Equinor, Shell and Total vow to press on with projects in Vaca Muerta

MOSCOW (MRC) -- Equinor, Shell and Total vowed to press on with projects in Vaca Muerta, even as policy uncertainty and price controls make it harder to plan investment in Argentina's biggest shale play, raising concerns of a slowdown in oil and natural gas production growth, reported S&P Global.

Representatives of the three companies expressed their determination for the play, one of the world's largest, in meetings with Omar Gutierrez, the governor of Neuquen, a southwestern province where most of the acreage is located.

Gutierrez met with executives of the three companies during a visit to Madrid last week.

Total told him it is delineating an undisclosed block as a step toward entering into mass production, building on a pilot and other developments in the play. The French company also plans to seek unconventional licenses for blocks it is developing for conventional resources in the province at the north end of Patagonia, Gutierrez said in a statement.

Norway's Equinor said it plans to drill six more wells in Bajo del Toro, building on two already in production for oil on the block, which it is developing in partnership with Argentina's state-backed YPF, according to Gutierrez. The partners are seeking a 35-year development license for the block, while Equinor looks for opportunities "to expand their participation in Vaca Muerta," Gutierrez said.

The governor said Shell told him that they will be completing five pre-development wells on Bajada de Anelo in July, a final step before evaluating whether to move into full-scale production on the block. That would build on its first project in the play, the development of the three adjoining blocks where the company said it plans to complete the expansion of an oil treatment plant to take processing capacity to 42,000 b/d from 12,000 b/d, Gutierrez said.

The decisions come after most companies put investments on hold in the play following the introduction of price controls last year that have reduced the price of oil and gas to near breakeven levels.

President Alberto Fernandez, a left-leaning moderate, extended the controls soon after taking office December 10, and he has yet to announce a plan to ease out of them or for the oil sector as a whole. This has left companies guessing what he could do.

"Companies invest when they can see that the future is predictable," said Hugo Giampaoli of Giga Consulting, an energy consultancy outside Buenos Aires. "When they feel that the rules are going to change, they rein in investment. Today, the conditions are not in place to invest."

The result, he said, should be slower production growth this year than in 2019.

Argentina produced a total of 507,412 b/d of oil in the first 11 months of 2019, up 3.7% from 489,159 b/d in all of 2018, according to the latest data from the Argentina Oil and Gas Institute, an industry group. Over the same period, gas production rose 5.6% to 136 million cu m/d from 128.8 million cu m/d, the data show.

The start of several new oil and gas processing plants in Vaca Muerta should boost output this year, but that will be offset by slower growth in blocks where rigs have been sidelined as companies wait for more certainty on policy and pricing.

Fernandez has said he is working on legislation designed to provide stable conditions for investing in Vaca Muerta over the long term.

The bill should gain approval in Congress, where the ruling party has a majority, Giampaoli said. "But until then, there are going to be announcements and meetings, but everything is going to continue at a slow pace like now."

As MRC informed before, in November 2019, Total disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

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.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
MRC

MOSCOW (MRC) -- U.S. manufacturers and freight haulers were hit last year by the sharpest slowdown since the 2008/09 recession and it filtered through into a noticeable dip in energy consumption, said Hydrocarbonprocessing.

Use of electricity, natural gas and diesel by industrial customers all showed large declines, or at least sharp slowdowns, in the nine months ending in September 2019. In July to September, industrial users’ total energy consumption fell 1% compared with the same period a year earlier, according to statistics from the U.S. Energy Information Administration.

That was the biggest decline since the mid-cycle manufacturing slowdown in 2015/16 and before that the recession of 2008/09 (“Monthly energy review”, EIA, Dec. 23).

Within the total, industrial consumers’ electricity consumption fell by almost 5% in the third quarter from a year earlier, easily the biggest decline since the recession. Power consumption exhibits a lot of short-term variability based on both the weather (which affects heating and cooling demand) and the state of the economy, so the data must be interpreted with care.

But industrial users’ consumption showed a much more pronounced third-quarter slowdown than for residential customers, which suggests most of the weakness was economic rather than weather-related.

In contrast to electricity, industrial users’ gas consumption continued to grow, mostly because of the strong increase in demand from petrochemical producers.

Even so, gas consumption rose by just 0.75% in July-September compared with a year earlier, down from a growth rate of 7% year on year in early 2018.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC

MOSCOW (MRC) -- BASF SE has invested to enhance the flexibility of its water-soluble polyacrylate production plant at the company’s Ludwigshafen site, Germany, and also has slightly expanded capacity, according to Chemical Engineering.

The upgraded plant is now operational, enabling customers in the household and commercial cleaning products, as well as for chemical and formulator industries to benefit from the expanded capacity in specialty chemicals.

"High-performance water-soluble polyacrylates and copolymers are an indispensable component of our customers’ formulations. With this investment and our applications expertise, we are supporting our European customers in their efforts to boost their market growth with differentiated products," said Soeren Hildebrandt, Senior Vice President, Home Care, I&I and Industrial Formulators Europe at BASF.

Water-soluble polyacrylates and copolymers are marketed by the Care Chemicals operating division under the Sokalan brand and have numerous applications. Sokalan PA and Sokalan CP grades are used in the household and commercial cleaning products industry for water softening and in various technical processes, for example to prevent fouling. As dye transfer inhibitors, Sokalan HP grades protect fabrics from discoloration during washing. Sokalan NR grades are polyacrylates whose narrow molecular-weight distribution makes them highly effective mineral dispersing agents.

As MRC wrote earlier, BASF, the world's petrochemical major, has restarted its No. 1 steam cracker following a maintenance turnaorund. Thus, the company resumed operations at the plant on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of around EUR63 billion in 2018.
MRC

MOSCOW (MRC) -- Imports of high density polyethylene (HDPE) into Russia grew in January-December 2019 by 44% year on year and reached 363,100 tonnes. Pipe grade and film grade polyethylene (PE) accounted for the greatest increase in imports, according to MRC's DataScope report.

December HDPE imports grew to the last year's maximum for the entire last year - about 37,900 tonnes against 30,200 tonnes a month earlier. Overall HDPE imports reached 363,100 tonnes in 2019 versus 251,500 tonnes a year earlier. Thus, the indicators of external deliveries of HDPE have reached a record level since 2013, a higher import volumes were only in 2012 - 410,200 tonnes. Pipe and film HDPE accounted for the greatest increase in shipments.

The structure of PE production by grades looked the following way over the stated period.

December HDPE imports exceeded 14,000 tonnes from 12,700 tonnes a month earlier, shipments from Uzbekistan and Ukraine increased.
Overall HDPE imports in the country grew to 131,900 tonnes in 2019, up by 65% year on year. Last month's imports of HDPE for extrusion blow moulding (EBM) decreased to 6,600 tonnes, compared to 7,300 tonnes in November; supplies of Uzbek polyethylene decreased. Total imports of blow moulding HDPE in the country exceeded 68,100 tonnes in Jan-December 2019, up 20% year on year.

December injection moulding HDPE imports increased to 4,600 tonnes from 2,700 tonnes a month earlier. Overall output of these products exceeded 60,300 tonnes in 2019, up by 4% year on year.

December imports of pipe HDPE into the country increased to 8,000 tonnes, compared with 4,800 tonnes in November. on a stronger purchases of natural HDPE from Turkmenistan. The overall imports of other ethylene polymers exceeded 58,700 tonnes over the stated period versus 27,500 tonnes a year earlier.

Overall imports of other grades of HDPE to Russia were 44,100 tonnes in 2019 compared to 29,300 tonnes year earlier.

MRC