COVID-19 - News digest as of 27.10.2020

1. Chemicals maker Covestro Q3 profit beats on cost-cutting, demand recovery

MOSCOW (MRC) -- German chemicals maker Covestro reported a better-than-expected third-quarter profit on Tuesday, citing cost-cutting measures, improved volumes in Asia-Pacific and demand recovery after a coronavirus-induced slump, said Reuters. In the second quarter, the company had managed an unexpectedly swift rebound from a pandemic-related slowdown and finance chief Thomas Toepfer had said the trend would continue into the last months of the year. “In the third quarter, demand from our customer industries experienced a strong rebound,” Chief Executive Markus Steilemann said in a statement on Tuesday.

MRC

MOSCOW (MRC) -- The French government will stop providing export guarantees to projects involving dirty forms of oil from next year, all oil in from 2025 and gas in from 2035, reported Reuters with reference to the finance ministry's statement earlier this month.

France stopped giving export guarantees this year to projects where fracking and flaring were involved and also stopped support for coal projects.

In a second step, guarantees would be halted next year for projects involving heavy oil, shale oil and bitumen oil sands, affecting the creation of up to 700 new jobs, the ministry said in its proposal to parliament.

From 2025, public export guarantees would no longer be provided for the exploration and development of new oilfields, potentially at a cost of 1,800 jobs, followed by new gas fields from 2035, which could affect 3,000 jobs.

The ministry said the later date for gas was because that could help some countries with the transition to cleaner forms of energy.

It also proposed scrapping export guarantees for thermal power stations with emissions higher than the national median of the benefiting country from 2021.

The proposals will be submitted to parliament in the 2021 budget bill being considered by lawmakers.

As MRC wrote before, in mid-October, 2020, Russian oil pipeline monopoly Transneft and producer Rosneft reached a settlement with Total over dirty oil supplies to the French company’s Leune refinery in Germany. Up to 5 MM tons of Russian oil in route to central Europe via the Druzhba pipeline were found to be contaminated last year. Total declared a force majeure in June 2019 on the production of jet fuel at its Leuna refinery in Germany following the supply of contaminated crude from Russia. Transneft did not disclose how much compensation would be paid to Total.

We remind that French energy major Total said in April that its joint USD5 billion petrochemical project with Saudi Aramco in the Saudi city of Jubail would not be hit by planned cuts in investment, although the partners were focused on controlling costs.

We also remind that in November 2019, Total disclosed that itis evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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) -- Showa Denko decided at its Board of Directors' meeting today to split its business in optical semiconductors and rare earth alloys through an absorption-type company split effective January 1, 2021 (hereinafter "the Company Split"), said Chemweek.

Showa Denko Photonics Co., Ltd., a wholly-owned subsidiary of SDK, will succeed to the business. As the Company Split is to be implemented through a simplified absorption-type company split between SDK and its wholly-owned subsidiary, part of details is omitted in this disclosure.

Objective of the Company Split. In its medium-term business plan "The TOP 2021," SDK aims to establish itself as a "KOSEIHA Company," which means a group of KOSEIHA businesses that can maintain their profitability and stability at high levels over a long period. The optical semiconductor business is classified as one of the "Grow" businesses under the plan. SDK aims to expand the business in this growth market by providing products and technologies meeting customer needs, thereby developing it into one of its KOSEIHA businesses.

To achieve this goal, SDK will make the business an operating company, increasing the speed of decision-making and sharing of the latest market information. By focusing on the growing business in infrared light-receiving/emitting devices, we will meet customers' requirements, taking advantage of our industry-leading product quality and customizing capability.

As per MRC, Showa Denko K.K. in March 2018, it stopped production at a cracking unit in Oita (Oita, Japan) for preventive maintenance. Maintenance at this enterprise with a capacity of 691 thousand tons of ethylene per year continued until April 19, 2018.

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) -- ADNOC announced the award of contracts worth USD324 million (AED 1.19 billion) to optimize onshore field operations and enhance efficiencies as it continues to invest responsibly to drive smart growth, said Worldoil.

ADNOC Onshore, a subsidiary of ADNOC, awarded the three contracts which will see the procurement and construction of flowlines and wellhead installations across several onshore oil fields in the Emirate of Abu Dhabi. The contracts also include the engineering, procurement, and construction (EPC) of a new bypass system to provide critical backup for the existing crude receiving stations at the Jebel Dhanna and Fujairah export terminals.

The contracts were awarded to Galfar Engineering and Contracting (WLL – Emirates) and Robt Stone (Middle East LLC). Over 70% of the combined award value will flow back into the United Arab Emirates’ (UAE) economy under ADNOC’s In-Country Value (ICV) program, reinforcing ADNOC’s commitment to maximizing value for the nation.

Yaser Saeed Almazrouei, Executive Director of ADNOC’s Upstream Directorate, said: “These awards further highlight ADNOC’s drive to invest responsibly to unlock greater value from our assets and resources and build long-term resilience as we deliver our 2030 strategy. The contracts follow a competitive tender process that ensures that substantial value will flow back into the UAE through our ICV program, reinforcing ADNOC’s commitment to supporting local business and stimulating the growth and diversification of the nation’s economy."

As part of the selection criteria for the awards, ADNOC carefully considered the extent to which bidders would maximize ICV in the delivery of the project. This is a mechanism integrated into ADNOC’s tender evaluation process, aimed at nurturing new local and international partnerships and business opportunities, fostering socio-economic growth, and creating job opportunities for UAE nationals. The successful bids by the two contractors prioritized UAE sources for materials, local suppliers, and workforce.

Omar Obaid Al Nasri, CEO of ADNOC Onshore, said: “These contracts build on the momentum of our recent awards for upgrades on the Jebel Dhanna terminal and underline our commitment to unlocking the full potential of our assets and fields to deliver increased value for our shareholders and contribute to ADNOC’s objective to create a more profitable upstream business. The award for flowlines and wellhead installations will help sustain long-term production at our Bab, Asab, and Sahil fields while the award for the bypass system will provide critical backup for the existing crude receiving station connecting our fields and export terminals, to ensure business continuity and resilience."

The two PC contracts awarded for flowlines and wellheads are split into two parts. The first contract, valued at approximately USD71 million (AED 261.2 million), is awarded to Galfar Engineering & Contracting (WLL - Emirates). The contractor will procure and construct flowlines and wellhead installations for the ADNOC Onshore Asab and Sahil fields.

The second contract, valued at approximately USD168 million (AED 618.2 million), is awarded to Robt Stone (Middle East LLC). The contractor will procure and construct flowlines and wellhead installations for the ADNOC Onshore Bab field. The scope of work includes residual engineering, procurement, construction, pre-commissioning, and commissioning of natural oil producer wells and water injection wells at the respective fields. Both contracts are expected to be completed in five years.

The third contract, the EPC awarded to Galfar Engineering and Contracting (WLL – Emirates), is valued at approximately USD84 million (AED 309.1 million). It will create a new bypass system to provide critical backup for ADNOC Onshore’s existing crude receiving stations at the Jebel Dhanna and Fujairah export terminals. The project is expected to be completed in 30 months.

As MRC informed earlier, in early May, 2020, Abu Dhabi National Oil Company (ADNOC) began a gradual restart of its Ruwais oil refinery complex after a scheduled maintenance shutdown. The Ruwais complex, which has capacity of 835,000 barrels per day, was shut down early this year, the ADNOC spokesman said. And in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

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) -- Elkem (Oslo, Norway) says it has received 10.0 million Norwegian kroner (USD1.1 million) in financial support from Enova (Trondheim, Norway), a state enterprise owned by the Norwegian Ministry of Climate and Environment, to fund initial planning for a potential large-scale battery materials plant in Norway, reported Chemweek.

The project, named Northern Recharge, aims to supply the fast-growing battery industry through a competitive production process and make batteries greener with lower carbon dioxide (CO2) emissions, the company says.

Elkem recently selected Heroya, one of the biggest industrial parks in Norway, as the project site. The company will now continue to progress the Northern Recharge project towards a final investment decision in 2021, it says. “Securing this initial support from Enova is an important step as we progress towards a final investment decision,” says Michael Koenig, CEO of Elkem. The company is also inviting industrial and financial partners to participate, he says.

The project will produce synthetic graphite and composites, which are the leading anode materials in lithium-ion (Li-ion) battery cells, the company says. Using Elkem's technology and renewable hydropower, the project can potentially reduce CO2 emissions by more than 90% compared to conventional production, while potentially reducing energy consumption by around 50%, it says.

“Batteries will undoubtedly play an important role in a future low-emission society. The production of batteries, however, is energy-consuming, so we need to see production processes that are more energy-efficient in the future," says Oyvind Leistad, director/markets at Enova.

Graphite demand is expected to increase more than 10 times from today’s level to 2030, with most battery cell and graphite production currently taking place in Asia, Elkem says. Graphite as an anode material typically represents around 10% of the total battery weight, it notes. The Northern Recharge project “competitively positions us for large-scale and cost-effective material science solutions for the rapidly developing European battery industry,” says Stian Madshus, vice president/battery materials at Elkem.

Elkem has invested NKr 65 million in the building of a pilot plant for battery graphite at Kristiansand, Norway, to evaluate the project's viability. This is expected to open at the beginning of 2021, with the project supported by Innovation Norway, a state-owned company, and a national development bank, Elkem says.

The company says it is also continuing to carry out research on silicon-graphite composite materials for improved battery performance, joining the Hydra and 3beLiEVe research projects on next generation Li-ion batteries coordinated by SINTEF and the Austrian Institute of Technology, respectively. Both projects have received funding from the EU's Horizon 2020 research and innovation program, it says.

As MRC informed before, Elkem (Oslo, Norway) says it will invest 180.0 million Norwegian krone (USD19.7 million) in a new plant in Canada to pilot an industrial biocarbon process specifically for silicon and ferrosilicon production. The plant will be constructed near Elkem’s production site at Chicoutimi, Quebec, with start of construction planned for the second half of 2020, the company says. The project has received financial support from the Canadian government, the Quebec government, and the city of Saguenay, reducing Elkem’s net investment to NKr60 million.

We remind that the COVID-19 pandemic has interrupted the development of Norway's offshore oil and gas projects, pushing up costs and postponing startups, the government and oil company Equinor announced. The costs of ongoing projects rose by 13.2 billion Norwegian crowns (USD1.4 billion) from a year ago on an inflation-adjusted basis, government documents showed, as COVID-19 restrictions stalled construction at several fields. "The COVID-19 pandemic and weakened Norwegian (currency) have negatively impacted some of the projects, but the combined project portfolio is still very resilient," Equinor said in a separate statement.

We also remind that BP and Equinor confirmed they are shutting in production on their platforms, while Chevron, BHP and others said they are evacuating some personnel and considering decisions on production reductions.

As 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.

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).
MRC