Total eyes stable oil, gas output in 2021 after OPEC+ cuts hit Q4 production

MOSCOW (MRC) -- Total expects to hold its oil and gas production flat in 2021, after OPEC+ cuts, field declines, and asset sales saw its output shrink 9% year on year in the fourth quarter, reported S&P Global with reference to the French energy major's statement on Feb. 9.

Reporting stronger than expected fourth-quarter earnings, Total said its production averaged 2.84 million b/d of oil equivalent in the period. With production volumes in Libya now recovering, however, Total said it expects production to be stable this year compared with 2020, when it pumped an average of 2.87 million boe/d.

Underlining plans to accelerate its transformation into an integrated energy company, Total said it plans to change its name to TotalEnergies to reflect its ambition to transition to carbon neutrality.

"2020 represents a pivoting year for the group's strategy with the announcement of its ambition to get to Net Zero, together with society," Total's CEO Patrick Pouyanne said in a statement. "The group affirms its plan to transform itself into a broad energy company to meet the dual challenge of the energy transition: more energy, less emissions."

It said it plans to propose the new name to its shareholders at its annual general meeting on May 28.

Like many of its European rivals, Total has signaled a major boost in spending on renewable energy in the coming years as part of its strategy to shift to cleaner, lower-carbon fuels.

The company, which has said it expects global oil demand to peak in the 2030s, last September announced plans to grow its overall energy production by a third in the next decade, with half the growth coming from LNG and half from electricity, mainly renewables. With a shift in focus to cleaner, low-carbon energy, however, it said it expects its oil product sales will be reduced by almost 30% in the same timeframe. The company expects its energy sales mix to be 50% gases, 30% oil products, 5% biofuels and 15% electrons by 2030, compared with 55% oil products, 40% gas and 5% electrons in 2019.

In the near term, Total said the global oil market outlook remains "uncertain" and dependent on the recovery of global demand, which is affected by the COVID-19 pandemic. Citing the ongoing market uncertainties, Total said it expects net investments of USD12 billion in 2021, down from nearly USD13 billion in 2020, but up from previous guidance of "less than" USD12 billion. It said a fifth of the spending will go to its renewables and electricity division this year.

Total said it continues to see profitable growth in LNG, with sales expected to increase by 10% in 2021 compared with 2020, notably due to the ramp-up of Cameron LNG in the US. Last year, its LNG sales rose by 12% thanks to the startup of three trains at Yamal LNG in Russia and Ichthys LNG in Australia and an increase in trading activity.

Downstream, Total said it sees European refining margins remaining "fragile", with low demand for jet fuel weighing on the recovery of distillates.

"However, thanks to the resilience of marketing and services, the group expects downstream to contribute more than USD5 billion of cash flow in 2021, assuming refining margins of USD25/mt," Total said.

Total, Europe's biggest refiner, saw its average refining margin recover to positive territory during the fourth quarter after turning negative for the first time in more than a decade when demand for fuels collapsed due to coronavirus lockdowns.

Total's "variable cost margin" for its European refineries averaged USD4.60/mt, or about 63 cents/b, in the fourth quarter, compared with minus USD2.70/mt in the previous quarter and down from USD30.20/mt in the year-earlier period, it said.

Refinery throughput volumes fell by 16% in the quarter compared to 1.26 million b/d in the previous year, as fuel demand remained depressed due to the pandemic which led to the economic shutdown of its Donges refinery due to weak margins. Throughputs rose, however from 1.21 million b/d in the previous quarter.

Total reported adjusted net earnings of USD1.3 billion for the quarter, 59% lower than the year-ago period but up from USD848 million in Q3 helped by stronger oil prices. The Q4 result beat consensus forecasts of USD1.13 billion by about 15%, according to S&P Global Market Intelligence.

"The... results rebounded from the previous quarter in a context where oil prices stabilized above $40/b thanks to strong OPEC+ discipline, and where gas prices rose sharply in Europe and Asia, but where refining margins remained depressed, still affected by low demand and high inventories," Pouyanne said.

For the year, Total posted an adjusted net income of USD4.06 billion, down 66% on 2019, but supported by 26% lower capex, USD1.1 billion in cost savings, and an organic cash breakeven of USD26/b.

As MRC wrote earlier, 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 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 ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
MRC

MOSCOW (MRC) -- Sumitomo Chemical will establish a subsidiary, Sumika Polymer Compounds Poland (SPCP), to build and operate a polypropylene (PP) compounding facility at PoznaA, Poland, reported Chemweek.

The capacity of the planned PP compounding plant will be 30,000 metric tons/year. It is due to commence operations in 2022.

PP compounds are materials made by kneading PP with synthetic rubber, glass fibers, or inorganic fillers to improve its functionality and increase rigidity and other properties, for use in automobile bumpers, interiors, and home appliances.

The company produces short glass fiber reinforced PP compounds (GFPP). GFPP is a high-performance material that combines the lightweight and superior moldability of PP with the strength and heat tolerance of glass fibers. It has been expanding GFPP sales globally for use in automotive parts, such as battery casings, and home appliances, such as drum cover cases for washing machines.

Many automobile and electric manufacturers have production bases in Poland and neighboring regions, such as eastern Germany and the Czech Republic. Because of the widespread adoption of electric vehicles prompted by tighter environmental regulations, strong demand for PP compounds is expected to continue, it added.

As the European Union’s circular economy action plan heightens the need for recycled products, Sumitomo Chemical intends to increase the market share of GFPP containing 60 to 100% recycled PP by starting production in SPCP, following the lead of Sumitomo Chemical’s bases in the United Kingdom and France.

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.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
MRC

MOSCOW (MRC) -- State-owned gas utility GAIL India Ltd on Wednesday reported a 170 per cent jump in its fourth-quarter net profit, as lower corporate tax rate offset lower petrochemical and natural gas prices, said Chemweek.

Net profit in January-March 2020 at Rs 3,018.20 crore, or Rs 6.69 per share, was 169 per cent higher than Rs 1,122.23 crore, or Rs 2.49 a share, net profit in the corresponding quarter a year ago, GAIL Chairman and Managing Director Manoj Jain told reporters here.

Jain said the company opted for lower corporate tax rates offered by the government to firms willing to forego exemptions. The lower tax rate offset a dip in petrochemical, liquid hydrocarbon and natural gas prices. Besides, leading to a dip in energy prices, the outbreak of the coronavirus pandemic and the ensuing lockdown to contain its spread also evaporated demand after industries shut down.

Jain said natural gas demand fell by up to 30 per cent in April as industries shut down and city gas operations comprising of mainly CNG sales saw a slump with vehicles going off road. The demand has since returned to near normal after lifting of the restrictions. "Except for CNG, we are near normal," he said adding that pre-COVID-19 levels for CNG sales are expected in two months.

The fall in domestic demand led to the company asking both domestic producers as well as its overseas LNG suppliers to reschedule supply of some of the gas volumes. In 2019-20, the company imported 74 cargoes or shiploads of liquefied natural gas (LNG) - 44 from US, 3 from Qatar, 15 from Gazprom of Russia and 12 from spot or current market.

As many as 56 cargoes of the LNG contracted from the US were sold in overseas market in the financial year ended March 2020. In 2020-21, it has scheduled 49 of US cargoes to come to India and sold 28 of them in the overseas market. Another 8-9 cargoes are left untied, he said.

Considering the slump in demand in the first quarter, GAIL may end up cutting down on spot volumes. Jain said the company had a capita expenditure (capex) spending of Rs 6,114 crore in 2019-20, mostly in laying of pipelines.

In the current financial year 2020-21, it plans to maintain a capex spend of Rs 4,000-5,000 crore, he said adding that there is no review of the spending in view of COVID-19 as most of the expenditure is in ongoing committed projects of laying gas pipeline grid.

Jain said the company has decided to opt for the tax dispute resolution scheme, the Vivad se Vishwas Scheme 2020, in respect of 44 number of income tax cases, involving 21 assessment year 1996-97 to 2016-17 having an estimated financial implication of Rs 2,157.34 crore.

"On settlement of these cases, in terms of the scheme, there would be an income tax liability of approximately Rs 1,183.15 crore and accordingly, after considering the existing provision of Rs 265.59 crore already made in the previous years, additional provision of Rs 917.56 crore has been made towards tax expenses during the financial year 2019-20," he said.

For the full financial year 2019-20, GAIL recorded a 10 per cent rise in its net profit to Rs 6,621 crore as the company opted for lower corporte tax rate. The turnover for the year stood at Rs 71,730 crore as against Rs 74,808 crore in the last fiscal year. "The increase in PAT (profit after tax) is mainly due to adoption of the lower tax regime," he said.

He said although there were some reductions in GAIL's business activities in initial stage due to the country-wide lockdown, with graded relaxation in lockdown and other measures by the Government of India to resume economic activities, the operations of the company has been normalised to a great extent.

The petrochemical plant, which had taken a shutdown in April 2020, is now operating at full capacity. The liquid hydrocarbon (LHC) production and transmission segments did not see much impact and are currently operating at 100 per cent of FY20 levels, he added.

As MRC informed earlier, GAIL India Ltd has restarted its polyethylene (PE) unit in Pata, Uttar Pradesh. Thus, the company's 400,000 tons/year high density polyethylene (HDPE)/linear low density polyethylene (LLDPE)swing plant in Pata, Uttar Pradesh resumed operations just a couple of days after the company shut down the unit on 25 September 2020 due to feedstock supply disruption.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
MRC

MOSCOW (MRC) -- BASF says it is restarting one of its steam crackers at its Ludwigshafen complex in Germany after operations were halted on Wednesday due to a technical issue, reported Chemweek with reference to a company spokesperson's statement.

“The affected cracker is in the process of restarting,” the spokesperson says. “I can’t give you any further details on the technical defect or which of our crackers is affected.” Operations were interrupted at around 8am on Wednesday morning, according to BASF. “There is currently visible fire and soot formation. Flaring is expected to continue until tomorrow. The responsible authorities have been informed,” it further stated in a social media post.

The naphtha cracker produces ethylene and propylene, and is one of two crackers on the site. One has a production capacity of 420,000 metric tons/year, with the other’s capacity at 240,000 metric tons/year, according to IHS Markit data.

BASF shut down an undisclosed part of its chemical complex at Ludwigshafen on 15 January, also due to a technical fault, it said last month.

OPIS is an IHS Markit company.

As MRC informed earlier, BASF has restarted its No. 1 steam cracker following a maintenance turnaround. Thus, the company resumed operations at the plant on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC

MOSCOW (MRC) -- MEGlobal has announced its Asian Contract Price (ACP) for monoethylene glycol (MEG) to be shipped in March 2021, according to the company's press release.

Thus, on 10 February, the company said ACP for MEG would be at USD790/MT CFR Asian main ports for arrival in March 2021, up by USD50/MT from February.

The March 2021 ACP reflects the short term supply/demand situation in the Asian market.

As MRC reported earlier, MEGlobal announced its February ACP for MEG at USD740/MT CFR Asian main ports, up by USD70/tonne from January 2021.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to ICIS-MRC Price report, there was an acute shortage of PET in the Russian market. As a result, there was speculative excitement in the market. Sellers were raising prices of Russian PET chips, while the buyers who needed material had no other alternative at the moment.

MEGlobal is a fully integrated supplier of monoethylene glycol (MEG) and diethylene glycol (DEG), collectively known as ethylene glycol (EG).
MRC