Canadian oil sands are gradually approaching record production

MOSCOW (MRC) -- Canada's oil sands are inching toward record production, as the country's biggest producers squeeze more bbl out of existing assets, but they are holding back on big spending despite some of the highest oil prices in seven yr., said Reuters.

The oil sands, which make up the bulk of Canada's production, are on track to reach 3.5 MM barrels per day (bpd) by year-end, surpassing January's record of 3.25 MMbpd, said Matt Murphy, analyst at investment bank Tudor, Pickering, Holt.

Oil demand is rebounding as expanding COVID-19 vaccination rates spur greater economic activity, and as the OPEC+ group of major producers ignores U.S. calls to raise supply faster. Those factors have driven global prices to more than USD80 per bbl. Canada's majors all signaled recently, however, that they have no plans to take on big new projects or significant expansions to existing facilities.

Canadian Natural Resources Ltd (CNRL), Suncor Energy Inc and Cenovus Energy Inc elected instead to increase dividends to take advantage of stronger revenues. Those producers are scheduled to unveil 2022 capital budgets in coming weeks, but will prioritize small expansions and efficiencies to their sites to raise output.

Total Canadian production, including conventional crude oil and condensate, hit a record of 4.96 MMbpd in December 2019, according to the Canada Energy Regulator. Canada produced 4.67 MMbpd in August 2021, the most recent data available. Cenovus plans to raise production through small expansions and reducing bottlenecks to assets it acquired this yr, rather than big projects, Chief Executive Alex Pourbaix said.

"These projects have way lower capital, they have very high returns and we can bring them into service in very short order," Pourbaix said in an interview. "They're actually much more compelling economically than looking at the large-scale, phased expansions that cost several billion dollars and take five to six years to construct." Imperial Oil Ltd, majority-owned by Exxon Mobil Corp, has a number of projects planned for its Kearl oil sands plant that will increase production to 280,000 bpd by 2025 from 265,000 bpd this yr, CEO Brad Corson said.

CNRL President Tim McKay said the company is focusing on efforts like introducing solvents to boost production at thermal oil sands operations and reduce emissions from natural gas. "Given what we have been through with all the volatility with oil and gas prices, it's very difficult to go out and sanction major expenditure," McKay said.

As per MRC, Canadian Natural Resources Ltd. said Aug. 31 it will acquire full ownership in the Joslyn oil sands lease from the project’s partners for roughly CD225 million. The price tag consists of CD100 million cash at closing plus annual cash payments of CD25 million over each of the next five years. The sellers consist of several partners led by operator Total SA.

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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
MRC

MOSCOW (MRC) -- The price of US benchmark West Texas Intermediate (WTI) crude oil is near its highest level since 2014, increasing rapidly from low prices in mid-2020. Because of the economic effects, government and business responses, and personal travel changes caused by the COVID-19 pandemic in 2020, demand for crude oil and petroleum products declined rapidly, inventories increased, and prices fell, according to Hydrocarbonprocessing.

The demand decrease in the first half of 2020 resulted in increasing crude oil inventory levels. US crude oil inventories were 440.3 MM bbl at the end of January 2020 and increased to 532.7 MM bbl by the end of June 2020.

US crude oil inventories, however, returned to pre-pandemic levels, falling to 438.9 MM bbl in July 2021, which is below inventory levels in January 2020. Crude oil inventories reached a recent low of 413.9 MM bbl during the week of September 17, but they increased to 434.1 MM bbl during the week of October 29.

This year, demand for petroleum, both in the United States and globally, has largely returned to the pre-pandemic levels in 2019. Demand has grown faster than supply, reducing inventories and contributing to higher prices for crude oil and petroleum products. The price for WTI reached USD84 per bbl on November 1, up USD37/b since the beginning of the yr. Likewise, the price of Europe's crude oil benchmark, Brent, rose USD34/b over the same period, reaching USD85/b on November 1.

Refineries use crude oil as a feedstock to produce petroleum products. Refineries have increased operations (increasing their demand for crude oil) at a faster rate than US crude oil production has increased this year, contributing to the decline in US crude oil inventories. US crude oil inputs have nearly returned to the 2019 level for this time of yr, despite several refinery closures since 2020.

In contrast, US crude oil production has returned more slowly. In 2019, US crude oil production averaged 12.3 MMbpd. US crude oil production then fell to 9.7 MMbpd in May 2020. From October 1 through October 29, 2021, weekly data indicate that US crude oil production averaged 11.4 MMbpd.

As MRC reported earlier, in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also 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) -- Qatar Petroleum raised the official selling prices (OSP) of its marine and land crudes in December, said Reuters.

Qatar marine was set at a premium of USD2.20/bbl over the Dubai/Oman crudes average and Qatar land was priced at a premium of USD2.55/bbl over the same benchmark.

In November the OSP for marine crude was set at a premium of USD1.30 and land crude at a premium of USD1.35.

Qatar's move comes after Saudi Arabia's state-owned oil producer Aramco raised last week its December official selling price to Asian customers, suggesting demand remains strong at a time of tighter supplies.

As MRC informed earlier, in July 2021, Qatar Petroleum entered into a long-term Sale and Purchase Agreement (SPA) with Shell for the supply of 1 million tons per year of LNG to the People's Republic of China for ten years. China is considered a major customer for the State of Qatar and a strategic partner in the energy sector. With the conclusion of this agreement, China will be supplied with approximately 12 MPTA of LNG under long term SPAs from Qatar.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

Qatar Petrochemical Company (Qapco) is a Qatari company founded in 1974. The company is a joint venture between Industries Qatar (80%) and Total Petrochemicals (20%). Qapco is currently one of the largest HDPE producers in the region. In addition, Qapco produces linear HDPE, ethylene and sulfur, exporting its products to 145 countries around the world.
MRC

MOSCOW (MRC) -- Solenis, a leading global producer of specialty chemicals, has been acquired by Platinum Equity from Clayton, Dubilier & Rice (CD&R) and BASF in a transaction worth USD5.25 billion, according to PaperFirst.

Both CD&R and BASF have fully exited Solenis.

In addition, as part of the acquisition, Solenis has merged with Sigura Water, an existing Platinum Equity portfolio company, for a total combined transaction value of approximately USD6.5 billion. The combined company generates approximately USD3.5 billion of revenue.

Headquartered in Wilmington, Delaware, Solenis supplies innovative specialty chemicals and services for process, functional and water treatment applications in two primary segments: Consumer Solutions (consumer and food packaging, graphic paper and tissue and towel markets) and Industrial Solutions (core water treatment and wastewater markets). Founded in 1907, its service-intensive business model relies on more than 1,300 highly trained sales technicians operating on-site at customer locations around the world.

The divestment of Solenis shares was initially announced in July and will be reflected in BASF’s financial reporting in the fourth quarter of 2021, as net income from shareholdings. BASF held 49% of shares in Solenis and accounted for its share in the company through equity, while the remaining majority share was held by Clayton, Dubilier & Rice and Solenis management.

As MRC reported earlier, BASF is strengthening its global catalyst development and helping customers to bring new products faster to the market. As part of this strategy, BASF is building a new pilot plant center at its Ludwigshafen site. The new Catalyst Development and Solids Processing Center will serve as a global hub for pilot-scale production and process innovations of chemical catalysts. The new building is scheduled for completion by mid-2024.

We remind that BASF aims is to electrify its production processes for basic chemicals, which are currently based on fossil fuels.

We also remind that in mid-February, BASF said it was restarting one of its steam crackers at its Ludwigshafen complex in Germany after operations were halted earlier that month due to a technical issue. The naphtha cracker produces ethylene and propylene, and is one of two crackers on the site. One has a production capacity of 420,000 metric tons/year, with the other"s capacity at 240,000 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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in the first nine months of 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC

MOSCOW (MRC) -- China's crude oil imports plunged in October to the lowest since September 2018, as large state-owned refiners withheld purchases because of rising prices while independent refiners were restrained by limited quotas to import, said Hydrocarbonprocessing.

The world's biggest crude oil importer brought in 37.8 MM tons last month, data from the General Administration of Customs showed on Sunday, equivalent to 8.9 MM barrels per day (bpd). That is down from 9.99 MMbpd in September and 10.02 MMbpd in the same period last yr. Over the January-October period, crude arrivals totaled 425.06 MM tons, or 10.21 MMbpd, down 7.2% year-on-year, the customs data showed.

Crude imports were down on a monthly basis for a second mos and the decline has occurred amid a 62% jump in crude oil prices this yr as economies open globally from COVID-19 pandemic restrictions, spurring fuel demand. Beijing's crackdown on illicit trading in crude oil quotas and import allowances for independent oil refiners also weighed on purchases.

Customs data on Sunday also showed China's refined oil product exports for October fell 31.8% on-year to 3.95 MM tons. Natural gas imports, including piped and liquefied natural gas (LNG), were 9.38 MM tons in October, up 24.6% from a yr earlier.

Oil imports may be set to rise in November as refiners have vowed to address a shortfall in diesel and gasoline supplies that has pushed fuel prices higher.

Additionally, Beijing has issued 14.89 MM tons of crude oil import quotas for independent refiners for the remaining period of 2021, and China's Zhejiang Petrochemical Corp (ZPC), operator of China's single largest refinery, has separately received a quota of 12 MM tons.

As per MRC, China will take action to reduce waste, promote renewables and unconventional fuel, and reform its electricity network as part of its plan to bring carbon emissions to a peak before 2030. The new action plan repeats China's targets to bring wind and solar capacity to 1,200 gigawatts by the end of the decade, to build more hydropower and nuclear plants and further develop natural gas resources. The document was published just five days before talks get under way in Glasgow to strengthen the global fight against climate change. China is set to announce its updated "nationally determined contributions" before the meeting begins.

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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in the first nine months of 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.
MRC