Crude oil futures increase in Asia on fears of tightening supply after OPEC+ cancels meeting

MOSCOW (MRC) -- Crude oil futures extended overnight gains during mid-morning trade in Asia July 6 on fears that oil demand will soon outstrip supply after the OPEC+ coalition, consisting of OPEC members and other oil producers, cancelled its July 5 meeting without ratifying an increase in production for August onward, reported S&P Global.

At 11:16 am Singapore time (0316 GMT), the ICE September Brent futures contract was up 25 cents/b (0.32%) from the previous close at USD77.41/b, while the NYMEX August light sweet crude contract was up 30 cents/b (4%) at USD76.64/b. The ICE Brent marker had settled 1.30% higher July 5 at USD77.16/b, the highest on record since Oct. 29, 2018.

The rise in the international oil markers come after OPEC+ called off their July 5 meeting, which was to mark the third day of official talks, necessitated by the coalition's failure to reach an agreement to ease production cuts from August onwards.

The producer group has reached a tentative agreement to boost collective crude output by 400,000 b/d each month from August to December, but Saudi Arabia wanted to tie the production increases to lengthening the supply management pact through the end of 2022 from the current April 2022 expiry.

The UAE, however, refused to sign off on the extension, insisting that its baseline production level from which its quota is determined be raised first. The UAE's baseline under the current pact, determined by its October 2018 production level, is 3.168 million b/d, but it now claims a capacity closer to 4 million b/d. UAE officials have also highlighted that the country has about 35% of its capacity shut, compared with an average 22% for other members.

Since all OPEC+ decisions must be unanimous, UAE's refusal to sign off on the extension, and by association the production plan, means that the alliance will rely on the fallback agreement, which calls for output quotas to remain flat at July levels. The coalition is withholding 5.8 million b/d of output as of July.

Analysts say that this would lead to an undersupplied market, with oil demand expected to rise as countries around the world emerge from pandemic-related lockdowns.

Meanwhile, as MRC informed earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world"s third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.

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 PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- Lukoil has entered into an agreement to acquire a 50% operator interest in the Area 4 offshore project in Mexico through the acquisition of the operator's holding company, said the Russian oil company.

"The transaction value is USD435 million plus expenditures incurred in 2021 as of the transaction completion date. The completion of the transaction is subject to certain conditions, including approval by the Mexican authorities," Lukoil said.

The project includes two plots with a total area of ??58 sq. km, located on the shelf of the Gulf of Mexico, 42 km from the coast. The sea depth in the area of ??the blocks is 30-45 m. Within the blocks there are two oil fields Ichalkil and Pokoch with recoverable hydrocarbon reserves of 564 million barrels of oil equivalent, of which more than 80% is oil.

Currently, the development of the fields is being completed, the start of production is scheduled for the third quarter of 2021. The project is being implemented in three phases with an expected maximum daily production of more than 115,000 barrels of oil equivalent.

The project is being implemented under the terms of a production sharing agreement signed in 2016 for a period of 25 years with the possibility of extension for up to 10 years. The partner in the project is the oil and gas company PetroBal (part of the Mexican conglomerate GrupoBAL) with a 50% participation interest.

As MRC reported earlier Lukoil plans to restore investments at pre-crisis levels in 2022, as President and co-owner of Lukoil Vagit Alekperov said in an interview with TASS on the sidelines of the St. Petersburg International Economic Forum in June.

Amid the recovery in the price environment, Lukoil has increased the target for the volume of capital expenditures in 2021 compared to the initial forecast. Now it is Rb460-490 billion, excluding the service project "West Qurna - 2". Previously, the target for capital expenditures was Rb450 billion.

It was also reported that Lukoil plans to invest about USD3 billion in petrochemical projects in the next 6 years, V. Alekperova also told reporters in June. At the same time, the company does not plan to adopt a separate petrochemical strategy, he said then.

Lukoil is one of the leading vertically integrated oil companies in Russia. The main activities of the company include operations for the exploration and production of oil and gas, production and sale of petroleum products. Lukoil is the second largest privately-owned oil company in the world in terms of proven hydrocarbon reserves. The structure of Lukoil includes one of the largest petrochemical enterprises in Russia - Stavrolen.
MRC

MOSCOW (MRC) -- SIBUR, the largest petrochemical complex in Russia and Eastern Europe, will place exchange-traded bonds totalling Rb10 billion, with a maturity of 10 years, said Finanz with reference to the company's statement.

Thus, the company will place 10 million exchange-traded bonds with a par value of Rb1,000 each.

Bids for the purchase of BO-03 series bonds will be accepted from 11:00 to 15:00 Moscow time on July 6, according to the statement.

As reported earlier, in May 2020, SIBUR Holding closed the order book for the placement of exchange-traded bonds of two series in the volume of Rb10 and 5 billion, respectively. Based on the results of the book formation, the semi-annual coupon rate was set at 5.50% per annum, which is the lowest coupon among the market issues of corporate issuers in the entire history of the modern Russian public debt market. The nominal value of one bond is Rb1,000. The placement price is 100% of the face value. The maturity date is 10 years from the date of commencement of the placement. The coupon period is 182 days. The term until the offer is 2.5 years.

As MRC informed previously, SIBUR is ready to quickly conduct an initial public offering (IPO) upon receipt of an appropriate decision of shareholders, the company is structurally ready for placement, the head of the company Dmitry Konov said to reporters in sidelines of the international industrial exhibition "Innoprom". At the same time, in case of an IPO, SIBUR may place its shares on the Moscow Exchange, D. Konov added.

It was also reported that in June,, 2021, the international rating agency S&P Global Ratings confirmed the long-term issuer default rating of the Russian petrochemical company SIBUR at "BBB-" with a "stable" outlook.

SIBUR manufactures and sells petrochemical products on the Russian and international markets in two business segments: olefins and polyolefins (polypropylene, polyethylene, BOPP, etc.), as well as plastics, elastomers and intermediate products (synthetic rubbers, expanded polystyrene, PET, etc.)
MRC

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, and its affiliate companies in Europe, have announced a price decrease for polystyrene (PS) in Europe, according to the company's press release as of July 2.

Effective July 1, 2021, or as existing contract terms allow, the contract and spot prices for the products listed below went down as follows:

- STYRON general purpose polystyrene grades (GPPS) -- by EUR190 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR170 per metric ton.

As MRC informed before, Trinseo reduced its prices for PS and acrylonitrile-styrene copolymer (SAN) grades on June 1, 2021, as stated below:

- STYRON GPPS -- by EUR290 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech HIPS - by EUR290 per metric ton;
- TYRIL SAN resins - by EUR170 per metric ton.

According to ICIS-MRC Price report, prices of Russian PS fell sharply in July, as market participant expected. Nizhnekamskneftekhim reduced its selling prices of material for large-sized buyers that purchase PS directly from the plant by roubles (Rb) 20,000/tonne. Penoplex also significantly reduced its selling GPPS prices on the back of a substantial reduction in styrene monomer (SM) prices.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.0 billion in net sales in 2020, with 17 manufacturing sites around the world, and approximately 2,600 employees.
MRC

MOSCOW (MRC) - TechnoNICOL, Europe's largest manufacturer and supplier of roofing, waterproofing and thermal insulation materials, plans to install two new extrusion lines in Poland and Russia, the company said in a statement.

The Italian company BG Plast (Italy) signed a contract with TechnoNICOL for the supply of two extrusion lines for the production of dimpled sheet membranes with and without a geotextile joint, 2000 mm and 4000 mm wide.

The lines will have a capacity of 600 and 1500 kg / h with extruders with diameters of 120 mm and 160 mm, respectively, and will be located at two strategic plants of the group - one in Russia and a new plant in Poland, where the installation of the line was completed.

Earlier it was reported that TechnoNICOL launched the first line in Russia for the production of geocomposite polymer membranes for underground insulation on the basis of the Logikruf plant (Ryazan). This line will produce PVC membranes for tunnels and underground structures and geocomposite based on polyvinyl chloride (PVC) up to 6 mm thick for insulation of hydraulic structures. The capacity of the line will be 5 million m2 of finished products per year. The company allocated over 450 million rubles for the project.

According to MRC's ScanPlast, in May the total production of unmixed PVC in Russia amounted to 86.1 thousand tons versus 86.6 thousand tons a month earlier, RusVinyl reduced the capacity utilization level. The total volume of polymer production in January - May 2021 amounted to 432.1 thousand tons, which corresponds to the indicator a year earlier. A decrease in production volumes was recorded for two manufacturers; it was possible to increase the production of resin from the Bashkir Soda Company and "Kaustik" (Volgograd).

TechnoNICOL Corporation is one of the largest manufacturers and suppliers of hydro, heat and sound insulation. The company includes 49 factories in Russia, Ukraine, Belarus, Lithuania and the Czech Republic, its own trade network of 140 branches and consulates in 33 countries. The company was founded in 1992 by Sergey Kolesnikov and Igor Rybakov.
MRC