on national refining capacity was assembled from reports filed by owners of the nation’s 135 refineries. The reports were filed by Jan. 1, 2020. They do not take into account reduced production levels because of the COVID-19 pandemic.

The number of total refineries was unchanged, but the number of idle plants grew by one to four, the EIA said.

Independent US refiner Marathon Petroleum Corp continues to be the nation’s largest. The combined throughput capacity of the company’s 16 refineries is 3.07 MMbpd, equal to 16% of the national total.

The increase in national capacity came from incremental growth in production capabilities at multiple plants across the country.

Marathon’s capacity grew by 42,285 bpd with increases at the company’s refineries in Garyville, Louisiana, and Catlettsburg, Kentucky, as well as other plants.

Fellow independent Valero Energy Corp, remains the nation’s second-largest refiner at 2.18 MMbpd.

Exxon Mobil Corp, one of the world’s largest corporations, is the third-largest refiner at 1.75 MMbpd. Exxon’s capacity grew by 15,200 bpd, all at the company’s Baton Rouge, Louisiana, refinery.

Phillips 66, also an independent refiner, is the nation’s fourth largest at 1.7 MMbpd.

Chevron Corp, PBF Energy, Royal Dutch Shell Plc, Citgo Petroleum Corp, BP Plc and Koch Industries’ Flint Hills Resources LP are the others among top 10 refiners.

Motiva Enterprises is the 11th largest refiner. Its only refinery is the nation’s largest in Port Arthur, Texas, with a capacity of 607,000 bpd.

The top 10 refiners are evenly divided between independents and integrated oil companies.

As MRC wrote before, Marathon Petroleum Corp will idle its 166,000 barrel-per-day (bpd)refinery in Martinez, California beginning April 27 in response to the coronavirus pandemic’s hit to demand for refined products.

Meanwhile, Marathon Petroleum Corp planned to operate the gasoline-producing fluidic catalytic cracker (FCC) at its 585,000 barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas. The 140,000 bpd FCC restarted on 12 April, after repairs following a March 23 brief power outage that shut the unit.

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

Imperial Oil delays Sarnia, Syncrude coker turnaround to Q3

MOSCOW (MRC) -- Imperial Oil said it will delay turnarounds at its 120,000 b/d Sarnia, Ontario, refinery and one of three cokers at the Syncrude facility in Western Canada from the second quarter to the third quarter as it continues to assess the impact of the coronavirus on its operations, reporteed S&P Global.

"These deferrals have resulted in an updated capital outlook of CD1.1 billion to CD1.2 billion for 2020, a CD500 million (30%) reduction compared to original guidance of CD1.6 billion to CD1.7 billion," the company said in a statement released in late June.

Imperial has a 25% stake in Syncrude and receives about 60,000 b/d to 70,000 b/d of oil net of royalties. The work on Syncrude 8-2 coker was planned to start in April and last through May, according to the Syncrude website.

At Sarnia, planned work on the 120,000 b/d crude unit and 24,300 b/d coker was planned to begin in early April and to end early June, according to market sources.

As MRC wrote before, Alberta's 80,000 b/d Sturgeon refinery ramped up to full operations in April as it began processing local bitumen to produce ultra low sulfur diesel and other refined products. Overall, Canadian refinery runs increased to 1.31 million b/d of 67% of capacity for the week ended May 12, up from the 1.27 million b/d the week earlier, according to National Energy Board data.

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

Asian refiners trim July LSFO output, exports on flagging regional demand

MOSCOW (MRC) -- With low sulfur fuel oil crack spreads in Asia under pressure from oversupply and lackluster demand, refineries in Thailand, Taiwan and South Korea are reducing their July LSFO production and exports, company sources at regional refineries said July 6, said S&P Global.

"For July, we've balanced our supply to just meet our domestic LSFO bunker term commitments, as the LSFO margins right now are weak, so we'll probably skip [LSFO] exports this month," a refining source close to Taiwan's CPC Corporation said. "We're likely to have a cargo to export in early August instead," she added.

The Asian LSFO crack spread, measured as the difference between the front-month Singapore Marine Fuel 0.5%S swap and the Dubai crude oil swap, was assessed at USD7.83/b on July 3, marginally higher than the Q2 average of USD7.47/b. The July 3 spread is, however, a quarter of the USD29.77/b spread on Jan. 2, after the International Maritime Organization's regulations on cleaner marine fuel came into effect on Jan. 1, S&P Global Platts data showed. The crack spread averaged USD6.76/b over June.

In response, refineries in South Korea, Taiwan and Thailand -- which have exported LSFO cargoes to Singapore in H1 2020 --have started reducing their LSFO production towards the end of the second quarter, in some cases by as much as 50%, and have cut exports to focus on domestic bunker demand.

"Our maximum LSFO production capacity is around 300,000 mt/month, but we're producing less than 200,000 mt/month, about 40% less," a source close to South Korean refiner Hyundai Oilbank said. "Low sulfur bunker demand [in South Korea] has been fairly stable at approximately 600,000-650,000 mt/month, but we're also facing increased competition from ports like Shanghai, so the bunker premiums [in South Korea] have not increased much," said a source at South Korean refiner SK Energy, which is producing at 50% of its LSFO production capacity of 400,000 mt/month.

SK Energy has sold 40,000 mt of LSFO for July loading from its Incheon refinery, unchanged from June, another company source said. The average difference between delivered low sulfur bunker prices at South Korea and Shanghai stood at USD6.17/mt over Q2, versus the Q1 average of minus USD18.90/mt, when South Korean prices were lower, Platts data showed.

The situation is no different in Taiwan and Thailand, where most refiners have yet to offer any July-loading LSFO spot cargoes for export due to low margins, preferring instead to focus on domestic demand, or in the case of Taiwan's Formosa, adjust to temporarily producing higher sulfur cargoes while run rates at its three crude distillation units are reduced, company sources said.

Formosa has not sold any LSFO for loading in July, although the last two cargoes it sold, each 40,000 mt and loading over H1 June and mid-July contained 0.9% sulfur, higher than the maximum 0.5% sulfur specification they typically produce, according to traders who participate in the company's tenders.

PTT Global Chemical, the biggest LSFO exporter in Thailand, sold 60,000 mt of IMO-compliant fuel oil for July loading, down from 70,000 mt for June loading. The company normally supplies LSFO for the domestic market, while the balance is exported. "Domestic bunker demand is recovering," a PTTGC source said.

As MRC informed earlier, Formosa Petrochemical Corp (FPCC) restarted No2 cracker in Mailiao, Taiwan on 4 June after brief outage. The craker No2 of capacity 1.035m ethylene, 520,000 propylene tonnes/year was shut on 1 June 2020 on technical issues. The company is currently operating its No 2 cracker at around 90% of capacity after resuming operation on 5 June, according to a market source.

Ethylene and propylene are feedstocks for producing PE and 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

Oil refiners adapt to post-lockdown shift to gasoline from diesel

MOSCOW (MRC) -- Petroleum consumption is rising around the world as the major economies exit from lockdowns imposed to control the coronavirus epidemic, but the uneven recovery presents challenges for fuel refiners, reported Reuters.

Refiners must cope with a much stronger rebound in demand for gasoline compared with diesel and jet fuel, reconfiguring their equipment to shift the yield towards light distillates and away from middle distillates.

The epidemic and measures introduced to control it have reduced petroleum consumption in three ways, with varying implications for the scale and speed of the recovery in fuel use:

First, the direct and indirect effects of mandatory lockdowns as a result of stay-at-home orders and the closure of some businesses, which sharply reduced personal mobility.

Formal lockdowns had the largest immediate impact on oil consumption because they hit personal movements, with the main impact on gasoline, the dominant motor fuel in all regions outside Europe.

But most mandatory lockdown measures have now been reversed, or eased, which has led to a big increase in mobility and gasoline consumption compared with early April, when lockdown measures were most intense.

Second, the effects of voluntary behavior changes, as individuals attempt to avoid crowded environments with a high risk of virus transmission.

Behavior changes have mostly involved avoiding mass transit systems and passenger aircraft, ensuring the largest impact has been felt on jet fuel.

Behavior changes have proved longer lasting, with scheduled flights and jet fuel consumption still down by around 50% compared with before the epidemic.

Senior airline executives expect passenger volumes to remain below pre-pandemic levels at least through the rest of 2020 and 2021, so jet consumption will be reduced in the medium term.

Third, the macroeconomic effects of lockdowns and voluntary behavior changes on household consumption and business investment, as consumers and firms respond to lower incomes and sales.

The epidemic and lockdowns have triggered a business cycle downturn, which will hit diesel especially hard since this is the fuel mostly commonly used by manufacturers and freight transportation firms.

Business cycle downturns take time to reverse fully, so there will be a hit to diesel consumption through the rest of 2020 and into 2021.

Light distillates (gasoline) were the most severely impacted by the first phase of the epidemic, but have also recovered fastest as lockdowns have eased.

Middle distillates (predominantly diesel but also jet) were less impacted in the first phase, but are now recovering more slowly and will be harder hit for the rest of 2020 and 2021.

By contrast, middle distillate margins have been gradually weakening since the start of the year on a deteriorating economic outlook and show no sign of a significant recovery.

Responding to both price signals and filling storage tanks, refiners slashed light distillate production at the height of the lockdown in favor of middle distillates – before sharply reversing course in recent weeks.

In the United States, refiners typically make around 1.5 times more gasoline than jet and diesel combined. But the ratio fell to 1:1 at the start of April before surging to almost 1.7:1 last week.

Gasoline is the largest output and principal revenue-earner for most refineries in the United States, so it dominates the decision about how much crude to process.

At the height of lockdown, refineries slashed their crude processing to avoid producing too much gasoline with no room to store it.

As the lockdowns have eased, however, refineries have ramped up their crude throughput to meet recovering gasoline demand.

The consequence has been the production of too much middle distillate, which has further weighted on diesel margins.

By restraining crude processing over the next couple of months, refiners should be able to reduce both gasoline and diesel inventories.

But the degree of normalization is likely to be greater for gasoline than diesel, which will leave middle distillate margins struggling.

As MRC informed before, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

Indian refiners crude processing in May recovers

MOSCOW (MRC) -- Indian crude oil processing gathered momentum in May, rising by some 7.3% from April to around 3.87 million barrels per day (bpd) as an easing of restrictions on transport and industrial activity boosted fuel demand, reported Reuters.

Compared to last year, Indian refiners’ crude processing however tumbled by 24.2% in May to 16.35 million tonnes, the data showed.

Fuel consumption, a proxy for oil demand in the world’s third biggest oil consuming nation, totalled 14.65 million tonnes in May, 47.4% higher than in April.

As a result, Indian refiners are already scaling up crude processing like their Asian peers. Indian Oil Corp, the country’s top refiner, aims to operate its plants at about 90% capacity in June.

IOC, along with subsidiary Chennai Petroleum Corp, operated its refineries at an average 69% of designed capacity of 1.6 million bpd, the data showed.

State refiners, which along with their subsidiaries account for about 65% of the country’s 5 million bpd refining capacity, are processing 69% of their installed capacity.

Reliance Industries Ltd, operator of the world’s biggest refining complex, operated its two refineries at 91.7% of their overall capacity of about 1.4 million bpd.

Meanwhile, crude oil production fell 7.1% in May from a year earlier to 2.60 million tonnes, or 615,300 bpd, its biggest decline in five months.

Natural gas output fell 16% to 2.30 billion cubic metres, data showed.

As MRC informed previously, LyondellBasell, the world’s largest licensor of polyolefin technologies, has recently announced that Indian Oil Corporation Ltd. (IOCL) will use the LyondellBasell Spheripol technology for a new facility. The process technology will be used for a 450 KTA polypropylene plant to be built in Panipat, Haryana State, India.

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