Crude oil futures up on signs of stronger downstream demand in the US

MOSCOW (MRC) -- Crude oil futures ticked higher during mid-morning trade in Asia April 29, as sentiment in the market remained positive amid signs of strong downstream demand in the US, but the progress of the pandemic in India remained on the market's radar, reporte S&P Global.

At 11:17 am Singapore time (0317 GMT), the ICE Brent June contract was up 36 cents/b (0.54%) from the April 27 settle at USD67.64/b, while the June NYMEX light sweet crude contract rose 29 cents/b (0.45%) at USD64.15/b.

There was some bullishness in the market after the US' Energy Information Administration released its weekly data late April 28, which backed the narrative of a recovery in US oil demand.

Total products supplied, the EIA's proxy for demand, increased 8.7% on the week, in the week ended April 23 to 20.34 million b/d. The increase in implied products demand was largely powered by a 12.35% increase in implied distillates demand to 4.33 million b/d in the same period, even as implied gasoline demand edged 2.49% lower to 8.88 million b/d.

The increase in implied distillate demand sent distillate inventories 3.34 million barrels lower last week to 139.05 million barrels. Gasoline inventories, meanwhile, climbed 90,000 barrels to 235.07 million barrels even as Apple mobility data showed US driving activity edging 0.4% higher last week.

The headline increase in US crude inventories was 90,000 barrels, according to the EIA data, which put stocks 0.3% behind the five-year average and erased a surplus that has persisted since the week ended March 27, 2020. Even though crude inventories registered a rise, the market took it as a positive development, as the rise was much smaller than the 4.32 million-barrel build reported by the American Petroleum Institute on April 27.

The increase in US oil demand, as per the EIA report, came amid the market's assessment of improved US economic conditions. The Federal Reserve, on April 28, echoed the market's view of bullish economic conditions in the country, saying that amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened.

Elsewhere, however, concerns over the pandemic and its pernicious impact on economic activity have escalated. COVID-19 infection and fatality numbers in India, the third largest importer of crude oil, have shown no signs of abating, with the country reporting record 360,927 new cases and 3,293 deaths on April 27, latest data from John Hopkins University showed.

As MRC informed earlier, 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 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 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.
MRC

EPA requires five companies to investigate and take action to reduce hazardous pollution

MOSCOW (MRC) -- Cancer-causing benzene emissions from oil refineries exceeded the federal action level for five refineries in Louisiana last year, putting at risk the health of neighboring communities, said Hydrocarbonprocessing.

Nationally, 13 refineries had benzene monitoring readings at their fencelines in 2020 that averaged above EPA’s action level, a regulatory threshold that requires companies to investigate and take action to reduce the dangerous pollution.

That was more than the 11 refineries nationally over EPA’s action level in 2019, and two in Louisiana that year, according to a report by the Environmental Integrity Project (EIP), “Environmental Justice and Refinery Pollution."

The highest benzene levels in the nation last year were at the Delek corporation refinery in Krotz Springs, Louisiana, about 40 minutes west of Baton Rouge. Fenceline benzene readings there averaged more than triple EPA’s action level last year and worsened by 29 percent between 2019 and 2020, according to EPA data. A public library, many homes, and a daycare center serving low-income children are located within a quarter mile of the refinery.

"Benzene is not some harmless chemical - it is a known carcinogen,” said Anne Rolfes, Director of the Louisiana Bucket Brigade. “We want the new administration at EPA to acknowledge that the Louisiana Department of Environmental Quality is incapable of solving this problem. Year after year, the state has failed to act. We need federal intervention and we need it now. Without an active EPA, schoolchildren will continue to be exposed. It is so wrong."

Federal data also show benzene exceedances last year at the Shell Norco refinery outside New Orleans (which was 62 percent over the EPA action level), Chalmette Refining (24 percent over), and the Phillips 66 refineries in Westlake (17 percent over) and Belle Chasse (4 percent over), according to EIP’s report.

In 2015, EPA imposed regulations for oil refineries that, for the first time starting in 2018, required them to start monitoring for benzene at the fencelines of their plants and publicly report the data, which EIP used for its report. The benzene rules require companies to investigate and crack down on facilities with an annual net average over nine micrograms per cubic meter of the carcinogen (not counting emissions from background sources or non-refinery equipment.)

Nationally, more than 530,000 people live within three miles of the 13 refineries with benzene emissions over the EPA action level in 2020, with 57 percent being people of color and 43 percent living below the poverty line, according to EIP’s report.

“If the Biden Administration wants to make good on its promise to tackle environmental injustices, it should act immediately to crack down on these dangerous benzene emissions,” said Eric Schaeffer, Executive Director of the Environmental Integrity Project and former Director of Civil Enforcement at EPA.

“EPA needs to start responding more rapidly to short-term spikes in benzene that threaten public health,” said Schaeffer. “And the agency should tighten up its regulations to close a loophole that allows refineries to avoid counting emissions from benzene storage tanks and other non-refining equipment – even though neighbors are exposed to all of these toxic emissions."

EIP’s report explains that fenceline monitoring data show that actual benzene emissions from oil refineries across the U.S. are higher than they appear. This is because the EPA’s 2015 regulations, which the agency imposed in response to a lawsuit that EIP and Earthjustice filed on behalf of communities living downwind from refineries, include a loophole. This loophole allows refiners to subtract from the benzene concentrations measured by fenceline air pollution monitors any benzene thought to come from offsite or non-refining equipment (such as benzene storage tanks).

If the total benzene concentrations are taken into account (without these adjustments), 17 refineries across the U.S. – not just 13 – would have averaged more than EPA’s “action level” of 9 micrograms per cubic meter in 2020. Nearly 700,000 people live within three miles of these 17 plants, with people of color accounting for 62 percent of this total, and nearly 45 percent living below the poverty level.

EIP’s report also shows that because EPA’s benzene regulations are based on annual averages, they often fail to reveal –or protect local residents against -- dangerous short-term spikes in air pollution. These spikes, above health advisory levels set by the federal Agency for Toxic Substances and Disease Registry (ATSDR) at 29 micrograms per cubic meter of air[i] over a two-week period, happened at 23 oil refineries in 2020, including six in Louisiana.

Examples of dangerous benzene spikes in Louisiana, and potentially impacted populations, are listed below: The Delek Krotz Springs refinery west of Baton Rouge recorded a spike of 114 micrograms of benzene at its fencelines (almost quadruple the health advisory level) for the two-week period ending on May 4, 2020. Forty-three percent of people living within three miles of the plant are below the poverty line.

The Shell Norco Manufacturing Complex in Norco, just west of New Orleans, recorded 79 micrograms of benzene (almost triple the health advisory level) for the two-week period ending on March 12, 2020. Twenty-four percent of people living within three miles of the plant are below the poverty line, and 30 percent are people of color.
Chalmette Refining, in Chalmette, LA, just east of New Orleans, recorded 58 micrograms of benzene (almost double the health advisory level) for the two week period ending on February 11, 2020. Thirty-four percent of people living within three miles are below the poverty line, and 55 percent are people of color.

The Phillips 66 Alliance refinery in Belle Chasse, LA, just southeast of New Orleans, recorded 55 micrograms of benzene (almost double the health advisory level) for the two week period ending on August 19, 2020. Fifty percent of those living within three miles of the plant are people of color, and 25 percent are below the poverty line.
The Phillips 66 Lake Charles refinery in Westlake, in southwest Louisiana, recorded 49 micrograms of benzene (69 percent over the health advisory level) during the two week period ending on August 24, 2020. Thirty five percent of those living within three miles are below the poverty level.

For a copy of the report, “Environmental Justice and Refinery Pollution,” click here. The Environmental Integrity Project is a 19-year-old nonprofit organization, based in Washington DC and Austin, Texas, that is dedicated to enforcing environmental laws and strengthening policy to protect public health and the environment.

The Louisiana Bucket Brigade uses grassroots action to create an informed, healthy society that holds the petrochemical industry and government accountable for the true costs of pollution to hasten the transition from fossil fuels.

As per MRC, The Washington, D.C.-based Plastics Industry Association has a new safety standard focusing on the manufacture, care and use of granulators, strand pelletizers, dicers, and single-shaft rotary grinders. This standard does not apply to other types of shredders or to pulverizers. Safety Requirements for Granulators, Strand Pelletizers and Dicers Used for Size Reduction of Plastics is available for sale at a reduced price for member companies at the association’s web store.

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

SAPREF lets contract for Durban refinery

MOSCOW (MRC) -- South African Petroleum Refineries (Pty.) Ltd. (SAPREF), a 50-50 joint venture of Shell Refining SA and BP Southern Africa, has let a contract to KBR Inc. to provide technology for an upgrade of the 33,000-b/d FCC unit at its 180,000-b/d refinery in Durban, South Africa, said Ogj.

As part of the contract, KBR will license its Catalyst Regeneration technology as well as deliver basic engineering, detailed engineering, and proprietary equipment for the FCC regenerator project, which will enable SAPREF to improve the unit’s reliability and integrity by optimizing catalyst and air distribution, the service provider said.

KBR disclosed neither a value of the contract nor a timeframe for its work on the project.

While SAPREF itself has not revealed details on the proposed FCC regeneration project, BP Southern Africa said it planned to continue investing in upgrading SAPREF to ensure the refinery can meet domestic consumer demands for low-sulfur fuel, according to the company’s website.

In its most recent major maintenance shutdown, executed in 2019, SAPREF completed two upgrading projects at Durban to enable production of a low-sulfur fuel oil and low-sulfur diesel, the latter of which included installation of a new reactor in one of the plant’s diesel hydrodesulfurizing units, the operator said in its 2019 annual sustainability report.

As MRC informed earlier, Royal Dutch Shell Plc restarted the small crude distillation unit (CDU) on 2 April at its 318,000-bpd joint-venture Deer Park, Texas, refinery. The 70,000-bpd DU-1 CDU was shut on Feb 14 by a pump seal failure. All other units were shut the following day by severe cold weather. DU-1 is the last unit shut in February to restart at the refinery.

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.

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

PE production in Russia up by 12% in Q1 2021

MOSCOW (MRC) -- Russia's overall polyethylene (PE) production totalled 823,700 tonnes in the first three months of 2021, up by 12% year on year. High density polyethylene (HDPE) accounted for the greatest increase in the output, according to MRC's ScanPlast report.

March total PE production in Russia rose to 283,900 tonnes, whereas this figure was at 252,600 tonnes a month earlier, output of all PE grades increased. Thus, overall PE production reached 823,700 tonnes in the first quarter of 2021, compared to 734,700 tonnes a year earlier. Production of all PE grades grew, but HDPE accounted for the greatest increase.

The PE production structure by grades looked the following way over the stated period.


March total HDPE production reached 175,900 tonnes versus 152,500 tonnes a month earlier, all producers raised their capacity utilisation. Russian plants' overall HDPE output reached 505,800 tonnes in the first three months of 2021, up by 15% year on year.

Last month's total low density polyethylene (LDPE) production rose to 60,100 tonnes from 54,800 tonnes in February, Angarsk Polymers Plant and Tomskneftekhim increased their capacity utilisation. Thus, overall production of this PE grade totalled 178,200 tonnes over the stated period, up by 3% year on year.

March linear low density polyethylene (LLDPE) production grew to 47,800 tonnes from 45,300 tonnes a month earlier, ZapSibNeftekhim increased its capacity utilisation. Overall LLDPE output rose to 139,700 tonnes in January-March 2021 from 122,100 tonnes a year earlier.

MRC

EPA to send experts to refinery in US Virgin Islands to conduct investigation after recent incidents

MOSCOW (MRC) -- The US Environmental Protection Agency (EPA) plans to send experts and staff to the Limetree Bay refinery in the US Virgin Islands as soon as this week to conduct an investigation after recent incidents at the plant caused some residents to feel ill, reported Reuters with reference to the agency's statement.

The EPA is conducting the investigation with the US Virgin Islands Department of Planning and Natural Resources and US Virgin Islands Department of Health.

The agency said is looking to determine “the level of the exceedances, the composition of the releases, the duration and cause of the incidents, the corrective actions taken or to be taken, the potential public health impacts, and how to best prevent future incidents.”

As MRC informed before, in late March 2021, EPA said it had revoked an expansion permit for the Limetree Bay oil refinery in the US Virgin Islands, citing concerns that the area around the facility is overburdened with pollution. The decision allowed the plant to keep operating but blocked ongoing expansion work pending an EPA review to assess measures the facility needs to take to protect nearby residents.

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 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.
MRC