Venezuela oil company PDVSA resorts to upgraded oil, blends for feeding domestic refineries

MOSCOW (MRC) -- Venezuela's state-run oil company PDVSA has started producing two upgraded crude grades for domestic refining, aiming at reanimating the country's much-needed output of motor fuels, reported Reuters with reference to a company document and sources close the decision.

Years of under-investment in PDVSA's 1.3 million-barrel-per-day capacity refining network and US sanctions since 2019 have led to intermittent scarcity of cooking gas, gasoline and diesel, making the nation more dependent on imports and forcing Venezuelans to line up for hours and even days to get fuel.

As Venezuela's refineries were originally built to process medium to light crudes, PDVSA's increasingly heavy oil output no longer meets the facilities' diet, forcing the company to decide every month whether to refine its limited stocks of light oil or use it as diluent for its flagship exportable grade Merey.

Following the restart of a key upgrader in June, operated by the Petrocedeno joint venture, PDVSA has scheduled the first cargo of light Zuata Sweet synthetic crude to be sent this month to its largest refinery, the 645,000-bpd Amuay, which remained mostly shut in June, according to the document and one of the sources.

PDVSA had stopped producing Zuata Sweet and other upgraded crudes in 2019 shortly after US sanctions deprived the firm and its private partners from the largest market for those grades, the US Gulf.

The state company last month also began production of a new upgraded crude grade, Hamaca 22, at neighboring project Petropiar, with the first 500,000-barrel cargo loading this week at the Jose port bound for Amuay, the document showed.

The company's fuel production has fallen since May after slightly rising in the first four months of the year. Venezuela also imported diesel to ease the lack of motor fuels.

Amuay's three-week paralysis, the continued outage of the El Palito refinery and low output at the Puerto La Cruz refinery contributed to the decline, for a total average of 193,000 barrels per day (bpd) of crude processed last month, 15% of the nation's installed capacity, the source said.

The 310,000-bpd Cardon has been the only refinery with stable output around 120,000 bpd this year, two sources added. PDVSA earlier this year began formulating a crude blend similar to its medium Leona by mixing grades from the Orinoco belt with diluents. That crude has since fed Amuay and Cardon, according to internal company documents.

The move to use blends and upgraded crudes for domestic refining is not only expected to allow more motor fuel output, but it would also free Mesa 30 crude to be used in production of exportable Merey, likely solving bottlenecks that in recent months have caused delays for loading cargoes bound for Asia.

As MRC informed before, in June 2021, Venezuela's political opposition has replaced members of the boards overseeing Citgo Petroleum Corp as factions in the movement led by Juan Guaido try to gain greater influence over Houston-based oil refiner. Citgo split from Venezuelan state-run oil company PDVSA in 2019 after the US imposed sanctions intended to oust Venezuela's President Nicolas Maduro. Then congress chief Juan Guaido appointed new boards and won US court recognition of their authority over the refining subsidiary.

We remind that in September 2020, Citgo Petroleum Corp said it did not plan to idle its 418,000 barrel-per-day (bpd) Lake Charles, Louisiana, refinery damaged by Hurricane Laura. Rumors have circulated since Laura’s passage over the Lake Charles area on Aug. 27 that Citgo was considering shutting the refinery for an indefinite period because of the extent of the damage and continuing low demand for motor fuels in the COVID-19 pandemic.

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) - Nizhnekamskneftekhim Plant (NKNKH, TAIF) announced that the Oksky-56 cargo ship delivered a decoking air compressor unit for the EP-600 ethylene complex under construction to the TransKama industrial port on June 6, the message says. companies.

The injection device was manufactured in South Korea and sent to Russia by sea through the Indian Ocean on a special barge. The installation includes two compressors. One of the positions is intended for supplying technical and instrumentation air to the EP-600 technological shops. Another compressor is used to supply compressed air to the coils of the pyrolysis ovens for the decoking procedure. The equipment will be installed in the water treatment shop No. 7209 EP-600.

The compressor unit will be the last batch of equipment delivered by water transport. The delivery of the main part of large-sized equipment, in particular 17 technological columns for EP-600, was carried out in navigation 2020 - from April to October. Cargo delivery will now continue by land transport.

At present, more than 2,500 employees of the Turkish company "Gemont" and more than 150 units of construction equipment have been mobilized at the construction site. It is noted that 89 thousand m3 of reinforced concrete structures have already been manufactured at the EP-600 construction site, more than 16 700 tons of metal structures have been installed. 313 units of equipment have been installed on the foundation, work has begun on the installation of pumping and compressor equipment.

In February 2020, Nizhnekamskneftekhim and the Turkish company Gemont signed a contract for the construction of EP-600 olefin complex. The planned completion date for the construction and installation work of the olefin complex is July 2023. A year later, in February 2021, the enterprise received another batch of equipment for the EP-600 ethylene production complex under construction.

Also, Nizhnekamskneftekhim signed contracts with Lummus Technology LLC for the provision of licenses and technologies for the production of ethylbenzene, styrene and propylene for the olefin complex. Facilities include a 250 ktpa ethylbenzene and styrene unit using EBOne and CLASSIC SM technologies, and a 150 ktpa olefin metathesis unit for polymer-grade propylene using Lummus ethylene dimerization and olefin conversion technology Technology. The units will operate as part of the olefin complex under construction (EP-600).

It is planned that the new plant will annually produce 600 thousand tons of ethylene, 270 thousand tons of propylene, 248 thousand tons of benzene, 89 thousand tons of butadiene per year. The company will create 600 new jobs.

According to the ScanPlast of MRC, Nizhnekamskneftekhim produced slightly less than 18,700 tonnes of propylene polymers in May, which is in line with the previous month. In January - May, the total polymer output at the Nizhnekamsk enterprise reached 91,400 tonnes against 92,100 tonnesin 2020.

PJSC "Nizhnekamskneftekhim" (NKNKH) is one of the largest Russian producers of petrochemical products. The production complex of the company includes ten factories of the main production and ten departments (railway transport, main ethylene pipelines, etc.). NKNKh produces over 120 types of chemical products, including synthetic rubber, polyethylene, polypropylene, polystyrene, surfactants. Nizhnekamskneftekhim is a part of TAIF Group.
MRC

MOSCOW (MRC) -- Oil rose to USD75 a barrel, rebounding from steep losses a day earlier with support coming from a tight market in the short term after OPEC+ talks collapsed this week without a deal to boost supply, said Reuters.

Underlining tightening conditions, U.S. crude inventories are expected to fall this week. The failure of OPEC+ talks on Monday means no output rise has been agreed, while U.S. oil shale firms are hesitating whether to pump more. "The OPEC+ deadlock continues, putting the market in a position of risking a sizeable under-supply in August," said Louise Dickson of Rystad Energy. "U.S. shale producers also seem to be reluctant to invest."

Brent crude was up 44 cents, or 0.6%, at USD74.97 a barrel by 1325 GMT, after slumping more than 3% on Tuesday. U.S. West Texas Intermediate gained 48 cents, or 0.7%, to USD73.85, having declined by more than 2% on Tuesday.

OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia and other producers, abandoned talks on Monday after three days of meetings failed to close divisions between Saudi Arabia and the United Arab Emirates. "With no agreement, the production and export levels apparently remain unchanged according to the overall framework, which creates the impression that the group does not shy away from over-tightening the market," said Norbert Ruecker of Swiss bank Julius Baer.

The White House said on Tuesday it was encouraged by the ongoing conversation to reach an agreement. Disagreement within OPEC+ could still prompt its members to open the taps. Concern about that scenario had led to Brent falling on Tuesday from a high of USD77.84, the highest since 2018, and U.S. crude sliding from USD76.98, the highest since 2014.

But Saudi Energy Minister Prince Abdulaziz bin Salman dampened concerns of a price war in an interview with CNBC on Tuesday. Away from OPEC+, the first of this week's two reports on U.S. inventories, from the American Petroleum Institute, is out at 2030 GMT. Analysts expect crude stocks to fall by 3.9 million barrels.

As MRC informed earlier, in 2020, total consumption of fossil fuels in the United States, including petroleum, natural gas, and coal, fell to 72.9 quadrillion British thermal units (Btu), down 9% from 2019 and the lowest level since 1991, according to US Energy Information Administration's (EIA) Monthly Energy Review.

We remind that most units were shut on Sunday night and Monday morning (15-16 February) at Marathon Petroleum Corp's 585,000 barrel-per-day Galveston Bay Refinery in Texas City, Texas, as temperatures plunged due to a Arctic cold front reaching the Gulf Coast. They resumed operations in the first half of March.

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) -- Oiltanking North America, LLC (“Oiltanking”) has entered into a non-binding Letter of Intent (LOI) with ReGen III Corp. (ReGen III) to develop and operate logistics for ReGen’s used motor oil re-refinery production facility (the “Re-Refinery”), said Hydrocarbonprocessing.

The Re-Refinery facility will be based at the Oiltanking Galveston County Terminal (“OTGAL”) in Texas City, Texas. Contributing to a sustainable future and establishing a circular economy is a key pillar for Oiltanking and ReGen III. The LOI is an important milestone for both companies as ReGen’s Re-Refinery facility will provide much needed domestic supplies of base oils while recycling and reusing used motor oil in a sustainable way.

Oiltanking is well equipped to support ReGen III with tailor-made infrastructure solutions. As one of the largest independent tank storage providers for gases, chemicals and petroleum products worldwide, the company is successfully active in the engineering, procurement and construction (EPC) of tank terminals. At OTGAL, Oiltanking handles specialty chemicals and petrochemicals with more than 87,000 cbm of storage capacity on over 200 acres providing ample room for expansion opportunities.

Jerry Hardman, Vice President, Business Development at Oiltanking North America stated, “The partnership with ReGen III is proof of Oiltanking’s ambition to actively shape the energy transition towards a circular and sustainable economy. With our high-quality engineering capabilities and our flexible, agile way of working, we are well equipped to support ReGen III by building and operating the storage and logistics assets associated with the Re-Refinery facility at the US Gulf Coast. We look forward to working with ReGen III to further develop the project and supporting their Re-Refinery ambitions leading to a more sustainable future."

Greg Clarkes, Chief Executive Officer of ReGen III stated, “The signing of the LOI with Oiltanking, allows the Company to advance its primary re-refinery project in the US Gulf Coast. We are excited to be working with a company of Oiltanking’s scale and reputation. When one considers Oiltanking operates 45 terminals in 20 countries and our offtake relationship with bp, we look forward to identifying additional re-refining facility siting opportunities globally and enhancing our industry presence." The LOI is subject to customary conditions, including completion of due diligence and related corporate approvals from each of Oiltanking and ReGen III.

As MRC informed earlier, in 2020, total consumption of fossil fuels in the United States, including petroleum, natural gas, and coal, fell to 72.9 quadrillion British thermal units (Btu), down 9% from 2019 and the lowest level since 1991, according to US Energy Information Administration's (EIA) Monthly Energy Review.

We remind that most units were shut on Sunday night and Monday morning (15-16 February) at Marathon Petroleum Corp's 585,000 barrel-per-day Galveston Bay Refinery in Texas City, Texas, as temperatures plunged due to a Arctic cold front reaching the Gulf Coast. They resumed operations in the first half of March.

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) -- U.S. crude and gasoline stocks fell and gasoline demand reached its highest since 2019, the U.S. Energy Information Administration said, signaling increasing strength in the U.S. economy, said Hydrocarbonprocessing.

Crude inventories fell by 6.9 million barrels in the week to July 2 to 445.5 million barrels, the lowest since February 2020, and more than the expected 4 million-barrel drop estimated in a Reuters poll. Crude stocks have declined steadily for several weeks as refiners process more oil into gasoline, diesel and other products. Overall product supplied - a proxy for demand from end-users of fuels - rose to 20.9 million barrels per day (bpd), in line with the same trend two years ago prior to the coronavirus pandemic.

In addition, gasoline demand surged to a one-week record, but the four-week average of gasoline supplied was at 9.5 million bpd, the highest since October 2019. That helped lower gasoline stocks by 6.1 million barrels, exceeding expectations for a 2.2 million-barrel drop. “The report is bullish, there’s no doubt,” said Tony Headrick, energy market analyst at CHS Hedging. “For all of the estimates out there suggesting gasoline demand was strong that showed true, leading to a sharp drawdown in inventories."

Oil prices rose on the news, shaking off earlier losses. U.S. crude futures were up 4 cents to USD72.24 a barrel while Brent gained 10 cents to USD73.54 as of 11:14 a.m. EDT (1514 GMT). Crude stocks dropped even as refiners cut back activity in the most recent week, with crude runs down by 184,000 bpd, and refinery utilization rates off by 0.7 percentage points to 92.2% of capacity.

Production rose to 11.3 million bpd, still short of the 2019 record of nearly 13 million bpd. Weekly production figures can tend to be volatile, however, and most analysts regard monthly data as more reliable. “Even though we saw a little bit of a rise to 11.3 million, we’ve still got a long way to go there to make it back to where we were,” said John Kilduff, a partner at Again Capital in New York. Distillate stockpiles, which include diesel and heating oil, rose by 1.6 million barrels in the week.

As per MRC, imports of petroleum products-gasoline, distillate, and other products into the East Coast region of the United States increased in March 2021. Rising imports resulted from lower domestic supply, higher demand, and higher domestic petroleum product prices compared with prices in Europe. In March, East Coast petroleum product imports averaged 1.4 million barrels per day (b/d). In addition, East Coast gasoline imports averaged 737,000 b/d, the highest March level since 2009, and East Coast distillate imports averaged 421,000 b/d, the highest March level since 2003.

We remind that most units were shut on Sunday night and Monday morning (15-16 February) at Marathon Petroleum Corp's 585,000 barrel-per-day Galveston Bay Refinery in Texas City, Texas, as temperatures plunged due to a Arctic cold front reaching the Gulf Coast. They resumed operations in the first half of March.

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