Pandemic impact justifies new focus on low-carbon targets: BP CEO

MOSCOW (MRC) -- The coronavirus pandemic underscored BP's efforts to "reimagine energy" by taking a leading role in the push to cleaner, low-carbon fuels, said S&P Global, citing CEO Bernard Looney.

Rising levels uncertainty over the future demand for oil, oil price volatility, a growing attractiveness of stable returns from some renewables, and an increased awareness of "the fragility of the world we live in" mean BP is taking the right path to pursue lower-carbon fuels, Looney said.

"We are maintaining momentum on the plans for reimagining energy and reinventing BP," Looney said in a speech at a webcast annual general meeting. "The more we understand the current situation, the more I am convinced that the decisions we took in February are right."

In February, Looney set out ambitious new targets for the oil major to become a "net-zero" carbon emitter by 2050 or sooner as he looks to position the company to take a leading role in tackling climate change with cleaner energy.

Under a number of as yet, loosely defined goals, BP plans to get to net-zero on the carbon content of the company's oil and gas production by 2050 or sooner and see its oil and gas output decline gradually "over time".

Like many of its oil major peers, BP also aims to increase its investment in non-oil and gas businesses, currently running at around USD500 million a year, or roughly 3% of overall capex.

Looney, who succeeded Bob Dudley as CEO in February, said BP was making "good progress with this transformation" and planned to provide a detailed update on its efforts at a strategy presentation in September.

The heads of the world's largest oil and gas producers pledged Tuesday to maintain a strategic focus on producing cleaner energy and helping to mitigate climate change despite reeling from the impact of the coronavirus pandemic on oil and gas prices.

As MRC informed earlier, the Turkish Competition Council has given permission to SOCAR and BP to establish a joint venture that will operate in the petrochemical sector, local media reported on July 22. Earlier it was reported that SOCAR and BP applied to the relevant institutions in Turkey to establish a joint petrochemical company, which will be called Mercury complex, in April 2020. Recall that on December 20, 2018 SOCAR and BP signed contractual principles for evaluation of plans for creation a world-class petrochemical complex in Turkey and establishment of a joint venture to manage it.

PTA is the main raw material in the production of polyester from which beverage and food containers, packaging materials, photo and film and other consumer and industrial goods are derived.

According to ICIS-MRC Price report, in Russia, July formulae PET prices for contract customers were in the range of Rb65,000-67,500/tonne CPT Moscow, including VAT. Prices of material in the spot market remained steady last week, Russian producers continued to ship material from 20 tonnes at a price of Rb70,000-72,000/tonne CPT Moscow, including VAT.
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MOSCOW (MRC) -- Germany's chemical industry association VCI (Frankfurt) says that production of chemicals, excluding pharmaceuticals, went up 1.5% on a year-on-year basis, in the country during the first quarter, and increased 3.6% compared with the final quarter of 2019, said Chemweek.

This is mainly because of strong demand for hygiene products and packaging materials, VCI says. Nevertheless, the “full force” of the pandemic caused by the coronavirus disease 2019 (COVID-19) has not yet been felt by the industry, VCI says.

The COVID-19 pandemic had only a minor impact in the first quarter since it was only in March that economic growth started slowing and the demand for chemicals declined worldwide, VCI says. Sales by Germany's chemical/pharmaceutical industry increased 0.6% to EUR49.5 billion (USD54.5 billion) compared with the fourth quarter of 2019.

For full-year 2020, the association anticipates a significant drop in production and sales for the chemical/pharmaceutical industry in Germany. In March, VCI lowered its full-year production forecast, estimating a 1.5% decline in the country’s chemical output on the anticipated impact of COVID-19. VCI says it will now publish a more precise forecast after the second quarter.

According to a VCI survey, German chemical companies expect a severe recession in 2020, with firms facing many challenges due to declining orders, disrupted supply chains, and a lack of transport capacity. “2020 is going to be a difficult year for the chemical/pharmaceutical industry. Companies will strongly feel the effects of the corona crisis in the coming months. 75% of VCI members are expecting a sales decline in Europe,” says Christian Kullmann, president at VCI and chairman of Evonik Industries.

Kullmann restated the need for political action to restart the German economy. “Not only our industry but the entire German economy urgently needs an investment and growth program—instead of new burdens. Furthermore, we need genuine and holistic sustainability strategies and not projects that are solely oriented to the ecological component,” says Kullmann.

As MRC informed earlier, the European Council decided, after a special meeting held on 21 July, to introduce a levy on non-recycled discarded plastic as part of the EU's COVID-19 recovery plan. However, Germany's chemical industry association VCI (Frankfurt) had, prior to the EU Council’s meeting, expressed opposition to the project because it adds a regulatory and cost burden rather than supporting packaging recyclability.

As MRC informed before, members of the European Parliament (MEPs) are proposing ways to step up green energy storage solutions such as hydrogen or home batteries, in a report that was adopted in one of the Parliament’s voting sessions on Friday, 10 July. The proposals outlined in the report are set to play a crucial role in reaching the goals of the Paris Agreement on Climate Change, as more efficient energy-storage options in the EU will help "spur decarbonization," the EU Parliament says. In addition, since solar and wind have a variable electricity output, more storage solutions should become available to secure supply, MEPs say.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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MOSCOW (MRC) -- Linde said it has started up a new air separation unit (ASU) and the first of three nitrogen generators in Taiwan, as part of a 15-year contract to supply ultra-high purity industrial gases to a major electronics customer, said Chemweek.

Built and operated by Linde’s joint venture Linde LienHwa (LLH), the project will support a multi-billion-dollar wafer fab expansion in Tainan Science Park.

The remaining two generators are expected to come on stream in 2021. Once completed, the ASU and the three generators will have a total combined gas capacity of over 173,000 Nm3/hr.

"LLH is proud to have reached this significant milestone with our customer, starting the project on time and with the highest safety standards," said Alex Tong, President of LLH.

"This start-up further underscores our track record of delivering on our promises and we look forward to completing the project safely in support of our customer’s growth."

As MRC informed earlier, Linde plans to work with a subsidiary of Chinese energy and petrochemicals firm China National Offshore Oil Corp (CNOOC) to jointly develop China’s hydrogen energy industry.

As MRC informed earlier, in February 2020, Linde PLC received a contract to provide technology for PJSC SIBUR Holding’s cracker at Amur gas chemical complex (GCC). GCC is an integrated 1.5 million tons per year polyethylene and polypropylene production complex to be built near Svobodny in Russia’s far-east Amur region. The contract was awarded to Linde under a consortium with SIBUR subsidiary and project contractor NIPIgazpererabota (Nipigaz).

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

According to MRC's ScanPlast report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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MOSCOW (MRC) -- Versalis announces the signing of the closing that formalizes the acquisition of a 40% stake in the Finproject capital from VEI Capital, according to the company's press release.

The Eni chemical company thus enters the high-performance formulated polymer sector and extends its position towards businesses that are more resilient to the volatility of the chemical industry scenario.

Work to complete the operation during lockdown never ceased and today Versalis launches an industrial partnership with Finproject group, a market leader in the production of cross-linkable and thermoplastic compounds and in the moulding of products for the footwear sector, and products in ultra-light materials under the brand XL EXTRALIGHT.

"We are delighted to have concluded this strategic operation with such a valuable Italian company as Finproject - said Daniele Ferrari, CEO of Versalis (Eni) - There are many opportunities that will see us working together to develop highly innovative products with a vision of growth in the name of sustainability and the circular economy".

The Versalis-Finproject operation will create a new centre of industrial competence in specialty plastic materials that will play a leading role in the development of the sector in Italy and worldwide. Finproject's market position in high value-added applications, in combination with Versalis' technological and industrial leadership in the chemical industry, will create an undeniably remarkable value chain. Together they will develop new materials geared towards sustainability and the circular economy, creating solutions that will bring innovations to countless strategic sectors such as wires and cables, automotive, design, fashion and many other emerging industries.

As MRC reported before, earlier this month, Eni, Versalis and COREPLA (the National Consortium for the Collection, Recycling and Recovery of Plastic Packaging) have signed an agreement that will see them pool their expertise to collect and recycle plastic packaging, with a particular focus on non-mechanically recyclable plasmix.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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MOSCOW (MRC) -- Crude oil futures were slightly lower during mid-morning trade in Asia July 27 as concerns over recovery in oil demand resurfaced amid a resurgence in the number of COVID-19 cases worldwide, reported S&P Global.

At 11:15 am Singapore time (0315 GMT), ICE Brent September crude futures was down 8 cents/b (0.18%) from the July 24 settle to USD43.26/b, while the NYMEX September light sweet crude contract was down by 4 cents/b (0.1%) at USD41.25/b.

"Crude has been overdue for a correction because the concerns over oil demand revival globally is quite real," Vandana Hari, founder and CEO of oil consultancy firm Vanda Insights said July 27.

Global COVID-19 case counts have continued to rise steadily and now stands at 16.2 million, with total deaths nearing 650,000, with the US and Brazil accounting for 41% of total confirmed cases, latest data from John Hopkins University showed.

Worldwide daily infections remained high even as it retreated slightly from a record high three-day rolling average of 281,500 cases to settle at 255,000 on July 25. However, major economies such as Japan and Australia, which had previously succeeded in curbing infection rates are once again battling to contain a fresh wave of infections.

However, while economic uncertainties continue to cloud the short term demand outlook, the global crude complex continues to be supported by the weakening US dollar, euphoria over positive vaccine results as well as the European and US fiscal stimulus packages.

"A weaker US dollar should continue to provide a healthy counterbalance to any US inventory overhang as investors will be on the reach for alternative investments to hedge the anticipated wave of US dollar weakness in the weeks and months to come," Stephen Innes, chief global markets analyst at AxiCorp, said in a July 27 note.

He added that there was a strong inverse relation between the US dollar and crude prices, and that a simple regression equation shows that "a weakening of the effective exchange rate of the US dollar of 1% has, on average, been accompanied by a rise in the Brent oil price of 2.0%."

Meanwhile, the US government is expected to finalize details on the trillion-dollar coronavirus relief package this week before further negotiations are expected prior to congressional approval.

"Crude has to some extent been carried on the sustained risk appetite. Watch out for what comes out today in the relief package, that might reignite the risk appetite in the stock market, which will carry crude up in the next few weeks," Vanda Insights' Hari added.

As MRC wrote before, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

And in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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