Saudi Aramco warns of shrinking global spare oil production capacity as air travel recovers

MOSCOW (MRC) -- Spare production capacity has shrunk significantly due to underinvestment, the head of Saudi Aramco said Nov. 9, warning that the potential rebound in jet travel and continued power plant demand for liquid fuels could create a worryingly tight market in 2022, reported S&P Global.

"Unfortunately, there is not enough investment in the sector to increase supplies and maintain that spare capacity," Aramco President and CEO Amin Nasser said at the Nikkei Global Management Forum.

He estimated that global oil demand would surpass pre-pandemic levels of some 100 million b/d next year. Jet fuel demand remains about 3 million-4 million b/d below where it was before the pandemic, and a recovery in air travel would quickly consume the world's spare production capacity, he said.

The current high oil prices reflect the healthy economic recovery, as well as energy switching in the power sector from gas to liquid fuels, which could potentially add 1.5 million b/d of oil demand this winter, Nasser said.

Spare capacity can act as the market's buffer against unexpected disruptions to supply, such as hurricanes, political unrest and security incidents.

With many international oil companies seeking to downsize their oil portfolios and some producing countries struggling to revive upstream investment, Saudi Aramco stands to benefit and gain in market share, as it embarks on raising its crude production capacity from 12 million b/d to a world-leading 13 million b/d by 2027. The company is already the world's largest exporter of crude.

The slower pace of the energy transition in many developing countries means oil will remain a major fuel source for several decades, Nasser said.

"Between now until 2050, there are going to be an estimated 2 billion more energy users in the world and population growth would be led by developing countries, where energy transition will be much slower," Nasser said. "Hence, I expect oil and gas demand will be healthy for many decades to come."

Oil and gas would remain Saudi Aramco's key businesses for a long time, though efforts to reduce carbon footprint will be executed with its combination of strategies including carbon capture, gas to hydrogen, liquid to chemical and more, Nasser said. Saudi Aramco recently set a target of bringing its carbon emissions down to net zero from its operations by 2050.

As MRC informed before, in June 2020, Aramco finalized its USD69 billion acquisition of a 70% stake in Saudi Basic Industries Corp., the Middle East's biggest petrochemical maker. SABIC reported more than a fivefold year-on-year increase in its Q3 net profit to USD1.49 billion thanks to higher average sales prices.

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.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco's value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC

MOSCOW (MRC) -- PTT Global Chemical's (PTTGC) net profit surged in the third quarter, supported by higher petrochemical sales prices and volumes, said the company.

PTTGC shows strong Q3 performance, supports 9 months, turns a profit of 41 billion baht, receives sales revenue. PTT Global Chemical Public Company Limited or PTTGC reported operating results for the 3rd quarter and the first 9 months of 2021 with net profits as follows.

As for the operating results in the 3rd quarter of 2021, the company had total sales revenue of 112,173 million baht, slightly increased from the quarter. 2/21 and an increase of 47% from Q3/2017. Likewise, the direction of petroleum product prices continued to rise in line with recovering crude oil prices and demand after many countries around the world began to pass.

However, the direction of the increase in crude oil prices has resulted in the Company The cost of raw materials has increased accordingly. especially for olefins and product groups. While Adjusted EBITDA in this quarter was at 14,080 million baht, a decrease of 8% from Q2/21, but an increase of 125% from Q3/2020.

"The pandemic situation seems to be quite well-controlled during the second half of 2021 caused by the speed-up in the progress on vaccination against COVID-19 in many countries, [which] led to the easing of lockdown restrictions, and stimulus packages to respond to the economic distress," the company said.

PTTGC "expects the global economy will gradually recover on the back of improving global consumption in 2022", it added.

As per MRC, PTT Global Chemical (PTTGC) is in plans to undertake a brief shutdown for maintenance at its low density polyethylene (LDPE) plant in October. However, the exact dates of the turnaround were not given. Located at Map Ta Phut in Thailand, the LDPE plant has a production capacity of 345,000 mt/year.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas 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) -- Norway-based aluminum producer Norsk Hydro said Nov. 9 its hydrogen company Hydro Havrand has agreed with Royal Dutch Shell unit Shell New Energies to explore the potential of producing hydrogen from renewable electricity, reported S&P Global.

Hydro said that with green hydrogen it could further reduce the footprint of its low-carbon aluminum, as aluminum production is highly energy-intensive, while adding that it could use the hydrogen to help decarbonize its own as well as and Shell's own operations, and to supply customers in heavy industries, the maritime sector and road transport.
Under the memorandum of understanding, both companies will jointly produce and supply hydrogen produced from renewable electricity in hubs centered around Hydro and Shell's own business, the company said.

Both companies have started initial work under the agreement and will look to identify opportunities to produce and supply renewable hydrogen to Hydro, Shell and the broader market from locations in Europe, with the intention to expand into additional regions and locations over time, Hydro said.

Replacing natural gas for heating purposes in aluminum production with renewable hydrogen will contribute toward Hydro's global commitment to reduce its greenhouse gas emissions by 30% by 2030, it said.

Shell's Executive Vice President for Renewables & Energy Solutions, Elisabeth Brinton, said: "Hydrogen will play a key role in decarbonizing hard-to-electrify sectors, which is vital for accelerating progress toward a net-zero emissions future."

"By leveraging each other's strengths and capabilities, Hydro Havrand and Shell can work toward a shared goal of establishing integrated hydrogen value chains and ultimately a strong global market for hydrogen," Brinton said.

As MRC informed earlier, Royal Dutch Shell plans to reduce its refining and chemicals portfolio by more than half, it said in July 2020 without giving a precise timeframe. The move is part of the Anglo-Dutch company's plan to shrink its oil and gas business and expand its renewables and power division to reduce greenhouse gas emissions sharply by 2050.

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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Lummus Technology announced that it has executed a memorandum of understanding (MoU) with Braskem Netherlands B.V., a subsidiary of Braskem, the largest biopolymer producer in the world, said the company.

The MOU is for the licensing of Braskem's green ethylene technology for two ethanol to ethylene conversion projects under development in North America and Asia, signaling a global interest in the technology. "Our partnership with Braskem is a very important building block that will strengthen Lummus' technology leadership in the energy transition," said Leon de Bruyn, President and Chief Executive Officer of Lummus Technology.

"As the world's largest ethylene technology provider, Lummus is confident in the green solutions we will be able to develop together with Braskem, the world's largest biopolymer producer and recognized for its role in the circular economy. Our collective expertise, experience and resources will accelerate circularity in our industry and help our customers decarbonize their investments and produce greener products."

"Braskem and Lummus are joining their expertise to foster the development of the sustainable chemistry", highlighted Walmir Soller, Braskem's VP Olefins/Polyolefins for Europe and Asia and Global Leader for the Green PE Business. "Braskem, with more than ten years producing Green Ethylene out of Ethanol from sugar cane, together with Lummus, with its process and technology licensing competences, will provide a solid basis for the growth of this green alternative that allows the use of carbon captured from the atmosphere into plastics and other chemical products, contributing to fight Climate Change."

In addition to the MoU, Lummus and Braskem are discussing a long-term agreement for Lummus to license Braskem's green ethylene technology as a way to accelerate the chemical industry's use of renewable feedstock and fight climate change, converting circular carbon from the atmosphere into plastic as an alternative for oil. This aligns with both organizations' goals to help reduce carbon emissions and play a significant role in the energy transition and circular economy.

This MoU also reflects Lummus' strategic business direction, through its subsidiary Green Circle, as a leader in commercializing and developing breakthrough solutions to address the key pillars of the energy transition, including end-of-life waste plastics recycling, production of bio-derived sustainable chemicals and decarbonization strategies for existing and new assets. Recognized as a market leader in ethylene technology, Lummus has licensed more than 120 ethylene plants around the world, accounting for approximately 40 percent of global ethylene capacity. Lummus has also completed over 200 ethylene grassroots, revamp and expansion design projects, more than any competing technology licensor.

Braskem is the global leader in bioplastic, and for more than a decade has been producing green polyethylene using ethanol from sustainably sourced sugarcane for its production.

We remind that Brazilian petrochemical producer Braskem's 450,000 mt/year PP plant in LaPorte, Texas, along the Houston Ship Channel completed its initial commercial production, as per the company's statement as of Sept. 10. "The launch of commercial production at our new world-class PP production line in La Porte clearly affirms Braskem's position as the North American polypropylene market leader," Braskem America CEO Mark Nikolich said in a statement. With a USD750 million investment, the new PP plant's construction started in October 2017 and was completed in June, 2020.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.

Lummus Technology is the global leader in developing process technologies that make modern life possible and focus on a more sustainable, low carbon future. Lummus is a master licensor of clean energy, petrochemical, refining, gas processing and renewable technologies, and a supplier of catalysts, proprietary equipment, digitalization and related lifecycle services to customers worldwide.

Braskem is engaged in contributing to the value chain to strengthen the Circular Economy. The petrochemical producer's 8,000 team members are dedicated every day to improving people's lives through sustainable solutions in chemistry and plastics. With its corporate DNA rooted in innovation, Braskem offers a complete portfolio of plastic resins and chemical products for various industries, such as food packaging, construction, manufacturing, automotive, agribusiness, health and hygiene, and more. With 40 industrial units in Brazil, United States, Mexico and Germany and net revenue of R$58.5 billion (USD11.4 billion), Braskem exports its products to clients in over 100 countries.
MRC

1. October crude oil imports decreased to lowest in three years in China

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.




MRC