U.S. crude stockpiles jump, refiners boost output last week

MOSCOW (MRC) -- U.S. crude oil stockpiles rose unexpectedly last week, while refineries hiked output to their capacity usage since March, the Energy Information Administration said, said Hydrocarbonprocessing.

Crude inventories rose by 4.4 million barrels in the week to Jan. 15, compared with analysts' expectations for a decrease of 1.2 million barrels. Refinery utilization rates rose by 0.5 percentage points to 82.5% of total capacity, their highest since March, EIA data showed, a potential signal of optimism that demand will rebound in coming months. Refinery crude runs rose by 110,000 barrels per day.

"The refinery runs came in better, so basically the market is getting a little support on the fact that we are seeing continued improvement in demand," said Phil Flynn, senior analyst at Price Futures Group in Chicago. Crude stocks at the Cushing, Oklahoma, delivery hub for futures fell by 4.7 million barrels to 52.5 million barrels, their lowest since August, the EIA said.

Oil prices pared their losses after the data. U.S. crude was off by 60 cents, or 1.1%, to USD52.53 a barrel as of 11:18 a.m. EST (1618 GMT), while Brent fell 60 cents to USD55.49 a barrel. Gasoline stocks fell by 260,000 barrels, compared with analysts' expectations in a Reuters poll for a 2.8 million-barrel gain.

Distillate stockpiles, which include diesel and heating oil, rose by 458,000 barrels, versus expectations for a 1.2 million-barrel increase, the EIA data showed. Net U.S. crude imports rose last week by 566,000 bpd.

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

Reliance reports YOY fall in oil-to-chemicals profit, revenue; sequential improvement

MOSCOW (MRC) -- Reliance Industries says that EBDITA dropped 28% year-on-year (YOY) at its oil-to-chemicals (O2C) business, to 97.56 billion Indian rupees (USD1.34 billion) in the fiscal third quarter ended 31 December, said Chemweek.

Quarterly sales for the sector were Rs838.3 billion, down 29.6% YOY. The O2C business includes refining, petrochemicals, fuel retailing through the Reliance BP Mobility business, aviation fuel, and bulk wholesale marketing.

However, Reliance's O2C business achieved sequential improvement with fiscal-third-quarter revenue up 10% quarter-on-quarter (QOQ) primarily on higher volumes of transportation fuels, purified terephthalic acid (PTA), and polyester supported by improved product realization across polymers, intermediates, and polyester. “We have delivered strong operational results during the quarter with a robust revival in the O2C segment,” says Mukesh Ambani, chairman and managing director at Reliance.

Segment EBITDA in the third quarter improved by 10.3% sequentially due to higher product sales and shifting of product placement from exports to the domestic market. Throughput grew from 16.8 million metric tons (MMt) to 18.2 MMt on a QOQ basis owing to improved demand.

In the polymers business, prices of polypropylene (PP), polyethylene (PE), and polyvinyl chloride (PVC) strengthened during the quarter by 18%, 8%, and 29% QOQ, respectively, amid a strong demand recovery in Asian markets. The company says that margins of PP and PE over naphtha increased by 31% (USD698/metric ton) and 13% ($541/metric ton), respectively, and PVC margins over naphtha and ethylene dichloride rose 15% (USD628/metric ton) on a QOQ basis led by strong demand recovery across sectors. PVC prices were at a decade-high level during the quarter, Reliance says.

In the intermediates and polyesters business, prices of para-xylene (p-xylene), PTA, and ethylene glycol (EG) strengthened during the quarter by 3%, 15%, and 8% QOQ, respectively, amid a hike in energy values and improved downstream demand. P-xylene, PTA, and EG margins increased by 4% (USD141/metric ton), 57% (USD168/metric ton), and 17% (USD218/metric ton), respectively, amid lower inventory across the polyester chain in China. Reliance says it achieved higher capacity utilization rates on the back of festive demand and the availability of labor in the downstream sector. Polyester margins improved QOQ through differentiated and specialty products.

Reliance's average steam cracker operating rate was 96%, despite a scheduled shutdown at the company's refinery off-gas cracker at Jamnagar, India. “The O2C platform will increasingly move further downstream and become closer to customers. It will create planet-friendly and affordable energy, and materials solutions to meet the growing needs of every sector of the Indian economy,” adds Ambani. The company’s other business units include oil and gas, retail, digital services, and financial services.

As MRC informed earlier, Reliance Industries Ltd (RIL), an Indian energy and petrochemical giant, has resumed production of refined terephthalic acid (PTA) in Kuantan, Malaysia following an unscheduled refurbishment. This production with a capacity of 610,000 tonnes of PTA was closed for repairs in mid-January for a technical reason.

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.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
MRC

Borealis plans April–May maintenance at phenol plant in Finland

MOSCOW (MRC) -- Borealis is planning to carry out maintenance work at its phenol plant at Porvoo, Finland, between April and May, said Chemweek.

The Porvoo site includes a 190,000-metric tons/year phenol plant and a 118,000-metric tons/year acetone facility, according to IHS Markit data. "The exact dates are not known but we know that Borealis is expected to have maintenance at both units between April and May, possibly mid-April until the end of May, which they postponed from last year," a source said.

Borealis did not wish to comment on the dates for the work. "We do not proactively communicate our maintenance schedule," a spokesperson for the company said Friday. Borealis declared force majeure on phenol and acetone production from the Porvoo site following a power outage on 15 December 2020. The force majeure on phenol production from Porvoo was lifted on 28 December, Borealis says.

Borealis also produces 150,000 metric tons/year of benzene and 245,000 metric tons/year of cumene at Porvoo, IHS Markit data show.

Along with phenol, acetone is largely used to produce bisphenol A (BPA), which, in its turn, is used in the production of plastics such as polycarbonate (PC) and epoxy resins.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to\\from Belarus) rose in January-November 2020 by 18% year on year to 83,600 tonnes (70,600 tonnes a year earlier).

OMV (Vienna, Austria) owns 75% of Borealis and the remaining 25% is owned by Mubadala (Abu Dhabi).
MRC

Petro Rabigh secures USD960-million credit facility to refinance debts, loans

MOSCOW (MRC) -- Rabigh Refining and Petrochemical Company (Petro Rabigh) has announced that it has secured alternative sharia-compliant banking facilities from the Saudi Industrial Development Fund (SIDF) worth SR3.6 billion (USD959 million), said Chemweek.

PetroRabigh is a joint venture between state oil giant Saudi Aramco and Japan's Sumitomo Chemical,
which engages in the development, construction, and operation of an integrated refining and petrochemical complex.

The key Islamic funding facility, which has been guaranteed by a promissory note, will be used for refinancing existing debts with better terms and conditions and repayment period, in addition to settling other loans, which will reflect positively on the company and its shareholders, said Petro Rabigh in its filing to the Saudi bourse Tadawul.

Under the 12-year facility, Petro Rabigh is granted a grace period until May next year.

Petro Rabigh had in September announced three joint revolving loans and facility agreements valued at SR7.5 billion with the key lenders being Saudi Aramco and Sumika Finance Company.

As MRC reported earlier, in December 2020, Sumitomo Chemical and Axens signed a license agreement of ethanol-to-ethylene technology Atol for Sumitomo Chemical’s waste-to-polyolefins project in Japan. In the project, to promote circular economy, Axens’ Atol technology will transform ethanol produced from waste into polymer-grade ethylene that will be polymerized in Sumitomo Chemical’s assets into polyolefin, a key product in the petrochemical industry.

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

After pandemic, oil firms even less willing to cover USD3.9 B cost of S.Africas clean fuel plan

MOSCOW (MRC) -- After being hit by the pandemic, oil companies in South Africa are unlikely to upgrade refineries to cut sulfur emissions unless the government allows them to pass the costs on to consumers or offers other support, the South African Petroleum Industry Association (SAPIA), said Hydrocarbonprocessing.

New rules requiring oil refineries in South Africa to cut diesel sulfur levels to 10 parts per million (ppm) had been due to come into effect in 2017 but have been postponed indefinitely due to a disagreement between the government and SAPIA, which represents oil majors, over who will cover the cost. SAPIA has estimated that it would cost USD3.9 billion for all refineries in the country to upgrade to meet the new rules.

"In the current worldwide refining environment … margins are hovering around zero and a large overhang of … product is presently depressing prices," Avhapfani Tshifularo, executive director of SAPIA, told Reuters in response to emailed questions. "Investment in cleaner fuels in the absence of government support is unlikely to occur," he said.

Pump prices are government-regulated in South Africa and Tshifularo said talks with the government on how companies will recover the cost of investment in cleaner fuel are deadlocked. The Department of Energy did not respond to requests for comment. Cutting diesel sulphur levels to 10 ppm would be in line with European rules.

"Future investment will depend on clarity of the regulations guiding … cost recovery," said a spokeswoman for Royal Dutch Shell, which operates South Africa's largest crude refinery, Sapref, in Durban in a 50/50 joint venture with BP . The pandemic, lower oil demand and pressure from investors to cut carbon emissions have forced oil majors to close some refineries around the world that were operating on very slim margins.

In 2006 South Africa, a net importer of petroleum products, banned lead from petrol and limited sulfur dioxide levels in diesel to 500 ppm, a sixfold decrease. Some refiners have reduced levels to 50 ppm. Still, according to the International Council on Clean Transportation, the health impact of exhaust emissions in South Africa has worsened in recent years. In 2015, there were 1,420 premature deaths linked to vehicle exhausts, a 6.5% uptick from 2010, a report by the council in 2019 showed.

In 2019, South Africa refined 70% of its 12.9 billion liters of diesel needs locally. Some refinery owners have suggested they could exit the domestic market, as the high costs of upgrading refineries to meet cleaner fuel specifications and a new carbon tax are among factors that weigh on capital expenditure projects.

Environmentalists say it is unfair to expect consumers to pay for investment in cleaner fuel. "Why should the consumer pay for cleaner fuels when they (oil companies) have made huge profits at the expense of the people living next to the facilities and who have been affected with asthma, cancer and leukaemia for many years?" said Desmond D'Sa, coordinator of the South Durban Community Environmental Alliance. Durban is the hub of South Africa's petrochemical industry.

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