Kazanorgsintez resumes LDPE production

MOSCOW (MRC) -- Kazanorgsintez (part of TAIF Group) has finished a gradual resumption of operations at its low density polyethylene (LDPE) production capacities after shutdown for maintenance, according to ICIS-MRC Price report.

The plant's clients said Kazanorgsintez had fully resumed operations at its LDPE production after a scheduled turnaround by the beginning of this week. The outage was quite long and started in mid-September. The plant's annual production capacity is 225,000 tonnes.

It is also worth noting that a gradual start-up of high density polyethylene (HDPE) production capacities began last week, after a shutdown for maintenance. The plant's production capacity is 540,000 tonnes per year.

Kazanorgsintez is the largest domestic producer of polymers and ethylene copolymers, a leading enterprise in the chemical industry of the Russian Federation, which is of strategic importance for the development of the economy of the Republic of Tatarstan and is part of the TAIF Group of Companies. At present, the company produces ethylene, polyethylene, polycarbonate, polyethylene pipes, bisphenol, phenol, acetone, ethylene glycols, ethanolamines and other organic synthesis products. The product range includes over 170 items. Kazanorgsintez's annual output is 1.7 million tonnes. The products comply with international quality standards and are exported to 31 countries around the world. The main types of feedstocks for the production of material are: ethane, ethylene, liquefied hydrocarbon gases (propane, butane), benzene, ethylene oxide, propane-propylene fraction, vinyl acetate.
MRC

MOSCOW (MRC) -- The coronavirus pandemic has set the stage for greater volatility in world oil supply, with US shale less able to act as a "shock absorber," and a heightened risk that global production will fall short, the International Energy Agency said in its World Energy Outlook Oct. 13, reported S&P Global.

The document, presenting scenarios for the period to 2040, said low-cost producers within the OPEC+ group were relatively well positioned, contrasting with producers in sub-Saharan Africa, where output is unlikely to reach 2019 levels any time in the period.

While upstream oil and gas investment has fallen by a third this year, it has dropped by half in the US shale sector, the report said, estimating investment in US tight oil this year at around USD45 billion, down from USD100 billion in 2018-19.

Rising investor skepticism toward shale, alongside growing criticism of the oil and gas sector for environmental reasons, mean shale can no longer be relied upon to the same extent, with serious global implications, the report said.

The report acknowledged an increase in the pace at which conventional producers can bring new production to the market, with new projects now taking three years on average to reach first production. But it said uncertainty over the world's demand for oil means "there is a distinct possibility that the supply side may be losing appetite for oil faster than the world's consumers."

"Any slack in markets in recent years has largely been picked up by rising US shale output, but it is not clear whether (and if so when) shale will be in a position to continue this role amid a collapse in investor confidence in the sector," the IEA said. "These uncertainties create real potential for future market imbalances and volatility."

"If demand recovers and tight oil for whatever reason does not, conventional producers may struggle to bridge the gap. Tight oil remains a force to be reckoned with in global oil supply, but the shale industry post-COVID will not be the same as the one that we have seen so far," it added.

North American oil output reaches 27.7 million b/d in 2025 under the IEA's latest central scenario, known as the Stated Policies Scenario, a 700,000 b/d reduction from the equivalent projection for 2025 in last year's report. The scenario foresees US tight oil production returning to 2019 levels in 2022, but with a "high degree of uncertainty."

The report said it would also be tough for advantaged countries such as Russia and Saudi Arabia to manage the market through international efforts at coordinating production, given the budgetary needs of partners like Iraq, and political uncertainties surrounding the likes of Iran and Libya.

Africa's oil production drops by 1.5 million b/d between 2019 and 2025 to 6.9 million b/d in the Stated Policies Scenario, putting it 1 million b/d lower than in last year's report under the same scenario.

With oil prices set to recover to USD71/b in 2025 under the IEA's central scenario for oil demand, this "assumes that attempts at market management led by OPEC are maintained and that individual producers avoid the temptation to 'open the taps,'" the report said.

"In practice, this is a very delicate balancing act. Uncertainty over the shape of the economic recovery from COVID-19 makes it very difficult for oil producers to know what investment and policy approach to follow."

"The possibility of a mismatch between supply and demand is ever present," the report said.

For the global upstream industry as a whole, "Bouncing back will be tougher than in the past, not least because of continued reductions in the cost of some key renewable technologies," the IEA said, going on to highlight the need to replenish production even in a period of muted demand.

In the central 'New Policies Scenario,' while there is only limited growth in oil demand after 2030, "around USD390 billion in annual investment is still needed in upstream oil projects," the IEA said.

"Less than 10% of this is required to meet the 900,000 b/d increase in oil demand in the 2030-40 period: the rest is necessary to sustain production in existing fields and develop new fields to offset declines in existing sources of production."

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 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

MOSCOW (MRC) -- Libya's state-owned National Oil Corp. said Oct. 11 it lifted force majeure on Sharara, the country's top producing oil field, and restarted pumping as the OPEC producer continues to restore it energy industry following the Libyan National Army's end of a nine-month blockade in September, reported S&P Global.

NOC received assurances from the Petroleum Facilities Guard, linked to the self-styled LNA, that it will end security violations and remove hurdles to allow the national oil company to lift force majeure and resume operations at the field, the company said in a statement.

NOC didn't disclose the current level of production at Sharara, which can pump as much as 300,000 b/d.

Libya was producing around 300,000 b/d at the end of last week as a handful of fields in the eastern Sirte Basin have restarted, but some of the country's larger oil fields and terminals remained shut on security and technical grounds, several industry and trading sources told S&P Global Platts on Oct. 9.

The OPEC member has managed to increase its production by almost 200,000 b/d since Sept. 18, when the UN -backed Government of National Accord and the LNA agreed to a fragile truce to restart oil fields and terminals.

The ramp up is mainly due to the return of production from the fields operated by the Arabian Gulf Oil Co., or Agoco, a subsidiary of NOC. Agoco operates the Beyda, Hamada, Mesla, Sarir and Nafoora fields, together which have the capacity to produce around 300,000 b/d. Sources said all the fields except Nafoora have restarted and are gradually increasing production.

The key eastern oil terminals of Ras Lanuf and Es Sider remained closed at the end of last week as NOC has not lifted force majeure from these ports due to the presence of armed groups there.

S&P Global Platts Analytics estimates Libyan crude supply could return to 500,000 b/d this month but warned that "longer term stability remains uncertain."

LNA leader Khalifa Haftar announced on Sept. 18 the end of the nine-month blockade allowing the return of a potential 1.1 million b/d of crude that Libya was pumping before the embargo and the release of crude in storage. The producer was pumping around 120,000 b/d before the lifting of the force majeure partially on its oil industry on Sept. 19.

On Jan. 18, eastern tribes supported by the LNA halted exports from five oil terminals, sharply reducing the country's crude production, which hit the lowest level since the 2011 civil war at the time.

The force majeure was then imposed on crude loadings out of the terminals of Brega, Es Sider , Marsa el-Hariga, Ras Lanuf and Zueitina.

Libya holds Africa's largest proven reserves of oil and its main light sweet Es Sider and Sharara export crudes yield a large proportion of gasoline and middle distillates, making them popular with refineries in the Mediterranean and Northwest Europe.

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 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

MOSCOW (MRC) -- Sasol Ltd. said its Lake Charles Chemicals Project in Louisiana remains shut, though no apparent damage to equipment was found following the nearby landfall of Hurricane Delta, reported Bloomberg.

While a preliminary assessment is underway, crews also indicated no flooding damage was experienced at the site from the hurricane that hit on Oct. 9, the company said in a reply to questions. Some power supply was lost overnight.

Delta was the second major weather system to strike the vicinity of the complex in less than two months. Hurricane Laura knocked out electricity to the site for weeks as Sasol struggles to finish the project that has been 99% complete since March. It was approved in 2014 at an estimated cost of USD8.1 billion, with a further $800 million budgeted for infrastructure improvement and land acquisition, but various setbacks have increased the total price tag to almost USD12.9 billion.

“We will resume the coordinated startup sequence of Sasol’s Lake Charles facilities when it is safe to do so,” the company said. “Start-up will depend on the availability of electricity and other feedstocks as well as the restoration process underway from Hurricane Laura.”

As MRC wrote previously, Sasol expected to restart crackers and downstream derivative units at its Lake Charles, Louisiana, complex by early- to mid-October once full load power is restored. By late September, Sasol 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.

We remind that Sasol's world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol's new cracker, the heart of Lake Charles Chemicals Project (LCCP), is the third and most significant of the seven LCCP facilities to come online and will provide feedstock to the company's six new derivative units at its Lake Charles multi-asset site.

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.

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) -- LG Chem Ltd., South Korea’s leading chemical firm, said Monday its operating profit hit a quarterly record high in the third quarter amid robust sales at the petrochemical and electric vehicle (EV) battery units, said Koreabizwire.

In its earnings guidance, the South Korean electric vehicle battery maker estimated its operating profit at 902 billion won (USD785 million) in the July-September period, up 158.7 percent from a year earlier. The third-quarter operating income estimate beats the market consensus of 732.8 billion won in the data compiled by Yonhap Infomax, the financial arm of Yonhap News Agency.

Robust sales in the petrochemical and EV battery units helped the company continue to report a larger-than-expected profit in the third quarter. LG Chem’s sales also hit a quarterly record high of 7.5 trillion won in the third quarter, the company said, without providing a net result for the third quarter in the guidance.

The company has said its EV battery plant in Poland began to produce products in a stable manner as the defect rate declined, which in turn improved its bottom line. LG Chem also operates electric vehicle battery plants in South Korea, China and the United States.

In July, LG Chem’s battery business unit achieved an operating income of 155.5 billion won in the second quarter on quarterly record sales of 2.82 trillion won. Cha Dong-seok, chief financial officer at LG Chem, said in July that the EV battery business unit could continue to post sharp growth in the third quarter due to increased shipments of EV batteries to Europe and increased sales of cylindrical batteries.

LG Chem is a key supplier of batteries to electric vehicles, including those of GM, Ford, Renault, Volvo, Audi, Volkswagen and Daimler, as well as South Korea’s largest carmaker, Hyundai Motor Co., and its smaller affiliate, Kia Motors Corp.

LG Chem said it is on track to boost its production capacity to 100 gigawatt hours by the end of this year, which is enough to supply batteries for about 1.7 million electric cars. LG Chem said its order backlog for EV batteries is currently valued at more than 150 trillion won.

The EV battery market has been on a roll as automakers around the world race to go electric and eco-friendly due to tightened regulations on greenhouse gas emissions, which scientists say are to blame for global warming. LG Chem is scheduled to release its third-quarter net result on Oct. 21.

As MRC informed earlier, LG Chem signed a conditional contract with Ningbo, China-based Ningbo Shanshan to sell a large portion of its liquid crystal display (LCD) polarizer business for USD1.1 billion. The sale reflects LG's strategy of exiting from the LCD business as cut-price Chinese electronics makers, such as Beijing-based BOE Technology, dominate the business.

Ethylene and propylene are feedstocks for producing 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.

LG Chem Ltd., often referred to as LG Chemical, is the largest Korean chemical company and is headquartered in Seoul, South Korea. According to ICIS report, it is 15th biggest chemical company in the world in 2011. It has eight domestic factories and global network of 29 business locations in 15 countries. LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.
MRC