MOSCOW (MRC) -- On April 27, BP, the world's oil and petrochemical major, forecast a further drop in its upstream production in 2021 due to the impact of asset sales on its portfolio, as it reported a 14% year-on-year fall in upstream oil and gas output for the first quarter, reported S&P Global.
In a results statement, the UK major said second-quarter production would be even lower than first-quarter production in both its conventional operations and newly created 'gas and low carbon' unit due to a combination of asset sales and maintenance, the latter in the North Sea, Gulf of Mexico as well as Trinidad and Tobago.
The downbeat production outlook follows a 10% drop in the company's 2020 output, mainly attributed to asset sales in its US shale business and Alaska. Upstream production in the first quarter hit 2.22 million b/d of oil equivalent, excluding the company's near-20% stake in Rosneft, due to the asset sales, reduced investment and asset decline, BP said.
"For full-year 2021 we expect reported upstream production to be lower than 2020 due to the impact of the ongoing divestment program. However, underlying production should be slightly higher than 2020 with the ramp-up of major projects, primarily in gas regions, partly offset by the impacts of reduced capital investment and decline in lower-margin gas assets," BP said, noting its startup of two gas projects in recent days, in Egypt and India.
BP responded to the global price crash and pandemic by slashing its capital expenditure by 21% last year, starting in the second quarter, and has since said it expects to see its oil and gas output fall by 40% by 2030 as it shifts toward lower-carbon energy production.
However, in a broadly optimistic results statement, CEO Bernard Looney hailed the company's success in lowering its net debt and reviving its cash generation, and forecast an improvement in oil market conditions.
"The oil market is set to continue its rebalancing process. Global stocks are expected to decline and reach historical levels (in terms of days of forward cover) at the end of 2021," BP said. "Oil demand is expected to recover in 2021 due to strong growth in US and China and as the distribution of vaccinations gains momentum and lockdown restrictions are gradually lifted," it added, noting also that OPEC+ decisions would play a significant role.
In the downstream, "industry refining margins are expected to improve over the course of 2021 compared to the first quarter, with the recovery in demand and the closure of some capacity supporting higher utilization rates compared to the exceptionally low levels seen last year. However, refining margins are expected to remain weaker than pre-COVID-19 levels," BP said.
As MRC informed earlier, Rosneft together with BP will develop the hydrogen business. Together they will study the prospects for new projects using renewable energy sources (RES), as well as the use of technologies for capturing, utilizing and storing CO2. Earlier in Russia, Gazprom and Novatek spoke about their intention to create a hydrogen business and new technologies for the disposal of harmful emissions.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.
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