US Gulf of Mexico producers shut in more production ahead of two tropical storms

MOSCOW (MRC) -- US Gulf of Mexico producers have opted to shut more of their production and evacuate crews Aug. 23 as meterologists revised the tracks of two tropical storms, Marco and Laura, that are set to come ashore back-to-back this week, likely along the Louisiana coast, reported S&P Global.

Statoil said that it had shut in production and evacuated crews from its US Gulf platforms on Aug. 22. The company has 123,000 boe/d of offshore US oil and gas production from nine Gulf fields, its website said. The company is also developing two other fields, Vito and North Platte.

And late Aug. 22, Shell had "shut in production at all but one of our assets" in the US Gulf, the company said in a statement, but did not identify the field that continues to produce.

Earlier that day, the company said it had shut in "the majority" of its Gulf assets.

Shell operates the Appomattox field in the eastern Gulf, the Stones and Perdido hubs in the remote ultra-deepwaters, and the Mars, Auger, Ursa, Olympus, Echilada and Salsa in shallower deep waters. All are offshore Louisiana except for Perdido, which is ofshore Texas.

Also, "we are in the process of safely pausing our drilling operations," Shell said.

The US Gulf currently produces about 1.85 million b/d of oil and about 2.7 Bcf/d of natural gas, according to the federal Bureau of Safety and Environmental Enforcement.

As of Aug. 22, BSEE reported that operators had shut in 13% of US Gulf oil output, or about 240,785 b/d, and 4.4% of natural gas, or 19,000 Mcf/d. An update is expected Aug 23.

In addition, the tracks for both storms have changed, as Marco's path has drifted east and Laura has migrated west of earlier forecasts. As a result, the storms are currently both predicted to hit the US Gulf Coast around Louisiana back-to-back early to midweek.

The storms pose a threat to area refineries, with the current storm cones covering roughly Houston, Texas to New Orleans, Louisiana.

Over 50% of US refining capacity is on the coast, with PADD III refining capacity, including condensate splitters, totaling over 10 million b/d, according to S&P Global Platts Analytics. Of that, 9.6 million b/d is in Texas, Louisiana and Mississippi.

"Depending on the severity, disruptions can last for a matter of days and most notably hurricanes Rita and Katrina upended operations during the fall of 2005," Platts Analytics analysts said in a report. "These historic storms led to some refineries being shuttered for weeks/months as extensive repairs became necessary. Overall US downtime amounted to over 3 million b/d for September and October of 2005, around five-six times average outages for the preceding five years for the respective months."

However, they added that refiners are currently cutting refinery runs because of weak demand owing to the coronavirus.

PADD III refinery runs averaged 7.8 million b/d the week ended Aug. 14, according to the US Energy Information Administration, 1.4 million b/d below the five-year average.

And the area is well-supplied with refined products. PADD III diesel inventories at 56.5 million barrels the week ending Aug. 14 were roughly 45% above the five-year average, while gasoline stocks at 89.3 million barrels were 13% above the five-year average.

Marco, which is forecasted to become a hurricane later Aug. 23, has now entered the Gulf of Mexico from the Caribbean Sea, according to the US National Hurricane Center. Storm watches are in effect for a band extending from Alabama to central Louisiana, including New Orleans.

Marco was earlier forecasted to make landfall in southeast Texas but the trajectory shifted substantially to the east late Aug. 22, according to the NHC. The storm is projected to make landfall late Aug. 24 or early Aug. 25 in southeast Louisiana.

Laura early Aug. 23 was passing over Hispanola and is projected to become a hurricane Aug. 26. It is targeted to make landfall along the central or eastern Louisiana coast late Aug. 26 or early Aug. 27, according to NHC.

As MRC wrote before, Shell will announce a major restructure by the end of the year as the company prepares to accelerate its shift toward its net-zero emissions goal by 2050, said CEO Ben van Beurden to employees. The restructuring will include workforce reductions as part of broader cost-cutting measures, although no figures have been decided yet, the CEO reportedly said during an internal webcast.

We remind that Royal Dutch Shell Plc plans to idle a sulfur recovery unit (SRU) at the joint-venture Deer Park, Texas, refinery in 2021, said Shell spokesman Curtis Smith in July 2020. Currently, the refinery is operating at about 75% of its 318,000 barrel-per-day capacity because of reduced demand due to the COVID-19 pandemic.

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) -- Motiva Enterprises may shut the largest crude oil refinery in the United States for the passage of Hurricane Marco and Tropical Storm Laura later this week, reported Reuters with reference to sources familiar with plant operations.

The company’s 607,000 barrel-per-day (bpd) refinery in the coastal city of Port Arthur, Texas, could be drenched by both storms between Tuesday and the end of the week based on current forecasts, the sources said.

As MRC wrote before, citing the current economic downturn, Motiva Enterprises (Houston, Texas) said earlier in August that it will slash 10% of its workforce by 1 September, including jobs at its headquarters, terminals, and Port Arthur, Texas, facilities.

We remind that Motiva is evaluating opportunities to build a new polyethylene (PE) line within its proposed steam cracker and aromatics project in Jefferson County, Texas. The new PE capacity will be located at the company’s Port Arthur Refinery Complex in Jefferson County, Texas. The planned capacity of the unit was not specified, while the value of the project is reportedly estimated at around USD3.1 billion.

Besides, in late 2019, Motiva Enterprises acquired 100% of Flint Hills Resources chemical plant, adjacent to its Port Arthur, Texas, oil refinery. The Flint Hills plant operates a 1.57 billion-pound-per-year ethylene cracker, a unit producing nylon component cyclohexane, and a network of pipelines and storage caverns. Saudi Aramco, in its IPO prospectus, said the cash payment will be determined as per the project value at SAR 7.13 billion (USD1.9 billion).

Ethylene and propylene are feedstocks for producing 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.

Motiva Enterprises, LLC, is a fully owned affiliate of Saudi Refining Inc. and headquartered in Houston, Texas, United States with revenue of USD24 billion. Previously, it was a 50–50 joint venture between Shell Oil Company (the wholly owned American subsidiary of Royal Dutch Shell) and Saudi Refining Inc. (controlled by Saudi Aramco).
MRC

MOSCOW (MRC) -- China imported a record-high 27,207 mt of polyvinyl chloride (PVC) from India in June - more than five times compared to 5,174 mt recorded in May - as India accelerated PVC exports amid pandemic-related nationwide lockdown, reported S&P Global with reference to the latest statistics data.

It is a rare move as the Indian PVC market is net short by close to 2 million mt/year.

India started its nationwide lockdown on March 25 and it was initially scheduled to be lifted on May 3, but the government extended the lockdown by another two weeks with new restrictions.

During the lockdown, India's PVC demand plunged, prompting cancellation of PVC deliveries to India. Suppliers had to move their cargoes to China to clear excess supplies.

Looking forward, market sources said China's PVC imports from India would likely slow as India's nationwide lockdown ended early-June.

In total, China's PVC imports for June also stood at a record-high of 172,941 mt, up from 92,254 mt in May, according to the latest statistics.

In other countries, China's PVC imports from the US stood at a three-month high of 23,672 mt, compared to 5,231 mt a month earlier, the statistics showed.

As MRC informed before, Sichuan Jinlu Group has halted operations at its Polyvinyl chloride (PVC) carbide based plant owing to flooding in the region. The company has undertaken an unplanned shutdown at the plant early this week. The exact duration of the shutdown could not be ascertained. Located at Deyang, China, the PVC carbide based plant has a production capacity of 300,000 mt/year.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia totalled 13,800 tonnes in the first half of 2020, up by 5% year on year, whereas exports grew by 7% year on year.
MRC

MOSCOW (MRC) -- US chemical production is rebounding, according to the ACC’s US Chemical Production Regional Index (US CPRI). The figure, a three-month moving average (3MMA), increased 0.8% in July after dropping 2.0% in May and 1.6% in June, reported Chemweek.

Segments contributing to the increase included plastic resins, chlor-alkali, organic chemicals, industrial gases, synthetic dyes and pigments, consumer products, and fertilizers, says ACC. Production continued to decline in adhesives, coatings, other specialty chemicals, crop protection, synthetic rubber, and manufactured fibers.

ACC notes that goods manufacturing continued a broad-based recovery in July, with overall factory activity up 4.9% on a 3MMA basis.

Year-over-year (YOY), the US CPRI was down 5.9%, the fourteenth consecutive month of YOY declines, but an improvement over recent months.

As MRC wrote previously, US chemical volumes are expected to drop nearly 10% this year as global economic activity contracts due to the impacts of COVID-19, according to the American Chemistry Council's (ACC) Mid-Year 2020 Chemical Industry Situation and Outlook. Volumes should recover in 2021 with a return to pre-COVID-19 output levels in the US by the second half of 2021.

We remind that after the May fall in June, Russia"s output of products from polymers rose by 16.9% due to the easing of quarantine restrictions and seasonally stronger demand. However, this figure increased by 1.3% year on year in the first six months of 2020.
MRC

MOSCOW (MRC) -- LyondellBasell came out with quarterly earnings of USD0.71 per share, beating the Zacks Consensus Estimate of USD0.61 per share. This compares to earnings of USD2.75 per share a year ago. These figures are adjusted for non-recurring items, as per ZACKS.

This quarterly report represents an earnings surprise of 16.39%. A quarter ago, it was expected that this oil refiner and chemical company would post earnings of USDUSD.36 per share when it actually produced earnings of USD1.52, delivering a surprise of 11.76%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

LyondellBasell, which belongs to the Zacks Chemical - Diversified industry, posted revenues of USD5.55 billion for the quarter ended June 2020, missing the Zacks Consensus Estimate by 3.98%. This compares to year-ago revenues of USD9.05 billion. The company has not been able to beat consensus revenue estimates over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

LyondellBasell shares have lost about 30.9% since the beginning of the year versus the S&P 500's gain of 0.5%.

As MRC reported previously, in early August, 2020, China’s Bora LyondellBasell Petrochemical, a JV between the privately owned Bora Enterprise Group and the world's petrochemical major - LyondellBasell, has started up its new steam cracker at the Panjin complex in northeast China. The steam cracker, when fully operational, is able to produce up to 1 mln mt/year of ethylene.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC