U.S. expected to return to being a net petroleum importer in 2021 and 2022

MOSCOW (MRC) -- More petroleum (including crude oil and refined products) was exported from the United States in 2020 than was imported. U.S. net imports (gross imports minus gross exports) of petroleum declined from 670,000 barrels per day (bpd) in 2019 to an estimated -700,000 bpd in 2020, said Hydrocarbonprocessing.

The U.S. Energy Information Administration’s (EIA) February 2021 Short-Term Energy Outlook (STEO) estimates that 2020 marked the first year that the United States was a net petroleum exporter on an annual basis. Declining net imports of crude oil primarily drove this change from being a net importer to a net exporter. In 2021 and 2022, EIA expects the United States to return to being a net petroleum importer, averaging 230,000 bpd in 2021 and 550,000 bpd in 2022.

The STEO model forecasts petroleum trade in terms of net imports rather than gross imports and gross exports. In 2020, 81% of the decline in net imports of petroleum was crude oil. EIA expects that increasing crude oil imports will drive the growth in net petroleum imports in 2021 and 2022 and more than offset declines in refined product net imports. In 2020, net imports of crude oil fell to a low of 2.3 MMbpd in the third quarter, down from 3.9 MMbpd in the third quarter of 2019. EIA forecasts that net imports of crude oil will increase, averaging 3.7 MMbpd in 2021 and 4.4 MMbpd in 2022. EIA expects that more imports of crude oil will be needed because crude oil inputs to U.S. refineries will increase more than domestic crude oil production.

Total U.S. demand of petroleum products—as measured by product supplied— declined by an estimated 2.5 MMbpd (12%) in 2020. U.S. petroleum demand dropped significantly in the first half of 2020 because of responses to the COVID-19 pandemic, but it increased in the second half of the year. EIA expects petroleum consumption to continue to recover from the effects of the pandemic as the vaccines for COVID-19 become more widely distributed and travel and economic activity increase. EIA forecasts total U.S. petroleum demand will grow by 1.4 MMbpd (7%) in 2021 and 1.0 MMbpd (5%) in 2022.

In the second quarter of 2020, U.S. refiners responded to the pandemic-driven drop in petroleum product consumption, high inventories, and reduced profitability by implementing steep cuts in refinery runs (Figure 2), which dropped 2.6 MMbpd to an average of 13.2 MMbpd. In the third and fourth quarters of 2020, product consumption increased, and refiners increased runs to average 14.0 MMbpd in the second half of 2020, which was still less than the second half of 2019 average of 16.6 MMbpd. Annual refinery inputs of crude oil declined 2.3 MMbpd (14%) in 2020. EIA expects refinery runs to increase by 0.9 MMbpd (6%) in 2021 and by 1.1 MMbpd (7%) in 2022 as domestic and foreign petroleum demand increase.

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 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).
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MOSCOW (MRC) -- Europe’s chlorine industry has recorded a third consecutive month of year-on-year (YOY) growth in output in 2020, according to the latest figures from Euro Chlor, the European chlor-alkali industry association, said Chemweek.

Total chlorine production in December rose to 807,437 tonnes, up 6.1% on the prior-year period’s monthly total of 760,958 metric tons. The daily average of 26,046 metric tons in December was however down slightly, by 0.03%, on November 2020’s total of 26,054 metric tons.

Chlorine production capacity utilization in Europe during December rose 3.9% compared with the prior-year period to 82.1% and was flat with November 2020, which was itself the highest utilization rate achieved since March last year.

Caustic soda stocks in Europe declined 6.2% to 207,739 metric tons in December from the prior month, and were 17,893 metric tons lower YOY.

For the full year 2020, chlorine output in Europe fell 2.3% compared to 2019 to 9.19 million metric tons, while capacity utilization dropped 3.1% YOY to 79.1%.

Euro Chlor’s figures are drawn from the EU-27 countries plus Norway, Switzerland, and the UK. The association represents 38 companies producing chlorine in 19 countries.

As per MRC, Industria Quimica del Istmo (Iquisa; Mexico City, Mexico) hired Bluestar Chemical Machinery Co. (BCMC) to build a membrane-cell chlor-alkali plant in Coatzacoalcos, Mexico, with capacity to produce 150,000 metric tons/year of chlorine. BCMC, which announced the news Monday, says it will supply its proprietary electrolysis technology for the project, which is to begin construction this month and to be completed within two years.

We remind that November production of sodium hydroxide (caustic soda) in Russia were 111,000 tonnes (100% of the basic substance) versus 108,000 tonnes a month earlier. Russia's overall output of caustic soda totalled 1,165,600 tonnes in the first eleven months of 2020, down by 1.3% year on year.
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MOSCOW (MRC) -- Symrise (Holzminden, Germany) has announced changes to its executive board, effective 1 April 2021, following the departure of board members Heinrich Schaper and Achim Daub, said Chemweek.

Schaper, board member responsible for Symrise’s flavor segment, will retire and leave the company on 31 March. Jean-Yves Parisot will take over global leadership of the flavor segment in addition to his existing responsibility for the nutrition segment. This will involve combining the flavor and nutrition activities in one segment. Schaper has been a Symrise board member since 2016.

Daub, who has been a board member since 2006 and is responsible for the scent and care segment, “has decided to pursue new professional opportunities,” Symrise says. He will leave the company on 31 March “by mutual agreement and on best terms,” it says. Succession planning for the leadership of the scent and care segment has been initiated. Meanwhile, Symrise CEO Heinz-Jurgen Bertram will lead the segment on an interim basis. The remaining executive board member, Olaf Klinger, will continue to head the finance, legal, and IT department.

“By combining the [flavor and nutrition] activities, Symrise will be able to leverage the strengths of the new flavor and nutrition segment even more effectively, increase customer penetration, and further differentiate itself in the market,” says Michael Konig, chairman of the Symrise supervisory board. “Planning for the leadership succession in the scent and care segment has already been initiated and will be announced in due course."

As per MRC, during the week ended 6 February, chemical railcar traffic in North America increased 4.1% year-over-year (YOY) on gains in Canada and Mexico. Volume totaled 46,250 carloads, down 4.3% from the previous week, according to data released by the Association of American Railroads (AAR). On a four-week basis, volume increased 5.4% from 2020 and 4.5% from 2019 (chart). For the year to date, chemical railcar traffic in North America is up 5.2% from 2020 and 4.4% from 2019.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1% year on year.
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MOSCOW (MRC) -- Shell says it will invest between USD4-5 billion annually to grow its chemicals and products business as part of a wider rebalancing of its group portfolio to reach its net-zero carbon emissions goal by 2050, according to Chemweek.

The investments, to be made “in the near term,” are part of a wide-ranging package of strategic measures the energy major announced today to accelerate its lower-emissions drive. Shell will also invest USD5-6 billion per year in renewables and marketing, around USD4 billion annually on its integrated gas business, and approximately USD8 billion on its legacy upstream assets. It also confirmed its expectation that its total carbon emissions peaked in 2018 at 1.7 gigatonnes/year and that company oil production peaked in 2019.

“We see chemical demand continuing to grow, outpacing GDP… so we will continue to grow our chemicals business with a focus on intermediates and performance chemicals. These are the areas where we have competitive advantages in technology, scale, and market access. We are currently building or studying projects in Pennsylvania and Louisiana in the US, and at Nanhai in China. We will also produce virgin chemicals from recycled waste,” says Shell CEO Ben van Beurden. “Between our opportunities to increase margins and the options that we have to invest for growth, we will increase our chemicals cash generation by USD1-2 billion a year by 2030,” he says.

Shell says it aims to complete before the end of the decade its previously announced plan to streamline its refining and chemicals business, reducing it from 13 refining sites currently to six core integrated energy and chemicals parks. These will deliver synergies and expand low-carbon product offerings, with the company to also undertake “selective growth in chemicals,” it says. It will utilize existing infrastructure and assets to enable a faster and more efficient transition, it adds.

“These six energy and chemicals parks will be highly integrated with our trading and optimization business, along with our standalone chemicals sites, of course,” says van Beurden. “Our shift to energy and chemical parks means we will reduce our production of traditional fuels by 55% by 2030. At the same time, we will produce more low-carbon fuels and performance chemicals,” he says.

The company’s enhanced focus on performance chemicals will achieve higher returns than from commodity chemicals due to increased resilience and lower volatility, according to Shell. It will also use value chains where it has a competitive advantage through advantaged feedstocks, scale, proprietary technology, and market access, such as the developments at Geismar, Louisiana; Monaca, Pennsylvania; and an expansion at Nanhai, China.

The chemicals business will be grown as an “enabler,” Shell says. It aims to achieve this through investments in integrated petrochemical complexes in emerging markets, and by reducing its commodity chemicals exposure by up to 70% by 2030. This will be done by increasing margins through its investments in intermediate and performance chemicals projects, it says. The company says it sees a “healthy funnel of opportunities to increase annual cash flow from operations by up to an additional USD1-2 billion by 2030 compared with medium-term cash generation.”

Shell estimates the average investment rate of return from projects in its chemicals and products business will range between 10-15%, describing the segment in its strategy presentation as “capital-intensive with longer-term cash flow profile and limited downside.” The average period for project payback on investments will be around 10 years, it says. Cash flow from its chemicals and products business has “limited exposure to commodity prices,” it adds.

The processing of 1 million metric tons/year of waste plastic by 2025 will also be targeted as part of Shell’s circular economy strategy to develop sustainable product offerings, as well as opportunities to use biomass feedstocks, electricity, and hydrogen as power sources, it says. It also aims to increase the amount of recycled plastic in its packaging to 30% by 2030 and ensure that the packaging is reusable or recyclable.

Shell will also seek to have access to an additional 25 million metric tons/year (MMt/y) of carbon capture and storage (CCS) capacity by 2035, with three projects totaling 4.5 MMt/y of capacity already operating, sanctioned, or planned, it adds.

To achieve net zero by 2050, Shell says it is targeting the reduction of its net carbon intensity by 6-8% by 2023, 20% by 2030, 45% by 2035, and 100% by 2050.

As MRC wrote previously, Shell expects its oil production to decrease by 1%-2% annually as it prioritizes spending on transition projects in an acceleration of its strategy to achieve net zero emissions by 2050.

We remind that Royal Dutch Shell has reported an outage at its olefins plant in Deer Park, Texas, USA, on 5 January, 2021. The plant flared for 16 hours following unspecified process upset. Maximum steam cracker operating rate in Texas falls to 89%.

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).

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. Evonik expands lipids production to support Pfizer/BioNTech COVID-19 vaccine

MOSCOW (MRC) -- Evonik Industries says it is expanding its partnership with BioNTech (Mainz, Germany) to increase supply security for the Pfizer-BioNTech COVID-19 vaccine and is investing in a short-term production expansion for specialty lipids, essential for messenger ribonucleic acid (mRNA) COVID-19 vaccines, reported Chemweek. The company says that "commercial lipid quantities" are to be produced at Evonik’s Hanau and Dossenheim, Germany, sites as early as the second half of 2021. Further details have not been disclosed. "The pandemic requires decisive action," says Christian Kullmann, chairman of Evonik. "We are therefore doing everything possible to supply our partners with the critical lipids they need. At the same time, we are expanding our production capacity and competencies along the entire value chain."



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