Sinopec Shanghai Petchem to raise second-half crude throughput

MOSCOW (MRC) -- Sinopec Shanghai Petrochemical, a refining subsidiary of Asia’s top refiner Sinopec, plans to raise daily crude oil throughput by 7.8% in the second half of 2020, as per Hydrocarbonprocessing.

The Chinese company aims to process 7.68 million tonnes of crude oil in July-December, equivalent to 304,700 barrels per day, a company official said at a briefing on Thursday.

That compares to 7.02 million tonnes of crude oil in the first half of 2020, which was down 6.1% from the same period last year due to the coronavirus outbreak and refinery overhaul.

The firm has annual crude refining capacity of 16 million tonnes.

That indicates Sinopec Shanghai would still lag behind its 2020 crude oil throughput target of 15.3 million tonnes.

Shanghai Petchem recorded a net loss of 1.7 billion yuan (USD247.10 million) in the first half of 2020 based on Chinese accounting standards, as the coronavirus pandemic dampened fuel demand, according to company statements filed with the Shanghai Stocks Exchange.

“The coronavirus outbreak had brought huge pressure on our production and operation in the first half of 2020...We were forced to cut crude throughput...and we were just able to ease inventory pressure since May,” said Huang Fei, a vice general manager at Shanghai Petchem at the briefing.

Huang also said the coronavirus crisis had forced the company to cut fuel exports in the second quarter.

However, the group’s average crude oil refining cost in the first six months of 2020 fell 17.9% year-on-year to 2,717 yuan per tonne, or around $54 per barrel, thanks to the decades-low oil prices.

Shanghai Petchem bought around 84% of its crude oil from the middle east and around 10% from Latin American countries in January-June.

It plans to maintain a full-load refining operation in the second half of this year, in particular increasing production of low sulphur marine fuel.

“We are confident of turning losses into gains in the second half and posting a full-year profit,” said Guan Zeming, general manager of Shanghai Petchem.

As MRC reported before, Sinopec Zhongyuan Petrochemical, also part of Sinopec Group, is in plans to bring on-stream its cracker following a maintenance turnaround. The company is likely to resume operations at the cracker by mid-September, 2020. The cracker was shut for maintenance on August 1, 2020. Located at Henan in China, the cracker has a ethylene capacity of 220,000 mt/year and propylene capacity of 95,000 mt/year.

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.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

COVID-19 - News digest as of 27.08.2020

1. Petrobras puts another small refinery and 26 oilfields on the block

MOSCOW (MRC) -- Brazil's Petrobras has initiated the sale process for a group of 26 onshore and shallow water oilfields and a small nearby refinery in the northeastern part of the country, as the state-run company forges ahead with its ambitious divestment program, reported Reuters. In a securities filing, Petroleo Brasileiro SA, as the firm is formally known, said it had begun the teaser phase for the sale of the oilfields and the nearby Clara Camarao refinery in the state of Rio Grande do Norte. The oilfields, known collectively as Polo Potiguar, produced roughly 23,000 barrels per day (bpd) of oil in 2020 and 124,000 cubic meters per day of gas, while the refinery has an installed capacity of 39,600 bpd, the company said. Petrobras is years into a drive to sell of tens of billions of dollars of non-core assets in a bid to reduce its hefty debt load and sharpen its focus on deepwater oil production. Clara Camarao adds to the list of eight refineries Petrobras has previously put up for sale: RNEST, REPAR, RLAM, REFAP, REGAP, REMAN, LUBNOR and SIX. That group accounts for half of Brazil's refining capacity, or 1.1 million bpd. Following the crash in crude oil prices earlier this year, the company announced that it was permanently idling its shallow-water fields, which tend to have relatively high lifting costs.


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Index of chemical production in Russia up by 5.3% in Jan-Jul 2020

MOSCOW (MRC) -- Russia's output of chemical products rose in Jule 2020 by 3.3% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first seven months of 2020, according to Rosstat's data.

According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output.

July production of benzene fell to 95,300 tonnes from 106,000 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 816,000 tonnes over the stated period, down by 4.9% year on year.

July production of sodium hydroxide (caustic soda) was 89,400 tonnes (100% of the main substance) versus 106,000 tonnes a month earlier because of shutdowns for maintenance at SayanskKhimPlast and RusVinyl. Overall output of caustic soda totalled 738,400 tonnes in the first seven months of 2020, down by only 0.4% year on year.

2,113,000 tonnes of mineral fertilizers (in terms of 100% nutrients) were produced in July 2020 versus 2,032,000 tonnes a month earlier. Overall, Russian plants produced slightly less than 14,500,000 tonnes of fertilizers in January-July 2020, up by 3.9% year on year.

Last month's production of polymers in primary form grew to 838,000 tonnes from 791,000 tonnes in June mainly because of higher capacity utilisation at ZapSibNeftekhim. Overall output of polymers in primary form totalled 5,740,000 tonnes over the stated period, up by 15.7% year on year.
MRC

US fuel inventories fall as demand rebounds

MOSCOW (MRC) -- US crude oil, gasoline and distillate inventories fell last week as refiners ramped up production and demand improved, according to Hydrocarbonprocessing with reference to a government report.

Refinery utilization rose 1.4 percentage points to 81% of total capacity nationally in the week to Aug. 7, the Energy Information Administration said in a weekly report. On the East Coast, refinery utilization rates climbed to 71.8% of total capacity, the highest since August 2019, according to the data.

US fuel demand rose to 19.37 million barrels per day last week, the highest since March, reducing gasoline and diesel inventories even as refineries produced more fuel.

"We're seeing the demand bounce back," said Phil Flynn, senior energy analyst at Price Futures Group. "The market is tightening a lot quicker than people thought."

The market has recovered from the doldrums of April, when US crude futures briefly dropped to more than negative-$40 a barrel, as producers trimmed supply due to a slump in demand amid lockdowns to control the COVID-19 pandemic.

Crude prices gained as much as 2% in the 30 minutes after the report was released. US crude was last trading 61 cents, or 1.5%, higher at USD42.22 a barrel by 12:28 p.m. EDT (1628 GMT), while Brent crude rose 67 cents, or 1.1% to USD45.17.

Gasoline stockpiles fell 722,000 barrels, the EIA said, exceeding analysts' estimates for a 647,000-barrel drop.

Distillate stockpiles, which include diesel, jet fuel and heating oil, fell by 2.3 million barrels, compared with expectations for a 400,000-barrel increase, the EIA data showed.

"Distillate, which has been the weak sister because of jet demand, had a big drawdown. That all is playing into the idea that demand is getting a little bit better," Flynn said.

Crude inventories fell 4.5 million, compared with analysts' expectations in a Reuters poll for a 2.9 million-barrel drop.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.3 million barrels last week, EIA said. US Gulf Coast crude stockpiles posted their biggest combined three-week drop on record, according to the report.

US crude output dropped to 10.7 million bpd from 11 million bpd the previous week, according to the report.

"The most surprising statistic was the decline in oil production by 300,000 barrels per day at the same time that we've been hearing producers talking about restoring production," said Andrew Lipow, president of Lipow Oil Associates in Houston. "That's going to give more support to crude oil prices for the balance of the year."

As MRC reported earlier, US crude oil stockpiles fell in the second week of August even as net imports jumped sharply, while fuel demand dipped as well, according to the US Energy Information Administration's statement. Crude inventories fell by 1.6 million barrels in the week to Aug. 14 to 512.5 million barrels, less than analysts’ expectations in a Reuters poll for a 2.7 million-barrel drop. Net US crude imports rose by 1.1 million barrels per day to 3.6 MMbpd, the EIA said.

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

Stronger Hurricane Laura aims at heart of US oil refining industry

MOSCOW (MRC) -- Hurricane Laura strengthened on Wednesday as it churned over evacuated oil-production platforms in the US Gulf of Mexico and took aim at the energy industry’s refining hub along the Texas/Louisiana coast, reported Reuters.

The storm is forecast to become a Category 4 hurricane with catastrophic, 130 mile (209 km) per hour winds that will drive ocean waters up to 30 miles inland, forecasters said.

A half a million people in the two states fled the storm, clogging highways out of the area. Laura is forecast to dissipate quickly after landfall either late Wednesday or early Thursday, with the greatest danger more from wind and storm surges than rain.

Nine oil-processing plants that convert nearly 2.9 million barrels per day of oil into fuel, and account for about 15% of US processing were shutting down. Chevron Corp and Motiva Enterprises halted two oil refineries in the area on Wednesday.

The storm track will bring devastating winds and a storm surge to an area spanning Port Arthur, Texas, to Lake Charles, Louisiana, forecasters said, an area with a half-dozen large oil refineries and natural-gas processing plants.

The most powerful storm to hit the area since Hurricane Rita in 2005 could deliver an up to 15-foot (4.6-m) storm surge to the plants along the Texas/Louisiana border, the National Hurricane Center said.

Coastal area will see large and destructive waves accompanied by a storm surge that “could penetrate up to 30 miles inland from the immediate coastline,” according to NHC forecaster Daniel Brown.

Oil producers on Tuesday had evacuated 310 offshore oil facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production.

As the storm prepared to strike the Texas/Louisiana border, refiners further west were expecting to ride it out. Marathon Petroleum Corp plans normal production at its large refinery in Texas City, according to people familiar with the matter. Marathon did not have an immediate response.

As MRC wrote before, Marathon Petroleum has recently sold its Speedway retail operations and is keeping offline two refineries shut earlier during the coronavirus pandemic, while increasing runs at its other refineries in the third quarter to meet rising demand following the easing of coronavirus-induced lockdowns.

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