SIBUR and Sinopec set up a JV at Amur Gas Chemical Complex

MOSCOW (MRC) -- SIBUR Holding, Russia’s leading petrochemicals company and one of the most rapidly growing petrochemicals businesses globally, and China Petroleum & Chemical Corporation (Sinopec), China’s leading energy and chemical company, have closed the deal to set up a joint venture (JV) at the Amur Gas Chemical Complex after obtaining all the necessary approvals from the regulators of both countries, as per SIBUR's press release.

SIBUR and Sinopec will hold interest in the JV in the amount of 60% and 40%, respectively.

In June 2019, the parties agreed on the main terms and conditions of the potential JV. Following the investment decision, all corporate and regulatory approvals were obtained as required to close the deal. Following the deal, the parties will gain joint control over the JV. (This will result in deconsolidation of the asset from SIBUR’s balance sheet in the consolidated financial statements under the IFRS.)

Set to become the world’s largest basic polymer production facility, Amur GCC will have a capacity of 2.7 mtpa, including 2.3 mtpa of polyethylene (PE) and 400 ktpa of polypropylene (PP), and will be producing a wide range of grades. The construction of Amur GCC proceeds in synch with the gradual ramp-up of Gazprom’s Amur Gas Processing Plant to its full capacity, so that the latter could supply ethane and LPG to Amur GCC for processing into high value-added products. The completion of construction and commissioning is scheduled for 2024.

The Amur GCC project will help attract international investments in the Russian economy while also making a considerable contribution to the national programme of growing the nation’s non-commodity exports. Given the facility’s geography, its products will be targeting Asian markets, primarily China, which is the largest consumer of polymers globally. The Amur GCC project is expected to be included in an intergovernmental agreement between Russia and China.

Amur GCC will set the tone in global environmental and technology standards, in particular through its reliance on renewable energy sources.

Amur GCC’s budget is tentatively estimated at USD 10 bn to USD 11 bn and is subject to adjustments as the project progresses. In December, Amur GCC attracted USD 1.5 bn in bridge financing from a syndicate of Russian banks. Gazprombank acted as the lead arranger and lender, with Otkritie and Sberbank as arrangers and lenders.

Dmitry Konov, Chairman of the Management Board at SIBUR Holding: “SIBUR and Sinopec have a long track record of jointly delivering on large-scale investment projects and implementing advanced production technologies. Creating a joint venture is a major milestone in our Amur GCC project. With Sinopec’s involvement, we will be able to maximise the project’s efficiency, in particular optimising and balancing the facility's future debt portfolio, while also enhancing its expertise in distribution across Asian markets.”

ZHANG Yuzhuo, Chairman of Sinopec: “Amur GCC is a milestone in the cooperation between Sinopec and SIBUR, and will also become a model for Sino-Russian energy cooperation to extend to downstream chemical industry. The success of Amur GCC will inject new impetus into advancing the high-quality cooperation between the two countries in the fields of energy, chemical industry, investment, economy and trade and play a positive role in effectively promoting the sound interaction of domestic and international markets as well as the economic development, employment and social well-being of the Far East region.”

Ethylene and propylene are feedstocks for producing PE and PP.

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.

Sinopec Corp. is one of the largest scale integrated energy and chemical company with upstream, midstream and downstream operations. Its principal business includes: exploring, developing, producing and trading crude oil and natural gas; producing, storing, transporting and distributing and marketing petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products. Its refining capacity and ethylene capacity rank No.2 and No.4 globally. Sinopec listed in Hong Kong, New York, London and Shanghai in August 2001.
MRC

MOSCOW (MRC) -- Formosa Petrochemical Corporation (FPCC) is running its crackers in Taiwan at 100% capacity utilisation in end-December, 2020, according to Chemweek.

The company's crackers have combined ethylene production capacity of 2.935 million metric tons/year.

Meanwhile, FPCC is planning overhaul of the smallest cracker in mid-2021.

As MRC wrote earlier, FPCC undertook a planned shutdown at its No.3 cracker in Mailiao on August 11, 2020. The cracker remained off-line till end-September, 2020. Located at Mailiao in Taiwan, the No. 3 cracker has an ethylene production capacity of 1.2 million mt/year and propylene production capacity of 600,000 mt/year.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC

1. Asia distillates-jet fuel cracks inch up; renewed travel bans likely to hurt recovery

MOSCOW (MRC) -- Asian refining margins for jet fuel inched higher on Monday, but reimposed travel restrictions in several countries to slow the spread of a highly-infectious coronavirus variant is expected to dent passenger demand recovery, reported Reuters. Refining margins, also known as cracks, for jet fuel ticked up USD0.05 to USD4.76/bbl over Dubai crude during Asian trading hours. The cracks, however, have shed 11% since hitting a more than nine-month high of USD5.35/bbl on Dec. 18. The Philippines on Saturday extended a ban on flights from the United Kingdom by another two weeks to mid-January in a bid to prevent the spread of the new coronavirus variant, while Japan said it would temporarily ban non-resident foreign nationals from entering the country.


MRC

MOSCOW (MRC) -- Formosa Petrochemical has awarded its tender for a batch of propylene at USD1,004/mt FOB Taiwan via fixed price tender that closed Dec. 24, reported S&P Global.

Chinese propylene market is poised to receive some support during the week as some last minute restocking ahead for New year lend support.

As MRC wrote previously, in late December, Formosa is running its crackers in Taiwan at full capacity.

Formosa, Asia's top naphtha importer, operates three naphtha crackers in Mailiao. These units have a total capacity of 2.93 million tpy of ethylene.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC

MOSCOW (MRC) -- Crude futures settled lower Dec. 28 as pandemic-fueled demand concerns overshadowed the positive news of the passing of a US stimulus package, reported S&P Global.

NYMEX February WTI settled 61 cents lower at USD47.62/b and ICE February Brent pulled back 43 cents to be settled at US50.86/b.

Demand recovery outlook continued to face headwinds from the emergence of a more contagious strain of COVID-19. Several countries, including Canada, France, Japan, Spain and Norway, have reported cases of the new strain, and there are now fears that the variant may have been transmitted undetected to other countries, many of which do not conduct genomic sequencing as actively as the UK.

Another coronavirus mutation has been discovered in South Africa, and as a result, other areas like the UK and Hong Kong have banned arrivals from the African nation.

"Thin trading conditions should see oil prices consolidate for the rest of the week, but risks for a dollar rebound and nervousness ahead of next week's OPEC gathering could provide some headwinds," OANDA senior market analyst Ed Moya said in a note.

NYMEX January RBOB settled 1.12 cents lower at USD1.3677/gal and January ULSD finished down 1.1 cents at USD1.4790/gal.

US gasoline inventory builds likely resumed in the week ended Dec. 25 as the Christmas holiday weighed on already-weak driving demand, an S&P Global Platts analysis showed Dec. 28. Total US gasoline inventories are expected to have climbed 2.3 million barrels last week to around 240 million barrels, analysts surveyed by Platts said.

Apple mobility data showed US driving activity in the week ended Dec. 25 was down nearly 3% from the week prior, snapping back-to-back weekly gains in driving demand.

Total commercial crude inventories are expected to have declined 3.8 million barrels to around 495.7 million barrels in the week ended Dec. 25, analysts said. But despite likely drawing for a third straight week, inventories are expected to remain ample at nearly 11% above the five-year average.

Oil futures had rallied earlier in the session after US President Donald Trump on Dec. 27 signed a pandemic stimulus bill, ending several days of brinkmanship with Congress regarding the size of the relief payments and ensuring the continuation of federal unemployment benefits that had expired on Dec. 26.

The passage of the stimulus bill prompted US investment bank Goldman Sachs on Dec. 28 to revise its outlook for first quarter US GDP growth upward to 5% from 3%, according to media reports.

As MRC informed previously, global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40% in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

And in 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 DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC