Lukoil and MOL to sign dirty oil settlement

MOSCOW (MRC) - Russian oil producer Lukoil and Hungarian energy company MOL are set to sign a settlement deal over contaminated oil during Russian President Putin's visit to Budapest this week, said Hydrocarbonprocessing.

A high level of organic chloride was found in late April in Russia's Druzhba pipeline, which connects Siberian oilfields with Belarus, Ukraine, Poland, Germany, Czech Republic and Hungary. The substance, which can damage refining equipment, was also detected in the Baltic Sea port of Ust-Luga.

The contamination disrupted oil exports from Russia to the West and has led to protracted negotiations over compensation. A source familiar with the plans of Lukoil and MOL, said the companies were unlikely to disclose the amount of compensation to be received by MOL.

"We've been cooperating very closely, so it's just to make an official statement about successful settlement and prospects for future cooperation," the source said.

The agreement is set to be signed during Putin's visit to Budapest. Last week, his aide, Yury Ushakov, said Putin would travel to Hungary on Oct. 30.

Last month, Russia and Kazakhstan reached a preliminary deal over compensation for tainted oil, though the final agreement is yet to be signed.

Lukoil, MOL and Russian oil pipeline monopoly Transneft have not replied to requests for comments.

Up to five million tonnes of crude may have been contaminated by organic chloride, which is used in oil extraction.

Traders such as Glencore and BP have been struggling to sell the tainted oil, which could potentially be mixed with unaffected crude to become usable.

Transneft has said compensation won't exceed USD15 per barrel.

According to ICIS-MRC Price report, Stavrolen (part of Lukoil), Russia's major polyolefins producer, has resumed its polypropylene (PP) production in Budennovsk after a long scheduled turnaround. The plant's customers said Stavrolen had fully resumed its PP production after the long scheduled maintenance by 15 October. The outage began on 6 September. The start-up of the plant"s high density polyethylene (HDPE) production will take place with a week delay.

Lukoil is one of the leading vertically integrated oil company in Russia. The main activities of the company include operations for exploration and production of oil and gas, production and sale of petroleum products. Lukoil is the second largest private oil Company worldwide by proven hydrocarbon reserves. Lukoil's structure includes one of the largest Russian petrochemical plant - Stavrolen.

SIBUR cuts LPG exports to Europe to feed ZapSibNefteKhim

MOSCOW (MRC) -- Russian petrochemical giant SIBUR has cut liquefied petroleum gas (LPG) exports to Europe by more than a third so far this month, redirecting flows to its newly built Siberian plant, reported Reuters with reference to data and traders.

SIBUR's complex in western Siberia, known as ZapSibNefteKhim, will be one of the world's five biggest petrochemical plants when it is fully operational and is part of Russia's plans to capture more value from the oil it produces.

SIBUR is supplying the plant with some of the LPG it produces domestically. The plant, also essential for SIBUR's plans to list its shares in Moscow and potentially in London, is operating in test mode, with full production capacity seen in 2021.

According to Refinitiv LPG trade flows data, SIBUR cut LPG exports via the Baltic Sea port of Ust-Luga by 36% on a daily basis between Oct. 1 and 20 to 4,170 t vs 6,512 t in January-September.

SIBUR declined to comment.

Ust-Luga is Sibur's main export route. The company exports LPG - chiefly used as fuel for cars, heating and to produce other petrochemicals - to Europe only.

According to Russian Energy Ministry data, Sibur supplied ZapSibNefteKhim with around 48,000 t of LPG last month vs 3,000 t in August.

SIBUR's Chief Executive Dmitry Konov said last month that the company planned to reduce its LPG exports to Europe to around 2 MMt next year as it holds back feedstock for its new plant in Siberia.

SIBUR exported 3.6 MMt of LPG last year and 1.9 MMt in the first half of 2019.

As MRC wrote previously, in September 2019, the Director General of SIBUR, Mikhail Karisalov, said that SIBUR intends to complete the commissioning and start up ZapSibNeftekhim early next year.

Besides, in October 2019,, ZapSibNeftekhim affiliate produced the first batch of polyethylene (PE) granules using its own ethylene feedstock at its Tobolsk complex in Siberia. Earlier this year, ZapSib produced a test batch of PE from imported feedstock, "while today the process is running smoothly using our own feedstock," SIBUR said. Commissioning and start-up are "well under way", and after ramping up to its full capacity, the petrochemical facility will produce 1.5m tonnes/year of PE - making ZapSib’s Tobolsk project Russia’s largest polymer production facility.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,436,390 tonnes in the first eight months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the PP consumption in the Russian market was 909,260 tonnes in January-August 2019, up by 10% year on year. Shipments of PP block copolymer and homopolymer PP increased.

PAO SIBUR Holding is the largest petrochemical company in Russia and Eastern Europe with full coverage of the industry cycle from gas processing, production of monomers, plastics and synthetic rubbers to plastics processing.

Incident at the ExxonMobil refinery in Seine-Maritime

MOSCOW (MRC) -- An electric fire Saturday morning on the ExxonMobil facilities in Notre-Dame-de-Gravenchon (Seine Maritime) resulted in a plume of smoke, below the regulatory thresholds, which could remain visible for several days, it was learned on Sunday, reported EN24 with reference to the industrial group.

"On Saturday, October 19, around 8 am, an electrical trip led to the shutdown of the ExxonMobil Chemical France steam cracker. To decompress the installation safely, the gases were sent to the torch, "said Sunday the petrochemical group in a" information to residents ".

In addition to the town hall, Atmo Normandie, a regional air quality monitoring association, approved by the Ministry in charge of the Environment, has been informed, as well as the Dreal (regional direction of the environment, of the planning and housing), we learned from the communication department of the group. "We have made information to residents to reassure them," said the same source.

"Further checks were conducted Saturday on the steam cracker and will lead to technical interventions before the restart phases of the facility. This is why the torch could remain visible for a few days. The current staff is making every effort to limit the duration and impact of this incident, "according to the information given by the group, which" apologizes to residents for the inconvenience. "

In a statement, Atmo Normandy ensures that, according to its measures, "a slight increase in sulfur dioxide concentrations is observed in the morning (Saturday) well below the regulatory threshold of information and recommendation."

The commune of Notre-Dame-de-Gravenchon, on which the ExxonMobil refinery is located, merged since 2016 with smaller neighboring municipalities to become Port-Jerome-sur-Seine, about forty kilometers from Havre.

As MRC informed before, in September 2019, ExxonMobil announced plans to spend GBP140 million over the next two years in an additional investment program at its Fife ethylene plant, which has a capacity of more than 800,000 t/y.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,436,390 tonnes in the first eight months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the PP consumption in the Russian market was 909,260 tonnes in January-August 2019, up by 10% year on year. Shipments of PP block copolymer and homopolymer PP increased.

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.

HIPS and GPPS imports to Kazakhstan remains in Jan-Aug 2019 at the level of last year

MOSCOW (MRC) -- Overall imports of general purpose polystyrene (GPPS) and high impact polystyrene (HIPS) to Kazakhstan remained in the first eight months of 2019 at the last year's level, totalling 5,300 tonnes, according to MRC's DataScope report.

Nevertheless, August shipments of material to the country more than quadrupled and were 900 tonnes, compared to 200 tonnes in August 2018. HIPS and GPPS imports into Kazakhstan were 710 tonnes in July 2019.

HIPS and GPPS are shipped to Kazakhstan mainly from Russia. Russia accounted for 64% of the total imports.

INEOS conducts consultation on the potential closure of Seal Sands ACN Plant

MOSCOW (MRC) -- INEOS has recently announced its intention to consult with employees on the proposed closure of the acrylonitrile (ACN) manufacturing plant at Seal Sands on Teesside, as per the company's press release.

The site which employs 224 people has been in INEOS ownership since 2008. In the event the plant closes, not all of these positions will be at risk of redundancy due to the continuation of other activities at Seal Sands.

Over the past 10 years, INEOS has invested almost EUR200m in the site to try to counter decades of significant under investment. Despite the company’s best efforts and the fact that every penny of profit has been ploughed back into the site to reverse this situation, the company is of the view that nothing more can be done to ensure that operations are both safe and economically viable. It would require another EUR200m just to meet INEOS standards and environmental regulations. The company intends to consult on any viable alternatives to closure.

The ACN process needs careful management and involves handling significant quantities of hazardous material. The company feels that it would not be possible to guarantee the long-term safety of our employees or our neighbours through continued operation of the plant and have thus reluctantly concluded that we should consider the option to close.

Paul Overment, CEO of INEOS Nitriles said, "After considering many options, we feel that we must now consult with employees on the potential closure of the plant. We do so with a heavy heart but there is no escaping the fact that decades of under investment on the site have led us to this point. Manufacturing assets need constant renewal if they are to survive. The last 10 years have proven that it is almost impossible to play catch-up and the lesson for us and other UK manufacturers is that constant reinvestment is vital for long term prosperity."

As MRC informed before, the restart of the ACN plant of INEOS Nitriles in Seal Sands, UK with the capacity of 280,000 mt/year from the planned maintenance, which began on 27 July 2019, was delayed in late September for a second time because of technical issues. The plant was initially expected to restart at the end of August.

ACN is a feedstock for the production of acrylonitrile-butadiene-styrene (ABS).

According to ICIS-MRC Price report, on the back of low Asian prices, August ABS imports to Russia were 3,600 tonnes versus 2,800 tonnes a month earlier and 2,700 tonnes in August 2018. ABS imports to the country did not change year on year in January-August 2019, totalling 21,900 tonnes.