India plans to fill strategic oil storage by the third week of May

MOSCOW (MRC) -- India plans to completely fill its strategic petroleum reserve (SPR) by the third week of May by moving about 19 million barrels into the sites by then, the managing director of the country’s SPR said, as per Reuters.

India is moving the oil to the SPR to help the country’s refineries reduce their excess crude as the lockdown to contain the outbreak of COVID-19, the respiratory disease caused by the new coronavirus, has dented transportation and industrial fuel consumption in Asia’s third-largest economy. India’s fuel demand in March declined by 17.8%, the lowest in over two decades.

India will be diverting cargoes for loading in April already bought by refiners Indian Oil Corp (IOC.NS), Bharat Petroleum (BPCL.NS), Hindustan Petroleum (HPCL.NS) and Mangalore Refinery and Petrochemicals Ltd (MRPL.NS). The refiners cut their crude processing after local fuel demand collapsed and are unable to store the excess oil themselves.

"As of now the plan is to fill the caverns by (the third week of May), before the arrival monsoon rains. We are buying oil from state refiners,” H.P.S. Ahuja, the managing director of the Indian Strategic Petroleum Reserves Ltd (ISPRL) said. ISPRL is responsible for building and filling of SPR sites.

ISPRL wants to receive the cargoes before India’s monsoon begins in May as the single point mooring system that can unload very large crude carriers (VLCC) at the port of Mangalore, which will feed two SPR sites, is shut during the three-month rainy season.

Reuters last month reported India planned to buy oil from the United Arab Emirates (UAE) and Saudi Arabia to fill its SPR to gain from low prices. "We are taking advantage of low oil prices,” he said, adding most of these cargoes are linked to official selling prices (OSP) for April.

Saudi Arabia drastically cut its OSPs for April to boost its oil sales after major producers failed to agree to extend a supply curtailment agreement that expired at the end of March. Ahuja said ISPRL hopes to receive the last oil cargo on May 21, while IOC supplied a VLCC containing oil from the UAE on Monday.

The SPR is divided between three locations in southern India and can store about 37 million barrels of oil, equivalent to about 9.5 days of India’s oil demand. A portion of the SPR is already filled. The federal government has allocated about 38 billion rupees (USD498.18 million) for the oil purchases, he said.

As MRC informed earlier, Indian IVL Dhunseri, Indorama Ventures Company Ltd (IVL) and Indian Dhunseri Petrochem Ltd, are planning to resume production of polyethylene terephthalate (PET) in Panipat (Panipat, Haryana, India) this week. This enterprise with a capacity of 216 thousand tons of PET per year was closed on March 26 due to logistics problems in the country caused by quarantine in the country due to coronavirus.

Earlier it was reported that IVL Dhunseri Petrochem Industries, JV Indorama Ventures Company Ltd (IVL) and Indian Dhunseri Petrochem Ltd, on March 26 closed the plant for the production of polyethylene terephthalate (PET) in the city of Haldia (Haldia, India). This line with a capacity of 240 thousand tons of PET per year is closed for an indefinite period.

According to ScanPlast of Market Report, in February of this year, the estimated PET consumption in Russia fell by 3% compared to the same period a year earlier and amounted to 53.89 thousand tons. According to the results of January - February 2020, 100.83 thousand tons of granulate was processed in Russia.


MRC

MOSCOW (MRC) -- Following Sasol’s (Johannesburg) announcement on 17 March of steps it is taking to overcome its financial problems, the company has informed the Johannesburg stock exchange that it is taking further actions in response to the fast-developing coronavirus disease 2019 (COVID-19) pandemic, reported Chemweek.

The company said that “a small number of Sasol employees have tested positive for COVID-19 and are receiving full support.”

It says that substantial progress has been made with regard to its USD2-billion cash conservation program and it plans to implement additional self-help management actions to mitigate further negative impacts of COVID-19 across its portfolio. In South Africa, the national COVID-19 lockdown has resulted in an unprecedented decline in fuel demand since coming into effect on 27 March 2020. Sasol and its partner Total South Africa have decided to suspend production at their Natref refinery at Sasolburg with effect from 9 April 2020 until further notice.

Given the steep decline in fuels demand, Sasol has also decided to reduce daily production rates at its Secunda Synfuels Operations (SSO) by approximately 25% to meet the current market demand, while maintaining optimal inventory levels, until further notice. A further reduction in production rates may be required depending on developments in the fuels market, the company says. All Sasol's coal mines are continuing to operate despite lower internal demand, resulting in external coal purchases being significantly minimized.

Sasol says it will continue to prioritize chemicals production within the revised SSO operating parameters including the latest cutback scenario. Despite the suspension of production at the Natref refinery and lower production rates at SSO, the country's current demand for fuels and chemicals, including sanitizers, will be met. The company says it will continue to monitor chemicals demand as well as supply chain risks.

Given these developments and the decline in demand, liquid fuels sales volumes are expected to be approximately 50–51 million barrels (MMbbl) against the previously guided 57–58 MMbbl for financial year 2020. Accordingly, synfuels production volumes will be approximately 7.3–7.4 million metric tons (MMt) against the previously guided range of 7.7–7.8 MMt. Sasol says that at this stage a similar reduction in synfuels chemicals demand is not being experienced, and the company is prioritizing supply of chemicals within South Africa as well as strong export demand.

Sasol has made significant progress on the $2-billion business self-help measures for financial years 2020 and 2021, which form the basis of the response strategy to the COVID-19 pandemic and oil price volatility. Given the continued negative impact of COVID-19 on market demand and global macroeconomic indicators, Sasol's management team is in the process of proactively identifying further measures to provide an additional buffer against short-term volatility.

As MRC wrote previously, in mid December 2019, Sasol announced that the LCCP Ethane Cracker was increasing production rates following the successful replacement of the acetylene reactor catalyst. Sasol’s Ethane Cracker with a nameplate capacity of 1.54 million tons per year achieved beneficial operation in August 2019 but has run approximately 50-60% of nameplate capacity due to underperformance of the plant’s acetylene removal system. The company stated that the issue had been resolved then.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

MOSCOW (MRC) -- Overall polyethylene (PE) imports into the Ukrainian market rose in the first three months of 2020 by 4% year on year to 67,500 tonnes. High density polyethylene (HDPE) accounted for the main increase in imports, according to MRC DataScope report.

Last month's PE imports to Ukraine grew to 27,700 tonnes from 20,500 tonnes in February, local companies increased shipments of all ethylene polymers grades, except for ethylene-vinyl-acetate (EVA). Thus, overall PE imports reached 67,500 tonnes in January-March 2020, compared to 65,100 tonnes a year earlier.

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

Last month's HDPE imports went up to 11,600 tonnes from 8,100 tonnes, Ukrainian companies raised their purchasing in all consumption segments due to seasonal factors. Overall HDPE imports exceeded 27,500 tonnes in the first three months of 2020 versus 23,700 tonnes a year earlier.

March low density polyethylene (LDPE) imports were slightly over 7,900 tonnes, compared to 6,500 tonnes a month earlier, local companies raised their purchasing of LDPE in Russia before stronger demand in spring. Overall LDPE imports reached 20,400 tonnes over the stated period, compared to 19,600 tonnes a year earlier.

Last month's linear low density polyethylene (LLDPE) imports were 7,200 tonnes versus 5,200 tonnes in February, with stretch films producers accounting for stronger demand for PE. Overall LLDPE imports reached 16,700 tonnes in January-March 2020, compared to 18,400 tonnes a year earlier.

Imports of other PE grades, including EVA, totalled 2,900 tonnes over the stated period, compared to 3,400 tonnes a year earlier.

MRC

1. French CIM oil storage tanks brimming as coronavirus quashes demand

Oil tanks at FranceпїЅs storage and dispatch services company CIM are completely full due to the glut in global oil supply and the sharp drop in products demand, the director general of the company said, as per Reuters. CIM, which handles around 40% of FranceпїЅs crude imports, has 3 million cubic metres of crude storage capacity and 1.7 million cubic metres of refined products storage capacity, mostly at the Le Havre oil port hub. The firm also operates the 4,700 km Trapil pipeline network. пїЅThere is no demand, our tanks are full to the brim,пїЅ CIM's Olivier Peyrin told Reuters.


3. OPEC, Russia approve biggest-ever oil cut to support prices amid coronavirus pandemic

MOSCOW (MRC) -- OPEC and allies led by Russia agreed to a record cut in output to prop up oil prices amid the coronavirus pandemic in an unprecedented deal with fellow oil nations, including the United States, that could curb global oil supply by 20%, reported Reuters. Measures to slow the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the U.S. shale industry, which is more vulnerable to low prices due to its higher costs.



MRC

MOSCOW (MRC) -- Brazilian petrochemical company Braskem SA expects to cut its Capex prediction for this year, of 3 billion reais (USD578 million)is by at least 10%, reported Reuters with reference to chief financial officer Pedro Freitas' statement in a webcast on Wednesday.

Braskem has drawn USD1 billion in revolving credit lines as an insurance against the coronavirus crisis, the CFO said.

The company’s cash position was USD3.3 billion in late 2019 and that the company issued additional USD2.25 billion in bonds maturing in 2030 and 2050.

As MRC informed earlier, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
MRC