Shell Deer Park, Texas refinery ops stable after channel closure

MOSCOW (MRC) -- Operations were stable last Thursday morning at Royal Dutch Shell Plc’s 340,000 barrel-per-day (bpd) joint-venture refinery in Deer Park, Texas, after the upper Houston Ship Channel was closed by protesters from Greenpeace USA, reported Reuters with reference to a Shell spokesman.

The Deer Park refinery is a 50-50 joint-venture between Shell and Mexico’s national oil company Petroleos Mexicanos (Pemex). Shell is the managing partner of the joint-venture.

Shell has three crackers at Deer Park site with a combined ethylene capacity of 1,67 mln per year and petrochemical plants.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Korea’s petrochemical exports to China are plummeting amid China’s economic slowdown and rising self-sufficiency in petrochemical products, said Businesskorea.

Exports of petrochemicals, one of Korea's main export items, fell 5.4 percent year on year in January. In December of last year, exports dropped 6.3 percent.

The sharp decline in exports of petrochemical products is blamed on sluggish exports to China. In January, Korea's exports to China fell 19.1 percent year on year. Exports of petrochemical and petroleum products fell 13.7 percent and 36.4 percent, respectively.

About half of Korea’s petrochemical exports go to China. Last year, China accounted of 47.5 percent of Korea’s petrochemical exports, down 3.5 percentage points from 2017. In monetary terms, the value of exports to China accounted for 43.6 percent of the total, down 2.4 percentage points from 2017.

Exports of major domestic petrochemical companies are lopsided toward China as well. In the case of SK Innovation, 90 percent of petrochemical exports go to China. The ratio is 60 percent for Hanwha Total. “Korean petrochemical companies have failed to diversify their export markets and continue to rely on China,” an industry official said. "China has been the biggest export market for Korean petrochemical companies."

The problem is that China's economy will not grow as fast as it did before and China’s self-sufficiency rate in petrochemical products is rising. The International Monetary Fund recently lowered its forecast on China's economic growth for this year to 6.2 percent from 6.4 percent. China's global exports growth also fell from 9.6 percent in August to 4.4 percent in December.

China’s self-sufficiency in petrochemical products is also on the rise. Its self-sufficiency rate has already exceeded 100 percent for high-purity terephthalic acid (PTA), polyvinyl chloride (PVC), polystyrene (PS) and acrylates.
MRC

МОSCOW (MRC) -- Saudi Arabian Oil Company (Saudi Aramco) has completed the acquisition of Shell Saudi Arabia (Refining) Limited’s (Shell) 50% interest in the SASREF joint venture in Jubail Industrial City, in the Kingdom of Saudi Arabia, for USD631 million, said the company.

Completion follows receipt of all necessary regulatory consents. The acquisition supports Saudi Aramco’s plan to increase the complexity and capacity of its refineries, as part of its long-term downstream growth strategy.

For Shell, the sale is part of an ongoing effort integrating its refining portfolio with Shell Trading hubs and chemicals operations.

SASREF’s crude processing capacity is 305,000 bbl/day, according to its website. The refinery’s products include liquefied petroleum gas(LPG), naphtha, kerosene, diesel, fuel oil and sulphur.

As MRC reported before, a number of Saudi Arabia's companies, such as Tasnee, Sadara, Advanced Petrochemical and Saudi Kayan, announced a curtailment of feedstock to their petrochemical plants, including polyethylene (PE) and polypropylene (PP) facilities, by an average of 30-50% due to the attacks on key Saudi Aramco facilities on Saturday.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.
mrcplastr.com

MOSCOW (MRC) -- Cosmo Oil, Japan’s third-largest refiner, has started building stocks of very low-sulfur fuel oil that can be supplied to domestic marine fuel markets from October ahead of IMO 2020, its top executive told Reuters.

The mandate by the International Maritime Organization requires ships globally to reduce the sulfur content in their bunker fuel to 0.5% from January from the current 3.5%.

Cosmo Oil, a unit of Cosmo Energy Holdings Co Ltd, is using VLSFO produced at its residue desulfurizer (RDS) unit at its Chiba refinery near Tokyo to build stocks, Cosmo Oil’s President Shunichi Tanaka said on Sunday, ahead of the Asia Pacific Petroleum Conference (APPEC), Asia’s largest oil industry gathering.

"We still have some spare capacity at our residue desulfurizer so we can produce more low-sulfur fuel oil to supply to the bunker market," Tanaka said.

This will also reduce Cosmo Oil’s surplus gasoil production, which used to be exported, he said. Residue from the RDS is typically processed further at secondary refining units to become higher value products such as gasoline and diesel.

Cosmo’s decision to start selling VLSFO is part of a growing trend among Asian refiners seeking to capitalize on IMO demand. As VLSFO production grows, demand for alternative marine gasoil (MGO) may not be as robust as initially forecast.

Rather than burning VLSFO or MGO that contain 0.5% sulfur, ships can instead add sulfur-removing units, or scrubbers, onboard to continue using cheap high-sulfur fuel oil (HSFO).

Of the six oil tankers under long-term charter by Cosmo Oil, half of them are fitted with scrubbers while the rest will use VLSFO, Tanaka said.

The company is in talks with suppliers to lock in some VLSFO supplies as it expects to start switching to the new fuel from October, he added.

Cosmo Oil will also increase slightly the capacity of its coker unit at Sakai refinery when the unit restarts by end-October after a revamp, its officials said.

The unit, which processes fuel oil into middle distillates, was shut on Aug. 21 for the revamp.
MRC

MOSCOW (MRC) -- Saudi Arabia will try to maintain oil supplies to its major customers by drawing down crude stored at tank farms in the kingdom and in its global network while repairing and replacing installations damaged in the recent attacks, said Hydrocarbonprocessing.

Saudi Arabia reported domestic crude stocks of 180 million barrels at the end of July, government data supplied to the Joint Organisations Data Initiative showed.

Saudi Aramco, the national oil company, also maintains a few tens of millions of barrels of forward storage near its customers in leased tank farms in the Netherlands, Japan and Egypt. Aramco holds crude for strategic reasons to cover emergencies, and for operational purposes to ensure an uninterrupted flow of the right grades of oil to domestic refineries and overseas customers.

Domestic stocks were relatively low at the end of July, having fallen by 50 million barrels (22%) since July 2018 and by 150 million barrels (45%) from their post-slump swollen peak in October 2015.

The sustained drawdown over almost four years has left domestic stocks at their lowest level since 2007, numbers from JODI showed. At the end of July, stocks were sufficient to cover 18 days’ worth of exports, domestic refinery requirements and direct crude burning in the kingdom’s power stations.

Forward cover is down from a recent peak of almost 33 days in October 2015 and is close to the lowest level for over a decade. Stocks should enable the kingdom to maintain supplies to customers in the short term until installations at Abqaiq and Khurais can be repaired/bypassed, or alternative production and processing capacity can be brought online.

Saudi Arabia’s energy minister said on Tuesday the kingdom had already managed to recover supply to customers to its pre-attack level — by implication using stored crude.

The minister also predicted oil production would be fully restored to its previous level by the end of the month (“Saudi Arabia to restore oil output fully by end of September”, Reuters, Sept. 17).

But stocks can only cover a limited and fairly short loss of production, which underlines the importance of repairing and replacing Abqaiq and Khurais as quickly as possible.

The kingdom may also reduce its own refinery processing to prioritize crude for export and make limited crude stocks go further. Saudi Aramco’s trading arm has reportedly been trying to buy diesel to offset reduced output from domestic refineries.

Saudi Arabia’s crude stocks are performing their intended role to act as a cushion against an unexpected production loss but they buy only a relatively short amount of time to get production back to pre-attack levels.

As MRC informed earlier, Saudi Arabia will restore its lost oil production by the end of September and has managed to recover supplies to customers to the levels they were at prior to weekend attacks on its facilities by drawing from its huge oil inventories.

As MRC reported before, a number of Saudi Arabia's companies, such as Tasnee, Sadara, Advanced Petrochemical and Saudi Kayan, announced a curtailment of feedstock to their petrochemical plants, including polyethylene (PE) and polypropylene (PP) facilities, by an average of 30-50% due to the attacks on key Saudi Aramco facilities on Saturday.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.
MRC