Vietnamese Nghi Son refinery begins commercial production

MOSCOW (MRC) -- Vietnam’s Nghi Son oil refinery has officially begun commercial production following months of tests, reported Reuters with reference to the owner of the refinery.

Commercial production had begun from Nov. 14, Nghi Son Refinery and Petrochemical LLC said in a statement, while a source at the refinery told Reuters the refinery was operating smoothly.

The USD9 billion refinery is 35.1 percent owned by Japan’s Idemitsu Kosan Co, 35.1 percent by Kuwait Petroleum, 25.1 percent by PetroVietnam and 4.7 percent by Mitsui Chemicals Inc.

The 200,000 barrels-per-day (bpd) Nghi Son refinery, 260 km (160 miles) south of Hanoi, offered its first gasoline export cargo in September after receiving approval from the government to begin exporting fuel products.

Nghi Son and the 130,000-bpd Dung Quat refinery, which began production in 2009, are together expected to meet about 70 percent of Vietnam’s refined oil product demand.

As MRC informed previously, Vietnam's second oil refinery, Nghi Son Refinery and Petrochemical, was ready for start-up on Feb. 28, 2018, its parent firm Vietnam Oil and Gas Group, or PetroVietnam said in February 2018. The USD9 billion plant, co-owned by Kuwait Petroleum Europe BV and Japanese firms Idemitsu Kosan and Mitsui Chemicals , is designed to help Vietnam cope with a shortage of refined oil products.

LyondellBasell and union begin contract talks at Houston oil refinery

MOSCOW (MRC) -- LyondellBasell Industries and a United Steelworkers (USW) local union began talks last Thursday for a new contract for 485 workers at the company’s Houston oil refinery, one day after employees rallied outside that plant over a lack of negotiations, reported Reuters with reference to the company and union.

Marcos Velez, USW International representative, said the union was expecting the company to propose cuts, without elaborating on the type of reductions expected.

"The union and the company have met and while the union remains committed to reaching a deal, the company’s initial proposals are concessionary and far from acceptable to the union," Velez said.

The contract between LyondellBasell and USW local 13-227 expires on Feb. 1.

The agreement on local issues will be combined with a national contract to be negotiated in January between USW International representatives and Shell Oil Co, the US arm of Royal Dutch Shell Plc, which is the lead company for refinery and chemical plant owners.

The national agreement sets the pattern for pay, benefits and health and safety issues that must be incorporated in the contracts at each location where USW members work.

The national agreement also expires on Feb. 1.

As MRC wrote previously, in August 2016, LyondellBasell made the final investment decision to build a high density polyethylene (HDPE) plant on the US Gulf Coast. The plant will have an annual capacity of 1.1 billion pounds (500,000 metric tons) and will be the first commercial plant to employ LyondellBasell's new proprietary Hyperzone PE technology. The start-up of the new plant is scheduled for 2019.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.

European PP for CIS markets fell in December, but not proportionally to propylene price reduction

MOSCOW (MRC) -- December contract price of propylene in Europe was settled down by EUR100/tonne from November. Taking it into account, all European producers announced a decrease in export prices of polypropylene (PP) for deliveries to the markets of the CIS countries in December. But price cuts are not proportional to the fall in monomer prices, according to ICIS-MRC Price Report.

Negotiations over December prices of European PP began last week. All market participants reported the desire of producers to limit the decline in export prices of propylene polymers to a value less than the decline in monomer prices. In fact, we are talking about lowering prices by only EUR40-60/tonne.

December deals for homopolymer PP were agreed in the range of EUR1,125-1,180/tonne FCA, down on average by EUR60/tonne from November. Some producers still had significant restrictions on this month's shipments.

Deals for block propylene copolymers (PP block copolymers) were done in the range of EUR1,210-1,270/tonne FCA, while in November deals were done in the range of EUR1,250-1,310/tonne FCA.

Asian jet fuel discounts slip to 9-yr seasonal low as supply swells

MOSCOW (MRC) - Asian jet fuel price discounts stand at their lowest December levels in nine years as a supply glut offsets consumption even as the region’s aviation sector booms, as per Hydrocabonprocessing.

The slump is a mirror image of the steep gains Asian aviation fuel price differentials saw in the first quarter of this year. Then, tight supply lifted them to their highest seasonal levels in a decade.

The cash differentials for jet fuel in the Asian trading hub of Singapore were at a discount of $1.06 a barrel below benchmark quotes on Monday JET-SIN-DIF, the weakest for this time of year since 2009, according to Refinitiv Eikon data.

Cash differentials represent the price buyers are prepared to pay for fuel over or below benchmark values published daily by price reporting agencies. “Clearly the physical market does not believe that the high prices of jet paper (contracts) are justified,” said Sukrit Vijayakar, director of energy consultancy Trifecta. “That is what is causing the weakness in the cash differentials."

The weakness also comes as winter in the northern hemisphere has seen a mild start: The outlook is largely for an unusually mild season because of an El Nino weather pattern. That’s especially the case in Japan, where kerosene - almost identical to jet fuel - is commonly used for heating.

The low kerosene consumption and high yields for churning out jet fuel are luring refiners to pump out more of the latter, market sources said, weighing on the price traders are willing to buy it for. And the low cash prices are starting to weigh on refinery margins, traders said.

Refining margins, also known as cracks, for jet fuel were at USD15.66 a barrel over Dubai crude during Asian trading hours on Monday - down 19 percent in the last four weeks.

Despite that, jet cracks remain comparatively high - the peak of USD19.34 a barrel on Nov. 15 was a near four-year high - and seasonally adjusted refinery cracks for jet fuel are still at their strongest levels for this time of the year since 2014.

Taiwan's Formosa Petrochemical seals 2019 gasoil, jet fuel term contracts

MOSCOW (MRC) - Taiwan’s Formosa Petrochemical Corp has finalized its term contracts to sell diesel and jet fuel for loading in 2019, at volumes and price levels mostly steady from this year, trade sources said, as per Hydrocarbonprocessing.

The refiner has sealed its one-year term contract for diesel with 10 parts per million (ppm) sulfur at a premium of 15 to 25 cents a barrel to Singapore quotes, they said.

That compares to a premium of 22 cents a barrel premium for 2018 term contracts, they added. Formosa has also finalized its 500 ppm sulfur gasoil for 2019 at a discount of 50 cents to 60 cents a barrel to Singapore quotes versus this year’s discount of 65 cents a barrel.

The prices for gasoil contracts vary depending on whether the buyer lifts it monthly or quarterly, two of the sources said.

For jet fuel, it finalised the term contracts at a premium of 5 cents a barrel to Singapore quotes, down 3 cents from this year’s term contract, the sources said.

Volumes were generally close to this year’s term deals, the sources added.

A Formosa spokesman could not be immediately reached for comment.