ExxonMobil to ease shut-ins to 200,000 boe/d in Q3 on recovering demand

MOSCOW (MRC) -- ExxonMobil aims to ease global oil and gas production shut-ins by about 40% to 200,000 b/d of oil equivalent as demand for transportation fuels slowly recovers from a second-quarter plunge, according to S&P Global.

About 70% of the shut-ins expected to persist into Q3 are from government mandates, with the rest being market-based cuts, the company said.

ExxonMobil sees global gasoline and diesel demand returning to year-ago levels by Q4, while jet fuel demand will take much longer to recover.

The driller posted a USD1.1 billion loss in Q2, its largest-ever quarterly loss, as global oil demand sank 20% year on year.

"The demand destruction in the second quarter was unprecedented in the history of modern oil markets," Neil Chapman, senior vice president, said during a July 31 earnings call. "Absolute demand fell to levels we haven't seen in nearly 20 years. We've never seen a decline with this magnitude and pace before."

ExxonMobil's global oil and gas production fell to 3.6 million boe/d, down 10% from the previous quarter and down 7% year on year.

North American production of crude and other liquids fell to 1.1 million b/d, down 11% from Q1 and down 2% year on year.

While output from the US Permian Basin actually rose 9% year on year to 298,000 boe/d in Q2, a sharp reduction in capital expenditures is expected to cap the outlook for the rest of the year.

The driller's Permian rig count fell to 30 in Q2 and will fall further to 10-15 by the end of the year, it said.

"That really is just a short-term to manage our current capital planning," Chapman said of the Permian rig count. "One of the great attractions of short cycle is you can take that capital off quickly and, of course, you can put it back on pretty quickly."

Chapman said the driller's focus in the Permian remains Poker Lake in Eddy County, New Mexico, where it started operations in Q2 at its new Delaware central processing facility to collect oil and gas supply in the basin for delivery to the Gulf Coast export markets.

Asked about the flow rates of Permian wells that were being brought back from shut-ins, Chapman said the wells were returning at or above where they left off on the decline curve.

"We wanted to be sure that when we bring them back online that they come back at what I always describe as the same position on the tight curve," he said. "That's indeed what we've seen."

ExxonMobil expects its Permian output to average 345,000 boe/d in 2020, only 15,000 boe/d below its March outlook and more than 70,000 boe/d above 2019 output.

S&P Global Platts Analytics expects total US oil production to decline around 500,000 b/d year on year in 2020 and more than 1.5 million b/d in 2021. That would put US output about 3.4 million b/d below Platts' pre-price collapse forecast by end-2021.

In Guyana, the first phase of the Liza project demonstrated production capacity of 120,000 b/d, and the second phase is set for 2022 startup, the company said.

In May, ExxonMobil pushed back its Guyana targets by six months to a year as a result of the country's election uncertainty and the challenges of rotating crews to prevent virus spread. It now expects to produce 750,000 b/d by 2026.

ExxonMobil's global refining throughput fell to 3.5 million b/d, down 14% from the previous quarter and down 11% year on year.

US refining throughput fell to 1.4 million b/d, down 8% from Q1 but up steady year on year.

As MRC wrote earlier, Exxon Mobil Corp reported a USD1.1 billion second-quarter loss on sharply lower energy demand and prices from the COVID-19 pandemic, and confirmed plans to make deeper spending cuts.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.
MRC

MOSCOW (MRC) -- Sinopec-SK Wuhan Petrochemical Co, a subsidiary of state oil and gas group Sinopec Corp, plans to shut down its 170,000 bpd refinery in late October for about 50 days of maintenance, three industry sources said, as per Hydrocarbonprocessing.

Separately, the Wuhan-based company is due to switch off an 800,000 tonne a year ethylene plant from around mid-October for a regular overhaul for a similar duration, according to a report on Sinopec’s website.

The ethylene facility is a joint venture between Sinopec and South Korea’s SK Innovation.

A Beijing-based Sinopec press official said the company does not comment on operational matters.

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) -- Overall production of polyvinyl chloride (PVC) reached 557,000 tonnes in the first seven months of 2020, up by 1% year on year. Only three producers managed to increase their output, according to MRC's ScanPlast report.

July total production of unmixed PVC was about 47,700 tonnes versus 77,200 tonnes a month earlier, SayanskKhimPlast and RusVinyl increased their capacity utilisation last month. Overall output of polymer rose to 557,000 tonnes in the first seven months of 2020 from 553,700 tonnes a year earlier, only three producers increased their production, whereas RusVinyl reduced its PVC production.

The structure of PVC production by plants looked the following way over the stated period.

RusVinyl (JV of SIBUR and SolVin) produced about 19,200 tonnes of PVC in July, with emulsion polyvinyl chloride (EPVC) accounting for 1,000 tonnes, compared to 28,500 tonnes a month earlier. RusVinyl shut its PVC production capacities for a scheduled maintenance works on 14 July. RusVinyl's overall SPVC output reached 190,000 tonnes in the first seven months of 2020, compared to 196,300 tonnes a year earlier.

SayanskKhimPlast produced less than 4,000 tonnes of suspension PVC (SPVC) in July, whereas this figure was 27,700 tonnes in June.
SayanskKhimPlast shut its PVC production capacities for a scheduled maintenance works on 8 July. The Sayansk plant managed to produce about 169,000 tonnes of PVC in January-July, compared to 166,300 tonnes a year earlier.

The Bashkir Soda Company (BSK) worked without interruptions in July, while in mid-June, due to interruptions in ethylene supplies, PVC production was stopped for 5 days. July total imports of suspension were 23,600 tonnes, compared to 15,800 tonnes a month earlier. The Baskhir plant's overall production of PVC reached 154,300 tonnes in January-July 2020, up 4% year on year.

Kaustik Volgograd shut its production capacities for maintenance in May-June, as a result, the plant's July PVC output was 7,200 tonnes, while in June it was 1,500 tonnes. The plant's overall production of PVC exceeded 43,700 tonnes in the first seven months of 2020 versus 43,200 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Stronger demand and a shutdown for maintenance at a producer's production capacities have led to an increase in polypropylene (PP) prices in Russia since the second half of July. And in the first week of August, the dynamics of price growth increased, according to ICIS-MRC Price report.

Demand for PP subsided significantly in the Russian market in April-May under the pressure of quarantine restrictions, but already since June, demand for polymer has begun to gradually recover from local converters. And already in July, some converters' capacity utilisation approached the last year's figures. Strong demand and an unscheduled shutdown at Stavrolen limited the supply of PP in the market and caused prices to rise. And already in August, the factor of tight supply of polymer from small-sized sellers increased the pressure on prices.

The plant's customers said Stavrolen shut its PP production on 16 July due to technical issues. Initially, the unplanned outage was expected to last 3-7 days, but in fact, the maintenance works lasted for almost one month. The next launch date is scheduled for the middle of this week. The plant's annual production capacity is 120,000 tonnes.

In July, Ufaorgsintez reduced its PP production due to tight supply of feedstock, and already in September, the plant plans to shut down its production capacities for a turnaround (the exact dates of the outage have not been announced yet). The plant's annual production capacity is 120,000 tonnes.

It is also worth noting that Tomskneftekhim's production capacities are expected to be taken off-stream for a scheduled two-week maintenance in September. The plant's production capacity is 140,000 tonnes/year.

The pipe grade stat-copolymer of propylene (PP random copolymer) segment accounted for the acutest shortage. Some converters were unable to fully replenish their inventories both due to domestic producers and foreign suppliers.

In the propylene homopolymer (homopolymer PP) market, most small-sized sellers restricted their sales. And this factor put an additional pressure on prices.

Thus, if in the first week of July, Russian homopolymer PP raffia was sold in the spot market in the range of Rb83,600-87,600/tonne CPT Moscow, including VAT, then by the end of July, PP prices had grown to Rb88,300-92,500/tonne CPT Moscow, including VAT.
MRC

MOSCOW (MRC) -- SayanskKhimPlast (Irkutsk region) has resumed its polyvinyl chloride (PVC) production after a scheduled turnaround, according to ICIS-MRC Price report.

The plant's representative said PVC production was brought on-line on 5 August after the scheduled turnaround. The shutdown was quite long and started on 8 July. The plant's annual production capacity is 350,000 tonnes.

As reported earlier, Russia's second largest PVC producer - RusVinyl - had resumed its production by 28 July, after the shutdown for a scheduled turnaround from 13 July. The plant's annual production capacity is 330,000 tonnes.

Thus, Russian producers completed all their shutdowns for maintenance this year.

JSC "Sayanskkhimplast" (Irkutsk region), established in 1998, is a complex of large-capacity chlororganic production facilities connected in a single production cycle. SayanskKhimPlast produces PVC, caustic soda and bleach. After commissioning of RusVinyl's PVC production (Nizhny Novgorod region), SayanskKhimPlast became Russia's second largest PVC producer.
MRC