Lithuania hopes for closer energy ties with Poland after PKN deal

MOSCOW (MRC) -- A deal between Poland's biggest oil refiner PKN Orlen and Lithuanian Railways agreed on Wednesday, 6 July, on new fees for transporting oil products could pave the way for more cooperation between the two countries on energy projects, as per Hydrocarbonprocessing.

PKN's Mazeikiai refinery in Lithuania relies on rail to ship its products to the Klaipeda oil terminal on the Baltic Sea, a route of about 155 mi, but the Polish company has been at odds with state-run Lithuanian Railways over transport fees since 2014.

Lithuanian Railways and PKN Orlen have now agreed on new tariffs for the cargos and to withdraw all litigation concerning roughly USD45.49 MM in fees unpaid by Orlen since it rejected a fee increase in 2014, a Lithuanian Railways spokesman told Reuters.

Under the agreement, PKN Orlen will have to pay only about half of the debt, head of Lithuanian Railways Mantas Bartuska said.

"Orlen's troubles were the largest negative factor in our relationship with Poland," Lithuania's transport minister Rokas Masiulis said. "As we solved this, we can now expect a breakthrough in all areas, including in energy security," the minister, who was in charge of Lithuania's energy security projects in a previous government, told Reuters.

Lithuanian Prime Minister Saulius Skvernelis said the conflict was "casting a shadow on good relationship between our countries."

Poland is the only European Union and NATO member country which shares a border with the Baltic States, making links between Poland and Lithuania vital for regional security as well as energy security.

There are several projects where Lithuania needs to work with Poland, including an expansion of the electric power link between the two countries and a synchronization of the Baltic countries' energy grid with the rest of continental Europe.

The two countries are also trying to develop a gas pipeline link.

A source familiar with the matter said the new rail fees would be more favorable for state-run PKN's Lithuanian subsidiary Orlen Lietuva and could bring it significant savings related to fuel transport from its refinery in Mazeikiai, Lithuania.

"The former agreement did not serve well PKN Orlen and the railways", head of PKN Orlen Wojciech Jasinski told reporters.

Orlen Lietuva had been a financial burden on its parent. In 2014, PKN wrote down the value of Orlen Lietuva by USD1.13 B after the refinery swung into the red. It returned to black in 2015, making net profit of USD237 MM in 2015 and USD238 million in 2016.

Jasinski said PKN was looking into reversing the writedown, but could not give a time frame.

"We hope this would go further, some things have to take place. We are having a discussion with the financial market regulator on that," he said.

In total, PKN has spent USD4 B on the Mazeikiai refinery, including the purchase price, since buying a controlling stake from Russia's Yukos in 2006.

As MRC wrote before, in December 2016, PKN Orlen signed an annex with Tatneft Europe AG to the agreement for crude oil supplies to Czech refinery in Litvinov that provides the extension of contractual period and increases the possible maximum volume of the crude oil delivered. According to the annex, Tatneft will deliver to Litvinov refinery a crude oil in the quantity from 1,620 MMt to maximum 3,960 MMt. The contract will be valid from Jan. 1, 2017 until Dec. 31, 2019.

PKN Orlen is a major Polish oil refiner and petrol retailer. The company is a significant European publicly traded firm with major operations in Poland, Czech Republic, Germany, and the Baltic States. It currently (2015) ranks 353, with a revenue of over USD33.8 billion.

PVC production in Russia up by 30% in H1 2017

MOSCOW (MRC) -- Russia's production of unmixed polyvinyl chloride (PVC) rose in the first six months of 2017 by 30% year on year, totalling 467,700 tonnes. Last year's low output was caused by the long forced shutdown at SayanskKhimPlast, according to MRC's ScanPlast report.

June production of unmixed PVC in Russia dropped to 81,200 tonnes from 84,000 tonnes a month earlier, all producers, except for SayanskKhimplast, reduced their PVC output. Overall PVC production reached 467,700 tonnes in January-June 2017, compared to 360,600 tonnes a year earlier. This year's high level of production growth was caused by the long forced outage at SayanskKhimPlast in February-July 2016.

The structure of PVC production by plants looked the following way over the stated period.

RusVinyl (joint venture of SIBUR and SolVin) produced about 25,400 tonnes of PVC in June, 2,200 tonnes of which accounted for emulsion polyvinyl chloride (EPVC), compared to 27,800 tonnes a month earlier. Thus, RusVinyl's overall production of resin reached 155,800 tonnes in the first six months of 2017, down by 1% year on year.

SayanskKhimPlast increased its capacity utilisation last month, the plant's suspension polyvinyl chloride (SPVC) production reached 26,900 tonnes, whereas this figure was 25,900 tonnes in May. The Sayansk plant managed to produce 136,300 tonnes of resin over the stated period versus 35,300 tonnes a year earlier (2016 low output was caused by the long shutdown from mid-February to July).

Bashkir Soda Company (BSC) produced 21,600 tonnes of SPVC in June, whereas 22,300 tonnes were manufactured in May. The plant's output of resin totalled about 130,000 tonnes in the first half of 2017, compared to 126,700 tonnes a year earlier.

Kaustik (Volgograd) slightly reduced its production last month, the plant's overall SPVC output slightly exceeded 7,300 tonnes versus 8,000 tonnes in May. The plant's overall production of resin reached 45,700 tonnes over the stated period, compared to 41,800 tonnes a year earlier.


GTI & Yangquan Coal Industry Group agree to build gasification demo plant in China

MOSCOW (MRC) -- Gas Technology Institute (GTI) and Yangquan Coal Industry Group signed an agreement to jointly develop an industrial demonstration project for the R-Gas gasification process in China, reported Apic-online.

The demonstration plant, which will be located at the "largest" coal-to-chemicals facility in Shanxi Province, will validate long-duration reliability, operability and capital costs.

"This breakthrough technology provides significant economic and environmental benefits for Yangquan's coal-to-chemical processes," said Eddie Johnston, senior vice president of GTI Research and Technology Development.

The design enables rapid start-up and shut-down, feed stock flexibility able to operate with all ranks of coal and process optimization capability, GTI explained. R-Gas also consumes up to 30% less water and the higher efficiency results in lower overall emissions.

Cost for electricity generation, chemicals and liquid fuels production are estimated to be 15% to 25% lower compared with existing technologies.

We remind that, as MRC informed previously, in early 2016, Rosneft and Sinopec signed a Memorandum of Understanding regarding cooperation in gas and petroleum chemicals projects to be developed in East Siberia.

And in June 2016, the companies signed a Framework Agreement on joint pre-feasibility study of the project related to the construction and operation of a gas processing and petrochemical complex in East Siberia. The Agreement signed in furtherance of the Memorandum of Understanding on cooperation in petrochemical projects, provides to select a technology for natural gas processing from its components to polymers. The parties also decided to choose a consultant for the project management and identified competitive challenges and the time to fix them before entering the stage front-end engineering design (FEED). In the event of successful outcomes as stipulated by the Framework Agreement, it is supposed to create a joint venture between Rosneft and Sinopec in 2017.

South African environmental services company moves into petchem, oil refinery sector

MOSCOW (MRC) -- GK-IT Environmental Services, a South African leader in bioremediation and environmental product manufacture, is diversifying from the mining industry to the petrochemical and oil refinery sector, said Hydrocarbonprocessing.

Focusing on the bioremediation of hydrocarbon-contaminated soils, Director Chris Cooper said gasoline and diesel range organic compounds can be degraded to levels below 100 parts per million (ppm) using its products. In addition, volatile, semi-volatile, and polyaromatic hydrocarbons can be degraded to below 50 parts per billion.

A South African company established in 2003, GK-IT Environmental Services has developed a range of unique bioremediation products based on micro-organisms such as aerobic and anaerobic bacteria, fungi, yeasts, and molds. The company is a subsidiary of the Man-Dirk group, a specialist supplier of engineering tools and equipment in the maintenance, repair, and operating (MRO) sector.

"We are focusing on the petchem and oil refinery sector as a potential growth area, as there is a considerable risk of spillage and contamination here. The traditional approach to contaminated soil has been a simple ‘dig-and-dump’ approach, which involves physically removing and transporting the material to a toxic landfill site. This not only incurs hazardous-transportation costs, but also poses a major environmental risk while en route," Cooper said.

GK-IT Environmental Services is able to offer a total "on-site" solution premised on returning contaminated soil to its original pristine condition, a process that normally takes 10 to 12 weeks. The company has a production facility in Randfontein, and also manufactures products for other suppliers.

GK-IT Environmental Services’ product range covers oil, petrochemical, and chemical absorbents, bioremediation products, "green" degreasing chemicals, spillage kits, recycling and waste stations, oil collection stations, and oil/water coalescing plate separators.

Shell sees rising investment in renewables

MOSCOW (MRC) — Royal Dutch Shell will be spending up to USD1 B a year by 2020 on projects within its new energies division, Chief Executive Ben van Beurden told an industry conference on Monday, said Reuters.

Shell set up the division to focus on renewable energy and new technologies to help lower carbon emissions.

"Shell is determined to find solutions and will be spending up to USD1 B a year on our new energies division by the end of the decade," van Beurden told the conference.

As MRC informed earlier, Royal Dutch Shell plc, through its subsidiary Shell International Exploration and Production B.V., and SBI BioEnergy Inc. have reached an agreement granting Shell exclusive development and licensing rights for SBI's biofuel technology.

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.