COVID-19 - News digest as of 24.09.2020

1. LyondellBasell to cut Houston refinery staff by 10% on pandemic losses

MOSCOW (MRC) -- LyondellBasell Industries said on Tuesday that it plans to cut salaried staff at its Houston oil refinery because of losses during the COVID-19 pandemic, said Hydrocarbonprocessing. The company confirmed the contents of an email seen by Reuters, in which executive vice president Torkel Rhenman said Lyondell wants "a reduction of approximately 10% of the refinery population." Refiners have posted large losses this year as air and road travel have cratered amid widespread lockdowns and work-from-home policies to combat the spread of the coronavirus.



MOSCOW (MRC) -- Oil futures were caught in a range during the mid-morning trade in Asia Sept. 21, even as Libya's state-owned National Oil Corp. lifted the force majeure on oil fields and ports on Sept.19, raising concerns of oversupply in a market plagued by demand uncertainty, reported S&P Global. At 11.15 am Singapore time (0315 GMT), ICE Brent November crude futures were trading at $43.19/b, up 0.04 cents/b (0.09%) from the Sept. 18 settle, while the NYMEX October light sweet crude contract was at $41.14/b, up 3 cents/b (0.07%). Libya's NOC lifted the force majeure on oil fields and ports, excluding facilities where militants are still present, after the Libyan National Army's leader Khalifa Haftar said on Sept.18 in a public broadcast that a blockade on oil exports, effective since Jan. 18, would be lifted immediately. The lifting of NOC's force majeure could result in the return of up to 1.1 million b/d of crude oil that Libya had been pumping to the market before the blockade was imposed, marking a significant increase over the 100,000 b/d pumped during the blockade. The return of Libyan crude could add to the woes of the OPEC+ coalition, which has been struggling with non-compliance issues from members as it tapers its oil output cuts to 7.7 million b/d from August onwards, from the 9.7 million b/d cut mandated from May through July. While the OPEC+ meeting held on Sept. 17, during which Saudi energy minister Prince Abdulaziz bin Salman secured commitments from compliance laggards to compensate for their excess production, boosted market sentiment, traders are now concerned over the prospect of additional oil from Libya amid weak demand. "The market can ill afford more crude hitting the market," ANZ analysts said in a Sept. 21 note. They reasoned that "The resurgence in COVID-19 infections around the world has seen many governments halt the easing of restrictions".

MRC

MOSCOW (MRC) -- Celanese Corporation, a global technology and specialty materials company, and a global leader in vinyl acetate ethylene (EVA) emulsions, has announced an increase in its September EVA prices in the Americas, as per the company's press release.

The price increases below are effective for orders shipped on or after 15 September 2020, or as contracts otherwise allow, and are incremental to any previously announced increases.

Thus, EVA prices rose, as follows:

- by USD0.05/lb - for the USA and Canada;
- by USD100/mt - for Mexico & South America.

As MRC reported earlier, Celanese also raised its September prices of EVA emulsions for the stated above regions, as follows:

- by USD0.03/lb - for the USA and Canada;
- by USD66/mt - for Mexico & South America.

According to MRC's DataScope report, June EVA imports to Russia fell by 22,5% year on year to 2,940 tonnes from 3,800 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-June 2020 by 8,16% year on year to 17,440 tonnes (18,980 tonnes a year earlier).

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

MOSCOW (MRC) -- Oil prices settled sharply lower Sept. 21 as the market eyed rising Libyan production and the prospect of more demand-destroying lockdowns on the horizon in Europe, reported S&P Global.

NYMEX October WTI settled USD1.80/b lower at USD39.31/b and ICE November Brent finished trading down USD1.71 at USD41.44/b.

A resurgence of COVID-19 coronavirus cases in Europe raised the specter of a return to lockdowns, sending US equity prices sharply lower and adding additional weight to an energy complex already under pressure from the prospect of rising supply.

UK leaders are considering instituting new lockdown measures in the face of a steep rise in the number of new coronavirus infections, according to media reports. The move could herald a return to global lockdowns as the risks of a so-called second wave of infection increases with the onset of cooler weather in the northern hemisphere.

With global refined product appetite still on the back foot from the spring lockdowns, further restrictions on travel and trade are likely to weigh heavily on crude and product demand. US refined product demand was 15% below normal as of the week ended Sept. 11, according to US Energy Information Administration data.

NYMEX October RBOB settled down 5.95 cents at USD1.1771/gal and October ULSD was 5.17 cents lower on the day USD1.1073/gal.

Futures were already lower overnight after Libya's state-owned National Oil Corp. said Sept. 19 it had lifted force majeure on oil fields and ports, excluding facilities where militants are still present, a day after the Libyan National Army announced an end to an eight-month oil blockade.

Regional price differentials were little moved by the news. Platts Es Sider FOB Libya was assessed at a USD1.40/b discount to the Med Dtd strip, in from USD1.45/ on Sept, while the Platts Azeri Light CIF Augusta premium to the BTC Dtd strip edged down to 90 cents/b from 95 cents/b the session prior.

Analysts were mixed on the impact of the lifting of the Libya blockade, which could send up to 1.1 million b/d of crude to the market and potentially complicate the OPEC+ coalition's attempt at balancing an oil market still awash with oil.

"OPEC+ tentatively provided some relief that the oil market was heading toward balance, but rising output from Libya puts that at risk," OANDA senior market analyst Edward Moya said in a note.

But Goldman Sachs analysts, citing "significant uncertainty on the timing, magnitude and sustainability" of a restart, forecast Libya production to rise by just 400,000 b/d by December, and noted that any upside risk to the forecast is offset by downside supply risks from better OPEC+ compliance.

Meanwhile, offshore US Gulf of Mexico oil and gas production continued to recover Sept. 21 as Tropical Storm Beta was preparing to make landfall along the Texas coast, US Bureau of Safety and Environmental Enforcement data showed.

Less than 10% of the Gulf's oil and gas volumes remained offline on Sept. 21 from the effects of Hurricane Sally last week, with much of the production still offline coming from Shell's Perdido platform in the western Gulf that was shut in ahead of Beta.

As MRC wrote previously, Royal Dutch Shell Plc returned its 227,400 barrel-per-day (bpd) oil refinery at Norco, Louisiana, to normal operations on Monday. Shell returned the 240,000-bpd crude distillation unit (CDU) and 14,800-bpd alkylation unit to production as well as restarting the 40,000-bpd reformer.

We remind that in May 2020, CNOOC Oil & Petrochemicals Co. Ltd (CNOOC), Shell Nanhai B.V (Shell) and the Huizhou Government have announced a strategic cooperation agreement to further expand the CNOOC and Shell Petrochemical Company (CSPC) 50:50 joint venture in Huizhou, Guangdong Province, China. The expansion is planned to serve the growing number of intermediate and performance chemicals customers in the key market of China, supplying products including SMPO, polyols, ethylene glycol, polyethylene (PE) and polypropylene (PP). These chemicals are used in a wide range of end products, in healthcare, construction, fabrics, packaging, transport and electronics. For the first time in Asia, Shell would apply its advanced technology for linear alpha olefins. The project is intended to include construction of a new 1.5 million-tonnes-per-year ethylene cracker, with the mega-site bringing economies of scale and enhanced competitiveness.

Ethylene and propylene are feedstocks for the production of PE and 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

MOSCOW (MRC) -- Sasol said Sept. 21 the new low density polyethylene (LDPE) plant, which had been slated to start up in early 2020 before it was damaged by fire during commissioning in January, did not sustain any significant storm impacts, reported S&P Global.

The company has resumed commissioning the plant, the last of the new units in the company's USD12.8 billion Lake Charles expansion, and expects to begin startup once power is fully restored at the site.

As MRC informed earlier, Sasol expects to restart crackers and downstream derivative units at its Lake Charles, Louisiana, complex by early- to mid-October once full load power is restored. "The Sasol Lake Charles site is currently partially energized," the company said.

Sasol added that it had finished damage assessments of all 14 manufacturing units and associated utilities and infrastructure at the complex, which was shut ahead of Hurricane Laura's Aug. 27 assault. Lake Charles took a direct hit from the Category 4 storm, which came ashore Aug. 27 packing 150 mph winds. Sasol said those assessments found moderate wind damage to cooling towers and some insulation and building damage, but no apparent damage to major process equipment, utilities and infrastructure.

Sasol's Lake Charles complex includes 1.5 million mt/year and 439,000 mt/year crackers; a 470,000 mt/year linear low density polyethylene plant (LLDPE); a 380,000 mt/year ethylene oxide/monoethylene glycol (MEG) unit; and a new 420,000 mt/year LDPE plant. The company issued a force majeure declaration on North American PE.

According to MRC's ScanPlast report, July estimated LDPE consumption in Russia decreased to 43,380 tonnes from 55,380 tonnes a month earlier. Angarsk Polymers Plant and Gazprom neftekhim Salavat cut thei shipments to the domestic market because of shutdowns for maintenance. Russia's estimated LDPE consumption grew to 335,000 tonnes in January-July 2020, up by 6% year on year. Despite the long outages, LDPE production increased, and imports also rose.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

MOSCOW (MRC) -- Country's largest oil marketing company Indian Oil Corporation proposes to leverage its growing petrochemical operations to expand textile business as it looks to diversify operations and offset risks associated with oil operations, said Swarajyamag.

At a recent Asia Pacific oil summit IOC chairman S M Vaidya reportedly said that petrochemical expansion is being targeted by the company as it gives the company ability to de-risk from lower refining margins.

The chairman said that the petrochemical expansion would look into entering niche areas with a possibility of forward integration into textile business.

Petrochemical presents big opportunity in India as the per capita consumption still remains very low. This is expected pick up pace in coming years and IOC wants to capture most of emerging market.

IOC is expanding its petrochemical capacity by more than 70 per cent from its current 3.2 million tonnes a year. It is also on new technologies that reduces the cost of producing petrochemicals.

The project will add a 500,000 metric tons/year PP unit as well as a 235,000 metric tons/year lube oil base stock plant.

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.

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