Formosa expects gasoline exports to halve in 2020

MOSCOW (MRC) -- Taiwan’s Formosa Petrochemical Corp expects to cut its gasoline exports by about half in 2020 as the coronavirus crisis dents demand, a spokesman said, said Hydrocarbonprocessing.

Formosa’s monthly average volume is estimated to drop to about 100,000 tonnes a month from some 200,000 tonnes per month in 2019, KY Lin said, adding: “Domestic demand has picked up in June but overseas demand is not great and we do not want to be caught in a situation where we have to struggle with excess cargoes to export."

"We will keep our refinery throughput at about 80% of our capacity in July,” Lin said, unchanged from June. The refiner, operator of a 540,000 barrel per day refinery in Mailiao which is one of the 10 largest standalone refining plants in Asia, is in talks to sell around 30,000 tonnes of gasoline a month through an August-December contract.

It has recently sold a total of four cargoes for June to July loading from Mailiao. Formosa’s most recent year-long contract expired in March, but negative gasoline margins to crude had prompted it to delay the term talks, Lin said.

Although Asia’s gasoline margins have returned to positive territory since June 3, a resurgence of new coronavirus infections in several countries could stall demand recovery.

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

COVID-19 - News digest as of 02.07.2020

1. Phillips 66, Trafigura Bluewater offshore terminal remains up in the air during pandemic

The fate of Phillips 66's and Trafigura's planned Bluewater oil export terminal offshore of Corpus Christi, Texas, remains uncertain as the coronavirus pandemic has sapped global crude demand, and caused US production to fall, reported S&P Global. Phillips 66 said June 9 that travel limitations during the pandemic are further delaying the federal licensing process and that a final investment decision from the Houston-based refining giant and Trafigura remains "many months" away. Back in November, the US Maritime Administration suspended the Bluewater application timeline, allowing Phillips 66 more time to submit additional information and analysis.




MRC

OPEC secretary general, UAE energy minister say tough times ahead for oil markets

MOSCOW (MRC) -- Tough times still lie ahead for oil markets despite OPEC+ coalition's implementation of a historic production cut that began in May and has been extended into July, reported S&P Global with reference to the secretary general of OPEC and the UAE energy minister's statement June 29.

"Although we are not yet out of the woods, but we have proven together with our partners in non-OPEC...that multilateralism is irreplaceable especially in our diverse world of energy that is sometimes punctuated with geopolitics," OPEC secretary general Mohammed Barkindo told a webinar organized by the Canada-UAE Business Council.

The 23-member coalition of OPEC+ are in the midst of a record 9.7 million b/d cut that started in May and was extended till July, excluding Mexico's 100,000 b/d cut. The output curbs will gradually ease after July through to April 2022. The OPEC+ Joint Ministerial Monitoring Committee, which is now meeting monthly, convenes next on July 15, with a delegate-level technical meeting held the day before.

UAE, OPEC's third largest oil producer, is also cutting an extra 100,000 b/d in June, joining Saudi Arabia, Kuwait and Oman in implementing cuts on top of their OPEC+ commitments this month to help rebalance the market.

Suhail al-Mazrouei, the UAE energy minister, told the webinar these remain tough times for the oil industry, but that the oil markets are rebounding.

"No one predicted, even after we announced the (9.7 million b/d) cut that the market will quickly rebound to where we are today," he said.

"We are all keen to produce our barrels to contribute to our economy but we need to do it at the right pace and at the right time."

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

Saudi Aramco CEO sees oil demand at 90 mil b/d in COVID-19 recovery

MOSCOW (MRC) -- Oil demand has rebounded close to 90 million b/d, partly reversing a slump in consumption caused by the COVID-19 pandemic, reported S&P Global with reference to Saudi Aramco's president and CEO Amin Nasser's statement in the transcript of an interview published on June 30.

"The worst is behind us," said Nasser, speaking at an online event for CERAWeek organized by IHS Markit. "We went from -$40 b/d to +$40 b/d with WTI. In April we were looking at demand of about 75-80 million b/d with significant supply at that time. Currently you are looking at almost close to 90 million b/d. I'm very optimistic about the second half of this year."

S&P Global Platts Analytics is forecasting oil demand will fall year-on-year by 8.3 million b/d in 2020 to 94.2 million b/d.

"There are different forecasts looking at between 95 million and 97 million b/d by year-end. So, it will all depend on whether there will be a second wave of coronavirus or not. But I am also not as concerned about a second wave because I think we are much better prepared now," said Nasser.

Downstream, Nasser said gasoline and diesel demand were picking up to pre-COVID-19 levels and he was optimistic about the prospects for a rebound in jet fuel as more countries open up.

Aramco, the world's largest oil company by production, was first impacted by the pandemic in February, with the reduction in demand from China. However, all of the oil giant's fields and plants have been running smoothly during the pandemic, said Nasser.

"More than 50% (of the office workers) were working from home, but when it comes to field presence, everybody was working, especially in remote areas and offshore sites," said Nasser. "We were able to manage the situation very well by putting all the precautions necessary to maintain their safety and health while maintaining our operational resilience during this time."

A major concern for Aramco through the pandemic is cybersecurity.

"We had a lot of hackers that target energy companies, so we had to be making sure that we are able to provide the connectivity while protecting our network from any hackers," said Nasser.

As MRC wrote previously, Saudi Aramco’s acquisition of petrochemical maker SABIC will accelerate the company’s downstream strategy and transform it into a global petrochemical player, said an official of the state oil giant's statement to al-Arabiya TV.

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.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC

Brazilian refinery utilization rate stable at pre-pandemic levels

MOSCOW (MRC) -- Brazil's refineries returned close to pre-pandemic levels in June, despite several incidents at processing units across Latin America's biggest country that led to output volatility during the month, reported S&P Global with reference to the Mines and Energy Ministry's statement June 30.

State-led oil company Petrobras, which operates 98% of Brazil's refining capacity, was running refineries at 77% of installed capacity on June 27, the ministry said in its latest coronavirus impact report. That was down from an average of 79% in the first quarter, but off the social-distancing low of 52% set in mid-April, the ministry's data showed.

"After a period of oscillations in the first 15 days of the month because of incidents at processing units, the global oil-processing cargo at refineries returned to growth and consistency that maintained volumes equivalent to those practiced before the start of the pandemic and social-distancing measures," the ministry said.

Petrobras slashed oil and natural gas production as well as reduced refinery run rates in late March amid expectations for dramatically lower refined-product demand because of the implementation of social-distancing measures. Demand, especially for diesel driven by the sugarcane and oil seed harvest seasons, proved more resilient than initially expected, with Petrobras walking back the production cuts by mid-April.

The uptick in oil and gas output was accompanied by an increase in refining activity, although Petrobras did bring forward some maintenance work and temporary unit stoppages during the downturn. The return of domestic demand and quick turnarounds on maintenance projects combined with a fire at a distillation unit at the Refinaria Duque de Caxias, or Reduc, on June 15 undermined refinery performance, the ministry's data showed.

Refined-product sales remained mostly lower on the year in the June 1-24 period, measured by the Mines and Energy Ministry, as social-distancing measures curbed mobility, but there are signs of a nascent recovery in demand, the ministry said.

Diesel sales were a highlight in the period, advancing 3.5% on the year, the ministry said. Diesel demand has been driven by the agriculture sector, which started to bring in the winter harvest in late March.

Sales of 13-kilogram LPG tanks also advanced on the year in the June 1-24 period, climbing 19.6%, the ministry said. LPG sales have been boosted by consumer fears of shortages, with Brazilians building stocks of the tanks used to power cooking stoves in regions not covered by traditional natural gas distribution networks.

Jet fuel sales were most affected by the outbreak, which caused air travel to plummet. Jet fuel sales plunged 75.9% on the year in the June 1-24 period, the ministry said. Gasoline and ethanol sales were also down on the year as fewer Brazilians drove during the shutdowns, with gasoline sales falling 8% on the year and ethanol sales down 22.5%.

Hydrous ethanol can be used directly in tanks of flex-fuel vehicles and is a biofuel competitor to gasoline, while gasoline sold at the pump is blended with 27% anhydrous ethanol.

As MRC informed before, in mid-June, 2020, Petrobras said that a fire at its Duque de Caixas refinery left the facility operating with only half of its installed capacity.

We remind that the chief executive of Brazilian state-run oil firm Petroleo Brasileiro said in December 2019 he wants to sell the company's stake in petrochemical company Braskem within 12 months.

Besides, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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.

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