COVID-19 - News digest as of 23.08.2021

1. Marathon forms JV with Archer-Daniels-Midland for renewable fuels feedstock

MOSCOW (MRC) -- Marathon Petroleum Corp and Archer-Daniels-Midland Co announced a joint venture to produce soybean oil that will be exclusively sold to Marathon as a renewable diesel feedstock, according to Hydrocarbonprocessing. Refiners are on the hunt for secure access to feedstocks for renewable fuels amid supply constraints and soaring prices for fats, greases and oils.

MRC

MOSCOW (MRC) -- OxyChem, the chemical division of Occidental Petroleum, will shutter its chlor-alkali plant in Niagara Falls because of poor market conditions and high costs to move products out via rail, reported S&P Global with reference to the company's statement on Aug. 19.

"This decision was made due to unfavorable regional market conditions as well as unreasonable and continually escalating rail transportation costs," the company said in a statement.

OxyChem did not say when the plant would shut down, but sources familiar with company operations said the shutdown was expected to occur 90 days from the Aug. 19 announcement, which would be November.

That announcement said plant employees would continue to receive pay and benefits for at least three months. The company said the plant continues to have a negative economic outlook despite significant efforts in recent years to "give this facility the opportunity to be viable."

According to Occidental's 2001 annual filing with the US Securities and Exchange Commission, the Niagara Falls plant can produce 335,000 mt/year of chlorine and 371,000 mt/year of caustic soda. The company stopped specifying individual plant capacities in SEC filings after that, instead reported total output per product.

Market sources said rail transportation of chlorine was costly given the volatility of the product, particularly for short routes. Such freight costs can range from USD125-USD200/st on an average, sources said. Other less volatile products, such as plastic resins, see rates around $66/mt, depending on contract terms.

"It's a major hit on chlorine profitability," a source said.

Another source said rates for chlorine could be at a point where producers seek to reduce how much product they move via rail, focusing on moving it via pipeline. Truck transportation is not a viable option given chlorine's volatility, said the same source, adding that it would be more expensive than rail transportation.

Olin, the world's largest chlor-alkali producer, aims to step back from supplying chlorine for titanium dioxide producers in 2023 as part of a company strategy to exit low-margin contracts and sell into higher-paying markets, according to CEO Scott Sutton. Market sources said high rail rates for chlorine could have helped prompt that decision.

And titanium dioxide producer Tronox's co-CEO, John Romano, said July 29 that the company may build more of its own chlorine production operations in the US amid a chlorine supply squeeze and logistics snags that have reduced its Ti02 production capabilities.

Chlorine is the first link in the production chain for polyvinyl chloride, a construction staple used to make pipes, window frames, vinyl siding and other products. Chlorine is also used to make hydrochloric acid, bleach, refrigerants, crop protection sprays and for water treatment.

Caustic soda, a byproduct of chlorine production, is a key feedstock for alumina and pulp and paper industries.

As MRC informed earlier, Occidental Petroleum sees continued strong demand for construction staple polyvinyl chloride (PVC) and caustic soda through the rest of 2021, driven largely by tight supply, homebuilding growth and continued global economic recovery from COVID-19 fallout, according to CFO Robert Peterson's statement Aug. 4.
Peterson said the company sees domestic PVC demand up 16% from Q2 2020, and up 13% from pre-pandemic 2019, he said during the company's Q2 2021 earnings call.

According to MRC's ScanPlast report, Russia's overall production of unmixed PVC totalled 515,900 tonnes in the first half of 2021, up by 1% year on year. At the same time, two producers reduced their output.

Occidental Petroleum Corporation (OxyChem) is a California-based oil and gas exploration and production company with operations in the United States, the Middle East, North Africa, and South America. Oxychem is Oxy's Texas-based subsidiary which manufacture polyvinyl chloride (PVC) resins, chlorine and caustic soda used in plastics, pharmaceuticals and water treatment chemicals.
MRC

MOSCOW (MRC) -- Malaysia's Sime Darby Plantation (SDP) said that it has agreed with PTT Global Chemical (PTTGC) to divest their collective 100% equity interest in the Asia Pacific business of Emery Oleochemicals and Emery Specialty Chemicals to Edenor Technology in a deal worth ringgit (MD) 38m (USD9m).

EOM, ESC and its respective subsidiaries, collectively referred to as Emery Group, is a 50:50 JV between Sime Darby Plantation and PTTGC.

In a filing Sime Darby Plantation said it has, together with PTTGC, inked a sale and purchase agreement to divest their collective stake in Emery Group to Edenor Technology for a target equity value of RM38 million.

"The equity consideration of RM38 million is derived based on enterprise value of RM243 million less the target net debt of RM205 million. The final sale consideration will be subject to price adjustments based on the net working capital and net debt position of EOM and ESC at completion," it said.

Edenor Technology is a JV company jointly incorporated by Mega First Corp Bhd and 9M Technologies Sdn Bhd to undertake the proposed acquisition. Sime Darby Plantation noted that the divestment is conditional upon the restructuring of Emery Group into separate stand-alone groups in respect of its Asia-Pacific business, and the North America and Europe businesses.

"Post restructuring, Emery Group's Asia-Pacific business will remain under EOM and ESC, while its North America and Europe businesses, both held under Emery Oleochemicals UK Ltd, will be transferred out from EOM, to be held directly by Sime Darby Plantation and PTTGC on a 50:50 basis," it added.

The group said the divestment is not expected to have a material effect on its earnings, consolidated net assets and consolidated gearing for the financial year ending Dec 31, 2021. Sime Darby Plantation's share price closed six sen or 1.56% lower at RM3.79 on Thursday, valuing the group at RM26.21 billion.

As MRC wrote previously, PTTGC abruptly shut down three crackers at its petrochemical complex in Map Ta Phut on 14 April 2021 after a thunderstorm caused a power outage. No. 1 and 4 crackers and the recently launched No. 5 cracker on the site were off-line for around one week. The production capacities of No. 1 and 4 crackers are 461,000 and 515,000 mt/year of ethylene, whereas the new cracker can produce 500,000 mt/year of ethylene and 260,000 mt/year of propylene.

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.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.MRC

MOSCOW (MRC) -- LyondellBasell, one of the largest plastics, chemicals and refining companies in the world, has announced that it has declared a dividend of USD1.13 per share, as per the company's press release.

Thus, the dividend is to be paid on September 7, 2021 to shareholders of record August 30, 2021, with an ex-dividend date of August 27, 2021.

As MRC reported earlier, LyondellBasell said in early August it was restarting the polymers and olefins units at its La Porte, Texas, facility following an acetic acid leak on 27 July, 2021, that killed two people. Both units are located in other parts of the La Porte 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 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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

MOSCOW (MRC) -- The American Petroleum Institute (API) published its 3rd Edition of Standard (Std) 1164, Pipeline Control Systems Cybersecurity, underscoring the natural gas and oil industry’s ongoing commitment to protecting the nation’s critical infrastructure from malicious and potentially disruptive cyber-attacks, said Hydrocarbonprocessing.

In development since 2017, the 3rd edition is a result of expert input from more than 70 organizations, including state and federal regulators within FERC, TSA, PHMSA, CISA, DoE, NIST, as well as Argonne National Laboratory, the American Gas Association (AGA), Interstate National Gas Association of America (INGAA), the Association of Oil Pipe Lines (AOPL) and numerous pipeline operators. It is based on the NIST (National Institute of Standards and Technology) Cybersecurity Framework and NERC-CIP (Critical Infrastructure Protection) standards and significantly expands the scope compared to the previous edition of the standard to cover all control system cybersecurity instead of solely supervisory control and data acquisition (SCADA) systems.

"The new edition API Std 1164 builds on our industry’s long history of engaging and collaborating with the federal government to protect the nation’s vast network of pipelines and other critical energy infrastructure from cyber-attacks,” API Senior Vice President of API Global Industry Services (GIS) Debra Phillips said. “This standard will help protect the nation’s critical pipeline infrastructure by enhancing safeguards for both digital and operational control systems, improving safety and preventing disruptions along the entire pipeline supply chain. What sets this framework apart is its adaptive risk assessment model that provides operators with an appropriate degree of flexibility to proactively mitigate against the rapidly evolving cyber threat matrix."

“This premier standard helps the operator manage cyber-risks associated with control system cybersecurity environments by providing requirements and guidance for proper isolation of control system environments from non-control system environments,” American Gas Association Senior Vice President for Safety, Operations and Security Christina Sames said.

This expansion of the standard supports the Biden administration’s national security priorities as well as the United Nations Sustainable Development Goal (UNSDG) 9 for resilient infrastructure. The updated standard establishes requirements to harden pipeline cybersecurity assets against a range of threats, including those posed by ransomware. It provides enhanced protections at critical connection points along the supply chain, specifically at pipelines, terminals, and refineries. Additionally, it includes improved risk assessment guidelines, a comprehensive model for implementing pipeline cybersecurity, and a framework for building out a robust industrial automation control (IAC) security program as part of the U.S. Transportation Security Administration required corporate security program.

“API Std 1164 reflects state-of-the-art cybersecurity protections tailored specifically to pipeline operations,” Association of Oil Pipe Lines President and CEO Andy Black said. This new edition pairs with other API standards to form a framework that is integral to industry’s ongoing work to counter cyber threats, including: API 780 – Provides tools to conduct effective security risk assessments, which are used to identify threats to facilities as well as countermeasures to those threats. Last October, API 780 was certified as an anti-terrorism technology by the U.S. Department of Homeland Security (DHS) under the Support Anti-terrorism by Fostering Effective Technologies Act of 2002. This provides liability protection if API members and others using API 780 have a terrorist attack at one of their facilities.

Recommended Practice 1173 – Pipeline Safety Management Systems provides pipeline operators with safety management system requirements that when applied provide a framework to reveal and manage risk, promote a learning environment, and continuously improve pipeline safety and integrity.

API represents all segments of America’s natural gas and oil industry, which supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Our 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 700 standards to enhance operational and environmental safety, efficiency and sustainability.

As per MRC, BP said it will remain a member of the American Petroleum Institute (API) after the largest U.S. oil and gas trade lobby group addressed some differences with the British energy company over climate change. BP, which plans to sharply cut its oil output and boost its renewable energy capacity over the next decade, said in a report that despite "uneven progress", the API was "heading in the right direction". The API has faced growing pressure from member companies and activist groups to change its policies relating to climate change and drilling regulations.

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