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Australia proposes paying oil refiners billions to stay open

September 16/2020

MOSCOW (MRC) -- Australia has proposed offering incentives worth AD2.3 billion (USD1.67 billion) over 10 years to keep the country's four remaining oil refineries open and said it would invest in building fuel storage as part of a long-term fuel security plan, said Hydrocarbonprocessing.

The country's refiners have been battered by the coronavirus-driven collapse in fuel demand, racking up losses which they say threaten the future of their plants as they compete against much bigger refineries around Asia. "The government is committed to a sovereign on-shore refinery capacity despite the threat to the viability of the industry," Prime Minister Scott Morrison said.

To shore up near term fuel security, the government said it would include AD211 million in its upcoming budget to boost storage of diesel, crucial for farms, mines, trucks and back-up power.

"The events of 2020 have reminded us that we cannot be complacent. We need a sovereign fuel supply to shield us from potential shocks in the future," Morrison said in a statement. The government said it would work with the industry to design a "refinery production payment" as an incentive to keep the four plants open. Together with an exemption from new fuel storage requirements, the incentives would be worth about AD2.3 billion over 10 years.

The four refiners - BP Plc, Exxon Mobil Corp, Viva Energy Group and Ampol Ltd - all welcomed the proposals but made no commitment to keep their plants open. "There's recognition the refining sector is at a bit of a critical crossroads and needs the long-term confidence to maintain operations and investment ... and I think the package goes a long way to achieving that outcome," Viva Chief Executive Scott Wyatt told Reuters.

BP and Ampol Ltd said they needed to see details of the measures to understand the impact on their businesses.

Earlier this year, as MRC wrote previously, 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.
Author:Anna Larionova
Tags:petroleum products, PP, PE, petrochemistry.
Category:General News
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