Septemer US crude imports to China hit record high but purchase value lags target

MOSCOW (MRC) -- The US became China's fourth biggest crude supplier in September in terms of volume, and inflows from the producer is expected to be ample in the fourth quarter as the Phase 1 trade deal between Beijing and Washington provides impetus to the flow of crude and energy products into China, according to S&P Global.

However, low crude oil prices will continue hindering Beijing's 2020 energy purchase targets and temper the impact of heightened flows, particularly when translated into value terms.

Crude oil is considered a key product to complete China's annual energy purchase commitments due to the commodity's typically higher value and volume compared with other energy products.

According to the Phase 1 trade deal struck in January, Beijing had committed to buy USD18.5 billion more of US energy products in 2020 than it bought in 2017, and USD33.9 billion more in 2021 over 2017 levels, with expectations of similar levels through 2025.

China's crude import volume in September surged 75.3% month on month to a record high of 3.9 million mt, or 952,254 b/d, showed data from the General Administration of Customs, or GAC, on Oct. 26.

The previous high was at 3.67 million mt, or 866,793 b/d in July, according to GAC data.

The import volume was within expectations as Sinopec took a majority of the arrivals while CNOOC, Zhejiang Petroleum & Chemical as well as independent refineries in Shandong also received shipments from the US, S&P Global Platts reported.

After a slight month-on-month contraction in October, China's crude imports from the US is likely to hit 908,000 b/d in November, data intelligence firm Kpler said on Oct. 26.

The September volume brought imports from the US at 10.92 million mt, or 292,236 b/d in January-September, more than double from 5.18 million mt in the same period of last year.

However, the value of the US crude imports in the first three quarters was merely USD3.32 billion, translating into an average CFR price of USD41.51/b with a conversion of 7.33 barrels/mt, according to GAC.

In comparison, China in 2017 imported about 153,000 b/d of US crude oil that was worth USD3.2 billion at an average price of about USD57.59/b, GAC data showed.

"Due to low crude price, it is unlikely to meet the trade deal, despite China increasing purchases and the monthly volumes keep hitting highs," a Beijing-based analyst said.

Crude imports from Saudi Arabia rebounded 48% from August at 7.78 million mt, or 1.9 million b/d, in September after a three-month-fall.

The strong recovery led to its return to the top spot in September.

Moreover, China also boosted crude imports from the Middle East, with shipments jumping 18.9% year on year at 5.16 million b/d in the first three quarters. The Middle East accounted for 46.3% of the market share compared with 43.8% in the same period last year.

In contrast to notable volume increases from the Middle East and North America, imports from Africa and South America fell 12.4% and 8% at 1.6 million b/d and 1.27 million b/d, respectively, in January-September, GAC data showed.

As MRC reported earlier, PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company’s biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year’s level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia’s top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

MOSCOW (MRC) -- ExxonMobil posted chemical earnings of USD661 million, up from USD240 million in the same year-ago quarter, reported Chemweek.

The gain reflected stronger margins and volumes as well as aggressive cost reduction, ExxonMobil said. Chemical sales volumes were higher than the second quarter, benefiting from resilient packaging demand and recovering automotive and construction markets. Chemical prime product sales of 6.62 million metric tons in the quarter were up 2.2% YOY.

ExxonMobil said that its Corpus Christi, Texas chemical complex joint venture with Sabic is approximately 80% complete and “under budget and ahead of schedule.” Startup activities are expected to commence in the fourth quarter of 2021.

ExxonMobil overall posted a $680 million loss in the quarter on heavy losses in upstream and downstream compared with net income of USD3.2 billion in the year-ago quarter. Results improved USD400 million from the second quarter "driven by early stages of demand recovery." ExxonMobil said it was on track to exceed reduction targets for 2020 capital and cash expenses with further reductions anticipated in 2021. The company said it would reduce its 2020 capital spending program from USD33 billion to USD23 billion with a further reduction in 2021 capital spending to USD16 billion-USD19 billion.

As MRC informed earlier, Exxon Mobil Corp has also recently announced it will lay off about 1,900 employees in the United States as the COVID-19 pandemic batters energy demand and prices.

We remind that ExxonMobil has undertaken a planned shutdown at its cracker in Singapore. The company halted operations at the cracker for maintenance on September 14, 2020. The cracker is expected to remain off-line till end-October, 2020. Located at Jurong Island, Singapore, the cracker has an ethylene production capacity of 1 million mt/year and a propylene production capacity of 450,000 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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.
MRC

MOSCOW (MRC) -- Chevron Lummus Global (CLG) announced they have been awarded a contract by China's largest oil and gas producer and distributor, PetroChina Company Limited, for the supply of its proprietary ISOMIX-e reactor internals for two of their RDS units in Liaoning Province, said Hydrocarbonprocessing.

CLG's high-performance ISOMIX-e® internals will help PetroChina facilitate maximum utilization of catalysts in their RDS reactors due to uniform process distribution and better product yield structure. At the same time, CLG’s state-of-the-art internals will promote safe operations with better reactor temperature management which will increase catalyst life and reduce turnaround times. With this project, PetroChina will avail of the benefits of CLG's high-performance reactor internals, thereby helping them get better product yields and longer run times per catalyst fill.

This win is significant as it enhances CLG's reputation as a supplier of locally fabricated, high-performance reactor internals, bringing significant benefits to regional oil producers.

As MRC reported earlier, Chevron Phillips Chemical, part of Chevron Corporation, still has not lifted force majeure on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations. The force majeure circumstances were declared on 1 September, 2020. CP Chem operates a 420,000 mt/year high-density polyethylene (HDPE) plant in Orange, Texas, and an 855,000 mt/year cracker in Port Arthur. The company plans to minimize the impact of the event and return to full PE deliveries as soon as possible.

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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
MRC

MOSCOW (MRC) -- Sibur (Moscow, Russia) has awarded Univation Technologies a contract to supply its Unipol polyethylene (PE) process technology for Sibur’s USD10-billion Amur gas-chemicals complex (AGCC) being built in Russia’s Far East, said Univation.

Sibur, Russia’s largest integrated petrochemical company, says it has selected Univation’s licensed process for three 600,000-metric tons/year PE lines at Amur. The lines will be part of the integrated project, located near Svobodny in the Amur region close to Russia’s border with China, which will have a total polyolefin design capacity of 2.7 million metric tons/year.

Two of the AGCC manufacturing lines will produce high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE), while a third will be focused on a range of bimodal and unimodal HDPE production. Sibur says the complex will capture a full-range of HDPE, LLDPE, and metallocene LLDPE product opportunities, which includes both conventional large-volume products as well as specialty applications.

"This strategic project signifies a key investment commitment directed at creating new world-scale polyolefin manufacturing capabilities and contributing to unlocking Russia’s huge non-commodity export potential,” says Sergey Komyshan, executive director/petrochemicals and management board member at Sibur. Production from the three PE lines will aimed at meeting growing customer demand for PE in both the Asian and Russian markets, he says.

The AGCC is due to be commissioned in 2025. Foundation site work began in August.

As per MRC's ScanPlast, September PE production in Russia was 233,200 tonnes, whereas this figure was 258,700 tonnes a month earlier, in the first month of autumn several producers stopped their capacities for repairs at once. Thus, overall PE output reached 2,204,200 tonnes in January-September 2020, compared to 1,349,000 tonnes a year earlier. Production of all PE grades rose, but LLDPE accounted for the greatest increase, which was provided by ZapSibNeftekhim.
MRC

MOSCOW (MRC) -- BP Australia plans to shut its 146,000 b/d Kwinana refinery in Western Australia and convert it into a fuel import terminal, reported S&P Global with reference to the company's statment Oct. 30.

The continued growth of large scale, export-oriented refineries throughout Asia and the Middle East has structurally changed the Australian market, BP said, adding that regional oversupply and sustained low refining
margins mean the Kwinana refinery is no longer economically viable.

Converting the refinery into an import terminal will help ensure ongoing security of fuel supply for Western Australia, the company said.

Refining activities will wind down over the next six months and conversion works will carry on out to 2022.

"BP is committed to playing a leading role in growing Australia's future prosperity, making significant investments in natural gas production, as well as in convenience and mobility businesses," Australia Head of Country Frederic Baudry said.

"We are particularly excited by the shared ambitions with Western Australia to be net zero by 2050 and the opportunities this can offer," he added.

This includes building on its position in the North West Shelf joint venture through gas exploration at Ironbark and investing in retail growth, as well as progressing low carbon projects with Lightsource BP. It is also assessing the feasibility of a large scale hydrogen export plant in Geraldton, Western Australia, in partnership with the federal government.

In addition to investing in an import terminal at Kwinana, BP is also exploring future options for the site, including a potential clean energy hub to harness the existing and emerging technologies required for the decarbonization of the Western Australian economy, it said, adding that a multi-use clean energy hub could produce and store lower carbon fuels, including sustainable aviation and marine fuels and waste-to-energy solutions such as renewable diesel.

As MRC wrote before, a “technical defect” disrupted production at part of the Gelsenkirchen integrated refinery and petrochemicals complex in Germany, early last week. The company operates plants in the Horst and Scholven districts at Gelsenkirchen, with the defect occurring at Horst. BP sais it was working to resume normal operations as soon as possible. It did not specify which unit has been affected, with sources suggesting it was the fluid catalytic cracker, but this was not confirmed by the company.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

BP plc (formerly The British Petroleum Company plc and BP Amoco plc) is a British multinational oil and gas company headquartered in London, United Kingdom. It is one of the world's seven oil and gas "supermajors", whose performance in 2012, made it the world's sixth-largest oil and gas company, the sixth-largest energy company by market capitalization and the company with the world's 12th-largest revenue (turnover). It is a vertically integrated company operating in all areas of the oil and gas industry, including exploration and production, refining, distribution and marketing, power generation and trading. It also has renewable energy interests in biofuels, wind power, smart grid and solar technology.
MRC