Group signs biofuel agreement for more than 2.5 B liters with Shell

MOSCOW (MRC) -- ECB Group Paraguay and Shell Trading (US) Company (“Shell”) have signed a multi-year contract that will provide more than 500 million liters of renewable diesel and renewable jet fuel per year to Shell, one of the world's largest energy companies. The contract is expected to run from 2024, said Hydrocarbonprocessing.

The renewable diesel HVO (Hydrotreated Vegetable Oil) and renewable jet fuel (Synthetic Paraffinic Kerosene/SPK), also known as Sustainable Aviation Fuel (SAF), will be produced at ECB’s to-be-built Omega Green biorefinery in Paraguay, with a total production capacity of 20,000 barrels per day of HVO, SPK/SAF and green naphtha.

"We are delighted to have Shell as our single largest offtaker,” said founder and CEO of the ECB Group, Erasmo Carlos Battistella. “With Shell’s well-known focus on decarbonization initiatives, it makes perfect sense for us to work together to provide renewable fuels solutions, especially in the road transportation and aviation sectors. This agreement also positions the Omega Green state-of-the-art biorefinery as a major producer to supply a growing demand for low carbon fuels."

The ECB Group, led by Battistella, is Brazil's leading producer of biodiesel with an annual capacity of 828 million liters. With the contract signed today, the group establishes itself as the leading future producer of HVO and SAF in the southern hemisphere, providing fuels that help drive decarbonization of key transport sectors such as aviation and road transport.

“Biofuels must play a key role in achieving a net-zero emissions energy system, but collaboration is critical if the world’s supply and use of these low-carbon fuels is to become more widespread,” said Odeh Khoury, Shell Vice President for Products Trading and Supply, Americas.

“We are pleased to work with ECB Group to supply low carbon biofuels to meet the demand for cleaner energy from our customers around the globe. By combining ECB’s production capabilities and regional presence with Shell’s global biofuels trading expertise we are able to bring a significant volume of renewable fuels into the global market."

The ECB Group venture to build and operate the Omega Green biorefinery includes contractor Honeywell UOP, owner of the renewable fuel refining technology for UOP Process reactors ™, Crown Iron Works, a U.S. company that provides processing systems and technologies, including feedstock pretreatment technology, and Acciona, one of the world's largest engineering and construction companies.

As MRC wrote before, Royal Dutch Shell has reported an outage at its olefins plant in Deer Park, Texas, on 5 January, 2021. The plant flared for 16 hours last Tuesday following unspecified process upset. Maximum steam cracker operating rate in Texas falls to 89%.

Ethylene and propylene are feedstocks for producing 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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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1. Valero posts smaller-than-expected loss, pins recovery hopes on vaccine rollout

MOSCOW (MRC) -- US refiner Valero Energy Corp posted a much smaller quarterly loss than Wall Street expected and pinned hopes on widespread COVID-19 vaccinations to ease travel restrictions and improve demand for fuel, accoring to Hydrocarbonprocessing. Crude prices have continued to climb after rallying more than 20% in the last quarter, driven by optimism over the development of coronavirus vaccines, even as refiners struggled with uneven demand due to renewed lockdown measures.



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MOSCOW (MRC) -- Sumitomo Chemical reports a 19% fall year on year (YOY) in net income to Yen 54.13 billion (USD523.0 million) for the fiscal first nine months ended 31 December 2020, on sales that declined Yen 8.1 billion to Yen 1.64 trillion, according to Chemweek.

The company does not disclose separate financial figures for the third quarter.

Net income attributable to owners of the parent company declined 41% YOY to Yen 21.94 billion, while operating profit fell 9% to Yen 116.64 billion, it says. Substantial sales declines in Sumitomo’s petrochemicals/plastics and energy/functional materials businesses in the first nine months were partially offset by increases in revenue for its pharmaceuticals, health and crop sciences, and electronic chemicals segments.

In its petchems and plastics business, Sumitomo says shipments of synthetic resins mainly for automotive use declined YOY, while a drop in market prices for raw materials saw petchem product prices hover at a lower level, due primarily to the economic downturn related to the COVID-19 pandemic. Sales plunged Yen 109.9 billion compared to the prior-year period to Yen 408.4 billion, with core operating income swinging to a loss of Yen 27.9 billion, down Yen 55.2 billion YOY. The operating loss was due mainly to lower shipment volumes, deteriorated petchem margins, and periodic shutdown maintenance at its Rabigh Refining and Petrochemical Co. (Rabigh, Saudi Arabia) joint venture with Aramco, it says.

In its energy and functional materials business, declining shipments of materials for automotive use, including separators for lithium-ion secondary batteries and synthetic rubber, resulted in a Yen 15.3 billion fall YOY in sales to Yen 175.4 billion. Core operating income fell by Yen 2.1 billion compared to the equivalent period last year to Yen 15.6 billion.

Sales rose Yen 35.3 billion YOY to Yen 417.5 billion in Sumitomo’s pharmaceuticals business, driven mainly by increased sales in Japan and North America, with core operating income increasing YOY by Yen 7.2 billion to Yen 74.7 billion.

Electronic chemicals shipments of processing materials for semiconductors, including high-purity chemicals and photoresists, increased due to growing demand, while shipment of materials for display applications also rose as a result of rising stay-at-home and tele-work demand, it says. Sales increased by ?19.3 billion compared to the prior-year period to Yen 324.3 billion, with core operating income rising by Yen 13.2 billion YOY to Yen 31.8 billion.

In the health and crop sciences business, crop protection product sales rose YOY following the acquisition in April 2020 of four Nufarm subsidiaries in South America, while shipments to India also performed well, it says. Revenue grew Yen 63.9 billion YOY to Yen 282.4 billion, with core operating income swinging to a core operating profit of Yen 12.2 billion, up Yen 25.8 billion YOY.

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

MOSCOW (MRC) -- Global oil demand is expected to rise by nearly 7% this year, boosted by quicker vaccine distribution and a better economic outlook, reproted Reuters with reference to consultancy Wood Mackenzie's statement.

Total liquids demand is expected to average 96.7 million barrels per day (bpd) in 2021, 6.3 million bpd higher than last year when the Covid-19 pandemic caused an unprecedented oil demand shock.

“Our short-term forecast assumes vaccine distribution accelerating through 2021 and is underpinned by 5% expected growth in global GDP, according to our macroeconomic outlook, following the global economy’s 5.4% contraction last year,” said the consultancy’s vice president, Ann-Louise Hittle.

“The pace and strength of the global liquids demand recovery will depend on the pace of Covid-19 vaccine distribution and global economic recovery.”

In terms of supply, WoodMac expects oil output from the US Lower 48 states to reduce by about 500,000 bpd this year, moderating from last year’s decline.

Rig activity is expected to continue to rise but much of the recovery rate will be dependent on oil prices and the industry’s willingness to spend on volume growth again, WoodMac said.

It added that decisions by the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, will be a huge uncertainty.

“Can OPEC+ negotiate deals each month and remain committed to production restraint? Some production restraint is needed in 2021 for market balance, but compliance could wane with demand recovery,” Hittle said.

Still, despite the potential increase in oil demand, refinery utilisation this year is expected to remain low, amid the ongoing pandemic, OPEC+ production cuts and new capacity additions, WoodMac said.

Over one million bpd of refining capacity will be completed this year in the Middle East and Asia, which could threaten further refinery rationalisation.

Refineries under the threat of closure could repurpose the facilities to produce liquid renewables instead of converting into a terminal, which could help oil companies’ aim of achieving carbon neutrality.

As MRC informed previously, in November 2020, Sinopec established strategic cooperation with three top institutions in Beijing, China, to take lead in a joint research on the energy and chemical industry’s carbon emissions peak and carbon neutrality. Sinopec invited thought leaders and experts in the fields of climate change, energy and chemical industry to conduct in-depth research on the strategic path of having CO2 emissions peak and achieve carbon neutrality before 2030 following China’s action plan.

We remind that in H1 October, 2020, China's Sinopec started operation of a 800,000 tons-per-year ethylene facility at its Zhanjiang refinery. The refinery, located in the southern Chinese coastal city of Zhanjiang, commenced operation of its 200,000 barrel per day crude oil refining units in June.

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

MOSCOW (MRC) -- Crude prices lack direction Jan. 27 as the market weighed a bullish US crude draw against pandemic-dimmed demand outlooks, reported S&P Global.

NYMEX March WTI settled up 24 cents at USD52.85/b, and ICE March Brent was down 10 cents at USD55.71/b.
US commercial crude inventories declined 9.91 million barrels during the week ended Jan. 22 to a 10-month low of 476.65 million barrels, according to US Energy Information Administration data released Jan. 27. It was the largest one-week draw since the week ended July 24 and left inventories just 6% above the five-year average, the narrowest supply overhang since early April.

The draw far-exceeded American Petroleum Institute data released late Jan. 26 showing a 5.3 million-barrel crude draw over the same period.

The US crude draw sent oil futures higher midday, but the market later gave up these gains amid weakened economic outlooks.

"Oil has been rangebound for the past few weeks and it seems like nothing will change unless something major happens on the COVID front," OANDA senior market analyst Edward Moya said in a note. "Crude prices could surge higher if Europe gets their vaccine rollouts heading in the right direction or tank if virus variants shutdown China and other countries that have been successfully reopening."

NYMEX February RBOB settled down 36 points at USD1.5771/gal, while February ULSD finished up 1.05 cents at USD1.6089/gal.

The number of daily COVID-19 deaths in the US climbed to a new high of 4,205 on Jan. 26, according to New York Times data, but as the number of new cases steadily declines, states have begun easing lockdown restrictions.

New York governor Andrew Cuomo on Jan. 27 announced restrictions on nonessential businesses and indoor dining would be lifted across much of the state. The move comes on the heels of California on Jan. 25 lifting a regional stay-at-home order that affected the vast majority of state residents.

Outside of the US, however, the pandemic situation remained grim. In Europe, countries are considering greater restrictions to curb the spread of the virus, whereas in Asia, demand-side concerns remain heightened following an outbreak in China.

Already, authorities in China have called upon citizens to not travel during the Lunar New Year Holiday, souring sentiment in the oil markets.

"While the general upward direction of travel in the market makes sense, it's difficult for oil traders to make a definitive near-term shift to the next price level higher given the very uncertain near-term demand outlook," surmised Stephen Innes, chief global markets strategist at Axi, in a Jan. 27 note.

US gasoline cracks weakened as stockpiles rose amid an unexpected dip in demand. The ICE New York Harbor RBOB crack against Brent edged down 7 cents to around USD10.16/b in afternoon trading.

Total gasoline inventories climbed 2.47 million barrels to 247.69 million barrels in the week ended Jan. 22, EIA data showed, as implied demand slipped 3.4% to 7.83 million b/d. The counter-seasonal decline left demand nearly 12% behind the five-year average, in line with levels seen earlier this month.

Notably, Apple Mobility data shows that US driving activity was higher for a third straight week last week, climbing nearly 2% from the week prior and up nearly 3% from a late-December nadir. This discrepancy suggests a possible disconnect between actual end user demand and the EIA figures, which are a proxy based on product disappearing from primary sources..

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