Pembina takes USD256m charge on stalled PDH/PP project

MOSCOW (MRC) -- Pembina Pipeline booked a Canadian dollar (CD) 323m (USD256m) impairment charge in Q4 on its share of a planned integrated propane dehydration/polypropylene (PDH/PP) project in Alberta province, the Canadian midstream energy company said the company.

The project by Pembina's joint venture with Kuwait’s Petrochemical Industries, Canada Kuwait Petrochemical (CKPC), remains suspended indefinitely, Pembina confirmed. The suspension is the result of “the significant risks arising from the ongoing COVID-19 pandemic, most notably with respect to costs under the lump sum contract for construction of the PDH plant, which remains under a force majeure condition,” it said.

CKPC is working through a process to manage, defer or cancel existing agreements with, among others, the lump-sum consortium, lenders, and technology licensors, in order to minimise the need for additional capital contributions, Pembina said. The impairment charge is for the full amount of Pembina’s investment in CKPC.

Nevertheless, Pembina continues to believe in the strategic rationale of the project, it said. “We remain equally committed to supporting further development of the petrochemical industry in Alberta and are ideally positioned to do so as the leading transporter of ethane in the province of Alberta,” it added.

Meanwhile another Canadian midstream energy company, Inter Pipeline, continues to look for a partner for its PDH/PP project in Alberta, due to start up in early 2022. Inter Pipeline also initiated a review of strategic alternatives for the company, a move that came after it recently received an unsolicited takeover bid valued CD13.5bn.

As MRC wrote before, in February 2019, it was announced that Pembina Pipeline and Petrochemical Industries Co. of Kuwait are moving forward with plans to build a propane dehydrogenation (PDH) and polypropylene complex in Alberta. The plant will convert about 23,000 barrels of propane per day into about 550,000 metric tons of polypropylene (PP) per year. The partners expect it to cost USD4.5 billion and come onstream in 2023. Another firm, Inter Pipeline, is already building a PDH and PP complex in Alberta. It is expected to cost USD3.5 billion and be completed in 2021.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

(USD1 = CD1.26)
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MOSCOW (MRC) -- India is becoming one of the world’s largest economies, driving consumer trends that affect chemical consumption - a massive, opening market. Meanwhile, changes resulting from the energy transition are driving new investment patterns in the country, with an increased focus on petrochemical opportunities, reported Chemweek.

New government regulations are enabling this change, driving India toward a basket of energy sources and refinery/petrochemical integration.

The India forum, held on Friday during IHS Markit’s World Petrochemical Conference (WPC) 2021, being held in a virtual format, moderated by Ravi Narayanaswamy, vice president/business development at IHS Markit, addressed these themes as well as the challenges of the COVID-19 pandemic, the lessons learned, and what the future holds for the post-COVID world. “Some of the habits formed during the pandemic, for example the working-from-home culture, will result in a lesser commute, leading to lesser demand,” he said.

Narayanaswamy said that the transition will to some extent be offset by a preference in India for use of private vehicles instead of public transport. He also questioned whether plastics sustainability will take a back seat with customers preferring to use virgin plastic as a packaging option instead of using recycled material from a hygienic perspective.

SM Vaidya, chairman of Indian Oil, told the forum that the imposition of lockdown and work-from-home rules was a massive challenge for a state-owned company, particularly from an IT perspective. “However, our robust and ready IT infrastructure that has been built over the years ensured a seamless transition,” he said. The company faced an unforeseen crash in demand for its products. Vaidya said that the challenge was to adjust production runs at the company’s 11 refineries in sync with reduced demand, and to manage inventories.

The unprecedented situation created unique challenges in different product lines, said Vaidya. “While demand for some products was plummeting, the demand for liquefied petroleum gas (LPG) was soaring,” he said.

Vaidya said that for construction projects, the pandemic hurt international supply chains and equipment availability, and that licenses from different countries were severely affected during the early part of 2020. “During the lockdown, activities came to a standstill and sent the project timelines haywire,” he said. Vaidya said that when the restrictions were eased, mobilization of labor became a big challenge, given the weakening of contractors' financial situation. Vaidya also noted that large-scale lockdown had induced rural migration and interstate restrictions in India.

“However, work started progressively, and at present work is going on in full swing at all the company’s 3,200 project sites,” Vaidya said. He added that the company is confident of achieving its capital-expenditure target of almost 260.0 billion Indian rupees (USD3.5 billion).

Vaidya noted that domestic primary-energy demand is growing. India's per-capita energy consumption is only a third of the worldwide average and with demand going up, there is a place for all forms of energy including fossil fuels, renewables, gas, biofuels, and hydrogen, he added.

Consumption of diesel and gasoline will remain and Indian demand for gasoline has already exceeded pre-COVID levels, said Vaidya. Domestic demand for gas and oil is currently at 85–90% of pre-COVID levels, he said. According to estimates, demand for oil in India in 2040–50 will be about 10 million b/d, Vaidya said. To meet the increasing demand, Indian Oil is in the process of strengthening its refining capacities, he said.

Indian Oil recently announced plans to expand the capacity of its refinery at Panipat, India, from 15 million metric tons/year (MMt/y), to 25 MMt/y. The company will also build a polypropylene (PP) unit and a catalytic dewaxing unit at the site. The cost of the project is Rs329.46 billion.

Indian Oil with its affiliate Chennai Petroleum (Chennai, India) decided in June 2020 to build a 9-MMt/y refinery complex at Nagapattinam, India. The companies will also build a PP plant. The cost of this project is Rs289.8 billion. Vaidya added that Indian Oil is expanding its naphtha cracker at Panipat and looking to build a naphtha cracker at Paradip. Vaidya said that to de-risk the company's conventional fuels business, it is moving more into petrochemicals.

Mukesh Surana, chairman and managing director of Hindustan Petroleum Corp. Ltd. (HPCL), told the forum that petchems offer a risk-mitigation portfolio in case of demand destruction in transportation fuels, and yield better margins. Surana noted that refiners in India are looking to integrate with petchems and that all greenfield projects in India today include petchems.

HPCL is establishing a 9-MMt/y refinery/petchem project at Pachpadra in the Barmer district of Rajasthan State. The project involves about 25% of petchem intensity, said Surana.

Indian Oil's refineries traditionally had poor petchems intensity, somewhere in a 3–5% range, which means that less than 5% of the company's crude oil consumption was being converted into petchems, said Vaidya. “But now we are consciously upping it to 15%,” he said. Vaidya noted that the company can grow in petchems because India is an importer of petchems. The company is bullish about the petchems business and making substantive investments, he added.

Surana said demand for petchems is growing in India and that the country's upwardly mobile middle class and overall demography supports that growth. He added that domestic petchems growth is supported by several government schemes such as the national smart cities mission, and make in India and self-reliant India campaigns.

Vaidya said that Indian Oil is looking at all possible ways to extract petchem molecules from its refinery streams.

Surana said that HPCL is one of the leading domestic producers of lubricants. After saturating the domestic market, the company now plans to supply lubricants to 30 countries, up from the 14 countries it currently supplies in the Asean region, Indian subcontinent, Gulf Cooperation Council region, and some African countries.

Vaidya noted that the path to energy transition will be different in each country. “India will chart its own path,” he said.

India will lead the way in gas consumption and the use of natural gas will help drive the country's energy transition, said Vaidya. The country’s energy mix consists of about 6.2% natural gas and the government plans to increase that to 15% by 2030.

IHS Markit vice chairman Daniel Yergin, during the recent CERAWeek 2021 by IHS Markit virtual conference, noted that prime minister Narendra Modi is shifting India toward a gas-based economy. Yergin said that this will transform the use of energy across the Indian economy, reduce urban pollution, and unlock opportunities across the nation.

As MRC wrote previously, Indian Oil has just announced plans to expand the capacity of its refinery at Panipat, India, from 15 million metric tons/year (MMt/y), to 25 MMt/y. The company will also build a polypropylene (PP) unit and a catalytic dewaxing unit at the site. The cost of the project is 329.46 billion Indian rupees (USD4.45 billion). The plan is the latest in a series of projects approved by Indian Oil to improve integration with petrochemicals at the company's refinery sites. The capacity of the planned PP facility has not been disclosed.

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

According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC

MOSCOW (MRC) -- The European Council has endorsed the EU's chemicals strategy for sustainability, adopted by the EU Commission in October 2020, reported Chemweek.

The council has directed the commission to implement the actions laid down in the strategy, including targeted amendments to streamline EU chemicals legislation, substituting and minimizing substances of concern, and phasing out the most harmful chemicals for non-essential societal uses. The chemicals strategy is an essential part of the EU Green Deal and its zero-pollution ambition, as well as a key component in the EU recovery plan from the COVID-19 crisis.

The council acknowledges in its conclusions that achieving the objectives and vision of the EU chemicals strategy for sustainability requires changes to relevant legislation, including the Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) and Classification, Labeling, and Packaging (CLP) regulations. As a result, it supports the announced amendment of REACH in a targeted manner, accompanied by a comprehensive impact assessment, to ensure that the changes will not weaken REACH or lower the level of protection already accomplished, or affect the rights of EU Member States to initiate and influence actions taken under the regulation.

The council says it also endorses the EU in taking a leading role globally by promoting its rules on chemicals as the 'golden standard,' as well as ensuring that the EU has secured access to chemicals that are critical for health and the functioning of society.

Separately, Germany’s chemical industry association VCI (Frankfurt) has raised concerns over the effects it says the implementation of the chemical strategy will have for the chemical and pharmaceutical industry and its customers in downstream industrial value chains, if it is implemented unchanged.

“The EU chemicals strategy is characterized by a regulatory approach that is heavily based on the hazardous properties of chemicals. This could mean that entire groups of substances could be banned from the market, regardless of whether their use actually poses a risk. The strategy does not take sufficient account of the fact that substances with hazardous properties can also be handled safely and are indispensable for many everyday applications,” VCI says.

As MRC informed before, demand and supply growth for naphtha in European markets is likely to be moderate until at least the second quarter of 2021 as inventories are run down and deployment of a COVID-19 vaccine starts to make some headway in reviving oil products demand, according to IHS Markit analysts.

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) -- TPC Group (Houston, Texas) says its Port Neches, Texas, terminal is receiving butadiene and delivering it to major area customers, said Chemweek.

The terminal is also receiving rail and marine deliveries of crude C4s. The developments complete the second phase of a three-phase startup of the terminal, which was significantly damaged by a November 2019 explosion and fire that destroyed much of the Port Neches facility’s crude-C4 processing capability. TPC also says it has signed a C4-processing agreement with a third-party toll processor.

TPC has estimated that reconstruction of the production assets will take up to five years. “We are pleased with the progress we continue to make on reestablishing butadiene, crude C4, and raffinate terminalling capabilities at the Port Neches site,” says Ed Dineen, TPC Group president and CEO.

TPC says it will use its logistic and storage facilities as well as commercial agreements for feedstock and product sales to supply crude C4s for processing to the tolling firm, which will return finished butadiene and raffinate products to TPC Group for distribution.

“This agreement provides us access to significant capabilities to consume our committed crude C4 volumes as well as meet the requirements of our long-term butadiene product sales agreements,” says Charlie Graham, senior vice president/commercial at TPC.

As per MRC, TPC stopped producing BD and other products at its Port Neches, Texas, site in November 2019 following a fire. There are currently no known plans to rebuild the production lines, and the site is being used as a logistics and storage hub. TPC had CC4 offtake agreements in place, and the new agreement with BTP will allow the company to consume those volumes and meet long-term finished product sales agreements, the company said in the release. BTP's nameplate BD capacity is 410,000 tonnes/year.

Butadiene is the main feedstock for the production of ABS.

According to the ICIS-MRC Price Report, last year ABS imports to Russia increased by 4% compared to 2019 and amounted to 35 thousand tons against 33.7 thousand tons. The share of South Korean supplies amounted to 62% (21.6 thousand tons) against 58% (19.7 thousand tons) in January-December 2019.

MRC

MOSCOW (MRC) -- Dow signed a Memorandum of Understanding (MoU) with the Zhanjiang Economic and Technological Development Zone Administrative Committee (Zhanjiang EDZ) to build the Dow South China Specialties Hub, a multi-year project providing customers local access to Dow’s portfolio of high value products and innovative technologies, said Hydrocarbonprocessing.

"Asia Pacific is the world’s largest chemicals market. Demands in the region are evolving towards high-value, specialty chemicals that help customers meet rapidly-developing megatrends in mobility, urbanization and sustainability,” said Jon Penrice, Dow Asia Pacific president. “The establishment of the Dow South China Specialties Hub would further position Dow to provide industry-leading materials science solutions to continue to grow with our customers in China and throughout the entire region."

The new manufacturing hub would extend Dow’s local reach, further enhancing supply reliability, responsiveness to market needs and customized innovation, and better positions customers for success in markets including automotive, pharmaceuticals, cleaning chemicals, apparel, lubricants and adhesives. Aligned to Dow’s focus on low capital intensive, fast payback and high return growth projects, under the MOU the Company would invest approximately USD250 million to construct specialty polyurethanes and alkoxylates facilities, with a total product capacity of approximately 250,000 tons. The site also offers opportunity for future development and expansion at the Specialties Hub.

Henry Ling, vice president of operations, Dow Asia Pacific, said, “The South China Specialties Hub will be built to Dow’s world-class environmental, health and safety standards and aligned to Dow’s recent commitment to become net carbon neutral by 2050. The new hub will adopt and employ advanced digital, intelligence and automation technologies to create a manufacturing space of world-class safety, productivity, reliability and sustainability performance."

"Dow is a global leader of material science solutions and we are happy to see its planned investment for establishing a specialties manufacturing hub in Zhanjiang,” said Liang Pei, party secretary of the Zhanjiang EDZ. “We are committed to turning our petrochemical park at the Donghai Island into a world-class one, providing a modern infrastructure and necessary supportive policies to Dow and the park’s other companies."

The Dow South China Specialties Hub will be located at Donghai Island in Zhanjiang, the farthest southern tip of mainland China. Unique advantages include a deep-water port, transportation networks, and a world-class chemical park with advanced infrastructure and services. The strategic location enables Dow to cover demand across Asia Pacific.

As MRC informed earlier, last year, Dow Chemical conducted a scheduled maintenance at its PDH unit in Freeport. Thus, the planned turnaround started in the week ended July 10 and lasted for 45 days.

Propylene is the main feedstock for the production of polypropylene (PP).

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). Supply of exclusively PP random copolymer increased.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
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