Japan quake knocks out 20% of country refining capacity

MOSCOW (MRC) -- Japanese refiners led by the biggest, Eneos Corp, shut down a fifth of the country's crude oil refining capacity after a powerful earthquake struck northeastern Japan knocking out power, bullet train lines and injuring more than 150 people, reported Reuters.

They refinery shutdowns in the world's fourth-biggest oil importer are another potential hit after the pandemic led to the evaporation of crude demand over the last year.

As much as 743,000 barrels per day (bpd) of oil-processing capacity has been idled, nearly 22% of Japan's roughly 3.4 million bpd capacity.

The refineries in locations from Yokohama to Sendai near the epicentre of the 7.3-magnitude earthquake, which struck a little before midnight on Saturday, either automatically shut down or were idled immediately for checks.

Eneos said on Monday it shut down its 145,000 barrel-per-day (bpd) Sendai refinery after it was hit by a large earthquake on Saturday. The company is still making checks on the refinery and does not have a restart date, the spokesman said.

Eneos later said the company's 270,000 bpd Negishi refinery, had also closed and it had no date for the resumption of operations.

The earthquake struck off the coast of northeastern Japan, injuring scores of people, triggering widespread power outages and causing damage across parts of northern Japan, including in Fukushima which is still recovering a decade after a bigger quake in the same area.

Fuji Oil Co Ltd shut the 143,000 barrel-per-day crude distillation unit (CDU) at its Sodegaura oil refinery in Chiba, east of Tokyo, after it was hit by an earthquake on Saturday, a company spokesman said on Monday.

Fuji Oil's only refinery was shut down automatically after the quake and the company plans to restart the CDU on Tuesday as no damage was found, the spokesman said.

Idemitsu Kosan did not immediately respond to a request to comment on media reports it had shut down its 190,000 bpd Chiba refinery, also because of the quake.

As MRC informed before, ENEOS Corporation (formerly known as JXTG Nippon Oil & Energy) restarted its naphtha cracker in Kawasaki on 1 February 2021. The company shut this cracker with an annual capacity of 515,000 tons/year of ethylene, 300,000 tons/year of propylene, and 105,000 tons/year of butadiene on 4 December, 2020, for repairment after a technical issue reported at the butadiene separation unit and initially planned to resume operations on 28 December.

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). Supply of exclusively PP random copolymer increased.
MRC

MOSCOW (MRC) -- SIBUR, Russia’s biggest producer of petrochemicals, has cut the timeline and reduced the estimated cost of its large-scale petrochemical project in Russia’s Far East, near the border with China, said the company.

The company is now targeting mechanical completion of the Amur Gas Chemical Complex (Amur GCC) in mid-2024, having previously said that the project would likely be completed in late 2024 or 2025. Sibur also says that the budgeted cost of building the complex has been reduced to USD10 billion or below, from a previous estimate of USD10-11 billion.

The company’s experience of building the USD8.8-billion ZapSibNeftekhim (ZapSib) petchem complex at Tobolsk, western Siberia, together with the sheer size of the Amur GCC, which will produce 2.3 million metric tons/year (MMt/y) of ethylene and have downstream polymers capacity totaling 2.7 MMt/y, have enabled the revisions, Alexander Petrov, board member/plastics, elastomers, and intermediates at Sibur, told CW in an interview after the release of the company’s fourth-quarter and full-year 2020 financial results.

"We have experience and we are going for scale,” Petrov says. "We learned a lot of lessons with ZapSib. It was our largest project, and we had built a propane dehydrogenation and polypropylene [PP] complex at Tobolsk seven years before. All this helped us to find a lot of new and smart solutions."

Construction on the Amur GCC began last August, and SIBUR and Sinopec formed a 60/40 joint venture (JV) in December for the complex. Sibur and Sinopec have a “good understanding,” Petrov says. “We believe we have a lot of reasons to do the project jointly. The Far East is a new territory for us, and the complex will definitely serve China because of the close proximity. And the Amur GCC is pretty capital intensive. So, it’s a new type of risk for us, and we know Sinopec as a shareholder.” Sinopec has a 10% stake in SIBUR.

ZapSib, based on a 1.5-MMt/y steam cracker, started up at the end of 2019 and reached its design capacity in the fourth quarter of 2020, ahead of schedule. The complex had an average operating rate of 92% during the quarter and attained an operating rate of about 97% in December, Petrov tells CW.

The ramp-up of supply from ZapSib had a hugely positive impact on Sibur’s fourth-quarter and full-year 2020 results. But the company also benefited from robust demand for polymers in packaging and medical applications, among others, during the pandemic.

The packaging sector gained from greater home-consumption of food and increased use of online delivery services for consumer goods. “Packaging demand inside and outside Russia was pretty good,” Petrov says. He estimates some decline in the first half of 2020 but only of a few percentage points, with demand in some segments improving.

Demand for Sibur’s plastics in medical applications benefited from the increase in consumption of PP in personal protective equipment such as face masks. However, there was a “deep decline” in demand from other sectors such as automotive and construction, particularly in the first half of 2020, caused mainly by COVID-19, Petrov says. “We experienced a fast recovery in construction, especially in residential housing, in the second half,” Petrov says.

SIBUR serves the automotive industry with synthetic rubber to manufacture tires. Petrov estimates there was a decline of about 20% in tire demand in Russia during 2020.

Meanwhile, SIBUR launched construction in September 2020 at its Polief site at Blagoveschensk, Bashkortostan, Russia on a project to produce primary polyethylene terephthalate (PET) granules partly from recycled PET. Polief will need to source 34,000 metric tons/year of used PET in the form of flakes, made from recycling PET packaging, that will be melted and mixed with 110,000 metric tons/year of virgin PET at the plant to produce 144,000 metric tons/year of PET. Start-up of the plant is scheduled for the second half of 2022. “The challenge is to accumulate enough flakes,” Petrov says. SIBUR has signed several contracts to receive PET flakes from recyclers, he says.

SIBUR, meanwhile, is building Russia’s first maleic anhydride (MA) plant. The unit, with capacity for 45,000 metric tons/year of MA, is taking shape at Tobolsk and completion is expected in the second half of 2022. “It is making good progress,” says Petrov. “There are 1,000 construction workers on site, and we are waiting for certain pieces of heavy equipment."

SIBUR started up a plant making phthalate-free dioctyl phthalate (DOTP) plasticizer at Perm, Russia, in 2019. The unit has a design capacity of 100,000 metric tons/year, making it Europe’s biggest facility for the product, but this has been “improved by capacity creep,” Petrov says. DOTP is a new product for Sibur and the Perm plant has seen double-digit growth in demand in Russia during the last two years, Petrov says. “It has not just replaced imports but has stimulated demand in the Russian market,” he says.

Russia imported about 63,000 metric tons of plasticizers in 2018, which dropped 43% to 36,000 metric tons in 2020 following completion of the Perm DOTP plant, Sibur says. Meanwhile, DOTP accounted for 49% of plasticizer consumption in Russia last year, jumping from 2% in 2018. The Perm plant sold 81,500 metric tons of its 100,000-metric tons output in Russia in 2020, according to SIBUR.

SIBUR started up a styrene butadiene styrene (SBS) plant at Voronezh, Russia, with capacity for 50,000 metric tons/year in early 2020 and the unit is running at full capacity, Petrov says. The plant accounts for 5% of worldwide SBS capacity, according to Sibur. It sells in Russia and “supplies a lot of tons for export to China and the US,” Petrov says. The facility makes five new SBS grades. “The focus is to develop new grades for different applications,” Petrov says.

As per MRC, SIBUR’s fourth-quarter adjusted profit rose 9% year on year on the back of the ramp-up of capacity at its ZapSibNeftekhim petrochemicals complex, which reached its full design capacity. The company’s EBITDA margin increased to 37.2% in the fourth quarter from 32.3% a year earlier. The ramp-up to full design capacity ahead of schedule at ZapSibNefthekhim, the company’s world-scale petrochemical complex at Tobolsk, Russia, drove earnings and sales higher

As MRC informed earlier, SUBUR also began construction on a large-scale gas chemical complex in Amur, near the Chinese boarder, to be carried out as a 60-40 joint venture with Sinopec.

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).

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.
MRC

MOSCOW (MRC) -- Energy giant Royal Dutch Shell vowed to eliminate net carbon emissions by 2050, raising its ambition from previous targets, as its oil output declines from a 2019 peak, according to Hydrocarbonprocessing.

The Anglo-Dutch company is in the midst of its largest overhaul yet as it prepares to expand its renewables and low-carbon business in the face of growing investor pressure on the oil and gas sector to battle climate change.

Shell last year laid out a plan to reach net zero by 2050, in line with the Paris climate agreement and European Union ambitions, but it said the goal depended on its customers.

In a strategy update on Thursday, Shell outlined plans to curb its emissions through rapid growth of its low-carbon businesses, including biofuels and hydrogen, although spending will stay tilted towards oil and gas in the near future.

"We will use our established strengths to build on our competitive portfolio as we make the transition," CEO Ben van Beurden said in a statement.

Investors welcomed the upgraded targets.

"Shell's net zero target is industry-leading and comprehensive as it covers all their carbon emissions," Adam Matthews, Director of Ethics & Engagement for the Church of England Pensions Board, who led investor engagement with Shell, said in a statement.

Shareholders have an advisory vote on Shell's transition plan at this year's general meeting, an industry first, Matthews added.

Although such votes would be non-binding, investors see them as a mechanism to hold management publicly accountable for their progress on meeting targets to cut emissions.

Shell shares were down 1.9% at 1142 GMT at 1337 pence, dragging on the FTSE 100 index.

Historically, oil projects have delivered a return on investment of at least 15%, while renewables developers expect 6%-9%, but Shell and BP have said their complex marketing and trading units can increase renewable returns to around 10%.

Shell's strategy is to remain reliant on its retail business, the world's largest. It has a goal to increase the number of sites to 55,000 by 2025 from today's 46,000 and increase the number of electric vehicle charging points to 500,000 from 60,000 now.

It did not outline plans to grow its solar and wind power generation capacity, marking a difference from rivals, such as BP and Total, which aim to boost their ownership of physical wind and solar farms.

As MRC wrote previously, 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.

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). Supply of exclusively PP random copolymer increased.

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.
MRC

MOSCOW (MRC) -- Bulk liquid storage player Rubis Terminal says its fourth-quarter 2020 storage revenues have risen 30% year on year (YOY) to EUR56.5 million (USD68.4 million), and that it has “significantly increased” its exposure to chemical and biofuels storage following its acquisition last year of Terminales Portuarias (Tepsa; Madrid, Spain), reported Chemweek.

Rubis, a terminals business joint venture (JV) between fund manager I Squared Capital (ISC) and Rubis Group (Paris, France), says its pro-forma share of revenues from chemicals is now at 36% compared to 31% during the first half of 2020, while biofuels storage now makes up 5% of its pro-forma revenues. “The company has been steadily decreasing its exposure to fuel from 70% of sales in 2016 to currently around 50% of sales,” it says. Rubis completed its acquisition of Tepsa in October 2020 for an undisclosed amount.

The JV’s fourth-quarter rise in sales included 9% organic growth, it says. Full-year 2020 sales rose 10% over 2019 to EUR186 million, it adds.

The quarter “was solid in current circumstances and saw similar development as in the third quarter, with improving volumes and solid margins,” Rubis says.

Rubis Group owns 55% of Rubis Terminal, with ISC owning the remaining 45%.

As MRC informed in January 2020, Berry Global Group, Evansville, Indiana, announced that Madrid-based Repsol, its longtime supplier, will supply it with circular resins. The Spanish multienergy global company will supply Berry with International Sustainability and Carbon Certification (ISCC) Plus-certified circular polyolefins from its Repsol Reciclex range. According to a news release from Berry Global, these polyolefins are obtained by advanced recycling, enabled by the adoption of new chemical recycling technologies, of postconsumer plastic scrap not suitable for traditional recycling.

We remind that Repsol shut down its cracker in Tarragona (Spain) for maintenance in the fourth quarter of 2019. The turnaround at this steam cracker, which produces 702,000 mt/year of ethylene and 372,000 mt/year of propylene, was pushed back from Q3 2019. The exact dates of maintenance works were not disclosed.

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). Supply of exclusively PP random copolymer increased.
MRC

MOSCOW (MRC) -- Asian refining margins for 10 ppm gasoil rose on Monday, hovering close to multi-month highs touched last week, buoyed by expectations for firmer demand and tighter supplies in coming months, reported Reuters.

Refining margins, also known as cracks, for 10 ppm gasoil climbed to USD7.34 per barrel over Dubai crude during Asian trading hours, compared with USD7.01 a barrel in the last trading session on Thursday. Cracks for the benchmark gasoil grade in Singapore have surged 22.7% so far this month, Refinitiv Eikon data showed.

The regional gasoil market is expected to strengthen further as countries roll out wider vaccinations in coming days that would boost economic recovery and fuel demand, market watchers said. Cash differentials for gasoil with 10 ppm sulfur content were at a narrow premium of USD0.01/bbl to Singapore quotes, compared with a discount of $0.04/bbl on Thursday.

Global oil and fuel prices are picking up as demand returns to pre-pandemic levels amid easing coronavirus lockdowns in key countries like China and India and signs of increasing road travel in several countries. However, there are questions over how quickly refiners with idled capacity can respond to increased demand. Analysts say the recovery pace will vary by region and fuel type, and that jet fuel demand will remain the weakest performer until more international air travel resumes.

As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

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