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Total swings to USD8.4 billion net loss on oil, gas write-down, petchems margins "resilient"

August 03/2020

MOSCOW (MRC) -- Total has swung to a net loss for the second quarter of 2020 of USD8.37 billion from a profit of USD2.76 billion in the prior-year period, due largely to a USD8.1-billion impairment after lowering its future oil and gas price assumptions and cutting the value of some of its upstream oil and gas assets, said Chemweek.

On an adjusted earnings basis it reports income of USD126 million, 96% lower year-on-year (YOY) but beating analysts consensus expectations for a net loss of about USD520 million, as reported by Refinitiv (New York).

The company says the lower adjusted earnings were due to lower Brent crude oil and natural gas prices, reduced refining margins, and the impact of the COVID-19 pandemic on demand. Net cash flow fell to USD226 million in the second quarter from USD3.3 billion a year earlier, with group sales plunging by over 50% YOY to USD25.7 billion.

Total does not state its chemicals earnings separately, reporting a 20% decline YOY in its adjusted net operating income to USD575 million for its combined refining and chemicals business. The decrease was notably due to an even more severely degraded refining margin environment in the second quarter and low plant utilization of 59%, it says. This was partially offset by resilient petrochemical margins and a good performance from its trading activities, it says. Refining and chemicals net sales in the quarter plunged over 60% YOY to USD11.92 billion from USD30.04 billion.

Olefins monomer production rose 40% YOY to 1.39 million metric tons, although last years equivalent quarter was impacted by planned maintenance of steam crackers in Daesan, South Korea; and Port Arthur, Texas. Polymer production grew by 6% compared to the prior-year period to 1.19 million metric tons, again partly due to the maintenance work last year at Daesan, Total says.

By region, petchems production of both olefins and polymers fell 3% YOY in Europe during the second quarter to 1.27 million metric tons, while petchems output in the Americas rose 34% to 637,000 metric tons. In the Middle East and Asia, petchems production more than doubled to 672,000 metric tons.

Total says oil prices have strengthened since the start of June but that the oil environment remains volatile, given the uncertainty around the extent and speed of the global economic recovery post-COVID-19. Net investments in 2020 will be kept below USD14 billion, while the company will achieve savings of USD1 billion in operating costs compared to 2019, it says.

As MRC informed before, Total has recently disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.


mrcplast.com
Author:Anna Larionova
Tags:petroleum products, PP, PE, petrochemistry, Total Petrochemicals.
Category:General News
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