COVID-19 - News digest as of 03.08.2021

1. Italian Eni increases near-term crude oil price outlook as market recovery powers strong Q2 earnings

MOSCOW (MRC) -- Italy's Eni raised its near-term oil price outlook July 30 as the market rebound fueled strong second quarter earnings despite lower production volumes and negative refining margins, reported S&P Global. Eni said it is now assuming a near-term Brent price of USD65/b, up from USD60/b previously, to reflect a firming oil market scenario which helped its adjusted earnings more than treble from the previous quarter. Hydrocarbon production in the second quarter slipped 5% on the year to average 1.6 million boe/d due to higher maintenance activity in Norway, Italy and the UK, lower activity in Nigeria and mature fields declines. In the first half, start-ups and ramp-ups added 50,000 boe/d mainly due to the Merakes gas field in Indonesia, Berkine in Algeria, Agogo in Angola, and the Mahani gas project in the UAE's Sharjah Emirate.


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Crude oil futures edge higher on bargain hunting following overnight slide

Crude oil futures edge higher on bargain hunting following overnight slide

MOSCOW (MRC) -- Crude oil futures ticked slightly higher during mid-morning trade in Asia Aug. 3 as investors sought to take advantage of lower prices following an overnight plunge, with a weaker US dollar providing further impetus to buy, reported S&P Global.

At 10:43 am Singapore time (0243 GMT), the ICE October Brent futures contract was up 9 cents/b (0.12%) from the previous close at USD72.98/b.

September light sweet crude contract was 13 cents/b (0.18%) higher at USD71.39/b.

The front-month ICE Brent and NYMEX light sweet crude markers had fallen 3.34% and 3.63% respectively on Aug. 2, as coronavirus fears tightened their grip on the market.

An increase in COVID-19 infections in several countries, driven by the highly transmissible delta variant, has brought back the specter of tighter and protracted lockdowns.

The market was rattled by outbreaks in the oil-consuming behemoth China, where millions of people have been placed under lockdown to curb rising infection numbers. Elsewhere, and especially in unvaccinated countries, the situation also looks grim.

"The short-term drivers are all negative: Brisbane's lockdown was extended, the CDC raised South Korea's travel advisory status one notch to Level 2, infections are spreading across China and the overall theme across much of Asia is for more restrictive measures," Edward Moya, senior market analyst at OANDA said in a note.

However, some investors saw the overnight price fall as an opportunity to snap up crude oil contracts at a lower price, believing that oil demand can weather the pandemic storm. Analysts shared this belief, noting that at least for now, demand does seem to be holding up.

"The market should be comforted by data in other Asian countries that show rising cases haven't impacted demand," ANZ analysts said in an Aug. 3 note.

"Mobility data shows increased travel in India as it emerges from recent restrictions. Japan has also seen more traffic, despite rising cases and calls for Tokyo's state of emergency to be widened," they added.

Demand is also expected to have defied a rise in COVID-19 cases in the US, with analysts surveyed by S&P Global expecting crude inventories to have declined by 4 million barrels in the week ended July 30. The analysts also expected gasoline and distillate inventories in the country to haven fallen by 1.1 million barrels and 600,000 barrels respectively over the same period.

Crude futures also received some respite in mid-morning trade in Asia from the dollar, which has followed US Treasury yields lower, making dollar-denominated assets such as oil cheaper for buyers holding foreign currency. At 10.35 am Singapore time, the ICE Dollar Index was trading at 92.05, down 0.16% from the July 30 settle.

As MRC informed earlier, Saudi Arabia, the world's top crude oil exporter, will supply full contractual volumes of August-loading crude to at least five Asian customers. However, Saudi Aramco has turned down two of the buyers' requests for extra barrels.

We remind that Mukesh Ambani, chairman and managing director of Reliance Industries Ltd (RIL), said in June he expects the company's deal with Saudi Aramco to materialise this year. Meanwhile, Yasir Al-Rumayyan, chairman of Saudi Aramco and the Governor of the Public Investment Fund, joined the board of Reliance as an independent director.

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.
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Essar Oil UK appoints Deepak Maheshwari as its new CEO

Essar Oil UK appoints Deepak Maheshwari as its new CEO

MOSCOW (MRC) -- Essar Oil UK Limited, operator of Britain's Stanlow oil refinery, appointed Deepak Maheshwari as its chief executive officer (CEO), reported Reuters.

Maheshwari succeeds Stein Ivar Bye who left the company in April this year due to personal reasons, shortly after joining in October 2020, a spokesperson for the company said.

Prior to joining Essar Oil UK, Maheshwari was CFO and head of strategy at Adani Ports and Special Economic Zone Limited (APSE.NS), India's largest commercial multi-port operator, according to the statement. He was previously CFO of Essar Energy Limited.

As MRC informed earlier, in late September 2019, Essar resumed operations at its cracker in Stanlow, UK with the capacity of 45,000 mt/year of ethylene and 165,000 mt/year of propylene. It was shut on 11 September, 2019, due to the power outage at the site.

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.
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Saras CEO says climate plan to put European refineries at a serious competitive disadvantage

Saras CEO says climate plan to put European refineries at a serious competitive disadvantage

MOSCOW (MRC) -- Europe's "Fit for 55" package will put European refineries at a serious competitive disadvantage, reported Reuters with reference to the head of Italian refiner Saras' statement.

"This is extremely worrying... It will have huge implications for the sector," Dario Scaffardi said speaking on a conference call on second-quarter results.

The package, unveiled by the European Commission last month, aims to cut the bloc’s output of greenhouse gases by 55% by 2030.

As MRC wrote before, in early 2017, Rosneft JV Projects S.A. (Luxembourg), an indirect subsidiary of Rosneft Oil Company, announced the agreement to sell to institutional investors 114,120,000 ordinary shares in Saras S.p.A., representing 12% of the total share capital in Saras S.p.A., at a price of EUR 1.53 per share through an accelerated bookbuilding.

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 density 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.
MRC

SIBUR-Neftekhim to become one of the leaders in efficiency among similar enterprises by 2025

SIBUR-Neftekhim to become one of the leaders in efficiency among similar enterprises by 2025

MOSCOW (MRC) -- A strategy has been developed at Dzerzhinsk SIBUR-Neftekhim, part of SIBUR, the largest petrochemical holding in Russia and Eastern Europe, which will allow the plant to become one of the leaders in terms of efficiency by 2025, said Business News, citing the statement of the new head of the plant, Dmitry Vladimirov, who headed the enterprise in March 2021.

“The pool of tasks facing the plant really looks like a challenge to us. On the one hand, productivity growth, on the other, - a decrease in environmental metrics for emissions. How can these goals be achieved? First of all, through the use of the best available technologies ", - said the general director of the plant at a meeting with journalists, summing up the first results of the work and talking about plans for further development.

So, according to him, an important environmental initiative was launched at the plant in June. Carbon dioxide from the production of ethylene oxide and glycols will be recycled by a nearby partner. As a result, the company will reduce greenhouse gas emissions, and the other party will receive a reliable supplier of CO2 for the production of food carbon dioxide.

At the same time, the refurbishment of ethylene oxide production began at the plant. "Green" technologies are also being introduced, which will allow, on the one hand, to significantly increase production, and on the other hand, to reduce the impact on the environment.

"We plan to complete the realization of this large investment project in 2022. Thanks to the reconstruction of the ethylene oxide production, natural gas consumption will be reduced by 20%, wastewater generation - by 10%, and air emissions - by 4%. But we don't stop there. The company has adopted a sustainable development strategy - we plan to strengthen the localization of these areas at the plant with additional projects by 2025, "said D.Vladimirov.

At the same time, the company is taking all the necessary measures to combat the coronavirus pandemic. Employees safety is an absolute priority. All sanitary requirements are met. Thus, more than 70% of employees have already been vaccinated against coronavirus.

As reported earlier, SIBUR-Neftekhim completed the technical re-equipment of ethylene oxide and glycols production in January 2021. The capacity for the production of monoethylene glycol (MEG) grew by 25 tonnes per day or by 3.1% - up to 830 tonnes per day. To increase production capacity, one of the process columns was improved at SIBUR-Neftekhim and a part of the dynamic and heat exchange equipment was replaced.

MEG, along with terephthalic acid (TPA), is one of the main components for the production of polyethylene terephthalate (PET).

According to MRC's ScanPlast report, May estimated PET consumption in Russia rose by 15% year on year to 85,850 tonnes. Russia's overall PET estimated consumption totalled 349,940 tonnes in January-May 2021, up by 22% year on year.

OJSC "SIBUR-Neftekhim" is a subsidiary of SIBUR, operating in the Nizhny Novgorod region. It was formed on December 20, 1999, on the basis of the assets of the Kstovo Neftekhim CJSC. It produces ethylene oxide, monoethylene glycol, diethylene glycol, acrylic acid, acrylic esters.
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