ExxonMobil expects lower prices, margins to hit second-quarter results

MOSCOW (MRC) -- ExxonMobil says lower oil and gas prices could negatively impact its upstream earnings in the second quarter by up to USD3.1 billion compared to the first quarter of 2020, while its chemical segment earnings will be relatively stable, according to Chemweek.

The company advises in a US regulatory filing that the quarter-on-quarter change in chemical margins in the second quarter could impact its chemical segment earnings within a range of plus or minus USD100 million. It also gave the same financial range for the estimated effects of planned changes in scheduled maintenance on the chemicals business. ExxonMobil’s chemicals segment in May reported first-quarter earnings of USD144 million, down 72% year on year (YOY).

Lower refining margins could also hit its downstream earnings by up to USD900 million, according to the filing. In the first quarter ExxonMobil reported a downstream profit of USD1.3 billion.

The SEC filing covers factors related to market dynamics, seasonal patterns, and planned activities that the company’s management believes will impact second-quarter earnings relative to the prior quarter, and is not meant to be a comprehensive estimate.

The US major is scheduled to release its financial results on 31 July.

As MRC informed before, boiler work at the ExxonMobil-operated 830,000-metric tons/year ethylene plant at Mossmorran, UK, was scheduled for completion in June, 2020. Two of the three boilers at the plant exploded in August 2019, resulting in the plant being taken offline until the end of February. OPIS sources said in May that the plant was currently able to operate at full capacity with two boilers in operation but that the third boiler would be working by June.

We remind that in September 2019, ExxonMobil announced plans to spend GBP140 million over the next two years in an additional investment program at its Fife ethylene plant, which has a capacity of more than 800,000 t/y.

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

MOSCOW (MRC) -- Gazprom neftekhim Salavat has shut down its polyethylene (PE) production for a scheduled maintenance, reported MRC analysts.

The plant's customers said Gazprom neftekhim Salavat took off-stream its PE production for a scheduled turnaround on 1 July. The plant's low density polyethylene (LDPE) production was shut for 30 days, whereas its high density polyethylene (HDPE) production was taken off-stream only for one week.

As reported earlier, Angarsk Polymers Plant (Rosneft) shut its LDPE production capacities for a long maintenance on 22 June. Due to the coronavirus pandemic, Tomskneftekhim (SIBUR) postponed a turnaround from 15 July to 31 August, the outage is planned to last for two weeks.

OAO "Gazprom neftekhim Salavat" (formerly OAO "Salavatnefteorgsintez") is one of the leading petrochemical companies in Russia, carrying out a full cycle of processing hydrocarbon material. The list of products manufactured by the plant includes more than 140 items, including 76 grades of the main products: gasoline, diesel fuel, kerosene, fuel oil, toluene, solvent, liquefied gases, benzene, styrene, ethylbenzene, butyl alcohols, phthalic anhydride and plasticizers, polyethylene, polystyrenes, silica gels and zeolite catalysts, corrosion inhibitors, elemental sulfur, ammonia and urea, glycols and amines, a wide range of household products made of plastics, surfactants and much more.
MRC

1. 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."


MRC

MOSCOW (MRC) -- Northwest European CIF naphtha cracks have flipped positive and hit an 18-month high last week amid tighter supplies and robust demand, reported Chemweek with reference to OPIS and IHS Markit data.

The naphtha/Brent crude crack spread, a measure of naphtha's margin for refiners, reached 10 cents/bbl at the close of business on 22 June, and remained positive at 3 cts/bbl on 23 June, according to broker data.

Lower refinery runs alongside decreased imports into northwest Europe, particularly from Russia, curtailed the supply of naphtha. Steam crackers did not reduce run rates as much as refineries, owing to the need for plastic hygienic products amid the COVID-19 pandemic, which supported naphtha demand, according to IHS Markit analysts.

"Demand for naphtha cracking remained quite steady - within Europe and also for exports to the East," says IHS Markit principal research analyst Eleanor Budd. "This has supported naphtha."

The CIF northwest Europe naphtha spot price hit USD379.50/metric ton on 23 June, a net gain of USD101.50/metric ton from the start of the month, according to OPIS data. Brent crude front-month futures climbed USD6.22/bbl to USD43.60/bbl on 23 June over the same period, according to data from the Intercontinental Exchange.

During April and May, European naphtha demand was bolstered by high exports to Asia, with April inflows to Asia reaching a record 3.4 million metric tons, further tightening West of Suez supplies, according to OPIS data. As lockdown measures due to COVID-19 ease, road fuel demand has slowly returned, and gasoline blending demand for naphtha has further tightened supply, Budd says.

The propane spread to naphtha has deepened to stand at minus USD86/metric ton Tuesday, compared with plus USD8/metric ton a month earlier. Still, naphtha market players remain sanguine as the petrochemical sector is seen moving away from naphtha to lighter feeds in the prompt, and about 250,000 metric tons of propane are pegged to arrive into northwest Europe from the US to date for July, according to OPIS LPG tracking data. Sources do not expect the switch to propane will last, as LPG supplies from the Middle East will fall, drawing US exports to Asia and away from Europe.

US propane exporters are expected to secure a higher netback moving their cargo to Asia rather than Europe, according to an OPIS analysis of US Gulf Coast LPG netback values from Asia and Europe. In June, the netback from Asia is 5.548 cts/gal versus 0.324 cts/gal from Europe. In July, Asian exports secured a netback of 3 cts/gal against 1.744 cts/gal from Europe, OPIS data show.

The opening up of the economy has seen demand for refined products pick up and, in turn, refiners are raising runs. While this will inevitably yield more naphtha, much of this could be absorbed by improved gasoline demand and the subsequent buying interest for naphtha by gasoline blenders, IHS Markit analysts say.

As MRC informed before, unplanned outages at Sabic's Wilton, UK, cracker and Borealis' Stenungsund, Sweden, cracker may cause availability shortages in the European propylene coastal market. The Wilton cracker, which has an annual propylene capacity of 415,000 mt was shut on June 17 due to technical issues and came back online in two weeks. Borealis' Stenungsund cracker unit has remained offline longer than initially anticipated, after it was shut following a force majeure declaration at the site on May 11. Sources said that the unit has been offline longer than initially expected with no confirmed startup date. 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

MOSCOW (MRC) -- With exports of Russia's medium sour Urals crude significantly reduced because of OPEC+ production cuts, the grade has risen to its highest value in S&P Global Platts data going back to 2001, reported S&P Global.

Urals was assessed at Dated Brent plus USD2/b on a delivered Rotterdam basis on June 30, Platts data showed.
Urals supply in July is sharply lower month on month even after May and June loading programs themselves saw big falls.

The July export schedule for seaborne Urals crude shows loadings averaging 774,310 b/d, a reduction of 536,730 b/d on the month to the lowest volume since at least 2012.

The volume in July reflects both the extension of the OPEC+ cuts and the impact of increased refinery runs in Russia, which will reduce the quantity of Urals available for export, sources said.

Loadings of heavier, sour crudes globally have been disproportionately impacted by the OPEC+ cuts, leaving refiners few alternatives.

A European refiner recently paid around Dated Brent plus USD2/b for a cargo loading July 7-11, a trader said. Another source said a cargo loading in the third decade of the month had traded at a premium of USD2.35/b to Dated Brent.

"Sour buyers in the Mediterranean are a bit stuck...nothing to buy and therefore bidding for anything remotely sour that can still be handled by refineries," a trader said.

However, the arbitrage to China for the grade was closed following ample inventory in the country, traders said.

With the country a significant buyer of the grade, reduced demand from the region may provide some respite to Mediterranean and European refiners.

In the Mediterranean, Urals was last assessed at a premium to Dated Brent of USD2.50/b on a delivered Augusta basis. The assessment has only been higher once before in Platts data, when it was assessed at a premium of USD2.55/b on June 18.

As MRC reported earlier, the 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 taht 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