European PP prices dropped significantly for the CIS markets in July

MOSCOW (MRC) - July contract price of propylene in Europe was agreed down by EUR80/tonne from the level in June. Therefore, all European producers announced a proportional decrease in export polypropylene (PP) prices for July shipments to the CIS markets, according to ICIS-MRC Price report.

Negotiations over July prices of European PP have begun this week. All market participants said that European producers had to cut export prices of polymers of propylene for shipments in July significantly under the pressure the lower cost of the main raw materials in the region.

Deals for July shipments of homopolymer propylene (homopolymer PP) were negotiated in the range of EUR1,070 -1,120/tonne FCA, whereas last month's deals were done in the range of EUR1,150 -1,200/tonne FCA.

Deals for block copolymers of propylene (PP block copolymers) were negotiated in the range of EUR1,140-1,180/tonne FCA.

Demand for European PP has subsided significantly from consumers in the CIS countries in May-June due to high export prices. But a significant reduction in July prices may change the situation with the demand for a European polymer for the better.

Lotos delayed coking unit reaches ready for start-up phase

MOSCOW (MRC) -- The key plant constructed as part of the Grupa Lotos EFRA Project, namely the Coker Complex consisting of the Delayed Coking Unit (DCU) and auxiliary installations, has reached the Ready For Start-Up (RFSU) status, according to Hydrocarbonprocessing.

The RFSU means formal completion of the construction. It was preceded by a long process of testing all 95 mechanical, electrical, automatic, IT and other systems, confirming their correct construction and operation, as well as detecting and removing any defects. After the RFSU phase was reached, the systems will be handed over for commissioning, i.e. for testing by its operator: the EFRA Plant owned by LOTOS Asfalt, the Coker Complex owner.

"The Ready For Start-Up status of the EFRA Project’s main unit is very good news to LOTOS, which will now have an even more efficient, innovative, environmentally friendly and profitable refinery, producing almost exclusively high-margin products," says Mateusz A. Bonca, President of the Grupa LOTOS Management Board " With the DCU we will be able to discontinue the production of heavy fuel oil. This is important because January 2020 will see the entry into force of IMO regulations that ban the combustion of heavy fuel oil by ships, i.e. the main consumer of this fuel with a high sulfur content. Instead of this low-value and non-ecological product, we will use heavy residues remaining after crude oil processing to obtain high-quality diesel oil, aviation fuel and coke, thus increasing our refining margins."

Thanks to the implementation of the EFRA Project, LOTOS will manufacture almost exclusively clean and high-margin products, whose share in its refining output will grow to over 89%, from approximately 77% in 2012. The financial effects of the launch of the Coker Complex should be visible in the Grupa LOTOS financial results for the fourth quarter of 2019.

The DCU has been built based on a globally unique, innovative Triplan technology (used in only one refinery to date), which ensures fully air-tight processes of unloading coke from the reactors and its further processing and transport. Coke removal will also meet the highest environmental standards.

"Implementation of the EFRA Project solves a problem that is common to all refineries in the world, namely the problem of heavy residues from oil processing. This project takes us to a higher technological level," emphasized Patryk Demski, Vice-President of the Grupa LOTOS Management Board for investment and innovation "However, this is not the end of our innovative path towards the improvement of our refinery. It is a new beginning. We are facing further challenges to make even better use of the potential of our plants and to achieve even better economic results."

The start-up process that is about to begin will be a complex project consisting of numerous tests, in which safety is the priority issue. It is also the time for further training of the personnel operating the DCU, being the first unit of this kind at the LOTOS refinery and in Poland, based on a technology different from other systems employed at the Gdansk plant. Training of the Coker Complex employees was partly conducted in the US, where they learned about systems of this type. Nearly 90 employees of LOTOS Asfalt have new responsibilities, and thus new work-related challenges in operating the EFRA units. Likewise, construction of the new units gave employment to more than 1,500 staff of the contractors, mainly Polish companies.

The cost of the EFRA Project run in 2015–2019 is some PLN 2.3 billion.

EFRA is the continuation of a wider process of technological modernization of the refinery and optimization of the oil processing chain initiated under the extensive 10+ Programme, which raised the refinery’s throughput by 4.5m tonnes annually. EFRA will significantly increase the depth of oil processing, enabling additional production of some 900,000 tonnes of high-margin fuels and 300,000 tonnes of coke per year. The new Coker Complex comprises the Delayed Coking Unit (DCU), the Coking Naphtha Hydrotreating Unit (CNHT), as well as facilities for storage and distribution of coke. Other units built and already commissioned under the EFRA Project include the Hydrowax Vacuum Distillation Unit (HVDU), the Hydrogen Generation Unit (HGU), Oxygen Production Plant, and a power distribution facility. In addition, many other units and facilities, mainly related to logistics, have been constructed and upgraded.

We remind that, as MRC reported earlier, Poland’s second-biggest oil refiner Lotos is looking to buy upstream assets to boost its own oil production, a strategy made all the more important given recent problems with supplies from Russia. Most of the crude refined at Lotos’s refinery in the northern Polish city of Gdansk comes from Russia via the Druzhba pipeline, but flows via Druzhba were suspended last month due to contamination, sending shockwaves through global oil markets.

Sabic raises stake to 75% in Saudi Methanol Co

MOSCOW (MRC) -- Sabic said it signed an agreement with the Japan Saudi Arabia Methanol Company (JSMC) to raise its stake in renew the JV partnership in Saudi Methanol Company (Ar-Razi) for another 20 years, as per Pipeline Oil&Gas News.

JSMC will pay more than 5 billion Saudi riyals to Sabic for renewing the joint venture partnership, which Sabic will use, in part or whole, to finance refurbishment of Ar-Razi’s existing methanol plants or set up new ones, Sabic said in a statement.

Under the agreement, which was approved by regulatory bodies, Sabic will raise its stake in Ar-Razi to 75%, reducing JSMC’s shareholding in Ar-Razi to 25 percent. Sabic will also become an equal co-owner with JSMC.

"Ar-Razi is the first joint venture in Sabic's history and one of the most successful partnerships that the company has had over 40 years," said Yousef Al-Benyan, Sabic vice chairman and CEO.

"Renewing the partnership for more 20 years is proof of its success and contribution to the Saudi-Japan strategic cooperation, in line with Vision 2030," he added.

Ar-Razi was set up in 1979, as a 50/50 joint venture between Sabic and JSMC with the aim of developing, establishing, owning and operating a methanol complex.

As MRC informed before, in February 2018, in response to customer needs, Sabic announced projects in Asia and the Netherlands designed to increase global capacity for two of its high-performance engineering thermoplastic materials, Ultem and Noryl resins. The planned new production facility in Singapore is expected to go online in the first half of 2021. The company also plans to recommission operations at its Bergen op Zoom PPE resin plant in the Netherlands by the end of 2019 to produce polyphenylene ether (PPE), the base resin for its line of Noryl resins and oligomers.

Saudi Basic Industries Corporation (Sabic) ranks among the world's top petrochemical companies. The company is among the worldпїЅs market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

Philadelphia Energy Solutions seeks to permanently shut oil refinery

MOSCOW (MRC) -- Philadelphia Energy Solutions (PES) will seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex, reported Reuters with reference to the mayor's confirmation.

"I spoke with the CEO and leadership of Philadelphia Energy Solutions this morning and can confirm that PES intends to shut down the refinery within the next month," Philadelphia Mayor Jim Kenney said in a statement.

"I’m extremely disappointed for the more than one thousand workers who will be immediately impacted by this closure, as well as other businesses that are dependent on the refinery operations," Kenney said.

Shutting the refinery, the largest and oldest on the US East Coast, would cost hundreds of jobs and squeeze gasoline supplies in the busiest, most densely populated corridor of the United States.

The refinery is expected to begin layoffs of the 700 union workers as early as Wednesday, according to two sources familiar with the plans. They said employees have been instructed to immediately begin the process of mothballing units, shutting them indefinitely.

About 100 non-union employees will be laid off immediately, with a "significant" number of the 700 union employees expected to lose their jobs in mid-July, the sources said.

The 335,000 barrel-per-day (bpd) complex, located in a densely populated area in the southern part of the city, erupted in flames in the early hours on Friday, in a series of explosions that could be heard miles away.

PES is expected to file a notice of intent with state and federal regulators as early as Wednesday, the sources said, which would start the closure process. A spokesperson for Philadelphia Energy Solutions on Tuesday night declined to comment.

"The impact of the closure will be a massive blow to the local economy," said Ryan O’Callaghan, head of the refinery’s union, estimating that it would cost tens of thousands of jobs when contractors and other businesses that rely on the plant are included.

The cause of the fire was unknown as of Tuesday, though city fire officials said it started in a butane vat around 4 a.m. (0800 GMT). It destroyed a 30,000-bpd alkylation unit that uses hydrofluoric acid to process refined products. Had the acid caught fire, it could have resulted in a vapor cloud that can damage the skin, eyes and lungs of nearby residents.

Before the fire, the refinery had struggled financially for years, forced to slash worker benefits and scale back capital projects to save cash. It went through a bankruptcy process last year to reduce debt, but cash on hand dwindled even after it emerged from bankruptcy in August.

After bankruptcy, Credit Suisse Asset Management and Bardin Hill became the controlling owners, with former primary owners Carlyle Group and Sunoco Logistics, an Energy Transfer subsidiary, holding a minority stake.

Workers were picking up large debris out of nearby waterways on Monday, according to pictures seen by Reuters, while other pictures showed the charred remains of control rooms and burned components.

The blaze was the second in two weeks at the complex, spurring the mayor to call for a task force to look into the cause and community outreach in the wake of the incidents. That task force will now be retooled to focus on helping the company transition the site of the refinery and supporting employees affected, Kenney said in his statement.

Investigators on the scene are dealing with unstable structures that need to be certified by engineers, slowing down the inquiry, city officials said. The investigation could ultimately take months or perhaps years, they said.

The state Department of Environmental Protection said on Tuesday it was concerned about the integrity of storage tanks on site. The US Chemical Safety Board is also investigating the incident.

AkzoNobel sells former paint factory in UK

MOSCOW (MRC) -- AkzoNobel has sold its former paint factory located in Wexham Road, Slough, UK. The site comprises both the former Slough Manufacturing Unit and AkzoNobel’s Research and Development facility, said the company.

Paint production ceased on the site in 2016 and operations were relocated to AkzoNobel’s state-of-the-art facility in Ashington, UK. The Research and Development facility is being leased by AkzoNobel for a short time until relocated.

The AkzoNobel UK headquarters and Dulux Academy, located to the west of Wexham Road, are not included as part of the sale and continue to be actively used by AkzoNobel.

This transaction generated proceeds of EUR75 million and will be reported in the financial results for the second quarter of 2019 as a one-off gain of EUR57 million, included within identified items.

As MRC informed earlier, AkzoNobel said it is in discussions with BASF to acquire BASF’s industrial coatings business. BASF confirmed that it is in discussions with AkzoNobel on the potential sale, but also declined to give further information. BASF is relatively small in industrial coatings.

Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people.