CKPC suspends PDH/PP project in Alberta indefinitely

MOSCOW (MRC) -- Plans for an integrated propane dehydrogenation (PDH) and polypropylene (PP) plant in Alberta, Canada, have been “suspended indefinitely,” according to Pembina Pipeline (Calgary), said Chemweek.

Capital expenditure on the proposed 4.5-billion-Canadian dollar (USD3.5 billion) development by Canada Kuwait Petrochemical Corp. (CKPC), a 50/50 joint venture (JV) between Pembina and Petrochemical Industries Co. (PIC; Kuwait City), was first deferred in March. Pembina now says in a business update that while it continues to believe in the strategic rationale of the project, the “significant risks arising from the ongoing COVID-19 pandemic, most notably with respect to costs under the lump sum contract for construction of the PDH plant, which remains under force majeure condition, require CKPC to suspend execution of the project indefinitely."

Pembina and PIC will continue to evaluate the PDH and PP facilities, each of which are planned to have a nameplate production capacity of 550,000 metric tons/year, Pembina says. “CKPC is working through a process to manage, defer, or cancel existing agreements with, among others, the lump-sum consortium, lenders, and technology licensers, in order to minimize the need for additional capital contributions,” it says. The JV will continue to take action to safeguard its existing investment associated with long-lead equipment and intellectual property, it adds. Pembina says it will recognize a material financial impairment on its investment in the JV in the fourth quarter.

In March Pembina said planning, engineering, and regulatory work done to date on the deferred project adjacent to its Redwater fractionation complex near Edmonton, Alberta, would allow the company to quickly resume activity to meet customers’ needs when global energy prices and the broader economic environment support such action. The deferred project was due to receive approximately 23,000 b/d of propane feedstock and was expected to come into service in the second half of 2023.

CKPC had signed agreements to use Honeywell UOP’s C3 Oleflex technology for the PDH plant and W.R. Grace’s Unipol process for the PP unit, while a lump-sum engineering, procurement, and construction (EPC) contract was awarded to Heartland Canada Partners, a JV of Fluor and Kiewit.

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.
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MOSCOW (MRC) -- For the week of Thanksgiving 2020, estimated consumption of major transportation fuels (motor gasoline, distillate, and jet fuel) was 11% lower than during Thanksgiving week 2019, reported Hydrocarbonprocessing.

About half as much jet fuel was consumed during the week of Thanksgiving as last year, measured using product supplied as a proxy for consumption: 1.1 million barrels per day (b/d) in 2020 compared with 2.0 million b/d in 2019, according to estimates in the US Energy Information Administration’s (EIA) Weekly Petroleum Status Report.

Using flight-level data provided by Cirium on commercial passenger flights (which accounted for approximately three-quarters of overall jet fuel consumption in 2019), EIA estimates that about 108,000 flights took off from US airports during the week of Thanksgiving in 2020, or 37% fewer than the 170,000 flights that departed during Thanksgiving week in 2019. EIA estimates that these flights consumed 45% less fuel than the flights during Thanksgiving week in 2020 compared with 2019.

estimated jet fuel consumption by commercial passenger jets departing US airports

EIA’s analysis, published in This Week in Petroleum, shows that states such as New York, Massachusetts, and California may have had the largest percentage declines (at least 60%) in commercial jet fuel consumption between the two Thanksgiving weeks. However, two states - Montana and Wyoming - may have had increases in commercial jet fuel consumption.

State-level variation in flight volume and implied fuel consumption could result from several factors: ifferences in state quarantine policies and travel restrictions, the relative severity of COVID-19 in that state, the share of the state’s population that was born or naturalized there (with higher shares associated with less travel during holidays),
the share of each state’s international air travel (which has generally been more affected than domestic travel).

As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

We remind that 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 1,760,950 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.
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MOSCOW (MRC) -- U.S.-based coatings maker PPG Industries has made an offer to buy Finnish paint producer Tikkurila for a total of 1.1 billion euros (USD1.35 billion), said Reuters.

Tikkurila said that the offer represented a premium of about 66.2% to the company’s closing price on Thursday.

"The combination of PPG and Tikkurila is extremely complementary, both geographically and from a decorative brand perspective," PPG Chief Executive Michael McGarry said.

The acquisition cost includes assumption of debt and cash, PPG said in a statement on Friday. The transaction is expected to close in the second quarter of 2021.

Tikkurila is a Vantaa-based paints and coatings producer with operations in 11 countries, with more than 80% of revenues being generated from Finland, Sweden, Russia, Poland and the Baltic states. The Finnish company employs about 2,700 people globally, and generated sales of about EUR564m in 2019.

The acquiring US company PPG is headquartered in Pittsburgh and operates in more than 70 countries. PPG reported net sales of USD15.1bn in 2019.

We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.
MRC

MOSCOW (MRC) -- Fertilizer Exchange (London, UK), the first blockchain-enabled, digital global platform specifically designed to trade physical fertilizer, has announced that it plans full commercial launch in the first quarter of 2021, said Chemweek.

The trading platform will help to modernize fertilizer supply chains, delivering "significant cost and time savings," Fertilizer Exchange says. The new platform lets buyers, sellers, and third parties trade fertilizer quickly and securely, Fertilizer Exchange says. It will be fully integrated with service providers and built on blockchain.

"Announcing this launch timetable is a huge step forward as we seek to modernize the global fertilizer trade,” says Phil Sunderland, general manager of Fertilizer Exchange. “We look forward to welcoming many global fertilizer sellers and buyers onto the platform in the coming weeks."

Misr Fertilizers Production Co. (Nasr City, Egypt), one of the world’s biggest producers of urea, says it looks forward “to seeing how the project develops and to see if it can add value to our already good distribution channels."

At launch, Fertilizer Exchange’s customers will have access to a number of embedded services in the platform including shipping, insurance, and inspection. Fertilizer Exchange has also announced that Direct Hedge (Hellerup, Denmark), one of the leading brokers in over-the-counter futures contracts for fertilizer, will offer users of the platform up-to-date pricing information on forward fertilizer contracts.

The fertilizer platform is being built by Fujitsu using the same technology it developed for Rice Exchange, a sister platform to Fertilizer Exchange. “It allows for price discovery, digital documentation, and smart contracts that reduce risk, increase transparency, and boost productivity,” Fertilizer Exchange says.

As per MRC, Saudi Basic Industries Corp (SABIC) said it had agreed to sell its agri-nutrients business to Saudi Arabia Fertilizers Co (SAFCO), in which it owns a 43% stake. SAFCO will finance the acquisition by issuing 59.4 million shares, valued at 10 riyals each, to SABIC, raising the fertilizer group’s overall share capital by 14.25% to 4.76 billion riyals (USD1.27 bln).

As MRC informed previously, in early November, 2020, SABIC announced that BOPP film based on the company’s certified circular PP from feedstock recycling of used plastics will be introduced in primary pet food brand packaging by Mars.

According to MRC's ScanPlast report, 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, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

MRC

MOSCOW (MRC) -- Austria's OMV will not make acquisitions before 2022 while it cements its transition into a chemicals group which increasingly uses less crude oil as feedstock, its chief executive said, diverging from other European oil and gas firms focusing on renewables, reported euters.

OMV in October completed a USD4.7 billion acquisition of a majority stake in Borealis, which makes speciality plastics and materials. Meanwhile, BP in June sold its petrochemicals business for USD5 billion.

While other oil and gas companies like BP or Royal Dutch Shell are turning themselves into broad energy providers and traders buying into renewable power development projects, OMV has shunned such investments.

"Do I understand the power market better than Eon or RWE? Definitely not. When I look into my transformation into chemicals, I can tell you, I have lots of competitive advantages," Chief Executive Rainer Seele told Reuters on Friday.

"Borealis is a technology leader with the Borstar technology (to make polyethylene and polypropylene)... They have the in-house technology, they are not licensing it out."

OMV also aims to lead the market in turning plastic waste into oil and increasing the bio-feedstock content for its refineries.

It sold its German petrol station network this month for around USD590 million as its bigger European rivals doubled down on their retail networks.

"Anti-cyclical decisions are sometimes very brave and successful," Seele said, asking why should he sell products other refiners make given OMV's German refinery focuses on petrochemicals and jet fuel production.

While BP and Royal Dutch Shell had to cut their dividends this year, OMV has kept payouts steady and Seele said he expected operating cash flow, which rose 6% in the first three quarters of 2020 from a year earlier, to rise in the fourth quarter.

As MRC informed before, the 380,000-metric tons/year steam cracker at Porvoo, Finland, operated by Borealis, resumed normal operations in early December after the company declared force majeure following a technical failure on 11 November. The cracker was shut down to allow necessary repair works, according to Borealis. The company began restart operations on 23 November, 2020. The force majeure was also lifted after the cracker reached full capacity utilisation.

Ethylene and propylene are feedstocks for producing 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.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.

OMV (Osterreichische Mineralolverwaltung AG) is an Austrian oil company, the largest in Central Europe. Headquarters - in Vienna.
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