Sinopec starts ethylene production at new Zhanjiang refinery

MOSCOW (MRC) -- China's Sinopec has started operation of a 800,000 tons-per-year ethylene facility at its Zhanjiang refinery, reported Reuters with reference to the company's statement.

The refinery, located in the southern Chinese coastal city of Zhanjiang, commenced operation of its 200,000 barrel per day crude oil refining units in June.

As MRC informed before, Sinopec SABIC Tianjin Petrochemical Co. (SSTPC), a 50-50 joint venture of Sinopec and SABIC, completed the debottlenecking of its ethylene cracker on 11 July 2020, adding another 30,000 tons/year output to its current capacity. Followed the expansion, the Tianjin based plant become the country's largest compressor unit, producing 1.3 million tons of ethylene annually.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

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

Nearly 92% of US Gulf of Mexico oil output still shut in after Hurricane Delta's landfall

MOSCOW (MRC) -- Nearly 92% of US Gulf of Mexico oil output remained shut in Oct. 10, a day after Hurricane Delta made landfall in Louisiana, as upstream operators began to return crews to producing platforms, reported S&P Global.

Offshore producers have now shut in 1.697 million b/d of oil, or 91.7% of the US Gulf's total, up slightly from 1.694 million b/d Oct. 9, the US Bureau of Safety and Environmental Enforcement said in its daily bulletin. Operators have also shut in 1.692 Bcf/d of natural gas, or 62% of the total, up from 1.685 Bcf/d Oct. 9.
In addition, 276 producing platforms remained offline, up from 274 on Oct. 9.

The Oct. 10 figures reflect the reporting of 44 companies, BSEE said.

"The US Gulf had been producing close to 1.8 million b/d of crude pre-Delta," said S&P Global Platts Analytics analyst Sami Yahya. "Given widespread curtailments, volume recovery may take up to two weeks post peak impact, which has likely been reached."

Now a tropical storm, Hurricane Delta made landfall around 6 p.m. local time Oct. 9 at Creole, Louisiana – about 35 miles east of the Texas-Louisiana border – as a Category 2 storm with maximum sustained winds around 100 mph, the National Hurricane Service said.

Delta continues to degrade as it moves further inland.

At the same time, producers Oct. 10 began to assess conditions offshore and started to return crews to producing platforms, where they will inspect the infrastructure for damages and make needed repairs prior to restoring production.

"As conditions continue to improve today and tomorrow (i.e., Oct. 10-11), we are beginning the process of redeploying personnel to our assets," said Shell, which had shut down nine assets prior to the storm's passage through the US Gulf.

"All of our mobile drilling units are returning to drill sites to restart operations," Shell added.

BHP was also flying crews out to its two operated US Gulf platforms.

"We are in the process of remobilizing at Neptune and Shenzi and we expect to be completed by tomorrow morning (Oct. 11)," BHP spokeswoman Judy Dane said. "Production restart will be dependent on our midstream providers."

Winds had not totally died down in parts of the US Gulf Oct. 10, which impaired some operator preparatory work.

"Winds have to subside before the platforms can be inspected for damage and be declared safe to be re-manned," Al Petrie, a spokesman for W&T Offshore, said. "It will take several days to get that all done."

W&T, one of the few small public independent pure-play US Gulf operators, produced 42,037 boe/d in the second quarter. It does not disclose specific platform shut-ins during storms, Petrie said.

Delta's cone narrowed from earlier in the week, putting fewer area refineries at risk. Of the four Louisiana refineries in Delta's path, only Alon's 80,000 b/d Krotz Springs plant was operating.

Citgo's 418,000 b/d Lake Charles refinery, and Phillips 66's 260,000 b/d Westlake refinery, both remained down because of power outages caused by Hurricane Laura in late August. Hurricane Delta might cause a delay in the return of those two plants. Citgo and Phillips 66 could not be reached for comment.

Hurricane Delta left roughly 575,000 thousand customers without electricity as of late morning Oct. 10, according to poweroutage.us.

Entergy Louisiana, which serves over a million customers, had over 300,000 customer outages on the morning of Oct. 10, poweroutage.us data showed, and regional utility Cleco, serving 288,000 customers in Louisiana, had 124,861 outages, according to an emailed statement.

Entergy did not have any generating plants knocked offline due to the storm, which includes the investor-owned utility's 992-MW River Bend-1 nuclear power plants in Louisiana and the 1.5-GW Grand Gulf-1 plant in Mississippi, spokesman Jerry Nappi said in an email.

The 1.2-GW Waterford-3 nuclear plant located in Louisiana had been previously shut down for a scheduled refueling and maintenance outage, Nappi noted.

"Now that the storm has passed and conditions are improving, damage assessments will begin by land and air, and crews will begin making any necessary system repairs and restoring power," James Lass, Cleco's director of distribution operations and emergency management, said in the statement.

Delta was the tenth named storm in what as been the busiest Atlantic hurricane season in years.

The nearly 1.7 million b/d peak oil shut-in figure in the US Gulf represented "the most [production taken offline at one time] since Hurricane Katrina," James West, an analyst with boutique investment bank Evercore ISI observed in an Oct. 9 investor note, referring to a legendary US Gulf storm which battered the New Orleans area in 2005.

Hurricane Delta hit in roughly the same area of far southwestern Louisiana that Hurricane Laura, an even more dangerous storm, had pounded six weeks before.

While it seems "strange" having two hurricanes land in the same area during the same storm season, "it actually has happened 17 times in the US since 1950," West said.

Many analysts are comparing this year's storm season to 2005, when Louisiana was hit by Hurricanes Cindy, Katrina and Rita, West noted. The latter two storms were legendary for their Category 5-intensity – the highest on the five-level Saffir-Simpson Hurricane Wind Scale – and the severity of their damages to life and property.

Rita also was unforgettable for parking-lot traffic created on Houston freeways for dozens of miles heading north and west the day before the storm made landfall, since it been predicted to hit that city before making a last-minute turn to the east. Rita ultimately made landfall 100 miles away from Houston, around Sabine Pass at the Louisiana-Texas state line.

In contrast, Katrina made landfall near the "toe" of Louisiana and devastated New Orleans, 50 miles northwest.

As MRC wrote before, Total SA on Thursday began shutting an oil processing unit at its 225,500 bpd, Port Arthur, Texas refinery because of the threat from Hurricane Delta, people familiar with plant operations said. And Royal Dutch Shell Plc said it would continue operating its refineries in Convent, Geismar and Norco, Louisiana, through the storm.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

COVID-19 - News digest as of 12.10.2020

1. PPG Industries says third-quarter results to be better than expected

MOSCOW (MRC) -- PPG Industries says it expects third-quarter net sales to be down 5% year-on-year (YOY), compared with prior guidance calling for a decline of 6–11%, reported Chemweek. Adjusted earnings are forecast to total USD1.90–1.94/share. PPG has not previously provided third-quarter earnings guidance. In the year-ago quarter, adjusted earnings totaled USD1.67/share, and net sales totaled about USD3.8 billion. “The better than expected quarterly financial results were driven by improving demand in several end-use markets resulting in higher sales volumes, coupled with continued, aggressive cost management actions,” PPG says. This includes strong YOY growth in sales volumes in the company’s architectural coatings business.

MRC

PESCO Switzerland AG announces a Project Management Services award

MOSCOW (MRC) -- PESCO Switzerland AG, a leading provider of project management services for the energy industry, announced they have been awarded a significant contract by China National Chemical Engineering & Construction Corporation Seven, Ltd. (CC7) for project management of Early Works, LLI procurement and supply for the largest gas-chemical complex in the Russian Federation, according to Hydrocarbonprocessing.

The project management of the complex is for the processing of ethane-rich gas with the participation of leading process technology licensors, EPC contractors and Russian design institutes.

“Being recognized as a contractor of choice for project management services is exciting for PESCO Switzerland AG and adds a critical component to our portfolio,” said Dorus Everwijn, managing director of PESCO Switzerland AG. “This is an excellent demonstration of the quality of our expertise and the project management that PESCO Switzerland AG can bring to a project of such magnitude, applying skills of our top specialists with in-depth know-how from the energy industry”.

PESCO Switzerland AG has been involved in this project since November 2019 by delivering project management services for the Extended Basic Engineering stage through a joint integrated project management team with CC7.

As MRC reported earlier, PetroChina Co Ltd's subsidiary refinery in northeast China's Daqing has started processing its first Russian crude oil transported via pipeline, after completion of plant upgrade. Daqing Petrochemical Corp is expected to process 3.5 MM tonnes of Russian oil annually, transported through the East Siberia Pacific Ocean Pipeline.

We remind that PetroChina Ningxia PC, part of PetroChina, brought on-stream its polypropylene (PP) plant following a turnaround. The company resumed operations at the plant on August 18, 2020. The plant was shut for maintenance on July 1, 2020. Located at Yinchuan, China, the PP plant has a production capacity of 110,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

PetroChina Company Limited, is a Chinese oil and gas company and is the listed arm of state-owned China National Petroleum Corporation, headquartered in Dongcheng District, Beijing. It is China's biggest oil producer.
MRC

Crude oil futures maintain overnight gains on worsening supply disruptions

MOSCOW (MRC) -- Crude oil futures ticked lower during mid-morning trade in Asia Oct. 9, but maintained most of their overnight gains, as the market remained lifted by the exacerbating supply disruptions in the Gulf of Mexico and Norway, as well as reports that Saudi Arabia is reconsidering the relaxation of the OPEC+ quotas slated from 2021 onward, reported S&P Global.

At 11.05 am Singapore time (0305 GMT), ICE Brent December crude futures were down 7 cents/b (0.16 %) from the Oct. 8 settle to USD43.27/b, while the NYMEX November light sweet crude contract was down 10 cents/b (0.24%) at USD41.09/b. Both international crude markets had surged 3.22% and 3.10% respectively to settle at USD43.34/b and USD41.19/b respectively on Oct. 8.

The general uptrend in oil prices can be attributed to increasing volumes of crude production being brought offline in the US Gulf of Mexico and Norway.

In the US Gulf of Mexico, according to Oct. 8 data from the US Bureau of Safety and Environmental Enforcement, Hurricane Delta has forced oil and gas producers to shut almost 45% of the Gulf's offshore operating facilities, idling around 91.53%, or 1.693 million b/d of crude capacity, along with 61.82%, or 1.675 Bcf/d of natural gas capacity.

In Norway, with the escalation of the Lerderne union's planned strike threatening to affect more fields, including the flagship Johan Sverup field, it will take out up to 966,000 b/d of oil equivalent output, industry group Norwegian Oil & Gas said on Oct. 8. Already since Oct. 5 when the strike began, 330,000 boe/d, or 8% of the Norway's total output, has been shuttered.

Stephen Innes, chief strategy officer at AXI, said in an Oct. 9 note: "The confirmation from Equinor (that it) would need to shut in its giant Johan Sverdrup oilfield if the current [labor strike] was to extend to Oct. 14 takes more barrels off the market, which is always a welcome relief for the oil complex that is struggling to rebalance."

Reports that Saudi Arabia is reconsidering the 2021 roll-back in OPEC+ production quotas may have provided additional relief to the market.

The OPEC+ alliance relaxed its historic 9.7 million b/d production cut to 7.7 million b/d in August, and is scheduled to further roll it back to 5.8 million b/d at the start of 2021.

"Saudi Arabia is said to be concerned about the rising infections of COVID-19 around the world and its impact on demand. They also need to make allowances for a return of Libyan oil to the market," ANZ analysts said in an Oct. 9 note.

On a bullish note, US President Donald Trump told Fox Business on Oct. 8 that negotiations over a new US stimulus package were back on, two days after he unexpectedly shut them down. A stimulus package has long been seen by the oil markets as critical to the US economic recovery and to oil demand.

Edward Moya, senior market analyst at OANDA, said: "Crude prices are also benefiting from optimism over a stimulus deal...Even if Congress is unable to reach an agreement before the election, financial markets are confident something will quickly get done after the election aftermath settles."

As MRC wrote before, global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

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 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