Pemex sees crude production dip 3% in October

MOSCOW (MRC) -- Mexican national oil company Pemex produced nearly 3% less crude in October compared with the previous month, as the heavily indebted firm struggles to reverse a prolonged production slump, reported Reuters.

Output averaged 1.66 million barrels per day (bpd) last month, or about 50,000 barrels less than in September.

Compared the same month last year, Pemex’s October oil output was down 5.5%.

The company produced 3.4 million bpd in 2004, but production has steadily declined every year since then. Pemex debt has grown dramatically to just under USD100 billion as of the end the third quarter.

Pemex Chief Executive Octavio Romero has at times this year announced that the company’s oil output has stabilized, while predicting that it should be producing around 1.8 million bpd by the end of this year.

Pemex’s press office did not immediately respond to a request for comment.

President Andres Manuel Lopez Obrador, who appoints the Pemex chief and has made the company’s revival a top priority, has said the firm’s oil output will reach some 2.7 million bpd when his six-year term ends in 2024.

Lopez Obrador, a leftist resource nationalist, has suspended competitive oil auctions open to private and foreign oil companies. He has also canceled auctions to pick joint venture partners for Pemex, a common industry practice designed to share the rewards and risks of complex oil and gas developments.

Both decisions have been sharply criticized by industry analysts as well as credit ratings agencies.

Meanwhile, Pemex’s crude exports in October averaged 963,000, the lowest monthly figure this year and down more than 6% compared with shipments during the same month last year.

The company’s taxes contribute about a fifth of federal government revenue.

As MRC informed earlier, the blast, which took lives of twenty-four people, occurred at a vinyl petrochemical plant that is a joint venture between Pemex's petrochemical unit and majority owner Mexican plastic pipe maker Mexichem in late April 2016. Pemex operates the larger petrochemical complex where the plant was located, known as Pajaritos. The plant produces some 900 tpd of vinyl chloride monomer (VCM), also known as chloroethene, an industrial chemical used to produce plastic piping. The joint venture had forecast sales of USD260 million this year.

VCM is the main feedstock for the production of polyvinyl chloride (PVC).

According to MRC's DataScope report, exports of suspension polyvinyl chloride (SPVC) from Russia totalled 175,600 tonnes in the first eleven months of 2019, up by 22% year on year. Imports increased more significantly - by 230% year on year to 48,500 tonnes.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene, polypropylene, polystyrene.
MRC

MOSCOW (MRC) -- Last month's demand for EPS boards subsided in the Ukrainian market by 40% from October 2019, according to ICIS-MRC Price report, citing a major converter's statement.

This figure showed a decrease of 4% year on year.

At the same time, a major converter said demand for finished products fell in the country in January-November 2019 by 10% year on year.

A season of weak demand began in the EPS boards market in early December. Thus, lower consumption of EPS by large- and medium-sized converters is expected this month.
MRC

MOSCOW (MRC) -- Stavrolen, Russia's major polyolefins producer, has shut down its high density polyethylene (HDPE) and polypropylene (PP) production capacities for an unscheduled short turnaround, according to ICIS-MRC Price report.

A plant's representative said Stavrolen took off-stream its HDPE and PP production on 11 December because of the necessity to conduct technical works. The outage will be short and will last for about 5 days.

At the same time, it is worth noting that maintenance works at the ethylene production will not affect supply of polyethylene (PE) and PP to consumers. The plant has sufficient stocks to meet customers' needs during the forced shutdown.

Stavrolen's (part of Lukoil) annual capacity of PP and HDPE production is 120,000 and 300,000 tonnes, respectively. The plant's output of propylene polymers and HDPE exceeded 86,700 tonnes and 221,300 tonnes, respectively, in the first ten months of 2019.
MRC

MOSCOW (MRC) -- India's growing urgency to embrace cleaner fuels has prompted Petronas to chalk out a growth strategy that leans towards environment-friendly energy such as LNG and renewables, as New Delhi aims to encourage companies that can help speed up the country's energy transition plans, reported S&P Global.

While the Malaysian oil and gas firm is actively looking at partnership opportunities in the gas value chain, it has made its maiden foray into the renewables space with the acquisition of Amplus Energy Solutions, which will provide end-to-end solutions for rooftop and ground-mounted solar power projects, and serves the Indian market.

Analysts said these initiatives will help Petronas build on its capabilities in India, where the company traditionally has a wide portfolio across the energy value chain, covering crude oil trading, LPG, petrochemicals and lubricants, in addition to LNG, and more recently, renewables.

"Cleaner fuels such as LNG and renewable energy have a huge potential in India as the country continues to grow and combat worsening air pollution. Petronas' efforts to expand business in these areas are likely to pay off in the long run," said Kang Wu, head of Asia Analytics at S&P Global Platts.

As India's energy needs continue to grow because of rapid urbanization and a rising middle class population, Petronas is eying a bigger share of the energy market, the company said in a statement recently, and added that by 2030, India would be home to seven megacities, boosting demand for energy, power and consumer goods.

"Petronas is on track to build an effective business ecosystem in India to better serve our customers and stakeholders in this important market," Rizan Ismail, chairman of Petronas Energy (India) Private Ltd., said recently during a visit to India.

Petronas in April acquired Amplus, which has a cumulative capacity of 600 MW in operation and under development. Amplus recently launched a new 75 MW open access solar plant in Mirzapur in Uttar Pradesh state.

India is also aggressively pushing for renewable energy, but the South Asian giant's energy structure is unlikely to see a major shift soon. The Indian government has set a target of installing 175 GW of renewable energy capacity by 2022.

Some analysts note that the growth in renewable energy use would be faster than that for gas in the coming years in India.

In addition to renewables, the company's lubricant business in India is also witnessing progress with the commencement of commercial operations at its lubricant blending plant in Patalganga in the western state of Maharashtra.

With a production capacity of 97,000 mt/year, it would enable Petronas to expand its distribution network to 35,000 outlets, from the current 12,000 outlets, across the country by 2021, the company said.

Petronas said its LNG business in India will expand further as it explores potential opportunities in the gas value chain.

"This reflects Petronas' commitment to support the government of India's aspiration of having natural gas achieve 15% of the country's total energy mix by 2030, by co-creating the gas market," it said.

Many other global companies are also in the race to grab a share of the Indian gas market. Total announced in October it would acquire a 37.4% stake in Adani Gas, highlighting its gas ambitions at a time when companies like Shell and BP are stepping up efforts to play a bigger role in India, where the share of gas in the energy mix is as low as 6% compared with a global average of 24%.

By increasingly investing in downstream demand, Petronas appears to be taking a route similar to the one taken by many large national and international oil and gas companies, Jeff Moore, manager for Asian LNG Analytics at S&P Global Platts, said.

"Not only does India provide a strong growth market from an energy perspective, it also provides a potential outlet for Petronas' future LNG ambitions, as it can look to ensure a market for future volumes by helping to invest in downstream infrastructure," Moore added.

Platts Analytics expects Malaysia's LNG exports to remain relatively steady over the next ten years, at an average of around 31 Bcm/year. "As contracted capacity continues to expire, the company would be looking for new customers for their volumes, and India represents a strong growth market," Moore said.

Petronas LNG is looking at regions like India and Southeast Asia, which are running large energy deficits and have significant latent gas demand waiting to be tapped, Ezhar Yazid Jaafar, CEO of Petronas LNG, a subsidiary of Petronas, said recently.

"India is one of our target markets. It is a market where we see a lot of potential," he said.

Petronas LNG has a team in India looking to develop small-scale LNG solutions as a means to supply its LNG, and to capture market opportunities like LNG trucking, a transportation option widely used in China but not popular in other countries, he added.

As MRC wrote previously, in June 2019, Petronas and Saudi Aramco started operations at their new 1.2-million-tonnes-per-year naphtha cracker. The cracker is part of the USD2.7 billion joint-venture oil refinery and petrochemical project known as RAPID - or Refinery and Petrochemical Integrated Development - located in Pengerang in the state of Johor, at the southern tip of peninsular Malaysia.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
MRC

MOSCOW (MRC) -- Boubyan Petrochemical Co. (BPC) has sold its entire stake of 3,326,371 shares in Saudi Aramco for 126 million Saudi riyals, reporyed Chemweek with reference to the company's regulatory filing.

BPC, a shareholder in Equate and Kuwait Olefins Co., said it generated a profit of KWD1.6 million (USD5.3 million) from the share sale, which will be reflected in the company’s third-quarter results ending 31 January 2020. BPC bought the shares in Aramco for SR106.44 million.

BPC is a shareholding company created for the purpose of investing in Kuwait government–owned petrochemicals sector. The company holds 9% in Equate, a joint venture in which government-owned Petrochemical Industries Co. and Dow have 42.5% each and Qurain Petrochemical Industry has 6%.

BPC decided to cash in its shareholding in Aramco soon after the latter debuted on the Riyadh stock exchange. Shares in Aramco started trading on 11 December. Saudi Arabia sold 3 billion shares in Aramco, equivalent to 1.5% of the company’s share capital, subsequently increased to 3.45 billion shares, or 1.725% of the share capital, via the greenshoe option. The offering generated USD29.4 billion, making it the world’s largest IPO.

On 13 December, Aramco share price of SAR36.80, on the third day of trading, has risen 15% above the launch price, valuing the entire company at USD1.98 trillion, very close to the USD2 trillion originally targeted by Crown Prince Mohammed bin Salman. Apart from a few hedge funds, who saw the opportunity for a quick profit, investors outside Saudi Arabia and the Arab Gulf region largely abstained from the IPO. A survey of 31 major institutions carried out by the brokerage firm, Stanford C. Bernstein, and reported in Fortune magazine, for instance, showed they value the company at an average of only USD1.26 trillion. Analysts outside the region cite reports that wealthy Saudi families and individuals were pressured into supporting the issue, and that government itself, through the Saudi Public Pension Fund, among others, also pumped money into it. They note that if continued pressure from low oil prices forces Riyadh to monetize more of its Aramco holding - via, for instance, a share sale to the Chinese government or its proxies or a second issue on an international stock exchange - it would be in Riyadh's interest to have the highest possible Aramco share price as a base valuation.

As MRC informed before, Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, is running its local refineries at full capacity and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia next year. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.

The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
MRC