Naftogaz says Gazprom must be part of new Russia-Ukraine gas talks

MOSCOW (MRC) -- The head of Ukraine’s Naftogaz said on Thursday EU-mediated talks over future Russian gas transit via the country to Europe must include Gazprom and must be based on firm commitments, reported Reuters.

Commenting on an invitation from the bloc to relaunch trilateral gas talks, Naftogaz chief Andriy Kobolev voiced doubts over Russia’s willingness to engage in serious talks.

He said Russia’s energy minister has agreed to the talks but not Gazprom.

"For the success of the talks, it is important to have Gazprom in the room," Kobolev told Reuters in Brussels. "I am struggling to understand what outcome we are trying to achieve because ... from what I know they are not ready to give any commitment."

Russian President Vladimir Putin said on Friday that Moscow was ready for talks with Ukraine on continued gas transits after their contract expires in 2019, following talks with German Chancellor Angela Merkel last week.

Russia’s Gazprom and five European companies, with German backing, plan to build the North Stream 2 gas pipeline on the Baltic seabed to connect Russia directly with Germany.

The pipeline bypassing eastern Europe would allow Gazprom to reduce gas flows through Ukraine, costing it valuable transit revenue.

Kobolev added that the EU’s decision to settle its antitrust case with Gazprom on Thursday would not bring any positive market changes, saying the commitments were too vague.

"It seems Gazprom is getting away with everything," he said.

We remind that, as MRC wrote earlier, Gazprom Export LLC in the beginning of 2018 completed the bidding procedure to sell helium from the Amur gas processing plant (Amur GPP). This resulted in the signing of the long term sales and purchase agreements (SPA) and the allocation of the vast part of the Amur GPP Helium quantities among the largest global industrial gas companies.
MRC

MOSCOW (MRC) -- Covestro (formerly Bayer MaterialScience) has launched the new polyurethane dispersion (PUD) Bayhydrol UH 2887, as per GV.

According to the company, the PUD is an easy-to-use, one-component (1K) coating resin with comparable performance to two-component (2K) waterborne coatings.

The fast drying coating eliminates the need to mix two components and it reduces waste by offering no potlife limitations. In addition, Covestro said vinyl window coatings made from Bayhydrol UH 2887 offer good performance and chemical properties as well as exceptional weathering.

"We conducted interviews with the vinyl window value chain and heard an unmet need for increased performance in a 1K coating," said Tom Durkin, Diamond execution project manager, Covestro LLC. "To meet this market need, we custom-developed a PUD that outperforms existing high-performance 1K PUDs and matches the performance of crosslinked 2K waterborne polyurethane coatings that are used in the vinyl window market."

As MRC reported earlier, on 1 September, 2015, Bayer MaterialScience became known as Covestro. The plans for the carve-out of Bayer MaterialScience were announced in September 2014.

Bayer is a global enterprise with core competencies in the fields of health care, agriculture and high-tech polymer materials. As an innovation company, it sets trends in research-intensive areas. Bayer's products and services are designed to benefit people and improve their quality of life. At the same time, the Group aims to create value through innovation, growth and high earning power. Bayer is committed to the principles of sustainable development and to its social and ethical responsibilities as a corporate citizen.

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc.
MRC

MOSCOW (MRC) – Total S.A., Borealis AG and NOVA Chemicals Corporation announced they have closed a joint venture in petrochemicals on the U.S. Gulf Coast after receiving all required regulatory approvals, as per Hydrocarbonprocessing.

The company named Bayport Polymers LLC (“Bay-Pol”) is 50% owned by Total and 50% owned by Novealis Holdings LLC, a joint venture between Borealis and NOVA Chemicals. Diane Chamberlain is appointed President of the new entity. The Bay-Pol Joint venture includes: the under-construction 1Mt/y ethane steam cracker in Port Arthur, Texas.

Total’s existing polyethylene 400 kt/y facility in Bayport, Texas. A new 625 kt/y Borstar® polyethylene unit at Total’s Bayport, Texas, site, subject to further approvals.

"We’re excited for the future of our new company. The partnership between Total, Borealis and NOVA Chemicals will create a major player in the U.S. polyethylene market,” said Diane Chamberlain. “We have a great opportunity to take advantage of low-cost feedstocks in the United States and deliver quality products that respond to the growing global demand for plastics."
MRC

MOSCOW (MRC) - The total volume polyethylene (PE) imports to Belarus declined by 0.7% in the first three months of this year compared to a year earlier and reached 31,300 tonnes. Local companies have increased the volume of purchases only of high density polyethylene (HDPE), according to MRC's DateScope.

According to the National Bureau of Statistics of the Republic of Belarus, external deliveries of polyethylene in the Republic of Belarus rose to 11,100 tonnes in March 2018 against 9,300 tonnes a month earlier. Local companies have increased the volume of purchases of all types of polyethylene. In general, for the first quarter of this year the total volume of imports of PE reached the level of 31,300 tonnes against 31,600 tonnes a year earlier. The demand for HDPE has increased, whereas the demand for linear low density polyethylene (LLDPE) has declined.

The structure of imports of PE to Belarus for the period under review is as follows.

The total volume of imports of LDPE grew to 3,300 tonnes in March 2018 against 3,000 tonnes a month earlier. Local companies increased the volume of purchases of polyethylene in Russia. In general, the total volume of imports of this type of polyethylene in the Republic of Belarus was about 9,100 tonnes in January - March , which practically corresponds to the level a year earlier.

March LLDPE imports in the country were about 2,600 tonnes against 1,900 tonnes in February, local companies seriously increased the volume of purchases of Middle Eastern butene polyethylene. Thus, during the reporting period, the total volume of imports of linear polyethylene reached the level of 7,000 tonnes, while a year earlier this figure was about 12,000 tonnes.

March imports of HDPE grew to 5,200 tonnes against 4,400 tonnes a month earlier. Local companies have increased their purchases of polyethylene from Russian producers. Thus, the first three months of the external supply of HDPE amounted to about 15,300 tonnes, which is 44% more than the same indicator in 2017.

MRC

MOSCOW (MRC) -- China's independent oil refiners are once again using fuel oil to feed their plants as stricter tax enforcement and rising crude oil prices have squeezed their margins, reported Reuters.

These independent refiners, nicknamed teapots, buy nearly one-fifth of China's crude imports and any reduction in their crude purchases would cap demand in what is now the world's biggest oil importer.

Two independent refiners based in the eastern province of Shandong, home to most of China's teapots, have each bought an 80,000-tonne cargo of straight-run fuel oil (SRFO) cargo, together totaling about 1.02 million barrels, for April and May delivery, according to three traders with knowledge of the deals.

One cargo is arriving from Abu Dhabi and the other from Singapore, said one of the sources, an executive with a western trader involved in the supply talks.

The independents had primarily used straight-run fuel oil, the residue left after crude oil has been initially distilled in a refinery, as a feedstock for their plants since it cost less than crude oil and was taxed less. However, in 2014, the Chinese government raised taxes on fuel oil imports. But, that was followed in 2015 by teapots winning licenses to import crude.

Straight-run fuel oil consumption slumped as the refiners bought crude oil, which yielded a higher volume of higher-value products such as gasoline and diesel than the SRFO when processed and boosted profit margins for the teapots. China remained a large buyer of so-called cracked fuel oil as fuel for ships.

However, starting on March 1, Beijing enacted new tax rules that more rigidly enforced on the teapots the collection of a USD38 per barrel gasoline consumption tax and USD29 per barrel tax on diesel.

Combined with a recent surge in crude oil prices to their highest since 2014, the higher tax collection has crushed the independent's margins. That has prompted the renewed interest in lower-priced fuel oil.

"Buying SRFO may not necessarily save tax cost as the buyer needs to pay up-front the (fuel oil) consumption tax, but obviously plants are exploring the old trade as the government's tax stick is really a hard one this time," said the oil trading executive.

Processing the SRFO does have an added tax benefit, however. The independents can deduct the tax of about $31 per barrel paid on their fuel oil imports from the consumption tax they are required to collect on their gasoline and diesel sales, said an official with an independent plant seeking fuel oil.

"Processing fuel oil gives better margins than (refining) crude oil as plants can get tax deducted (when selling refined fuel) later," the official said.

The source, who declined to be named as he is not authorized to talk to the press, added that his plant expected margins to be negative if they only processed crude oil.

The lower margins have resulted in the teapots cutting their run rates.

In early May, the independent refiners operated at only 63 percent of their processing capacity, the lowest since February during the Lunar New Year break, according to a weekly survey of 38 plants by Shandong-based consultancy Sublime China Information. Planned maintenance was also a factor, said Gao Lei, an analyst with Sublime.

"We've seen less impact (from the tax measures) on import volumes as state-run plants increase runs, but more on teapot margins," said Seng-Yick Tee, of consultancy SIA Energy,

"They are definitely making less money now than before."
MRC