Light hydrocarbons comprehensive utilization project signed in Tianjin

MOSCOW (MRC) -- Tianjin Wison China Holding Company and Tianjin Development Zone Administrative Committee officially entered into an "Investment and Cooperation Agreement on Light Hydrocarbons Comprehensive Utilization Project" at the Investment Service Center of Tianjin Development Zone, said Hydrocarbonprocessing.

Phase 1 of the project has investment at around 15 billion yuan and an area of about 1.7 million square meters, mainly including 1 Mtpa light hydrocarbons cracking unit, downstream units for high-density polyethylene (HDPE), linear low density polyethylene (LLDPE), acrylonitrile, and butadiene, as well as supporting utilities and auxiliary production facilities.

By leveraging its proprietary and internationally advanced process technology, cheap and abundant light hydrocarbon (LPG) is used as the feedstock to produce basic chemical raw materials such as ethylene and propylene, and high-end chemicals such as polyethylene and acrylonitrile to meet the growing domestic and international high-end market demands. In addition, a truly smart demonstration plant will be built with Wison’s comprehensive advantage in digital design and chemical big data.

Wison is a diversified group mainly providing energy and chemical services, which range from the storage and utilization of primary energy such as coal, oil and natural gas, onshore energy engineering services, marine engineering equipment fabrication to the development of downstream new chemical materials. Wison (China) Holding Company is a subsidiary of Wison Group for the new chemical materials business that globally acquires light hydrocarbon raw materials, builds and operates olefin and its downstream production units, and works on the R&D of high-end new chemical materials. The company is dedicated to building high value-added light hydrocarbon and new materials industrial parks.

Tianjin Nangang Industrial Zone, where the project is signed, is a petrochemical industrial base in Tianjin. It has a favorable port and location, convenient logistics and transportation infrastructure, and mature utilities, which serves as a solid base for realization and future development of the project.

China cuts refiners oil import quotas with first 2019 allowances

MOSCOW (MRC) - China issued its first batch of crude oil import quotas for 2019 at a lower volume than for the same batch a year ago though expectations are for the volumes to climb later this year, as per Reuters.

The Ministry of Commerce granted quotas totaling 89.84 million tonnes to 58 companies in its first allowances for 2019, according to four sources with direct knowledge of the matter and documents reviewed by Reuters on Wednesday.

This is down from the 121.32 million tonnes issued in the first batch of allowances for 2018, although the sources said Beijing may increase the overall volume for 2019 in the second batch of quotas later this year. Lower import quotas may signal to slow crude demand growth for the first half of 2019 in China, the world’s largest oil importer and second-largest oil consumer.

“The market, in general, does not have an upbeat outlook for imports. I think the drop in quota could likely mean easing growth in China’s crude imports in the first half,” said Zhou Guoxia, a crude oil analyst with consultancy JLC. Private refiners, also known as teapots, received quotas for 70.65 million tonnes of imports, more than 20 percent lower than the first batch of quotas issued last year, according to the documents and Reuters data.

This followed lower consumption of the 2018 quotas, said Seng Yick Tee, analyst at Beijing-based consultancy SIA Energy. Refiners only used 71 percent of the quotas allocated between January and October 2018, the period that the government used to determine quotas for the first batch of 2019, said Tee.

One of the four sources with knowledge of the quotas, who works for a private Chinese refiner, said they received about a third of its annual quota in the first batch and expects to get the remainder in a second batch, which Beijing usually issues around September.

Overall though, the start-up of new refineries in China in 2019 is expected to raise crude imports to a record, adding 630,000 barrels per day of new demand, 7 percent higher than last year, according to SIA Energy. "We don’t see any major impact on China’s overall crude imports in 2019 as the import growth is mostly contributed by mega petrochemical refiners and national oil companies’ refineries," SIA Energy’s Tee said.

Dalian Hengli Petrochemical and Zhejiang Petrochemical, which are starting up new refineries in 2019, have each received quotas of 4 million tonnes, according to the documents reviewed by Reuters.Dragon Aromatics, a petrochemical producer based in Fujian province, has also received import quota of 600,000 tonnes as it resumes operations at its condensate splitter, the sources said.

BASF plans to shed assets to try to salvage Solvay deal

MOSCOW (MRC) -- BASF is looking to shed a sizeable portfolio of assets to try to salvage a deal it struck in 2017 to buy Belgian chemicals group Solvay's polyamide business, reported Reuters with reference to people close to the matter.

The German company is working with investment bank Lazard to find a buyer for the plastics assets, which could be valued at about 450 million euros (USD515 million), including debt, the people said.

Information packages were sent out to potential buyers just before Christmas, and first-round bids are expected by the end of the month, they added.

BASF and Lazard declined to comment, while Solvay was not immediately available for comment.

To try to allay concerns raised by European Union antitrust regulators, BASF offered in October to exclude parts of Solvay's European polyamide business, including innovation capabilities, from the list of assets it plans to acquire.

It also offered to exclude manufacturing assets of Solvay's intermediate and engineering plastics business.

The European Commission has set a provisional deadline of Jan. 25 for its ruling on the planned deal.

According to people close to the matter, BASF is marketing the assets to companies that also took part in the 2017 auction for the Solvay business, including South Korea's SK Innovation , China's KingFa, and private equity group SK Capital, which owns peer Ascend.

The assets, with estimated core earnings of about 60 million euros and an expected enterprise value (equity plus debt) of 7-8 times that, also include engineering plastics that have whet the appetite of peers such as Lanxess, they added.

BASF is seeking to strengthen its nylon business and enhance its access to key growth markets in Asia and South America with the Solvay deal. The purchase would boosts its activities in nylon, or polyamide 6-6, a heat-resistant engineering plastic that is used in textiles and also industrial parts such as tube fittings, cooling fans and engine air ducts.

For Solvay, the sale is part of its drive to divest high-volume products and focus on specific applications in aerospace, automotive and the oil and gas industries where it can achieve higher margins.

EU Commissioner Margrethe Vestager said last year that as only a few manufacturers provide essential inputs to produce different nylon products, a careful assessment was needed whether the proposed acquisition would lead to higher prices.

A main precursor material for polyamide 6-6 is ADN. The main suppliers of this material are Ascend as well as Butachimie, a joint venture of Solvay and Invista, a former DuPont business now held by Koch Industries.

Solvay is a multi-specialty chemical company, committed to developing chemistry that addresses key societal challenges. Solvay innovates and partners with customers in diverse global end markets. Its products and solutions are used in planes, cars, smart and medical devices, batteries, in mineral and oil extraction, among many other applications promoting sustainability. Its lightweighting materials enhance cleaner mobility, its formulations optimize the use of resources and its performance chemicals improve air and water quality. Solvay is headquartered in Brussels with around 27,000 employees in 58 countries. Net sales were EUR10.9 billion in 2016, with 90% from activities where Solvay ranks among the world’s top 3 leaders.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.

Curacao oil refinery resumes work after eight-month stoppage

MOSCOW (MRC) -- Curacao’s 335,000-barrel-per-day (bpd) Isla refinery has resumed work, management of the government-owned facility said, after eight months of paralysis caused by a dispute between its operator, Venezuela’s PDVSA, and US producer ConocoPhillips, reported Rueters.

Isla, which has been looking for a new operator to run the refinery beginning at the end of this year, restarted one of its crude distillation units and its thermal cracker, it said in a statement.

"Both units are producing gasoil and fuel oil," it added.

The plant suffered a fire early last year and fell idle after ConocoPhillips brought legal actions against PDVSA over a $2-billion arbitration award linked to the nationalization of Conoco’s projects in Venezuela. The US company got court orders temporarily seizing PDVSA’s cargoes and terminals across the Caribbean.

The parties reached a payment agreement in August. Conoco said seized assets would be released following the reception of the first installment, which was received in the fourth quarter

The long paralysis of the island facility, which is crucial for PDVSA’s crude blending, storage and shipping operations, spurred the government of the Caribbean island, which owns the refinery, to start a process to choose a new operator.

Houston-based Motiva Enterprises, a subsidiary of Saudi Aramco, was chosen in December as preferred bidder to operate the refinery, according to local media, but the government has yet to confirm the decision.
Isla’s management said the restart process took longer than expected due to its lengthy paralysis. The utility company providing power and other industrial services to the refinery also struggled to resume supply.

Isla declined to comment on the status of the bidding process.

As MRC informed before, Curacao’s Isla refinery is considering offers from 15 companies interested in temporarily operating the 335,000-barrel-per-day facility to replace the current operator, Venezuela’s ailing PDVSA state oil company, the refinery and the Curacao government said in a joint statement in late July 2018.

US crude stocks fall less than expected, products build sharply

MOSCOW (MRC) - US crude oil stockpiles fell less than expected last week according to a largely bearish report from the Energy Information Administration, which also showed that gasoline and distillate inventories rose more than expected, reported Reuters.

Crude inventories fell by 1.7 million barrels in the week to Jan. 4, compared with analysts’ expectations in a Reuters poll for a decrease of 2.8 million barrels.

Distillate stockpiles, which include diesel and heating oil, rose 10.6 million barrels, more than five times the expected 1.9 million-barrel increase, the EIA data showed.

Gasoline stocks rose 8.1 million barrels, the largest weekly rise since December of 2016. Analysts had forecast a 3.4 million-barrel gain.

US Gulf Coast gasoline inventories rose to 89.4 million barrels, hitting fresh record highs, EIA data showed.

"The report is bearish given the smaller-than-expected decline in crude oil inventories and the very large increase in refined product inventories," said John Kilduff, a partner at Again Capital Management in New York.

"Refiners continue to operate at a high level, but they appear to be playing to increasingly empty theater, in that, demand and export levels continue to be lackluster, especially for gasoline."

Distillates may have seen lower demand due to warmer than normal temperatures.

"The milder temperatures have hurt distillate demand a little bit," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose 330,000 barrels, EIA said.

Refinery crude runs fell by 194,000 barrels per day, EIA data showed. Refinery utilization rates fell by 1.1 percentage point to 96.1 percent of total capacity.

Net US crude imports rose last week by 626,000 bpd while crude production was steady at 11.7 million bpd.