Saudi Arabian SIIG and Petrochem in merger talks

MOSCOW (MRC) -- Saudi Industrial Investment Group (SIIG; Riyadh) and National Petrochemical Co. (Petrochem; Jubail, Saudi Arabia) say they have started talks over a potential merger of the two companies, reported Chemweek.

SIIG and Petrochem have issued statements saying their boards have approved initial discussions between the companies to study the “economic feasibility” of a possible merger. No agreement has been reached on the final structure of any merged business, they note. SIIG currently owns 50% of Petrochem. The two companies are listed on the Saudi stock exchange.

Entering into the talks “does not necessarily mean that the deal will take place between the two parties,” they state separately. If a deal is agreed on, it will be subject to the conditions and approvals of the competent authorities, and the approval of the extraordinary general assembly of each company, they say. Any developments in the talks will be announced later, they say.

The two companies previously held merger discussions in 2011, with those talks eventually postponed to allow Petrochem’s petchems facility at Jubail to reach production capacity and provide better valuations of the companies, SIIG said at the time.

SIIG was established in 1996 and Petrochem was formed in 2008. SIIG had total assets of 19.2 billion Saudi riyals (USD5.1 billion) at the end of June, and Petrochem had SR16.4 billion in total assets.

Petrochem owns 65% of Saudi Polymer Co. at Jubail, which produces more than 1.7 million metric tons/year (MMt/y) of polymers, it says. The complex at Jubail is designed to produce 1.22 MMt/y of ethylene, 440,000 metric tons/year of propylene, a combined 1.1 MMt/y of high-density polyethylene (HDPE) and low-density polyethylene (LDPE), 400,000 metric tons/year of polypropylene (PP), and 100,000 metric tons/year of hexene-1. The units are fed by a steam cracker using ethane and propane as feedstock.

Petrochem confirmed in July that Saudi Polymers Co. would permanently close its 200,000-metric tons/year polystyrene (PS) manufacturing plant at the Jubail petchems complex and write down its value. It said the move reflected difficulties in achieving profits in the market. Arabian Chevron Phillips Petrochemical, wholly owned by CPChem, owns the rest of Saudi Polymers Co. The closure of the PS complex was estimated to have an impact of up to SR277 million on Petrochem’s second-quarter results, it said at the time.

Saudi Chevron Phillips (SCP), an equally owned joint venture (JV) between SIIG and Arabian Chevron Phillips Petrochemical, operates a complex at Jubail designed to produce 835,000 metric tons/year of benzene, 355,000 metric tons/year of cyclohexane, and 804,000 metric tons/year of gasoline. SCP is Saudi Arabia’s sole producer of cyclohexane, a feedstock used in the production of nylon. It is also the largest single producer of benzene in Saudi Arabia. Another equally owned manufacturing JV between the two companies, Jubail Chevron Phillips (JCP), produces dilute ethylene, propylene, and pyrolysis gasoline. The 230,000 metric tons/year of ethylene produced is fed into a 730,000-metric tons/year styrene unit. The propylene plant is designed to produce 150,000 metric tons/year. The two JVs use light naphtha feedstock supplied by Saudi Aramco.

Any deal between SIIG and Petrochem would mark further consolidation in the Saudi petrochemicals sector, following Aramco’s acquisition of a 70% stake in Sabic earlier this year and Saudi International Petrochemical Co.’s (Sipchem) acquisition last year of Sahara Petrochemical Co.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

Oil refiners worldwide struggle with weak demand, inventory glut

MOSCOW (MRC) - Global oil refiners reeling from months of lackluster demand and an abundance of inventories are cutting fuel production into the autumn because the recovery in demand from the impact of coronavirus has stalled, according to executives, refinery workers, and industry analysts, Reuters.

Refiners cut output by as much as 35% in spring as coronavirus lockdowns destroyed the need for travel. As lockdowns eased, refiners increased output slowly through late August. But in top fuel consumers the United States and elsewhere, refiners have been decreasing rates for the last several weeks in response to increased inventories, a sustained lack of demand, and in response to natural disasters.

The hit to capacity has been most notable in China. The second-largest fuel consumer led the world in oil demand recovery after taming its outbreak of coronavirus. But its refiners also export fuel, and those shipments have been weak due to the virus's effect on fuel demand in other Asian nations. Chinese refineries are expected to cut runs in September, led by PetroChina with a 5-10% reduction versus August, as Chinese refiners grapple with high fuel inventories and poor export margins, analysts said.

"The impacts of COVID-19...are putting extreme pressures on the refining business that we have not experienced before and are not sustainable over the longer term," Scott Wyatt, chief executive at Australian fuel supplier Viva Energy Group Ltd, said earlier this month.

Inventories of distillates, which include diesel, jet fuel, and heating oil, which usually start building ahead of winter, are brimming this year, leading to a poor outlook for refinery margins for the coming months. U.S. fuel demand has fallen 13% year-on-year, according to the U.S. Energy Information Administration. Autumn is typically when use of heating oil and diesel rises, but with more than 179 million barrels in storage, nearly a record, refiners have no incentive to keep units running.

The Paris-based International Energy Agency cut its forecast for global oil demand for 2020 for the second time in two months last week due to the faltering recovery. The energy watchdog forecast global consumption of petroleum and liquid fuels will average 91.7 million barrels per day for all of 2020, a reduction in its previous forecast of 200,000 bpd and down 8.4 million bpd from 2019's 100.1 million bpd level.

"From our perspective, we see that pre-COVID demand will probably not be back until 2023," said Molly Morris, senior vice president in crude, products, and liquids at Equinor. U.S. refiners are still producing 20% less fuel than before the pandemic, operating at 76% of overall capacity, lowest for this time of year since 2008. Chinese, Indian, Japanese, and South Korean refineries cut their utilization rates from July and August.

"Even with a U-shape economic recovery, demand potentially is going to be around 2 million bpd below where it was in the fourth quarter of 2019," David Fyfe, chief economist at Argus, said on a webinar earlier this month. Asia’s fuel output could fall further during seasonal maintenance between September and November, and several facilities worldwide are expected to close.

Average utilization rates at Chinese state-owned refineries were at around 78.6% by end-August, down around 3.6 percentage points from July, data compiled by China-based Longzhong consultancy showed.

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

Honeywell UOP Polybed to supply high purity hydrogen for Hengli Petrochemicals

MOSCOW (MRC) -- Honeywell UOP announced today that Hengli Petrochemical Co. Ltd. successfully started up seven UOP Polybed pressure swing adsorption (PSA) units supplying high-purity hydrogen at its complex in Dalian, Liaoning, China, according to Hydrocarbonprocessing.

As a fully integrated site, the complex produces gasoline and diesel, along with plastics and other chemicals. Hengli will use the PSA units in downstream hydrotreating to create feedstock for petrochemical products, producing approximately 1.4 MM Nm3/h (normal cubic meters per hour) of hydrogen.

“Hydrogen purification is essential to produce clean fuels, remove contaminants and improve the quality of fuels and petrochemicals,” said Bryan Glover, vice president and general manager, of the UOP Process Technologies business. “Customers such as Hengli are choosing UOP PSA technology because of its record of producing a reliable and efficient source of high-purity hydrogen to improve the efficiency of their operations.

Polybed PSA systems are skid-mounted, modular units complete with hardware, adsorbents, control systems and embedded process technology, enabling quick and efficient installation to reduce cost and downtime. Modular delivery can reduce the installation time by up to 30%, versus conventional “stick-built” construction.

The PSA process uses proprietary UOP adsorbents to remove impurities at high pressure from hydrogen-containing process streams, allowing hydrogen to be recovered and upgraded to more than 99.9% purity to meet refining needs. In addition to recovering and purifying hydrogen from steam reformers and refinery off-gases, the Polybed PSA system can be used to produce hydrogen from other sources such as ethylene off-gas, methanol off-gas and partial-oxidation synthesis gas.

Since its introduction in 1966, UOP has improved Polybed PSA technology with new generations of adsorbents, enhanced cycle configurations, modified process and equipment designs and more reliable control systems and equipment. Today, Honeywell UOP has installed more than 1,100 Polybed PSA units in more than 70 countries. As a result, Polybed PSA is a proven technology with dozens of large-scale unit references globally.

Hengli Petrochemical, established in 1994, is one of the largest refining and petrochemical companies in China. In 2017, Hengli selected Callidus advanced flares and low-nitrogen oxides (NOx) burner technology for its refinery and petrochemicals complex.

As MRC reported earlier, Hengli Petrochemical has resumed operations at its propylene unit following a planned outage. The company restarted the unit on March 9, 2020. The unit remained under turnaround for about one week. Located in Liaoning, China, the propylene unit has a production capacity of 450,000 mt/year.

We remind that Hengli started up the 450,000 tons/year Phase I polypropylene (PP) plant in May 2019 and launched its Phase II PP plant by end of November 2019.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

Evonik and Siemens Energy put pilot plant into operations

MOSCOW (MRC) -- Evonik and Siemens Energy today commissioned a pilot plant sponsored by the German Federal Ministry of Education and Research (BMBF) that uses carbon dioxide and water to produce chemicals, said the company.

The necessary energy is supplied by electricity from renewable sources. The pilot plant is located in Marl, in the northern Ruhr area, and its innovative technology of artificial photosynthesis should contribute to the success of the energy revolution. It is an essential part of the Rheticus I and II research projects, which are sponsored by the Federal Ministry of Education and Research (BMBF) with a total of 6.3 million euros.

German Federal Minister of Education and Research Anja Karliczek said on the opening ceremony in Marl, "I am delighted that we have today given the go-ahead for a new test facility of the very highest standard in Marl. With Rheticus, we are showing how we can set up climate-friendly production processes in the chemical industry and at the same time manufacture new innovative products. And this works not only here in Germany, but potentially all over the world. This opens promising opportunities for technology exports. We want to promote effective climate protection and continue to have a strong industrial base in Germany. I am firmly convinced that we can succeed in both. I am pleased that my ministry is now investing a total of 6.3 million euros in the new pilot plant in Marl with this goal in mind and wish all those involved every success".

Stefan Kaufmann, Member of the German Bundestag and Federal Commissioner for Green Hydrogen, states, "Today's start of the Rheticus pilot plant for the production of specialty chemicals is a real pioneering achievement. After all, a green hydrogen economy can only succeed in Germany as a country of innovation, if innovative technologies are used. This requires courage and a spirit of research. The project partners at Rheticus are exemplary in demonstrating this." Harald Schwager, Deputy Chairman of the Executive Board of Evonik and responsible for innovations, said, "Climate protection is not possible without chemistry, because our industry supplies and develops solutions for the energy turnaround. Research projects such as Rheticus are a motivation and innovation driver for a sustainable society". At the same time, he warned against speed when phasing out fossil fuels. "Security of supply and reliability in political decisions set the framework in which new things are created."

Christian Bruch, CEO of Siemens Energy: "Our goal is to use innovative technologies to enable new, more sustainable solutions. With our hydrogen and CO electrolysis, we are building a bridge from green electricity to sustainable material applications. The close cooperation between politics, science and business partners, like Evonik, is an important step in this direction." The Rheticus research project is a spin-off of the Copernicus projects, one of the largest research initiatives of the German Federal Government on energy system transformation. Rheticus demonstrates how the Power-to-X idea can be successfully put into practice.

For the idea of artificial photosynthesis, which is behind the Rheticus experimental facility, the researchers took nature as a model. Just as plants use solar energy to produce sugar, for example, from carbon dioxide (CO2) and water in several steps, artificial photosynthesis uses renewable energies to produce valuable chemicals from CO2 and water through electrolysis with the help of bacteria. This type of artificial photosynthesis can serve as an energy store and thus help to close the carbon cycle and reduce carbon dioxide pollution in the atmosphere.

The pilot plant has started up in Marl, the largest Evonik site. It consists of a CO electrolyzer, developed by Siemens Energy, a water electrolyzer and the bioreactor with Evonik's know-how. In the electrolyzers, carbon dioxide and water are converted into carbon monoxide (CO) and hydrogen (H2) with electricity in a first step. This synthesis gas is used by special microorganisms to produce specialty chemicals, initially for research purposes. These are starting materials for special plastics or food supplements, for example. In the coming weeks, the composition of the synthesis gas and the interaction between electrolysis and fermentation will be optimized. In addition, a unit for processing the liquid from the bioreactor will be set up to obtain the pure chemicals.

After successful completion of the current Rheticus project phase (Rheticus II), Evonik and Siemens Energy will have a unique platform technology at their disposal that can produce energy-rich and valuable substances such as specialty chemicals or artificial fuels from CO2 - in a modular and flexible manner.

As MRC reported before, Dow and Evonik have recently entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, Russian plants' total PP production grew to 158,800 tonnes in July, compared to 149,400 tonnes a month earlier; ZapSibNeftekhim, Nizhnekamskneftekhim and Poliom increased their capacity utilisation. Russia"s overall PP production reached 1,063,700 tonnes in January-July 2020, compared to 854,500 tonnes a year earlier. Five out of eight producers raised their capacity utilisation, with a new producer - ZapSibNeftekhim - accounting for the main increase in the output.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.
MRC

Indian Oil reviews refinery expansion plans

MOSCOW (MRC) -- Indian Oil Corp (IOC) India's largest refiner, is reviewing its refinery expansion plans because of a gradual rise in use of cleaner fuels and changing demand patterns in Asia's third-largest economy, reported Reuters with reference to IOC's chairman's statement.

In 2018 India set a target for a 77% jump in refining capacity to about 9 MM barrels per day (bpd) by 2030, with IOC raising capacity to 2.6 MM bpd.

However, Petroleum Planning and Analysis Cell, an oil ministry think-tank, is revising the supply and demand scenario for the country.

"Based on that study we will revise our numbers as well," IOC Chairman S.M. Vaidya told a news conference on Monday.

"Demand is not really destructive in our country. It has got deferred. Nevertheless, we are reviewing our refinery expansion plans."

Vaidya said that IOC's focus is on adding higher capacity through expansion of existing units and raising petrochemical capacity to protect margins.

"As far as grassroots projects are concerned, we are reviewing all projects," he added.

IOC will also review expansion of its Paradip refinery when the revised supply and demand figures are available, he said.

As MRC informed previously, Indian Oil Corp, the country’s top refiner, is close to winning its first contract to export up to 720,000 tons of clean products to Mauritius under an annual deal from November.

We remind that Indian Oil says it will build an integrated paraxylene (PX) and purified terephthalic acid (PTA) facility at Paradip in Odisha State, India, at an estimated investment of 138 billion Indian rupees (USD1.84 billion). The project will be completed by early 2024, with the complex planned to produce 800,000 metric tons/year of PX and 1.2 million metric tons/year of PTA, it says.

PTA is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, Russia's estimated PET consumption totalled 367,720 tonnes in the first six months of 2020, up by 19% year on year. Russian companies processed 62,910 tonnes of material in June.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.
MRC