OMV petchem margin declines, refining margins tank

MOSCOW (MRC) -- OMV (Vienna, Austria) says its petrochemical net margin declined 15% year on year (YOY) in the third quarter ended 30 September, while its refining margin indicator plunged 84% YOY, reported Chemweek.

In a trading update ahead of the company’s third-quarter results, due to be released on 29 October, OMV says its ethylene/propylene net margin fell to EUR375/metric ton (USD441/metric ton) from EUR441/metric ton a year earlier. The third-quarter petchem margin is also down from EUR393/metric ton in the second quarter of this year. The company calculates the petchem net margin based on West European contract prices, with naphtha as the feedstock.

OMV’s refining margin indicator collapsed to USD0.87/barrel (bbl) in the quarter from USD5.46/bbl in the prior-year period, and is also down substantially from the second-quarter figure of USD2.26/bbl. The company’s refinery capacity utilization rate averaged 90% in the third quarter, a decline of 6% from a year earlier but up from 79% in the second quarter of this year.

OMV recorded a “positive contribution” in the third quarter from refining margin hedges in a “mid-double digit million Euros magnitude,” it says.

As MRC informed earlier, Austrian energy group OMV sees hope for a recovery in oil prices in the second half of 2020 helped by increased fuel demand and output cuts by producers such as Saudi Arabia, according to its chief executive's statement in May 2020.

We remind that on 12 March, 2020, Austria’s OMV OMV, the international integrated gas and oil company headquartered in Vienna, and Mubadala Investment Company, the Abu Dhabi-based strategic investment company, signed an agreement that will give OMV a controlling stake in Borealis, one of Europe’s leading petrochemical companies. OMV, which currently owns a 36% stake in Borealis, will acquire an additional 39% from Mubadala, increasing its stake to 75%. Mubadala will retain a 25% interest. The closing of the transaction is expected by the end of 2020 and is subject to regulatory approvals.

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

MOSCOW (MRC) -- The world leading operator in the development and production of process automation systems for the storage, transport and treatment of plastic and food polymers and powders, listed in the Star segment of the Italian Stock Exchange, Piovan Group, announced the signing of the agreement for the acquisition of 100% of the share capital of Doteco, said the company.

"The acquisition of Doteco strengthens and increases Piovan global technological leadership, consolidating the strategic growth process that has always distinguished the Piovan Group", declared Nicola Piovan, Executive Chairman of the Piovan Group.

"With this integration - continued Filippo Zuppichin, CEO of Piovan Group - we could combine Doteco film dosing technologies with Piovan feeding and storage automations, becoming a leader in the supply of complete plants in this field and acquiring new customers in a sector that, also in light of the increasingly necessary sanitary and hygiene improvements, is becoming strategic in food packaging".

As MRC informed earlier, European petrochemical industry faces short-term and longer-term challenges caused by or exacerbated by the COVID-19 pandemic. Speakers on Monday at the European Petrochemical Association’s (EPCA) 54th annual meeting, being held in a virtual format, said the crisis had been a learning experience for the industry.

According to MRC's DataScope report, Russian companies significantly raised their purchasing of PP in foreign markets in August partially because of a major increase in demand, imports were 21,200 tonnes versus 17,200 tonnes a month earlier. Thus, overall PP imports into Russia reached 143,200 tonnes in January-August 2020, compared to 120,100 tonnes a year earlier.

Founded in 1994, Doteco is based in Modena (Italy) and is one of the world leaders in technologies for the dosing of plastic films (for food and non-food packaging) and synthetic fibers. The company closed 2019 with a consolidated turnover of 19.7 million euros and a consolidated Ebitda of 3.4 million euros. Doteco operates internationally and counts, among its partners, the main extrusion producers on a global level.
MRC

MOSCOW (MRC) -- KP Engineering (KPE), a leader in designing, executing and delivering customized EPC solutions for the refining, specialty chemical and renewable industries, will perform a fluid catalytic cracking (FCC) waste heat boiler (WHB) replacement at a refinery in Oklahoma, according to Hydrocarbonprocessing.

The refinery’s existing carbon monoxide (CO) boiler was approaching the end of its useful life. Within the scope of the FCC steam reliability project, KPE will design and install a new WHB (FCC flue gas cooler), orifice chamber and flue gas slide valve with associated refractory lined ductwork, piping, structures and instrumentation. The existing CO boiler will be removed from service and replaced with a WHB.

The project offers a unique set of challenges, requiring sound engineering design of the WHB to minimize erosion due to catalyst carryover and sand blast scoring in the duct to minimize tube failures.

Purva Mehta, senior process engineer, KPE, said, “The WHB is a critical piece of equipment for normal, continuous operation of an FCC unit. It will require in-depth engineering design, including hydraulic sizing, thermal ratings and computational fluid dynamic (CFD) modeling for optimizing the process requirements, while maintaining the mechanical integrity and safety of the system. Successful engineering of key components on the flue gas system will improve the system’s reliability, ensure long uninterrupted runs between shutdowns, maximize profits for the refinery, while maintaining safety as the primary objective.”

Doug Schnittker, vice president of engineering, KPE, said, “This project underscores KPE’s engineering expertise in the technologies behind FCC units, used for waste heat recovery in the refining industry. KPE has already performed several front-end engineering (FEL) 1 & 2 level studies, and completing the detail design on an FCC reliability project such as this further extends KPE’s engineering, procurement and construction capability. Lessons learned from prior FCC flue gas cooler projects will be applied to this project to deliver a highly robust design in this technically challenging project.”

The FEL 3 phase of the project will be completed in November 2020.

We remind that, as MRC reported earlier, Motiva Enterprises has restarted production on the gasoline-producing fluidic catalytic cracker (FCC) at its 607,000-barrel-per-day (bpd) Port Arthur, Texas, refinery. The company also completed a catalyst change on the 105,000-bpd hydrocracker in mid-June 2020.

We also 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.

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

MOSCOW (MRC) -- Ampol Ltd is considering closing its Lytton oil refinery, one of Australia's four refineries, as it has racked up big losses because of a coronavirus-driven slump in fuel demand and competition from huge Asian plants, reported Reuters.

Ampol, formerly known as Caltex Australia, may close Lytton despite a recent offer from the Australian government of incentives worth AD2.3 billion (USD1.6 billion) to the industry to keep the country’s refineries open for the sake of national security.

Ampol's shares rose as much as 2.3% after flagging the refinery review, outpacing gains in the broader market.

“We really appreciate the government recognizing with its proposed package the challenges that the refining sector is facing,...but we need to be realistic about the extreme structural pressures that Lytton is facing,” Ampol chief executive Matt Halliday said in an interview.

Ampol on Thursday reported a AD141 million loss at the plant so far this year, worse than analysts’ expectations.

“That demand destruction and the oversupply that we’ve seen ... presents a very challenging outlook for margins,” Halliday told Reuters.

“That’s on top of the pressures that we face in the international context. The (Australian) refineries are relatively small and relatively old.”

Ampol said it would review the future of the Lytton plant, located in Queensland state, by the second quarter of 2021, weighing up whether to close it, turn it into a fuel import terminal as it did with its Kurnell refinery in 2014, continue existing operations or try other models of operation.

“Lytton’s larger than expected loss for Q3 reflects a combination of weak refining margins and the structural aspect of its relatively high fixed cost base,” RBC analysts said in a note.

Energy Minister Angus Taylor said in emailed comments the government was working closely with Ampol and the industry on its fuel security package.

Analysts have expected Ampol, which fended off a takeover offer earlier this year, to shut Lytton to boost returns.

Rival Viva Energy Group Ltd last month also warned it might shut its refinery in Geelong, near Melbourne.

As MRC wrote before, Ampol brought forward the refinery turnaround to May, 2020, as refining margins crashed and extended the outage from two months to four months to the end of August to allow for social distancing of workers at the site.

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

MOSCOW (MRC) -- The European Court of Auditors (ECA), which audits the EU's finances, says in a recent review there is a significant risk that the EU will not meet its plastic packaging recycling targets for 2025 and 2030, said Chemweek.

ECA notes that the EU's 2018 update of its legal framework for plastic recycling reflects the EU’s increased ambitions and could help boost recycling capacity, but says the scale of the challenge facing the EU member states should not be underestimated. The auditors call for new and more accurate recycling reporting rules and a tightening of plastic waste export rules. Concerted action is needed to get the EU to where it wants to be in 5–10 years’ time, ECA says.

According to the review, packaging alone, such as yogurt pots or water bottles, accounts for about 40% of plastic use and more than 60% of plastic waste generated in the EU. However, packaging has the lowest recycling rate in the EU at slightly more than 40%, ECA says.

The European Commission’s plastics strategy, adopted in 2018, included an update of its 1994 Packaging and Packaging Waste Directive and doubled the EU's recycling target to 50% by 2025 with a goal of 55% by 2030. Reaching these targets would be a significant step toward achieving the EU’s circular economy goals, the auditors say.

"To meet its new recycling targets for plastic packaging, the EU must reverse the current situation, whereby we incinerate more than we recycle. This is a daunting challenge,” says Samo Jereb, the ECA member responsible for the review. “By resuscitating single-use habits amid sanitary concerns, the [COVID-19] pandemic shows that plastics will continue to be a mainstay of our economies, but also an ever-growing environmental threat."

As mRC informed earlier, European petrochemical industry faces short-term and longer-term challenges caused by or exacerbated by the COVID-19 pandemic. Speakers on Monday at the European Petrochemical Association’s (EPCA) 54th annual meeting, being held in a virtual format, said the crisis had been a learning experience for the industry.

According to MRC's DataScope report, Russian companies significantly raised their purchasing of PP in foreign markets in August partially because of a major increase in demand, imports were 21,200 tonnes versus 17,200 tonnes a month earlier. Thus, overall PP imports into Russia reached 143,200 tonnes in January-August 2020, compared to 120,100 tonnes a year earlier.
MRC