Citgo posts first profit in seven quarters as higher fuel exports helped offset weak margins

MOSCOW (MRC) -- Citgo Petroleum reported a slim, second-quarter profit, its first in seven quarters, as higher fuel exports helped offset weak margins and the impact of a fuel pipeline shutdown, reported Reuters.

Earnings at the US refining arm of Venezuela's state oil company Petroleos de Venezuela have been under pressure since it lost access to Venezuelan oil due to US sanctions. Citgo is also battling possible seizure by creditors seeking to collect on unpaid debts incurred by PDVSA and Venezuela.

The eighth-largest US refiner posted a USD3 million profit, its first since the third quarter of 2019, for the three months ended June 30 as exports rose and the utilization rate at its plant in Lemont, Illinois hit 97%. It suffered a $5 million net loss in the second quarter a year ago.

"Given the multiple challenges we have faced during 2020 and the first half of 2021, this return to profitability is particularly satisfying," Citgo Chief Executive Carlos Jorda said in a statement. Citgo fell deep into the red last year as the COVID-19 pandemic slashed demand for motor fuel.

In May, it reduced production at its 418,000 barrel per day (bpd) Lake Charles, Louisiana, refinery, the largest of its three facilities, after the Colonial fuel pipeline was taken out of commission for a week following a cyberattack.

Total refinery throughput was 732,000 bpd, from 575,000 bpd a year earlier. Exports rose to 130,000 bpd, from 87,000 bpd a year earlier. However, its Corpus Christi, Texas plant ran at a weak 78% utilization rate, hurt by operational and third-party outages.

A planned overhaul at Corpus Christi will be pushed back to the first quarter of next year, helping reduce expenses and lift production this year.

As MRC wrote before, 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 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC

MOSCOW (MRC) -- After the launch of Zapsibneftekhim at full capacity, SIBUR decided to use the significantly increased free cash flow to reduce debt, according to the Kommersant.

After the launch of Zapsibneftekhim at full capacity, SIBUR decided to use the significantly increased free cash flow to reduce debt, according to the Kommersant newspaper.

According to the newspaper, the company is going to fully repay the loan of the National Wealth Fund (NWF), which was attracted in 2015 for the construction of Zapsibneftekhim. The company borrowed USD1.75 billion (at that time - 118.6 billion rubles) at the rate (inflation in the United States plus 1 percentage point) maturing in 2030.

The Izvestia newspaper notes that the reason for the early repayment of the debt could have been the high efficiency of the complex already in the early days of its operation.

Thus, Zapsibneftekhim had a positive impact on the implementation of the international cooperation and export national project. According to analysts, the contribution of production in Tobolsk to the growth of non-resource exports of Russia exceeded 16%. In addition, according to Sibur itself, products manufactured at Zapsibneftekhim can make a significant contribution to solving the problem of import substitution. For various categories, the volume reaches 85–95% of the total market. For example, in the production of stretch films, pipes and cable insulation, this figure can exceed more than 90%.

According to the Kommersant newspaper, during the period of using the loan, SIBUR paid USD290.5 million (17.8 billion rubles) of coupon income to the state budget. SIBUR has already informed the government of its intention to pay off its debt to the NWF.

As per MRC, On 10 August, the Central Bank registered an additional issue of ordinary shares of PJSC SIBUR Holding, the largest petrochemical holding in Russia and Eastern Europe, reported BusinessOnline. Now the authorized capital of PJSC SIBUR Holding is Rb21,784, 791. There are 2,178,479.1 ordinary shares in circulation with a par value of Rb10 each one. In accordance with the decision on the additional issue, the issuer is placing 384,437,000.489 new ordinary shares by private subscription.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

SIBUR manufactures and sells petrochemical products in 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

1. Westlake earnings increased in Q2 on post-pandemic recovery

MOSCOW (MRC) -- Westlake Chemical Corporation reported record quarterly earnings in the second quarter 2021 compared to the previous year, as strong demand encouraged higher sales prices and margins, said the company. The vinyls segment made record income, driven by higher sales prices, margins and sales volumes for polyvinyl chloride (PVC) resin market on regaining strength in the building and construction materials business. Olefins also tracked record income from operations in the second quarter on higher sales prices and margins across the portfolio, on the back of good global demand, and tight supply, partially offset by lower polyethylene (PE) sales volumes.


MRC

MOSCOW (MRC) -- Crude oil futures were stable to slightly higher in mid-morning trade in Asia Aug. 17 amid bargain-hunting by investors, with the upside limited by the rising number of COVID-19 cases globally sapping market sentiment, reported S&P Global.

At 11:20 am Singapore time (0320 GMT), the October ICE Brent futures contract was up 4 cents/b (0.06%) from the previous close at USD69.55/b, while the NYMEX September light sweet crude contract was 8 cents/b (0.12%) higher at USD67.37/b.

A resurgence in COVID-19 cases globally fueled by the delta variant has impacted the oil demand outlook in August, particularly in China, the world's largest energy consumer.

"China also reported weaker-than-expected industrials and retail sales on Monday, stoking fears about the global recovery, and oil demand," said Avtar Sandu, senior commodities manager at Phillips Futures, on Aug. 17.

Other analysts shared similar bearish views, noting that mobility in China has fallen sharply as authorities impose strict guidelines to curb rising COVID-19 infection rates.

China's refineries processed 13.96 million b/d of crude in July, down 6% from a record high of 14.86 million b/d in June, National Bureau of Statistics data released Aug 16 showed. The volume was also down 0.9% year on year, marking the first year-on-year fall since March 2020.

As MRC informed earlier, crude oil stockpiles fell modestly last week, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- Reliance Industries (RIL) has taken off-stream one of its polypropylene (PP) plants in Jamnagar, India for a scheduled maintenance, according to CommoPlast with reference to market sources.

Thus, this unit with an annual capacity of 400,000 tons/year of PP was shut on 5 August 2021 and will remain idle for approximately one month.

The local supply is expected to take a hit from the shutdown, especially when demand is recovering from the COVID-19 outbreak.

As MRC reported earlier, RIL shut its another PP unit in Jamnagar, India for a 20-day maintenance on 15 October, 2020. This unit came back online on 5 November, 2020. The plant has an annual capacity of 480,000 tons/year.

According to MRC's ScanPlast report, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
MRC