Midwest refiners to ship more fuel to East Coast, pressuring plants

MOSCOW (MRC) -- US Midwest refiners are gearing up to send more gasoline and diesel to East Coast buyers, hoping to fill a void created by refinery closures and cutbacks, but likely to add pressure to regional fuel producers, reported Reuters.

Midwest refiners, such as BP and Husky Energy, that process inexpensive Canadian crude are betting on East Coast markets to boost sales and margins. But the move could make it more difficult for PBF Energy to restore production of gasoline, diesel and jet fuel at its Paulsboro, N.J., plant.

“The midwest refining complex is a firehose to the East Coast, which is already drowning in imports,” said Zachary Rogers, senior oil analyst at consultancy Rapidan Energy Group.

Shippers are geared up to transport up to 25,000 barrels per day (bpd) of refined products on the Mariner 1 pipeline from the Midwest as soon as this week, two traders familiar with the matter said. If demand permits, refiners could double that amount, they said.

“We do expect that this service will help to lower overall fuel costs for Pennsylvania residents and business,” said a spokeswoman at Energy Transfer, which operates Mariner 1. Volumes of between 20,000 bpd and 25,000 bpd will begin this month, she said.

Gasoline prices in the Midwest traded 4 cents a gallon below the futures benchmark for gasoline on the New York Mercantile Exchange on Tuesday while New York Harbor conventional gasoline prices were 3.25 cents above the futures benchmark.

East Coast refineries produce only part of the fuel consumed in the region, with pipeline and seaborne imports furnishing most. Three refineries, owned by Delta Airlines, PBF Energy and Phillips 66, produce 700,000 bpd combined out of the 5.2 million bpd of gasoline, diesel, and jet fuel consumed last year, Energy Information Administration data shows.

The largest refiner, Philadelphia Energy Solutions, halted operations following a 2019 explosion, Canada’s Come-by-Chance, which sold fuel into the East Coast, was idled in May, and PBF Energy said in October it would shut fuel-producing units at its 180,000 bpd Paulsboro refinery.

PBF did not reply to a request for comment.

As MRC wrote before, in October 2020, US refiner Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 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 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
MRC

Russia approves Sinopec participation in Sibur Amur gas chemical mega-project

MOSCOW (MRC) -- Russia’s government commission on foreign investment has formally approved Sinopec’s proposed acquisition of a 40% ownership stake in the USD10-billion Amur gas chemicals complex being developed by Sibur (Moscow) in Russia’s Far East, said Chemweek.

The approval was announced in a formal statement by the Russian government. Sibur began foundation construction activity for the Amur project in Blagoveshchensk, Russia, in August this year. The complex, near Russia’s border with China, is planned to produce 2.3 million metric tons/year of polyethylene (PE) and 400,000 metric tons/year of polypropylene (PP), with commissioning scheduled in 2025. The facility’s steam cracker will be supplied with 2 MMt/y of ethane and 1.5-MMt/y of liquefied petroleum gas (LPG) as feedstock under a supply agreement with Gazprom (Moscow), which is building a 42-billion cubic meters/year gas processing plant at the same location.

Sibur said in August that Sinopec was expected to become its partner in the project and that China “remains the key driver behind global polymer consumption growth and is a target market for Amur.” The two companies signed a shareholder agreement in June.

As MRC informed earlier, LyondellBasell, the world’s leading licensor of polyolefin technologies, announced that the Amur Gas Chemical Complex project, being implemented by SIBUR Holding PJSC, the largest integrated petrochemicals company in Russia, has selected LyondellBasell’s Spheripol technology for a new facility. The process technology will be used for a 400 KTA polypropylene unit to be built in Svobodny, Amur region, Russia.

According to MRC's DataScope report, Russian companies increased external purchases of polypropylene in November, imports reached 20,400 tonnes against 17,900 tonnes a month earlier. Thus, overall PP imports into Russia reached 202,000 tonnes in January-November 2020, compared to 167,400 tonnes a year earlier. Purchasing of all grades of propylene polymers in foreign markets increased, with homopolymer PP imports accounting for the most noticeable rise.
MRC

Sinopec refinery in Qilu resumes operation after overhaul

MOSCOW (MRC) -- Sinopec Corp's Qilu refinery has resumed operations after a more than three-month overhaul of its 160,000 barrels per day (bpd) crude processing facility, reported Reuters with reference to the company's statement on Thursday.

The refinery, based in China's oil refining hub Shandong province, has total crude oil processing capacity of 13 million tonnes per year, or 260,000 bpd.

"With only half-month left before the year-end, the refinery will increase operational rates at all production facilities to meet the output targets for 2020," Sinopec said.

As MRC informed earlier, SKGC's joint venture Sinopec-SK Wuhan Petrochemical plans to restart its naphtha-fed steam cracker in Wuhan in the second-half of December as scheduled after the turnaround and debottlenecking. The cracker was shut down in October, 2020.

SK Wuhan's steam cracker is able to produce 800,000 mt/year of ethylene and 400,000 mt/year of propylene.After the debottlenecking, the cracker's ethylene production capacity will be increased to 1.1 million mt/year and propylene capacity to 550,000 mt/year. The company will add a new 60,000 mt/year butadiene unit at the plant.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

COVID-19 - News digest as of 17.12.2020

1. VCI sees return to growth in Germany next year

MOSCOW (MRC) -- Production of chemicals, including pharmaceuticals, will increase 1.5% in Germany in 2021, and sales generated by the German chemical-pharmaceutical industry will rise 2.5%, according to industry association VCI (Frankfurt), said Chemweek. Demand for chemical products is largely stable at the end of 2020, it says. "Business sentiment is now confident in most of our companies,” says VCI president and Evonik Industries CEO Christian Kullmann. "More than half of them expect sales to go up next year both in Germany and abroad." The industry in Germany has had a “difficult year” in 2020 due to COVID-19, VCI says. The period has been “characterized by marked ups and downs in the four quarters,” it says. Due to weaker demand, chemical production including pharmaceuticals has decreased by 3% overall in 2020, with all sectors recording losses, VCI says. The decline is in line with VCI’s latest forecast. Losses by sector ranged from a minor slip in the output of pharmaceuticals of 0.5% to a slump of 6.5% in polymers production. Total output of chemicals excluding pharmaceuticals has decreased 4% in Germany this year, VCI says.


MRC

Brenntag appoints chief transformation officer

MOSCOW (MRC) -- The supervisory board of Brenntag has appointed Ewout van Jarwaarde to the company’s management board as chief transformation officer, reported Chemweek.

Van Jarwaarde, a Dutch national, will take over the newly created position as of 1 January 2021. He will be responsible for the execution of the company’s global transformation program Project Brenntag.

Van Jarwaarde will also, among other responsibilities, be in charge of driving functional excellence, realizing digital- and data-driven business opportunities, as well as developing the group-wide IT and indirect procurement functions. His appointment increases the number of Brenntag management board members to five.

Van Jarwaarde was most recently CEO of CarNext.com, a marketplace for used cars that forms part of LeasePlan (Amsterdam, Netherlands), which has operations across Europe. He was previously a partner at McKinsey & Co. in Amsterdam.

As MRC informed earlier, in April 2020, Brenntag sai it had acquired the operating assets of Suffolk Solutions’ (Suffolk, Virginia) caustic soda distribution business. Financial terms of the deal have not been disclosed.

We also remind that Brenntag said earlier this month that it had signed a deal with Elementis under which Brenntag will distribute the company’s products in coatings, adhesives, sealants, inks and construction materials in Canada.

We remind that October production of sodium hydroxide (caustic soda) in Russia were 109,000 tonnes (100% of the basic substance) versus 108,000 tonnes a month earlier. Russia's overall output of caustic soda totalled 1,054,600 tonnes in the first ten months of 2020, down by 1.6% year on year.
MRC