Iraq Gharraf oil field restarts at production rate of 50,000 b/d: Japex

MOSCOW (MRC) -- Iraq's Gharraf oil field has restarted production at a rate of 50,000 b/d after output was suspended in mid-March as part of measures to contain the coronavirus pandemic, a Japan Petroleum Exploration spokesman told S&P Global.

Production was restarted July 21 after Malaysia's Petronas, the operator of the field in southern Iraq, dispatched personnel to the oil field in southern Iraq in mid-June, according to the Japex spokesman.

News of the Gharraf oil field restart came to light after OPEC+ members on July 15 pared back their production cut commitment. The 23-country coalition enacted a 9.7 million b/d output cut accord in May in response to the coronavirus crisis and will roll the deal back to 7.7 million b/d in August through to the end of the year, maintaining the terms of the agreement laid out in April.

Production at the Gharraf oil field was suspended on March 16 after Baghdad closed all airports as part of its measures to contain the coronavirus pandemic. The field produced an average of 75,000 b/d over January-March, the Japex spokesman said July 20.

The Gharraf field started production in August 2013 under a technical service contract with Iraq's South Oil Co. The consortium consists of Petronas with a 45% stake, Japex Garraf with 30% and North Oil Co. with 25%. Japex holds a 55% stake in Japex Garraf with state-owned Japan Oil, Gas and Metals National Corp. holding 35% and Mitsubishi 10%.

As MRC wrote before, in early May, 2020, Petronas Chemicals (Kuala Lumpur), Malaysia’s leading petrochemicals player, reported a drop in first-quarter sales and earnings citing the coronavirus disease 2019 (COVID-19) pandemic. The sharp decline in petrochemical product prices following the outbreak of COVID-19, the deepening industry downcycle as crude oil prices collapsed due to the OPEC+ fallout, and the recessionary global economic outlook have hurt results, the company says.

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) -- KNM Process Systems and ADAP Capital have entered into an agreement to set up a joint venture company to undertake oil, gas and petrochemical projects in Sarawak, Malaysia, as per Apic-online.

Under the agreement, KNW would hold a 51% stake in the new company, while ADAP would hold the remaining 49% interest. The agreement is valid for 12 months from the date of execution and may be extended for another period, subject to written approval by both parties.

The parties will partner on engineering, procurement and construction contracts for oil, gas and petrochemical plants; the manufacture and supply of process equipment, tanks, piping and structures for oil, gas and petrochemical plants, and, subject to feasibility and a separate agreement, they may build, own and operate strategic projects.

As MRC wrote before, in mid-March 2020, Malaysia's Pengerang Refining and Petrochemical (PRefChem), a 50:50 JV between Petronas and Saudi Aramco, took its naphtha cracker in Johor off-stream after an explostion and fire at the site. The cracker has an annual capacity of 1.2 million tons/year of ethylene and 600,000 tons/year of propylene. Thus, the explosion occurred at PRefChem complex at roughly 10.50 PM on 15 March 2020, which killed five people. The initial report confirmed that the incident took place at the 300,000 barrel per day refinery unit.

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) -- Russian oil exports to Europe are set to hit their lowest levels in two decades in July, with an output cut deal prompting other suppliers to fill the gap left by Moscow, reported Reuters with reference to data from traders and Refinitiv Eikon.

Russia is set to slash seaborne Urals supplies to Europe to 3.8 million tonnes (900,000 barrels per day) next month, its lowest since 1999, when President Vladimir Putin first came to power as prime minister.

“This is a shock for everyone ... Even the American oil is currently more profitable to refine ... Requests for oil supplies from the United States have increased,” a trading source said.

Light oil flows from the United States to Europe were close to 3 million tonnes in both May and June, just 1 million tonnes lower than a record high in March, Refinitiv Eikon data shows.

Supplies from the United States to Europe remain ample despite oil production decrease in the US by 2.1 million bpd from March, as oil prices have plummeted due to overproduction and the fallout from the coronavirus crisis.

Through May to July, Russia produced 2 million bpd less due to the global oil output cut deal, which Washington is not part of. With less Urals available, its prices have spiked, hurting the demand further.

Urals have traded at a hefty premium of more than USD2 per barrel to dated Brent, global benchmark, since April, up from a discount of around $4 per barrel.

Russian crude sales have also been hit by recovering oil production in Europe, where output had been stagnant for decades until Norway launched the huge Johan Sverdrup oilfield last year.

The new grade, JS Blend, has lower sulphur content than Urals, making it more attractive to some refineries. Norway is not part of the global cuts either and production at Johan Sverdrup is seen rising to 440,000 bpd this summer.

“There is a high risk of not finding a (Urals) cargo at all, so we are looking for alternatives from the start,” a trader at a European refinery said.

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 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) -- Stepan reports second-quarter net income if USD35.8 million, 18.6% higher year-on-year (YOY), as strong demand for cleaning and disinfectant products due to COVID-19 more than offset weakness in construction and oilfield markets, said Chemweek.

Adjusted earnings of USD1.65/share was 10.0% higher YOY and handily beat the analysts’ consensus estimate of USD1.20/share, as reported by Refinitiv (New York). Net sales decreased 2.6% YOY, to USD460.5 million.

Surfactant operating income increased 51% YOY, to USD48.5 million, on sales up 6%, to USD332.3 million. The increase was primarily attributable to a 10% increase in global Surfactant volume and an improved product mix. The sales volume growth was principally due to higher demand in the global consumer product end markets driven by increased demand cleaning and disinfection products as a result of COVID-19, and a USD5.0 million operating income improvement in Mexico.

Polymer operating income fell 32% YOY, to USD15.5 million, on sales down 20%, to USD112.4 million. This decrease was mostly attributable to a 13% decline in sales volume versus prior year. Global rigid polyol sales volume declined 8% driven by Europe and North America, due to COVID-19 construction project delays and cancellations, partially offset by strong growth in China. Lower volume and higher raw material inventory cost within the phthalic anhydride business also contributed to the decline in operating income versus the prior year.

Specialty Product operating income fell 46% YOY, to USD3.2 million, on sales down 17%, to USD15.8 million. This decrease was primarily attributable to order timing differences in Stepan’s food and flavor business and lower margins within its medium chain triglycerides product line.

"2020 will continue to be a difficult year for the world, our country and our industry. We believe Stepan's business remains better positioned to perform than most as we demonstrated in the second quarter. Our teams are working to minimize vulnerabilities and capture opportunities that are available to us," said F. Quinn Stepan, Jr., Chairman, President and CEO. "We believe our Surfactant volume in the consumer product end markets should remain strong as a result of heightened demand for disinfection, cleaning and personal wash products. We anticipate that demand for surfactants within the agricultural market will approximate last year and that the oilfield market will remain down for the balance of 2020. Although the long-term prospects for our Polymer business remain attractive as energy conservation efforts and more stringent building codes should increase demand, we believe the business will be challenged in the short term as re-roofing and new construction projects continue to be deferred or canceled."

As MRC informed earlier, Stepan Co. says that, through subsidiaries in Mexico, it has entered into an agreement with Clariant (Mexico) to acquire Clariant's anionic surfactant business and associated sulfation equipment at Santa Clara, Mexico. The transaction is expected to close in the third quarter of 2020, subject to regulatory approvals and satisfaction of certain other requirements. Financial terms of the transaction were not disclosed.

Besides, in May 2020, Clariant’s CATOFIN catalysts was selected by Advanced Global Investment Co. (AGIC), a joint venture between Advanced Petrochemical Company (APC) and SK Group, to build a PDH facility in the Middle East.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, 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) -- Indonesia's Pertamina is likely to keep planned import volumes in August tepid on the back of sluggish demand, adding further downside pressure to an already lackluster Asian gasoline market, industry sources told S&P Global Platts in the week that began July 19, said S&P Global.

Pertamina's August gasoline import volumes are pegged in the range of 5-6 million barrels, according to market participants, within the previously planned range in July, sources said. The muted import volumes come even as Indonesian domestic gasoline consumption witnessed an uptrend following the easing of large scale social restrictions, or PSBB, early-June.

The acting general manager of Pertamina MOR IV, Rahman Pramono Wibowo, said in a statement that the "average fuel consumption of gasoline in early July [has] increased by 20%, where daily consumption is currently at 2,100 kiloliters [per day]." The average daily consumption of gasoline was higher than May's average of 1,750 kilo liters/day, the statement added.

In May, as the country remained in PSBB, Indonesia's gasoline imports fell to 5.929 million barrels, the lowest since Platts started tracking the country's gasoline import volumes in 2013. The uptick in gasoline consumption mirrors increased activity, with driving across Indonesia recorded at 13% below baseline levels in the week ended July 12, in contrast to April's low of 70% below baseline levels, mobility data from Apple showed.

But with the import volumes for August far from the normal range of around 10 million barrels, sources remained bearish over supply-demand fundamentals. "It [the import volumes] is really very bad," a Singapore-based source said.

In 2019, Indonesia -- Southeast Asia's largest buyer of gasoline -- imported an average of 10.294 million barrels per month, according to data from Statistic Indonesia. Another source echoing similar views said "their Pertamina'] domestic refineries are still running. With the lower [gasoline] consumption rates, it seems unlikely that they Indonesia will come out to buy."

"Pertamina has been discharging cargoes at the end of the month. We saw this in June and it will happen in July again. For them [Pertamina] to come out on spot market they have to finish using these gasoline that is going into their tanks," a third source said.

With muted buying from Indonesia, supply-side pressures due to increased gasoline cargoes from China will continue to weigh in the near term, added market participants.

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 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