February LDPE prices fell in Russia

MOSCOW (MRC) -- Weak seasonal demand and oversupply became the main reason for the reduction of low density polyethylene (LDPE) prices in the Russian market. The key suppliers announced a price cut of Rb2,000-4,000/tonne for February shipments, according to ICIS-MRC Price report.

January was short due to the long New Year holidays, moreover, demand for LDPE is always very weak in the first months of the year due to a number of factors. Despite these factors, supply of polyethylene (PE) was excessive from some producers. And weak demand from the key export markets did not allow to get rid of oversupply of LDPE in the Russian market. As a result, many sellers announced price reductions for February shipments.

PE for the production of thick films (108 grade LDPE) accounted for the weakest demand in January, offer prices of this LDPE grade had reached Rb85,500-87,000/tonne, CPT Moscow, including VAT, by February. At the same time, the company's customers said Angarsk Polymers Plant intends to reduce its output of 108 grade LDPE by one third year on year this year.

Demand for 158 grade PE was slightly stronger last month than that for 108 grade LDPE. In addition, there were temporary disruptions in Kazanorgsintez's PE shipments. Offer prices for February deliveries of 158 grade LDPE were heard in a rather wide range, as follows: Rb91,500-96,400 CPT Moscow, including VAT.

PVC in Russia for deliveries in February rose by Rb1,000-1,500/tonne

MOSCOW (MRC) -- Negotiations over February shipments of suspension polyvinyl chloride (SPVC) began in the Russian market in the early last week. Expectedly producers announced a further increase of prices for supplies to the domestic market, according to ICIS-MRC Price Report.

SPVC prices in the Russian market reached their minimum last December, and prices has resumed rising since January despite weak demand. Demand for PVC improved in the Russian market in February, while there was still no import alternative. Therefore Russian producers announced price increase of Rb1,000 - 1,500/tonne for February shipments.

A month earlier, Russian producers raised the contract prices of SPVC by Rb1,200 - 1,500/tonne or January deliveries, which was mainly due to the increase in the VAT rate from 2019 by 2%. At the same time, despite the long New Year holidays and preventive downtime of a number of converters, some producers sold all their January quotas in the first week of sales.

Local producers significantly cut export prices of acetylene PVC in the end of December - January, in some cases, price offers for container shipments of acetylene PVC reached USD785/tonne, DAP Moscow. But even this level did not become attractive for Russian companies, the volume of imports is still insignificant.

Russian producers keep a fairly high level of capacity utilisation despite the low season in the domestic market.
Manufacturers supply excess PVC to foreign markets, particularly to India. The Indian market in the last few months shows a steady increase in demand and prices, which accordingly affects the export prices of Russian producers.

All these factors, the lack of an import alternative, good export volumes and a high level of prices in foreign markets, led to a further rise in the price of PVC in the Russian market. Overall, February deals for K64/67 PVC were negotiated in the range of Rb73,000 - 75,500/tonne CPT Moscow, including VAT, up Rb1,000-1,500/tonne from the January level. Deals for K70 PVC were discussed up by Rb1,500/tonne.

ExxonMobil, Plains, Lotus to proceed with 1 million b/d Permian crude pipe to feed Beaumont expansion

MOSCOW (MRC) -- A 1 million b/d crude pipeline that would transport Permian Basin crude to the US Gulf Coast received the formal go-ahead from its backers and is expected online in the first half of 2021, according to a statement released Wednesday by partners ExxonMobil, Plains All American and Lotus Midstream, as per S&P Global.

"The new common-carrier pipeline system will provide more than 1 million b/d of crude oil and condensate capacity and will be constructed from the Permian Basin in West Texas to the Texas Gulf Coast," they said.

Plains, ExxonMobil and Lotus Midstream formed the Wink to Webster Pipeline LLC Joint Venture and have already ordered nearly 650 miles of domestically sourced 36-inch-diameter line pipe. Plains will be the operator of the line during the construction phase.

The pipeline announcement was expected after ExxonMobil on Tuesday confirmed it was beginning construction at its 365,644 b/d Beaumont, Texas, refinery of a 250,000 b/d crude unit to run the light, sweet oil produced from its holdings in the Permian Basin, which would provide shipping commitments substantial enough to make the pipeline commercially viable.

The pipeline will have origin points at Wink and Midland, Texas, and multiple destination points in the Houston area including Webster and Baytown, where ExxonMobil is currently expanding light sweet crude processing capacity at the 560,500 b/d refinery by about 60,000 b/d.

Pipeline connectivity will also be provided to Texas City and Beaumont, the project's backers said.

As MRC wrote before, in October 2017, ExxonMobil Chemical commenced production on the first of two new 650,000 tons-per-year high-performance polyethylene (PE) lines at its plastics plant in Mont Belvieu, Texas. The full project, part of the company’s multi-billion dollar expansion project in the Baytown area and ExxonMobil’s broader Growing the Gulf expansion initiative, will increase the plant’s PE capacity by approximately 1.3 million tons per year. The Mont Belvieu plant capacity will total more than 2.5 million tons per year, making it one of the largest polyethylene plants in the world. These performance polyethylene products will deliver significant sustainability benefits enabling lighter weight higher performance packaging, lower energy consumption and reduced emissions.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.

Nouryon to supply CiD technology to Ukrainian PVC producer

MOSCOW (MRC) -- Nouryon (formerly AkzoNobel Specialty Chemicals) will license its innovative continuous initiator dosing (CiD) technology to Karpatnaftochim, Ukraine’s largest polyvinyl chloride (PVC) producer, as per the company's press release.

Nouryon’s patented CiD technology allows PVC producers to increase reactor output by up to 40 percent, improve product quality, and make the production process intrinsically safer – all with minimum capital expenditure.

"The agreement with Karpatnaftochim once again confirms our strong offering to customers in the PVC market," said Johan Landfors, Managing Director Polymer Chemistry. "Many customers have made the shift to CiD technology, and we expect interest for this technology to continue to grow as more users realize its advantages."

In conventional PVC production, the organic peroxide initiator is added in one step - this generates a lot of heat and the reactor output is determined by the cooling capacity. With CiD technology, the initiator is added continuously, reducing the amount of heat produced, making the process safer and increasing the effective capacity of the reactor.

Ivan Pidsadyuk, General Director of Karpatnaftochim, added: "Nouryon’s CiD technology introduces unique benefits for us and our customers. As an important manufacturer in a competitive market, we aim to incorporate solutions that give us an advantage."

As reported earlier, Karpatneftekhim resumed operations on 9 June 2017, after a five-year outage.

Karpatneftekhim is one of the largest enterprises of Ukraine's petrochemical complex. Currently, the plant can produce annually 300,000 tonnes of PVC, 200,000 tonnes of caustic soda, about 180,000 tonnes of chlorine, as well as 250,000 tonnes of ethylene and 100,000 tonnes of polyethylene.

Eni keeps foot on the gas in high-speed Gulf drive

MOSCOW (MRC) -- In less than 12 months Eni CEO Claudio Descalzi has turned the Middle East from a sideshow to a strategic hub for the Italian energy major. And the shift is not over, reported Reuters.

Since last March the 63-year-old has clinched nine deals in the United Arab Emirates, gained a toehold in Bahrain and expanded in Oman to reshape the group’s future.

In the latest deal on Sunday, Eni pledged USD3.3 billion to buy part of the world’s fourth-biggest refinery in the UAE, increasing its own refining capacity overnight by more than a third.

But the buying spree is not over and the company is looking to further bolster its presence in the Gulf region, according to three banking and industry sources with knowledge of the matter.

They said Eni was now primarily targeting "upstream" exploration assets - oil and gas fields - rather than downstream operations.

The company is looking to buy more assets in the UAE, as well as entering Qatar, the sources said, without giving further details.

"Descalzi was in the UAE 20-odd times last year to personally build relationships to secure the deals," said a separate industry source. "And there’s more on the way."

Eni declined to comment.

The Gulf drive is part of Descalzi’s plans to cut Eni’s traditional reliance on Africa, which accounts for more than half its production while gaining more exposure to refining assets in an oil-rich region closer to Asian markets.

In recent years, weakness in the company’s downstream businesses like refining and chemicals have dragged on profits and placed more of a premium on securing success in exploration.

Its heavy presence in Africa, with the risk associated with working in places like Libya and Nigeria, has also weighed on share price performance.

A banking source with knowledge of the matter said Eni was targeting the Gulf area of the Middle East because it did not have the political and security risks of countries like Iraq.

The Gulf region has in recent years attracted the world’s top oil companies seeking stakes in big and easy-to-develop oil and gas fields at a time of uncertainty over oil prices.

Long-term contracts in the region also guarantee stable revenues even if the returns are lower than other, riskier fields.

But while majors like BP, Total, Shell and Exxon have had a strong presence in the Gulf for decades, Eni has not.

The Italian firm’s strategy of selling down assets like its prize Zohr gas field in Egypt has been key to its recent expansion in the region.

Last March Eni traded a stake in Zohr with Emirates fund Mubadala to get its first foothold in the country, since when it has clinched a flurry of more deals with UAE oil giant ADNOC.

"Zohr was used as a way in. Since then the group has ramped up operations lightning fast in an area that has some of the world’s biggest resources and that’s on the doorstep of Asia," said Mediobanca oil analyst Alessandro Pozzi.

In Qatar, Eni can count on good relations with the state petroleum firm which recently bought Mexican oil blocks from the Italian company.

A decade ago Eni was struggling to replace reserves and lost credibility over its management of the huge Kashagan oilfield in Kazakhstan.

But giant gas discoveries in Mozambique and Egypt have since given it the strongest discovery record in the industry, boosting its credentials with oil-producing nations.

In 2017 ADNOC presented its 2030 strategy plan to open up its energy markets to foreign operators and attract the skills needed to develop the exploration and production, refining and petrochemical industries.

"When you are a country thinking, who can find the stuff, you look to Eni with its track record," said a source familiar with Eni management.

As MRC wrote previously, in late January 2019, ADNOC signed two new strategic equity partnerships with Eni and OMV covering both ADNOC Refining and a new trading joint venture, which will be jointly established by the three partners. In one of the largest ever refinery transactions, Eni and OMV will acquire 20% and 15% shares in ADNOC Refining respectively, with ADNOC owning the remaining 65%. The agreement values ADNOC Refining, which has a total refining capacity of 922,000 barrels per day, and which operates the fourth largest single site refinery in the world, at an enterprise value of USD19.3 billion. As a further part and condition of this agreement, the partners will also establish a trading joint venture, in which Eni and OMV will own 20% and 15% of the shares respectively. Proceeds to ADNOC from the sale are estimated to be USD5.8 billion, subject to completion adjustments. The transaction reflects the scale, quality and growth potential of ADNOC Refining’s assets, coupled with an advantageous location from which to supply markets in Africa, Asia and Europe.