Shell to carry out Pernis oil refinery maintenance on one unit

MOSCOW (MRC) -- Royal Dutch Shell announced it plans to carry out major maintenance work on a unit at its Pernis oil refinery in the Netherlands from mid-October to end November, reported Reuters.

The company did not specify the unit involved.

Pernis is Europe’s largest oil refinery with a capacity to process 404,000 barrels per day.

As MRC wrote previously, a unit failure at Royal Dutch Shell’s Pernis oil refinery in Rotterdam was resolved on August 17, 2020.

We remind that Shell will announce a major restructure by the end of the year as the company prepares to accelerate its shift toward its net-zero emissions goal by 2050, said CEO Ben van Beurden to employees. The restructuring will include workforce reductions as part of broader cost-cutting measures, although no figures have been decided yet, the CEO reportedly said during an internal webcast.

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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

COVID-19 - News digest as of 13.10.2020

1. BASF expects third-quarter net loss on impairments as COVID-19 crushes demand

BASF has released preliminary figures for the third quarter and says it expects to post a net loss of EUR2.12 billion (USD2.50 billion) compared with a net profit of EUR911 million in the year-earlier period due to non-cash impairments and restructuring provisions, below current analyst estimates, said Chemweek. However, the company says its operating performance was “better than expected” during the third quarter and expects to record a 5% sales decline to EUR13.81 billion from EUR14.56 billion in the third quarter of 2019. This was mainly driven by negative currency effects, the company says.


MRC

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

COVID-19 spells volatility for long-term oil supply, risk of shortfalls: IEA

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

Libya's NOC lifts force majeure on Sharara oil field and restarts production

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