Saudi Aramco plans to raise billions by issuing international bonds, as low oil prices and a grim demand outlook loom over its finances

MOSCOW (MRC) -- Saudi Aramco, the world's biggest oil company, will issue a multi-tranche international bond, reported Business Insider with reference to a filing with the national stock exchange.

The company has hired Citi, Goldman Sachs International, HSBC, JP Morgan, Morgan Stanley and NCB Capital to underwrite the sale.

Aramco did not specify how large the dollar-denominated issuance would be, but it is expected to run into the billions, as the company struggles with a historic hit to oil demand.

Saudi Aramco, the world's largest oil company, plans to issue an international bond, as it works to shore up its finances in light of the collapse in demand for crude oil this year.

In a filing with the Riyadh stock exchange on Monday, Aramco said it would issue dollar-denominated bonds of varying maturities - 3-, 5-, 10-, 30- and possibly 50-years - but did not specify how large the sale would be.
"The bonds will be senior, dollar denominated, unsecured by assets," Aramco said in a filing.

Citi, Goldman Sachs International, HSBC, JP Morgan, Morgan Stanley and NCB Capital have been appointed as underwriters for the sale, the filing showed.

Aramco, which reported a near-45% drop in net profit in the third quarter just two weeks ago, has struggled to shore up its balance sheet this year, much like its rivals, as the COVID-19 pandemic has destroyed energy demand and kept crude prices below USD40 a barrel for much of the past six months.

The company also committed to paying a dividend of USD18.75 for the third quarter.

The company has repeatedly cut official selling prices to its big customers in Asia to try to maintain demand, even as air, sea and road transport in the region remain below pre-pandemic levels.

Ratings agency Fitch last week lowered its outlook on Saudi Aramco's debt to negative and maintained its "A" rating, in line with the same decision on November 10 on its sovereign rating for Saudi Arabia.

Aramco made its then-record-breaking debut on the stock market last December. Its shares since then have fallen by 9% to around 35.30 riyals. But this is a far cry from the 31% drop so far this year in the price of crude oil.

As MRC wrote before, Saudi Aramco and Saudi Basic Industries Corporation (SABIC) have decided to reevaluate their crude-oil-to-chemicals project in Yanbu on the kingdom's west coast, according to an Oct. 18 statement on the Tadawul stock exchange, as they slash spending due to low prices. The USD20 billion project may be downsized to use Aramco's existing facilities in the port city, instead of building a new plant, the statement posted by SABIC said.

We remind that in June, Aramco said it had completed the share acquisition of a 70% stake in SABIC from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyals 259.125 billion (USD69.1 billion). Combined, in 2019 Aramco and SABIC recorded petrochemicals production volume of nearly 90 million mt, including agri-nutrient and specialty products.

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.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC

China October refinery output hits record high on firm holiday gasoline demand

MOSCOW (MRC) -- China’s crude oil throughput rose 2.6% in October from a year earlier to its highest-ever level as fuel demand firmed on strong holiday travel, reporte Reuters.

The country processed 59.82 million tons of crude oil last month, equivalent to 14.09 MMbpd, according to data from the National Bureau of Statistics (NBS).

That compared with 13.96 MMbpd in September, topping the previous daily record set in June at 14.08 MMbpd.

Total throughput during the first 10 months of 2020 was 555.18 million tons, or 13.29 MMbpd, up 2.9% from the same period in 2019.

Gasoline demand was firm as more motorists hit the road for long-distance driving during a holiday period in early October.

Domestic aviation fuel consumption rebounded to near pre-COVID levels in September and was expected to firm up more in October, thanks to a fast recovery in passenger travel and cargo freight, although demand from international flights remained weak.

The refinery throughput increase, however, was capped as one of Sinopec’s main refineries, Qilu in Shandong, switched off a 160,000 bpd crude processing unit from late September.

“Independent refiners still have incentives to maintain high operational rates amid a solid refining margin of 200 yuan (USD30.38) a ton,” said Ding Xu, analyst from China-based Longzhong consultancy, speaking before the data was released.

The NBS data also showed China’s crude oil output last month was 16.41 million ton, up 1.4% from the same month a year earlier.

Output for the first 10 months gained 1.7% on the year to 162.66 million tons, a small but significant increase given rapid reservoir depletion at major mature fields.

Natural gas output last month was up 12% from a year earlier to 16.3 billion cubic meters, ahead of the start of the winter heating season in the north when consumption of the fuel typically shoots up.

January-October production grew a robust 9% year-on-year.

As MRC informed before, in H1 October, 2020, China's Sinopec started operation of a 800,000 tons-per-year ethylene facility at its Zhanjiang refinery. 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.

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

ccording 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

Tongsuh Petrochemical shut No. 4 ACN plant in South Korea

MOSCOW (MRC) -- Tongsuh Petrochemical, an affiliate of Asahi Kasei Corp., has taken off-stream its No.4 acrylonitrile (ACN) plant in South Koreas, following a power outage, reported S&P Global.

Thus, this plant was shut on 6 November, 2020. At present it is unclear when it will resume operations.

Located in Ulsan, South Korea, the No. 4 line has a production capacity of 265,000 mt/year.

As MRC informed before, Tongsuh Petrochemical began commercial production of a new line at its ACN plant in January 2013. Tongsuh added line No.4, which initially had a production capacity of 245,000 tons per year, at its Ulsan based ACN plant. Tongsuh had had an ACN capacity of 315,000 tons per annum and with the addition of the new ACN line in 2013 reached 560,000 tons per year.

ACN is a feedstock for the production of acrylonitrile-butadiene-styrene (ABS).

According to MRC's ScanPlast report, Russia's consumption of material in the ABS segment decreased in January-September 2020 by 8% year on year, totalling 32,240 tonnes.

Tongsuh Petrochemical Corp., Ltd. manufactures acrylonitrile, ethylene diamine tetraacetic acid, and ammonium sulfate. The company also offers related derivatives and co-products, such as sodium cyanide, EDTA, acrylamide, and acetonitrile. The company was founded in 1969 and is based in Ulsan, South Korea. Tongsuh Petrochemical Corp., Ltd. operates as a subsidiary of Asahi Kasei Corporation.
MRC

Phillips 66 posts smaller-than-feared loss on retail improvement

MOSOCW (MRC) - U.S. refiner Phillips 66 PSX.N reported a smaller-than-expected quarterly loss on Friday, as its marketing and specialties unit, which retails refined products, benefited from people returning to gas stations, said Reuters.

The unit buys refined products wholesale to resell at over 9,100 outlets the company operates through a joint venture, and has seen demand recover as coronavirus-related lockdowns ease and travel gradually picks up.

On a sequential basis, marketing fuel margins improved 27.4% in the third quarter to USD2.23 per barrel in the United States and up 24% to USD6.28 per barrel internationally.

However, realized refining margins slumped to USD1.78 per barrel, a 31.5% drop from the second quarter and 84% lower than last year, hit by weak fuel demand though oil prices have ticked up from spring lows.

Adjusted loss for the refining segment came at USD970 million, wider than USD867 million posted in the second-quarter.

Results in the third quarter were also hit by impairment charges of USD798 million related to the planned conversion of a San Francisco refinery into a renewable fuels plan.

The company had said in August it will reconfigure the refinery in Rodeo to produce renewable fuels, which are made from used cooking oil and fats, among others, and have seen an increased demand in recent months as they burn cleaner than traditional diesel.

The Houston, Texas-based company reported a net loss of USD799 million, or USD1.82 per share, for the quarter ended Sept. 30, from a year-ago profit of USD712 million, or USD1.58 per share.

As MRC informed earlier, Phillips 66 shut down its Belle Chasse refinery on 16 September in anticipation of Hurricane Sally. No estimate was provided for the duration of the shutdown. This site houses a plant with a capacity of 355,000/tonnes propylene per year.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 880,130 tonnes in the first nine months of 2020 (calculated using the formula: production minus exports plus imports, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Phillips 66 was formed in May 2012 as a result of the division of ConocoPhillips, taking over the company's refining assets. The staff of the company consisted of about 14 thousand employees. The company is headquartered in Houston.
MRC

Global liquid fuels production outages have increased in 2020

MOSCOW (MRC) -- Disruptions to crude oil and condensate production from members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries have risen considerably since last year, said Hydrocarbonprocessing.

These outages have contributed to reduced liquid fuel supply and, along with crude oil production declines agreed to among OPEC and partner countries (OPEC+), have contributed to global liquid fuels inventory draws since June. So far in 2020, monthly oil supply disruptions have averaged 4.6 MM barrels per day (bpd) and reached 5.2 MM bpd in June, the highest monthly levels since at least 2011, when the U.S. Energy Information Administration (EIA) began tracking monthly liquids production outages. Global oil supply disruptions averaged 3.1 MM bpd in 2019, and rising outages in Iran have been the main drivers of the year-on-year increase. EIA does not include field closures for economic reasons or oil demand declines in its accounting of supply disruptions.

Libya, Venezuela, and Iran (the OPEC countries exempt from the latest OPEC+ agreement) were the main contributors to these outages. Domestic political instability in Libya has removed about 1.2 MM bpd from oil production since February 2020. The Libyan National Army, the warring faction in eastern Libya, blockaded five of the country’s oil export terminals and shut in oil production from major fields in the southwestern region in January 2020, causing Libya’s production to fall to less than 100,000 bpd by April.

U.S. sanctions have led to production outages in Venezuela and Iran. U.S. sanctions placed on oil-trading companies and shipping companies that facilitated exports of Venezuela’s crude oil in the first half of 2020 removed 500,000 bpd of crude oil production from global markets by August. Ongoing U.S. sanctions on Iran’s crude oil and condensate exports have kept Iran’s disruption levels elevated through 2020, and disruptions there have increased by another 100,000 bpd since January.

Non-OPEC oil supply disruptions, mostly from the United States and Canada, rose to nearly 800,000 bpd in August. Disruptions in Canada occurred when operators ordered nonessential staff to stop work because of coronavirus outbreaks at production sites. In the United States, hurricane-related disruptions and unplanned maintenance affected oil production this summer. Other non-OPEC countries experienced temporary field closures for various reasons such as coronavirus outbreaks among workers, logistical issues moving workers or equipment during the pandemic, fires at field operations in Canada, or other natural disasters.

As MRC informed earlier, crude oil futures fell during the mid-morning trade in Asia Nov. 13, extending overnight losses, after the US Energy Information Administration data showed a large build in US crude inventories, while concerns over the progression of the coronavirus pandemic continued to weigh on the market.

Iin 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 1,594,510 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.

EIA publishes historical unplanned production outage estimates in its Short-Term Energy Outlook (STEO). In its estimates of outages, EIA differentiates among declines in production resulting from unplanned production outages, permanent losses of production capacity, and voluntary production cutbacks. EIA’s estimates of unplanned production outages are calculated as the difference between estimated effective production capacity (the level of supply that could be available within one year) and estimated production.
MRC