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BP increases oil price assumptions by USD5/b and promises output recovery following 25%-slump in Q2 2021

August 04/2021

MOSCOW (MRC) -- BP raised Aug. 3 its 2025 oil price assumption by USD5/b to USD60/b to reflect an expected supply constraint, while promising a recovery in its own production volumes following a maintenance-related slump in the second quarter, reported S&P Global.

In its Q2 results statement, the UK oil company spoke of an "improving outlook" in the industry environment and said its own performance was "resilient," even as production in its upstream oil production and operations unit fell nearly 25% on the year at 1.25 million b/d of oil equivalent. Its upstream production slump was offset by more stable production in the company's LNG-focused gas and low-carbon energy unit and at Rosneft, in which BP holds a near 20% stake.

BP said its third-quarter production should be higher due to the completion of maintenance, which has held back many of the major producers in recent months, as well as the ramp-up of key new projects.

Production is expected to get a boost from the startup of four main projects in Q2, in India, Egypt, Angola and the US Gulf of Mexico, the company added.

BP said the oil market was rebalancing and global stocks should revert to historical levels in the first half of 2022. It consequently set out new Brent oil price assumptions, raising its 2025 forecast to USD60/b, maintaining its 2030 forecast at USD60/b, but lowering its 2040 forecast to USD55/b from USD60/b to reflect an acceleration in the transition to low-carbon energy. BP also lowered its 2050 price assumption to USD45/b from USD50/b.

In downstream, where the company struggled to capitalize on broadly improved margins in Q2, "realized refining margins are expected to improve slightly supported by stronger demand and wider North American heavy crude oil differentials," BP said.

As MRC reported before, BP and Lukoil want to quit their Iraqi energy projects due to the current investment environment, the country's oil minister said earlier this month, as OPEC's second biggest producer faces an exodus of international oil companies that want to exit unattractive contracts. Lukoil wants to sell its stake in West Qurna 2 to Chinese companies.

We remind that Russian energy major Lukoil (Moscow) is studying several potential petrochemical projects in Russia and Bulgaria, with investment decisions expected to be made on two of them in 2021.

Thus, Lukoil announced an investment decision in June, 2019, to proceed with a 500,000-metric tons/year polypropylene (PP) plant at its Kstovo refinery. In September this year it selected Lummus Technologys Novolen PP technology and basic design engineering for the facilitys production unit. Kstovo is one of Lukoils largest crude refineries in Russia with a throughput of 17 million metric tons/year, with the company recently adding a catalytic cracking unit that almost doubled the refinerys production of propylene feedstock to 300,000 metric tons/year.

At Budennovsk in Russias far south west, the companys Stavrolen petchems complex currently has the capacity to produce 350,000 metric tons/year of ethylene, 300,000 metric tons of polyethylene (PE), 120,000 metric tons/year of PP, and 80,000 metric tons of benzene. Lukoil has for several years been considering construction of a new gas chemicals plant at Stavrolen to crack more ethane extracted from associated petroleum gas produced by its oil and gas fields in the north of the Caspian Sea. The potential new plant would raise Stavrolens ethylene and PE output to around 600,000 metric tons/year each, and increase PP production to 200,000 metric tons/year.

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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.

BP is one of the world's largest oil and gas companies, serving millions of customers every day in around 80 countries, and employing around 85,000 people. BPs business segments are Upstream (oil and gas exploration & production), and Downstream (refining & marketing). Through these activities, BP provides fuel for transportation; energy for heat and light; services for motorists; and petrochemicals products for plastics, textiles and food packaging. It has strong positions in many of the world's hydrocarbon basins and strong market positions in key economies.
Author:Margaret Volkova
Tags:Europe, PP, PE, crude and gaz condensate, petrochemistry, Lukoyl, Rosneft, BP Plc, Angola, Egypt, India, Russia, USA.
Category:General News
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