COVID-19 - News digest as of 20.12.2021

1. Crude oil prices down on surging cases of Omicron and fears that restrictions may affect fuel demand

MOSCOW (MRC) -- Oil prices fell on Friday and were also down on the week as surging cases of the Omicron coronavirus variant raised fears that new restrictions may hit fuel demand, reported Reuters. "There are concerns about COVID that won't go away, and the perception that could weigh on demand is putting pressure on the market," said Bob Yawger, director of energy futures at Mizuho in New York. Brent crude futures settled down USD1.50, or 2%, at USD73.52 a barrel, while US West Texas Intermediate (WTI) crude dropped USD1.52, or 2.1%, tosettle at USD70.86 a barrel. Brent was down 2.6% on the week and WTI fell 1.3%.

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MOSCOW (MRC) -- ExxonMobil’s Canadian Imperial Oil affiliate aims to make a final investment decision (FID) next year on a planned renewable diesel project in Canada’s Alberta province, said the company.

The plant at Imperial’s Strathcona refinery would produce about 20,000 bbl/day of renewable diesel after starting up in 2024. It would source blue hydrogen – that is, hydrogen produced from natural gas with carbon capture and storage - to reduce greenhouse gas emissions.

ExxonMobil said it plans to achieve net zero greenhouse gas emissions from operated assets in the U.S. Permian Basin by 2030, accelerating and expanding its emission-reduction plans for unconventional operations in New Mexico and Texas. The plans are part of the corporate-wide effort to reduce Upstream greenhouse gas emissions intensity by 40-50% by 2030, compared to 2016 levels.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.

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MOSCOW (MRC) -- Svante and Kiewit Energy Group Inc. have entered into an MOU to pursue industrial carbon capture projects under development by industrial carbon emitter clients in the US and Canada including cement, SMR hydrogen, refineries, chemicals, steel, ammonia and pulp & paper facilities, according to Hydrocarbonprocessing.

The KSI Alliance will work as a highly collaborative, integrated team to offer clients a “one-stop-shop” common business development and construction approach from pre-construction services phase to engineering, procurement and construction (EPC) project delivery.

The carbon capture projects will employ Svante’s solid sorbent technology to capture CO2 directly from industrial post-combustion diluted flue gases as a non-intrusive “end-of-the-pipe’’ solution to produce pipeline-grade pure CO2 for safe storage.

Through this collaboration, both companies intend to address the critical need of lowering the capital cost of the capture of the carbon dioxide emitted from industrial facilities in order to achieve the world’s net-zero carbon goals required to stabilize the climate.

As MRC wrote before, in September 2021, Mitsubishi Corp and Shell Canada Products, by its managing partner, Shell Canada Limited (Shell Canada) signed a Memorandum of Understanding (MoU) relating to the production of low-carbon hydrogen through the use of carbon capture and storage (CCS) near Edmonton, Canada.

Mitsubishi Corp said it aims to build and start-up the low-carbon hydrogen facility near the Shell Energy and Chemicals Park Scotford towards the latter half of this decade, and Shell would provide CO2 storage via the proposed Polaris CCS project. The low-carbon hydrogen, commonly called blue hydrogen, would be produced via a natural gas feedstock and exported mainly to the Japanese market to produce clean energy.

We remind that 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 2,047,100 tonnes in the first ten months of 2021, up by 17% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,226,530 tonnes in January-October 2021, up by 26% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding stat-copolymers of propylene (PP random copolymers) decreased significantly.
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MOSCOW (MRC) -- Oil prices fell on Friday and were also down on the week as surging cases of the Omicron coronavirus variant raised fears that new restrictions may hit fuel demand, reported Reuters.

"There are concerns about COVID that won't go away, and the perception that could weigh on demand is putting pressure on the market," said Bob Yawger, director of energy futures at Mizuho in New York.

Brent crude futures settled down USD1.50, or 2%, at USD73.52 a barrel, while US West Texas Intermediate (WTI) crude dropped USD1.52, or 2.1%, tosettle at USD70.86 a barrel. Brent was down 2.6% on the week and WTI fell 1.3%.

In Denmark, South Africa and Britain, the number of new Omicron cases has been doubling every two days. Danish Prime Minister Mette Frederiksen said on Friday her government would propose new restrictions to limit the spread.

In the United States, the rapid spread of the Omicron variant has led some companies to pause plans to get workers back into offices.

"Messages of caution and warnings of a worsening COVID wave are starting to ring louder with the approach of the year-end holiday season, dampening market sentiment," said Vandana Hari, energy analyst at Vanda Insights. "Crude may remain in a holding pattern, albeit with plenty of price volatility around the mean, in holiday-thinned trading over the next couple of weeks."

The Organization of the Petroleum Exporting Countries, Russia and allies, together known as OPEC+, have said they could meet before their scheduled Jan. 4 meeting if changes in the demand outlook warrant a review of their plans to add 400,000 barrels per day of supply in January.

"We could see further consolidation around USD70 in the coming sessions as we learn more about Omicron, what restrictions it will bring, and whether OPEC+ will react," said Craig Erlam, senior market analyst at OANDA.

The US oil rig count, a leading indicator of output, rose in the week, prompting concerns of potential oversupply. The oil and gas rig count, an early indicator of future output, rose by three to 579 in the week to Dec. 17, energy services firm Baker Hughes Co said in its closely followed report on Friday.

But despite the Omicron threats to demand, Goldman Sachs said on Friday the new variant has had limited impact on mobility or oil demand, adding that it expected oil consumption to hit record highs in 2022 and 2023.

Oil prices have retreated from multi-year highs earlier in the fourth quarter on improved supplies.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

We remind that 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, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- Materials science company Dow has announced that five of its largest manufacturing sites have received International Sustainability & Carbon Certification (ISCC) Plus recognition for their compliance with tracking of sustainable feedstocks use, said Canplastics.

The sites certified are Freeport, Texas; Tarragona, Spain; Terneuzen, the Netherlands; Boehlen, Germany; and Schkopau, Germany.

ISCC is a globally applicable sustainability certification system that covers all sustainable feedstocks, including circular feedstocks produced from plastic scrap as well as biobased renewables sourced from agriculture and forestry biomass or waste products. According to a Dow news release, this certification recognizes the company’s implementation of environmentally, socially and economically sustainable production requirements, which was awarded following an independent, external audit to ensure product supply chains are fully traceable and that Dow and its suppliers adhere to and accelerate sustainable practices.

"This third-party validation is a critical step in our sustainability journey to design and produce fully circular products,” said Nestor de Mattos, Dow’s North America commercial vice president for packaging and specialty plastics. “Our intent is to help our customers reach their circularity targets by providing 100 per cent recyclable solutions and offering products made with recycled content."

According to Dow, these certifications will help the company to meet its sustainability goals, including reaching a target to stop waste by enabling one million metric tons of plastic scrap to be collected, reused or recycled by 2030; and to close the loop on plastic scrap by enabling 100 per cent of Dow products sold into packaging applications to be reusable or recyclable by 2035.

As per MRC, Dow has no plans to pursue any major mergers and acquisitions anytime soon, although the company is open to deals that could be valued in the millions.

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 2,047,100 tonnes in the first ten months of 2021, up by 17% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,226,530 tonnes in January-October 2021, up by 26% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding stat-copolymers of propylene (PP random copolymers) decreased significantly.

Dow Chemical is an American diversified chemical company headquartered in Midland, Michigan. It is a major manufacturer of polymer products, including polystyrene, polyurethane, polyethylene, polypropylene and synthetic rubbers. The company produces more than five thousand products at 188 production facilities in 37 countries.
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