Argentine energy giant YPF sticks with USD2.7 B capex plan despite debt woes

MOSCOW (MRC) -- Argentine state oil giant YPF said it would maintain its USD2.7 billion 2021 investment plan despite only partially resolving a recent debt crisis, with USD1.3 billion of the spending for shale oil and gas production at Vaca Muerta, reported Reuters.

The investment represents an 73% increase versus 2020, when the firm suffered a severe blow from the drop in international oil prices and lower demand due to the coronavirus pandemic.

YPF, which leads activity in Vaca Muerta, one of the largest shale formations in the world, restructured a portion of its debt last month, but fell well short of a larger plan to free up its financing amid a squeeze from the central bank on access to foreign currency.

"In order to make this ambitious activity recovery plan viable, YPF will maintain strict discipline in managing costs, seeking to improve operational efficiencies," YPF said in a statement.

Vaca Muerta, the size of Belgium, is the world's fourth largest unconventional oil reserve and the second largest for gas. YPF said it would drill 180 new wells in the area.

The oil company reported at the beginning of the month that it had a net profit of USD539 million in the fourth quarter of 2020, reversing the trend of big losses that it had the rest of last year as a result of the pandemic.

The plan includes investing USD800 million in conventional hydrocarbons and USD600 million in gas this year.

As MRC informed earlier, Argentina's state-backed energy company YPF plans to ramp up it investment 73% this year, with the brunt of the increased spending going toward rebuilding oil and natural gas production after a 10% slump in 2020, according to a company source's statement Jan. 26, 2021.

We remind that in March, 2019, YPF announced that it will invest around USD2 billion over the next five years to carry out a desulfurization process in two of its refineries. YPF will initially invest more than USD1 billion in its Mendoza province refinery and hire about 900 people to adapt the plant for the process. The rest of the investment will go towards the company’s refinery in La Plata.

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.
MRC

MOSCOW (MRC) -- Chevron outlined a plan to expand oil and gas production through 2025, but without spending significantly more, and pledged to limit the pace of growth of its carbon emissions, reported Reuters.

Falling energy demand due to pandemic-driven lockdowns sent the industry into a tailspin in 2020 and led Chevron to a USD5.54 billion annual loss, its first since 2016.

Investors have been pressuring Chevron and other oil companies to hold spending flat and reduce emissions that contribute to climate change. Competitors Royal Dutch Shell , BP Plc and Exxon Mobil have vowed to hold output flat or allow it to decline to meet climate or financial goals.

Chief Executive Officer Michael Wirth told analysts in a presentation on Tuesday that Chevron can achieve its output and carbon goals regardless of oil price fluctuations.

"We're not betting on higher prices to bail us out," he said in an apparent dig at Exxon and others counting on oil's rebound to cover dividends and debt repayments. By 2025, Chevron can more than double its return on capital employed, a measure of how efficiently a company invests, to more than 10%.

Still, some analysts were unimpressed with the climate and emissions goals, viewing them as too modest. Shares dipped a fraction from a one-year high to USD109.50.

A forecast of USD25 billion in free cash flow through 2025 after dividends and project outlays is "underwhelming," said Biraj Borkhataria, an analyst with RBC Capital Markets.

The carbon intensity goals "lag the industry average" and "focus on its controllable elements" rather than building new business lines," that could contribute to profits, he added.

The goal of investing about 2% of overall project spending on lower carbon emissions, indicates Chevron is not pivoting its underlying operations, said Pavel Molchanov, analyst at Raymond James.

"Others have longer-dated goals," Chevron Chief Financial Officer Pierre Breber said in an interview. Chevron's climate targets for this decade are "going to be very competitive with anybody," he said.

Other oil majors have outlined plans to invest in renewable energy and carbon capture and storage.

Still, Chevron said through 2025 it would fix annual capital outlays at around USD14 billion and increase oil and gas output by about 3.5% on a compound annual basis.

It plans to beef up investments through 2025 in the Permian basin of Texas and New Mexico, the top US shale field, as costs of a major expansion in Kazakhstan decrease.

Overall, it aims to boost output to around 3.5 million barrels of oil and gas per day (mbpd) by 2025, from about 2.98 mbpd last year. Permian production could reach 1 million barrels per day.

Chevron will be the largest player in the Permian basin with a "wide margin on production volumes over ExxonMobil, roughly 40% greater," said Peter McNally, analyst at Third Bridge.

Its climate focus includes a 35% reduction in its carbon emissions rate per unit of production by 2028. Routine flaring of natural gas, a contributor to climate warming, will halt by 2030, officials said.

The intensity target is less ambitious than rivals that look to reduce absolute emissions of carbon gases. Releases overall can increase if production rises, and Chevron failed to set a net zero emissions target like European and some US peers.

Chevron is on a "pathway toward net zero" emissions, Wirth said on Tuesday, but added that technology breakthroughs, carbon markets and policy changes are needed.

"We'll make more specific commitments as time unfolds," he said.

Chevron, which acquired Noble Energy during last year's market lows, raised to USD600 million its expected cost savings from the deal, helping lower operating expenses 10% this year compared with 2019.

As MRC informed earlier, in March 2018, Chevron Phillips Chemical, part of Chevron Corp, successfully introduced feedstock and commenced operations of a new ethane cracker at its Cedar Bayou facility in Baytown, Texas. At peak production, the unit will produce 1.5 million metric tons/3.3 billion lbs. per year. This unit is one of the largest and most energy efficient crackers in the world. In September 2017, the company announced the successful commissioning and start-up of two new Marlex polyethylene (PE) units in Old Ocean, Texas, based on the company’s proprietary MarTech technologies. Together, these assets form the bulk of the company’s US Gulf Coast Petrochemicals Project (USGCPP), which was first announced in 2011.

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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.

MOSCOW (MRC) - Polypropylene (PP) prices continued to rise in the worls market, buyers reported new historical price level. A similar situation was seen in the Russian market. The dynamics of price growth increased in the second week of March as prices broke another historical record , according to the ICIS-MRC Price Report.

Polypropylene prices began to rise in December in a number of regions of the world, and the dynamics of price growth intensified in February-March. For a number of reasons, the Russian market follows global trends, but with a slight delay.

Polypropylene prices are growing in the domestic market in line with export prices and by the end of this week exceeded the level of Rb160,000/tonne, including VAT, and delivery in spot market. Whereas at the end of February they were on average down by Rb30,000/tonne.

The record level of polypropylene prices in the Russian market is accompanied by a lack of supply, some sellers limited their sales in the domestic market for a number of reasons in February. Converters, in turn, find it increasingly difficult to accept new price levels and pass them to the cost of finished products.

It will hardly be possible to change the situation in the near future due to the growth of import volumes. Turkmenistan, a traditional and one of the largest suppliers of polypropylene to Russia, is also showing record levels of export prices.

Export prices of homopolymer PP raffia rose this week to USD1,775/tonne, FCA / FOB, for shipment within six months. Russian producers said that the prices of polypropylene in the domestic market have only now begun to approach the export alternative, while since the beginning of the year they have been lower than the prices of export sales.

In particular, depending on the producer and the direction of export, deals for for March shipments were done in the range of USD1,820-2,090/tonne FCA. Prices of homopolymer PP raffia from some producers exceeded Rb160,000/tonne CPT Moscow, including VAT in the spot market by mid-March. Discussions of copolymers started from Rb170,000/tonne CPT Moscow, including VAT, and higher.
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1. Hexion loss narrows on higher sales, improving volumes

MOSCOW (MRC) -- Hexion has reported a fourth-quarter net loss that narrowed to USD35 million, from USD46 million in the year-ago period. Net sales grew 4.0% year on year (YOY), to USD655 million, reported Chemweek. Segment EBITDA was up 39.6% YOY, to USD74 million. Volumes were up, led by increases in formaldehyde, and specialty epoxy and epoxy resins, while pricing cut into sales figures due to higher raw material costs. “In the fourth quarter of 2020, our Adhesives segment reflected continued strength in North America residential construction and gains in our global formaldehyde business,” says Hexion chairman and CEO Craig Rogerson. “Segment EBITDA in our coatings and composites segment increased more than 100% year over year owing to strong results in specialty epoxy from wind energy demand and versatic acids and derivatives due to increasing demand in architectural coatings, as well as improved results in our base epoxy resins.”


MRC

MOSCOW (MRC) -- Crude oil futures rose during the mid-morning trade in Asia March 15, as the market fell back on bullish macro fundamentals amid an absence of fresh cues, reported S&P Global.

At 10:21 am Singapore time (0221 GMT), the ICE Brent May contract was up 68 cents/b (0.98%) from the March 12 settle to USD69.90/b, while the April NYMEX light sweet crude contract also gained 68 cents/b (1.04%) to USD66.29/b.

Market analysts noted a lack of new drivers in the market this morning, adding that the rise in price is the result of the market buying into the narrative that an improved economic climate will push up oil demand.

"There are no specific oil-related headlines that have come up this morning. The market just wants to buy the growth recovery trade, and oil is one of the assets that it has its eye on," Jeffrey Halley, senior market analyst at OANDA, told S&P Global Platts on March 15.

"The fundamentals for oil are good, and the market really needs no excuse to buy oil when there is a price dip," Halley added, as he alluded to the downward price movement seen in the market at the close of week ended March 13.

Both the Brent and NYMEX light sweet crude markets ended lower 0.59% and 0.62% on the day to settle at USD69.22/b and USD65.61/b, respectively on March 12.

Stephen Innes, chief global market strategist at Axi, said in a March 15 note that crude prices are likely to extend gains, as US gasoline demand is on the verge of a resurgence.

"Prices should continue to dance higher into the summer, especially to the chime of gasoline pumps turning over. And given the rosy US reopening narrative, more and more folks take the highways ahead of what is likely to be the biggest pent up driving season on record as the US could reach herd immunity from COVID-19 by summer vacation time," Innes said.

Some market analysts were a little more cautious, saying the higher prices could derail demand recovery.

ANZ analysts, in a March 15 note, said that crude prices had come under pressure last week on concerns that high prices may hamper demand. They further noted that already in India, amid higher pump prices, February fuel sales were lower.

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 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.
MRC