Russian naphtha exports fall in July as gasoline output rises

MOSCOW (MRC) -- Russian naphtha exports are declining in July while domestic refineries ramp up gasoline output to cover the shortfall following months of reduced production, reported S&P Global.

Northwest European naphtha traders said Russian naphtha exports are much smaller than usual.
"Russian exports are less than half we normally see," a trader said.

Data from Kpler software showed on July 7 that about 168,551 mt of full-range naphtha including Light Virgin grades mainly used for gasoline blending as well as petrochemicals grades, could be loading in the Baltics with a European destination for July, from 629,537kt in June. The majority of the July volumes are loading at port terminals at Ust-Luga.

Russian naphtha exports rose after March as refiners preferred to produce naphtha instead of gasoline, amid anticipated weak domestic demand during the lockdown introduced to combat the spread of the coronavirus, but also to benefit from improved demand from the petrochemical sector.

Gasoline exports were also up, rising 148.8% month on month in March and 47% over January-April, according to customs data.

Meanwhile, gasoline production was curtailed, dropping 29.5% month on month in April, the first full month of nationwide restrictions. Output continued to fall in May, as Russian refineries entered large-scale maintenance and also cut runs amid concerns that reduced traffic was taking up to 50% of the gasoline consumption.

However, contrary to expectations, gasoline demand started to recover in May and surged in June as the lockdown was eased.

"Demand in Russia has recovered very fast and could exceed last year," a Russia-based trader said.

The demand surge pushed prices, especially of premium unleaded 95 RON, to record highs, forcing the government to recommend a reduction of exports while calling on refineries to raise output.

While full June export data is not available, exports of Euro 5 gasoline alone halved last month and production was up 31.8% from May, according to energy ministry data.

Stocks also rose to 1.4 million mt, the ministry said, though traders said stocks remain low and thus still provides a boost to prices as demand continues to firm.

Gasoline demand is expected to continue to climb as many people opt to travel by car rather than public transport, but also to drive to Russian resorts this summer, sources said.

As a result, gasoline output is also projected to increase, especially as refineries have mostly completed maintenance. This would also result in less naphtha available for exports as heavy naphtha grades could be processed in catalytic reformers to boost octane numbers, while light naphtha grades can be added directly into the blending pool.

The increased gasoline production has started pushing down Russian domestic gasoline prices, which started to retreat this week.

But European naphtha has seen a significant boost in prices, led in particular by a supply squeeze stemming from reduced refinery runs, but also the decline in exports from the Baltics and particularly Russia.

"The lack of exports out of the Baltics is really adding to the overall supply reduction we see in the naphtha market," a source said.

Naphtha CIF NWE was assessed at $403/mt on July 6, up $8/mt on the day and above the $400/mt mark for the first time since March 3. This was a 10.8% increase week on week, and the upside is expected to continue, particularly if more gasoline blending demand absorbs naphtha blendstock grades.

As MRC wrote before, Russian offline primary oil refining capacity was seen declining in June to 1.583 million tons from an upwardly revised plan of 4.168 million tons expected in May, reported Reuters in late June with reference to energy ministry data, as seasonal maintenance comes off its peak.

We also remind that 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.

And 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 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

MOSCOW (MRC) -- Linde has announced that it has started up a state-of-the-art hydrogen and carbon monoxide facility in Clear Lake, Texas (TX), as well as a new air separation unit in LaPorte, TX. The plants will supply oxygen, nitrogen and carbon monoxide to Celanese, under a previously announced long-term agreement, and hydrogen to other customers via Linde’s US Gulf Coast pipeline system, according to Hydrocarbonengineering.

The new air separation unit is also connected to Linde’s nitrogen and oxygen pipeline network which enables safe and reliable supply to Celanese as well as other customers in the area.

"We are proud to be a key supplier to Celanese and further strengthen our relationship through various long-term projects with this world-class company," said Jeff Barnhard, Vice President South Region, Linde. "The new plants, along with our pipeline network, are uniquely positioned to safely and reliably supply Celanese and other valued customers in the US Gulf Coast. These projects will also support our merchant liquid business customers in the region."

As MRC reported earlier, Celanese Corporation, a global chemical and specialty materials company, has raised July list and off-list selling prices for Vinyl Acetate Monomer (VAM) sold in the Americas. The price increases below are effective for orders shipped on or after 1 July 2020, or as contracts otherwise allow, and are incremental to any previously announced increases. Thus, VAM prices rose, as follows:

- by USD0.05/lb - for the USA and Canada;
- by USD125/mt - for Mexico & South America.

VAM is the main feedstock for the production of ethylene-vinyl-acetate (EVA).

According to MRC's DataScope report, April EVA imports to Russia dropped by 5,85% year on year to 3,050 tonnes from 3,250 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation increased in January-April 2020 by 1,55% year on year to 12,540 tonnes (12,350 tonnes a year earlier).

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

MOSCOW (MRC) -- Oil's share of the global energy mix continued to slip last year, but remained the largest contributor to primary energy supply, as the role of natural gas and renewables rose to record highs, reported S&P Global with reference to BP's estimates.

Oil's dominance over world energy use slipped 0.2 percentage point to 33.1% in 2019, while the growth of natural gas and renewables saw their shares rise to 24.2% and 5%, respectively, BP's latest annual Statistical Review of World Energy showed.

Rising renewable power, mostly from solar and wind, accounted for over 40% of global energy growth last year, according to the data, after renewables posted a record increase in consumption in energy terms.

As a result, renewable energy, including biofuels, overtook nuclear which makes up 4.3% of the energy mix, the report found.

Natural gas consumption increased by 78 Bcm, or 2%, led by LNG exports from the US.

Oil's share of the global energy mix has been falling steadily over the past four decades after hitting a peak of 50% in 1973, according to BP's data.

Bar a brief recovery in the wake of the 2014 oil price crash, the slide accelerated in 1999 as oil was largely displaced by rising coal consumption as energy demand growth slowed.

But a more recent shift away from coal toward gas and renewables meant coal's share of primary energy fell to its lowest level in 16 years last year to 27%, according to BP.

Despite coal slipping consumption slipping last year, BP said coal was still the single largest source of power generation, accounting for over 36% of global power compared to 10% provided by renewable energy.

Overall, the report showed the world's primary energy consumption rose 1.3% in 2019, less than half the rate of the previous year.

China remained the dominant driver of global energy demand growth, accounting for more than three-quarters of the net global total, while the US and Germany posted the largest declines in energy terms.

Global oil consumption grew by a below-average 900,000 b/d, or 0.9%, in 2019 while demand for all liquid fuels, including biofuels, topped 100 million b/d for the first time, BP said.

Demand growth was still led by China, where demand rose by 680,000 b/d, the largest increase in the country's demand since 2015.

OECD oil demand fell 290,000 b/d, the first decrease since 2014, BP said.

On supply, BP noted that the US had the largest increase of any country for the third consecutive year, with its output rising by 1.7 million b/d, down from the record increase in 2018 of 2.2 million b/d.

The world's total proven reserves of oil slipped for the first time since 2015 by 0.1% to 1.733 trillion barrels last year, BP said, from 1.735 trillion barrels in 2018.

The change, which saw the original 2018 estimate revised upward from 1.73 trillion barrels, mostly reflects proved reserve reductions in Canada (900 million barrels), Brazil (700 million barrels), and Indonesia (700 million barrels).

The proven reserves total would be sufficient to meet 49.9 years of production at 2019 levels, BP said, down from 50 years in the previous year's review.

BP's proven reserves figures, based on official reporting from national authorities, can reflect average oil prices which affects the volumes of oil a country considers recoverable.

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

MOSCOW (MRC) -- Honeywell and Kuwait Integrated Petroleum Industries Company (KIPIC) have extended their strategic collaboration, signing a five-year, multi-million dollar contract for services to protect, maintain and optimize operations at the Al Zour refinery and liquefied natural gas import (LNGI) terminal in southern Kuwait, according to Hydrocarbonprocessing.

The contract will see the deployment of Honeywell Forge, an advanced Enterprise Performance Management software platform with robust cybersecurity capabilities that simplify, strengthen and scale industrial cybersecurity operations. The implementation will bolster network and endpoint security at KIPIC’s new 615,000 barrel per day crude refining plant and three trillion British thermal unit per day LNG import facility. Honeywell Assurance 360, an outcome-based, performance-focused service management program, will also be implemented at the sites.

“Ensuring the highest levels of cybersecurity and operational excellence remains a top priority for KIPIC,” said Hatem Al-Awadi, acting chief executive officer, KIPIC. “We are building one of the largest integrated refining facilities in the world and selected Honeywell in view of their world-class cybersecurity credentials and expertise in implementing robust lifecycle management plans for critical infrastructure in the energy sector.”

To better secure critical operational technology (OT) assets and operations from evolving cybersecurity threats, KIPIC will use Honeywell Forge Cybersecurity Software to safeguard cybersecurity performance and increase the visibility of vulnerabilities, mitigate risks, and improve cybersecurity compliance and management efficiency. This will include the creation of cybersecurity policies and procedures, audits and assessments of enterprise processes and assets, and training programs to help ensure 360-degree cybersecurity protection.

Under the terms of the Assurance 360 service agreement, Honeywell will work with KIPIC to maintain, support and optimize the performance of its facilities while maximizing uptime and reducing operating costs. The multi-year strategic agreement will help ensure automation assets are kept secure and reliable, while providing KIPIC with predictive maintenance and performance insights designed to help meet and exceed production goals and manage total cost of ownership.

“Honeywell has been supplying technologies to support the global oil and gas industry for over 100 years, and we are committed to helping our customers maintain leadership positions in the field through world-class digital technologies and software solutions,” said Que Dallara, president and CEO, Honeywell Connected Enterprise. “We are immensely proud of our long-standing relationship with KIPIC and will work closely with them to reduce unplanned maintenance while increasing the reliability, uptime and safety of their operations.”

In 2019, KIPIC selected Honeywell to be the main automation contractor for its Petrochemicals and Refinery Integration Al Zour Project (PRIZe). Under the agreement, Honeywell Process Solutions (HPS) is providing KIPIC with front-end engineering design and advanced process control technology for the complex, which will help KIPIC expedite production start-up and assist in reaching production targets faster and more efficiently. Also last year, KIPIC selected Honeywell UOP for the reconfiguration of refining and petrochemicals sections of PRIZe to increase the plant’s output capacity of fuels and petrochemicals.

Honeywell has been in Kuwait for more than 50 years, and supports the country’s energy industry with cutting-edge technologies, efficient business solutions and local training initiatives. The company is the first to build “Made in Kuwait” solutions to power digital transformation across the country’s growing oil, gas and petrochemical sectors.

As MRC informed previously, in February 2020, Qatargas signed an agreement with Shell to deliver 1 million mt/year of LNG to Kuwait for 15 years, starting this year. The LNG will come from Qatar Liquefied Gas Co. 4, a joint venture between Qatar Petroleum (70%) and Shell (30%), Qatargas said Sunday in a statement.

We also remind that in March 2019, Mammoet safely completed a critical lift at Shell’s Pennsylvania Chemicals Project in Potter Township, utilizing its MSG80 to hoist a 2,000 ton quench tower into position. The facility is the first major US project of its kind to be built outside of the Gulf Coast region in 20 years. Once operational, the facility will boast an ethane cracker and three polyethylene units, and is expected to employ up to 600 employees.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Royal Dutch Shell Plc restarted the reformer and hydrocracker at its 227,400-barrel-per-day (bpd) Norco, Louisiana, refinery, sources familiar with plant operations said, said Reuters.

The 40,000-bpd reformer restarted on Sunday after a month-long overhaul, the sources said. The 40,000-bpd hydrocracker restarted on Monday after tripping out of operation due to a brief furnace malfunction.

Shell spokesman Curtis Smith declined comment.

As MRC wrote before, in May 2020, CNOOC Oil & Petrochemicals Co. Ltd (CNOOC), Shell Nanhai B.V (Shell) and the Huizhou Government have announced a strategic cooperation agreement to further expand the CNOOC and Shell Petrochemical Company (CSPC) 50:50 joint venture in Huizhou, Guangdong Province, China.

The expansion is planned to serve the growing number of intermediate and performance chemicals customers in the key market of China, supplying products including SMPO, polyols, ethylene glycol, polyethylene (PE) and polypropylene (PP). These chemicals are used in a wide range of end products, in healthcare, construction, fabrics, packaging, transport and electronics. For the first time in Asia, Shell would apply its advanced technology for linear alpha olefins. The project is intended to include construction of a new 1.5 million-tonnes-per-year ethylene cracker, with the mega-site bringing economies of scale and enhanced competitiveness.

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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC