Sinopec, Total to build 230,000 ton SAF plant

Chinese state-owned Sinopec and French oil major TotalEnergies have signed an agreement to produce SAF, said Hydrocarbonprocessing.

The companies will jointly build and operate a SAF unit at one of Sinopec's refineries in China, with an annual production capacity of 230,000 metric tons per year, the statement said.

Burning SAF can reduce CO2 emissions by around 80% versus traditional jet fuel, according to data cited by Airbus.

The European Union is set to introduce a blending mandate requiring airports to supply jet fuel at 2% SAF blends from 2025. In the U.S., the Biden administration has introduced tax credits for SAF production under the Inflation Reduction Act.

Total has announced a target of 1.5 million tons of annual SAF production by 2030. The SAF facility will run on used cooking oil (UCO) as feedstock. China is the world's largest producer of UCO, generating around 11.4 billion liters annually, according to data cited by the U.S. Department of Agriculture.

Sinopec currently operates a 100,000 ton per year SAF refinery in Zhenhai, in the eastern province of Zhejiang.

However, Beijing has not rolled out policies - such as subsidies or blending mandates - to support SAF consumption in its domestic aviation market, and most feedstock and biofuel products are exported.

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Vietnam's largest refinery Nghi Son said it will boost its operating capacity by 15% to 20% in order to ensure stable supplies, said Hydrocarbonprocessing.

The 200,000-bpd Nghi Son Refinery and Petrochemical is currently operating at 100% of its designed capacity, it said.

The "planned increase of 15 to 20% in the refinery's capacity will further ensure a stable supply of petroleum products," it said in a statement.

Nghi Son is one of two oil refineries in Vietnam, which meet around 70% of the country's needs for refined petroleum products.

Nghi Son is 35.1% owned by Japan's Idemitsu Kosan Co 5019.T, 35.1% by Kuwait Petroleum, 25.1% by Vietnam's state oil firm PetroVietnam and 4.7% by Mitsui Chemicals Inc.

The company has delivered its first batch of 10ppm sulfur diesel oil cargo to the domestic market, it said, without elaborating.

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Saudi chemical manufacturer Sabic signed a memorandum of understanding with Pashupati Group, an India-based mechanical and chemical recycler of PET and polyolefins, said the company.

The companies will explore, evaluate, and develop local business opportunities for recycling waste plastics in India, including the potential development of a pyrolysis plant to provide Sabic with feedstock for its circular polymers.

Pashupati operates waste management services under the Extended Producer Responsibility (EPR) legislation for plastics introduced in India in 2016. The company uses its Waste Circularity mobile app to collect plastic waste in challenging terrains, including mountains and coastal areas, in addition to serving urban and rural settings. It collects 12 million PET bottles and 2 million polyolefin bottles a day.

Through the new partnership, Sabic and Pashupati will share best practices and exchange knowledge about plastic recycling processes, including the mixing of virgin and recycled polyolefins in manufacturing new products. Pashupati will contribute its expertise in mechanical and chemical recycling, whilst Sabic will focus on the marketing and sales of recycled products.

“This is a crucial first step in our efforts to support and accelerate the transformation of India’s plastics economy towards circularity,” said Sanjay Mishra, general manager, engineering thermoplastics & performance polymers at Sabic. “At the same time, it expands our collaboration with experienced local recyclers in Asia as we are continuously sourcing valuable feedstock to meet the growing demand for our Trucircle portfolio of recycled, circular polymers.”

Sabic has committed to producing 1 million tonnes of circular materials by 2030. At the World Economic Forum 2023 Meeting in Davos, it revealed that it is exploring a new world-scale commercial chemical recycling investment. This new plant would potentially have a capacity of around 200 kilotons of per year.

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Sinopec’s annual profits declined 13%, after oil prices fell and Chinese refiners posted a record year for processing and imports.

China’s largest fuel processor, officially known as China Petroleum & Chemical Corp., reported 58.3 billion yuan ($8 billion) net income for last year, it said in an exchange filing. That compared with 66.2 billion yuan in 2022.

Global oil prices were 17% lower in 2023 than the previous year, which reduced the value of Sinopec’s drilling output but also lowered its crude costs.

The results missed the average analyst estimate despite a rebound in its key refining margins, as upstream profits fell and its chemicals business continued to lose money. Chinese refiners ramped up fuel production last year to feed a populace eager to travel after Covid-19 restrictions were lifted. Still, the company had to grapple with a tepid economic recovery that created a glut of some chemicals like ethylene.

The increase in refining activity also boosted China’s oil imports to a record. The nation’s refiners benefited in particular from cheap Russian crude shunned by many nations after the country’s invasion of Ukraine.

Sinopec set its 2024 capital expenditure budget at 173 billion yuan, slightly below last year’s 176.8 billion yuan spending bill, mainly due to a scale-back in the chemical sector.

It plans to maintain modest growth in both output and processing in 2024, with targeted oil and gas production is 1% higher than 2023 levels and refining throughput to increase 0.8%. Domestic refined oil product sales, which jumped 16% last year, are only expected to rise 1.6% this year.

We remind, Sinopec Engineering (Group) Co. Ltd. has reported CNY/RMB 34.6 billion ($4.8 billion) in revenue from petrochemical contracts for 2023, up 9.5 percent against 2022. The company, majority-owned by the state’s China Petrochemical Corp. (Sinopec Group), attributed the growth to domestic projects including an ethylene production facility of Exxon Mobil Corp., an ethylene co-venture between Sinopec and Ineos, and the second phase of Sinopec’s Zhenhai Base refining and chemical complex.

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The US Department of Energy (DOE) has selected ExxonMobil’s Baytown, Texas, olefins plant carbon reduction project to receive up to USD331.9 million in funding under the USD6-billion Industrial Demonstrations Program (IDP), said Chemweek.

The announcement comes one month after a report in the Houston Chronicle that ExxonMobil might have to cancel the project if proposed federal tax incentives for the production of clean hydrogen exclude the use of carbon capture and sequestration (CCS).

The project, which ExxonMobil announced in March 2022, would include construction of a plant capable of producing 1 billion cubic feet of hydrogen per day from methane, with the associated carbon dioxide emissions to be captured and stored underground. ExxonMobil would use this “blue” hydrogen to fuel its olefins plant, which is currently fueled with natural gas. The company expects to make a final investment decision this year, with startup planned for 2027-2028.

At the time of the project announcement, ExxonMobil estimated that the project would reduce integrated site carbon dioxide emissions at Baytown by up to 30%. DOE, in its IDP announcement, said the project would reduce the olefins plant’s emissions by over 50%, or 2.5 million metric tons per year.

On February 22, the Houston Chronicle reported that executives at ExxonMobil were warning that the project might not proceed. Proposed federal tax rules would grant tax credits of $3 per kilogram for “green” hydrogen produced using power from wind and solar farms, whereas “blue” hydrogen produced from methane with CCS would only be eligible for tax credits of 60 cents per kilogram, the paper reported.

The newspaper quoted Mark Klewpatinond, global business manager for hydrogen at ExxonMobil. “If we’re not able to differentiate natural gas production, it’s highly unlikely Baytown would proceed,” he reportedly told the Chronicle. “It needs to compete for capital against other projects we have.”

We remind, QatarEnergy and ExxonMobil are on track to commence LNG production at their Golden Pass LNG export terminal, situated on the US Gulf Coast near Sabine Pass, Texas, during the first half of 2025. QatarEnergy, a state-owned entity, holds a substantial 70 percent stake in the Golden Pass project, which boasts a capacity exceeding 18 million metric tons per annum (mtpa). Notably, QatarEnergy will offload 70 percent of the terminal's capacity. In parallel, ExxonMobil, a prominent US-based energy firm, possesses a 30 percent share in the venture.

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