EIA expects crude oil prices to average near USD50 per barrel through 2022

MOSCOW (MRC) -- In its January Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) expects global demand for petroleum liquids will be greater than global supply in 2021, especially during the first quarter, leading to inventory draws, as per Hydrocarbonprocessing.

As a result, EIA expects the price of Brent crude oil to increase from its December 2020 average of USD50 per barrel (b) to an average of USD56/b in the first quarter of 2021. The Brent price is then expected to average between USD51/b and USD54/b on a quarterly basis through 2022.

EIA expects that growth in crude oil production from members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) will be limited because of a multilateral agreement to limit production. Saudi Arabia announced that it would voluntarily cut production by an additional 1.0 million b/d during February and March. Even with this cut, EIA expects OPEC to produce more oil than it did last year, forecasting that crude oil production from OPEC will average 27.2 million b/d in 2021, up from an estimated 25.6 million b/d in 2020.

EIA forecasts that U.S. crude oil production in the Lower 48 states—excluding the Gulf of Mexico—will decline in the first quarter of 2021 before increasing through the end of 2022. In 2021, EIA expects crude oil production in this region will average 8.9 million b/d and total U.S. crude oil production will average 11.1 million b/d, which is less than 2020 production.

EIA expects that responses to the recent rise in COVID-19 cases will continue to limit global oil demand in the first half of 2021. Based on global macroeconomic forecasts from Oxford Economics, however, EIA forecasts that global gross domestic product will grow by 5.4% in 2021 and by 4.3% in 2022, leading to energy consumption growth. EIA forecasts that global consumption of liquid fuels will average 97.8 million barrels per day (b/d) in 2021 and 101.1 million b/d in 2022, only slightly less than the 2019 average of 101.2 million b/d.

EIA expects global inventory draws will contribute to forecast rising crude oil prices in the first quarter of 2021. Despite rising forecast crude oil prices in early 2021, EIA expects upward price pressure will be limited through the forecast period because of high global oil inventory, surplus crude oil production capacity, and stock draws decreasing after the first quarter of 2021. EIA forecasts Brent crude oil prices will average USD53/b in both 2021 and 2022.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency"s (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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

US EPA grants three biofuel waivers to refiners before Trump leaves office

MOSCOW (MRC) -- The US Environmental Protection Agency (EPA) granted three waivers to oil refiners that exempt them from US biofuel blending obligations, a last-minute move before President Donald Trump leaves office, reported Reuters.

The agency granted two waivers for the 2019 compliance year and one waiver for the 2018 compliance year. The announcement followed four years of controversy around the waiver program under the Trump administration, but left many questions unresolved. Some 30 waiver requests remain outstanding for 2019 and 15 for 2020, which the incoming administration of Joe Biden will need to deal with.

The three waivers were granted to oil refiners, but it was not clear which refiners received the exemptions.

During his term Trump attempted to find a compromise between two major constituencies, farmers and oil refiners, that disagreed about national requirements to blend biofuels into the fuel mix.

Under the US Renewable Fuel Standard, refiners are required to blend billions of gallons of biofuels into their fuel mix, or buy credits from those that do. Refiners can apply for an exemption if they can prove the requirements would do them financial harm.

Biofuel producers and farmers say the waivers hurt demand for their products, while oil refiners reject that claim and say they are necessary to keep small refiners afloat. The Trump administration has greatly increased the number of waivers it grants to refiners.

The administration recently announced a series of moves regarding US biofuel blending laws. The agency this month said it was requesting comment on a potential general waiver for refiners for the 2019 and 2020 compliance years and also was proposing a new rule that would remove or alter the labeling for retail gasoline that contains higher ethanol blends.

The agency also said it was proposing to further extend the deadlines for oil refiners to prove compliance with blending requirements for both the 2019 and 2020 years.

Biofuel groups criticized Tuesday's announcement.

"It flouts both the statute and recent court decisions that clearly limit EPA's authority and ability to grant these exemptions," said Renewable Fuels Association President Geoff Cooper.

A lower court ruling that severely limited the government's powers to grant exemptions is due to be considered by the US Supreme Court later this year.

As MRC informed earlier, last year, US lawmakers introduced a relief bill that would include aid to biofuel producers after demand for the fuel plummeted because of the coronavirus pandemic, causing mass shutdowns in the industry. The bill, introduced by House Democrats, would reimburse producers that suffered unexpected market losses because of the pandemic from January 1 through May 1. It is not clear whether the bill as proposed will be passed into law.

We remind that within the framework of its net zero strategy, Total will convert its Grandpuits refinery (Seine-et-Marne) into a zero-crude platform and will invest more then EUR500 mln into this project. By 2024 the platform will focus on four new industrial activities: production of renewable diesel primarily intended for the aviation industry, production of bioplastics, plastics recycling and operation of two photovoltaic solar power plants.

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 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

Trinidad and Tobago returns to market searching for refinery buyer

MOSCOW (MRC) -- Trinidad and Tobago will return to the open market to seek a buyer for its oil refinery that ceased operations two years ago after rejecting a proposal from a local group, Finance minister Colm Imbert said, said Reuters.

Imbert said Patriotic Energies, a subsidiary of a trade union which represents oil workers, could not provide any credible offer of financing for the Petrotrin oil refinery. The government decided to “return to the open market to see if there is anybody else interested in the plant…and explore all options for the utilization of the refinery", he said.

The government shut down the state-run Petrotrin and ceased operations two years ago at its only refinery, which then had the capacity to process about 140,000 barrels per day of crude, to curtail losses of over USD1 billion in the previous five years.

The government said Petrotrin required a cash injection of USD4 billion to remain in operation, upgrade its infrastructure and repay the nearly USD2 billion in debt it had racked up.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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

Indian oil imports at near three-year high in December

MOSCOW (MRC) -- India’s crude oil imports in December soared to the highest levels in nearly three years to more than 5 million barrels per day (bpd) as its refiners cranked up output to meet a rebound in fuel demand, reported Reuters with reference to data from trade sources.

A boy walks past an oil tanker train stationed at a railway station in Ghaziabad, on the outskirts of New Delhi, India, February 1, 2019.

India’s year-end rush for crude supplies coincided with stronger demand from north Asian buyers during winter, boosting prices and an accelerating de-stocking of floating storage globally.

December oil imports by India, the world’s third biggest crude importer and consumer, were about 29% more than the previous month and about 11.6% higher than a year earlier, the data showed, after fuel consumption rose for a fourth straight month to an 11-month high in December.

“India’s refinery utilisation rates are also nearing full capacity and probably refiners are replenishing inventory anticipating higher prices during winter,” said Ehsan Ul Haq, analyst with Refinitiv.

“This is the harbinger of a recovery in fuel demand and improving refining margins.”

However, India’s annual crude imports declined by about a tenth in 2020 from the previous year to 4.04 million bpd, the lowest in five years, data compiled by Reuters showed.

The share of India’s imports from the Organization of the Petroleum Exporting Countries, including supplies from the Saudi-Kuwait Neutral Zone, fell to a record low of 67% in December. OPEC’s average share for the first nine months of India’s current fiscal year which ends in March was about 74%.

OPEC's share of India's oil imports drop to record low

While India cut back imports from Middle Eastern, African and US oil in December from the previous month, it marginally lifted its intake of Latin American and Caspian Sea oil.

In December, Iraq remained the top oil supplier to India followed by Saudi Arabia, United Arab Emirates. Nigeria emerged as the fourth biggest supplier, pushing the United States down to the sixth position just after Brazil.

As MRC informed before, India’s Chemicals and Fertilisers Minister D V Sadananda Gowda said in mid-December, 2020, the demand for chemicals and petrochemicals is expected to rise 9% annually, and the size of the industry is likely to grow to USD300 billion by 2025.

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

Sinopec Yizheng selects INVISTA leading PTA Technology

MOSCOW (MRC) -- INVISTA’s technology and licensing group, INVISTA Performance Technologies (IPT), and China Petrochemical International Co., Ltd. (Sinopec Yizheng) have reached an agreement for licensing of INVISTA’s industry leading PTA P8++ technology for Sinopec Yizheng’s third PTA line, reported BusinessWire.

This plant will be installed in Jiangsu province, China, with an annual name-plate capacity of 3 million tonnes.

Sinopec Yizheng previously utilised IPT’s P6 PTA technology for its 450,000 te/annum second PTA line. Sinopec Yizheng and INVISTA are pleased to once more leverage this technology to create long-term value for both parties.

This is a further confirmation of INVISTA’s strategy of relentlessly improving its PTA technology offering, through a combination of increased scale, reduced capital and variable cost per tonne of PTA, and greater sustainability.

During the recent project kick-off meeting, Mr. Guo Xiaojun, Sinopec Yizheng’s General Manager, expressed his trust in the INVISTA PTA technology and extended his gratitude towards the INVISTA project team. Mr. Guo said, “These 3 million te/annum PTA plants is a major project for SINOPEC during the 14th five-year plan period and a critical project for Sinopec Yizheng as well. I look forward to the cooperation between the two parties. To ensure the success of the project, we will execute the project in an effective manner by setting the goal as ‘excellent quality, fast schedule and profitable investment’.”

Adam Sackett, IPT vice president of PTA, commented, “Following the experience of working directly with the Sinopec Yizheng team on the second PTA line in 2003, I am excited by this new chapter in the partnership between our organizations. The manufacturing capability of Sinopec Yizheng combined with INVISTA’s industry leading PTA technology is a great fit, which should meet the ambitious project goals set by Mr. Guo.”

INVISTA’s industry-leading PTA technology, including its latest version of P8 technology, is available as a license package from IPT.

As MRC wrote before, Sinopec Yangzi Petrochemical Company, part of Sinopec Group, has brought on-stream its No.3 purified terephthalic acid (PTA) unit in Nanjing. The company resumed operations at the unit on August 21, 2020. The unit was shut for maintenance on August 6, 2020. Located at Nanjing in China, the No.3 PTA unit has a production capacity of 650,000 mt/year.

PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, Russia's estimate PET consumption reached 61,110 tonnes in November 2020, up by 1% year on year. Overall PET consumption in Russia reached 648,110 tonnes in the first eleven months of 2020, down by 18% year on year.

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