Iraq oil-rig count tumbles after IOCs ordered to cut spending on oil plunge

MOSCOW (MRC) -- Iraq's oil-rig count has tumbled by almost two-thirds this year after international oil companies were ordered to cut spending because of the oil crash and OPEC's second-largest producer agreed to stringent new OPEC+ cuts, said S&P Global.

The total now averages 32 rigs operated by IOCs this month, down from 88 rigs in December 2019, Iraqi sources told S&P Global Platts. Federal Iraq is averaging 31 rigs this month, compared with 76 in December, while the semiautonomous Kurdish region in the northern part of the country is averaging only one rig in May compared with 12 in December.

Iraq's state-run Basrah Oil Co. in March asked IOCs to cut budgets by 30% and postpone payments to subcontractors due to the oil price crash. Oil prices received by federal Iraq were down to about USD14/b in April, from USD60/b in January, slashing oil revenue to USD1.4 billion from USD6.16 billion. Oil revenue accounts for more than 90% of Iraq's federal budget.

Oil drilling is now the biggest investment expenditure of IOCs, the sources said. The drop in the drilling programs will allow Iraq to cut costs by 30%, sources said. Iraq is currently in the midst of cutting its output in line with the new OPEC+ agreement that will trim a record 9.7 million b/d in May and June. At 4.54 million b/d in April -- according to the latest Platts OPEC survey -- Iraq's production will have to fall by almost 1 million b/d for the country to abide by its quota under the OPEC+ deal.

The politically splintered nation has been a consistent laggard in compliance, drawing the ire of other members, and the government faces challenging negotiations with IOCs and the Kurdish region to fulfill its cut commitment.

The country is fully committed to the new OPEC+ cuts, acting oil minister Ali Allawi said earlier this month. The existing rig count should be sufficient to keep Iraq's production at least within the OPEC+ target, the sources said.

Unlike other producers in OPEC, led by top producer Saudi Arabia which pumped at record levels in April, Iraq was not able to open the taps last month despite the expiry of the old OPEC+ cuts agreement in March. The outbreak of the coronavirus and lockdowns also forced Malaysia's Petronas to evacuate staff in March and stop production from the southern oil field of al-Gharraf, which pumped some 90,000 b/d.

The KRG has its own burdens. According to a report by Deloitte, the KRG last year had to pay $2.20/b to transport crude by pipeline to the Turkish border, USD3/b to the Turkish energy ministry and USD14.80/b to IOCs. The KRG also received USD1.573 billion from traders as an advance payment, and at the end of the year owed USD3.4 billion.

More recently, federal Iraq told the KRG in a May 22 letter that it must develop an oil and budget deal within 30 days before it will approve future salary payments. The KRG is now sending a delegation to Baghdad for talks, the sources said.

As MRC informed earlier, Iraq is cutting its oil output by around 700,000 barrels per day (bpd), a third less than required under an OPEC+ supply pact, after it failed to persuade international oil majors operating its giant fields to agree to deeper reductions.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Japanese refineries may be forced to shut down capacity once again unless they see a strong recovery from the coronavirus pandemic, reported Reuters.

They’ve been hit by declining use for fuel at home, competition from newer refineries in China and South Korea dominating in other markets, as well.

Idemitsu Kosan on Tuesday reported an annual loss, like its competitors have done in recent days.

Executive Officer Noriaki Sakai said Japan’s second-biggest refiner expects fuel sales to fall 30% in the year through March 2021 while President Shunichi Kito said the company “may need to consider some measures (to consolidate refineries) in the mid-2020s”.

Tsutomu Sugimori, president of JXTG Holdings, Japan’s biggest refiner, told an earnings conference last week: “We have been considering consolidation of refineries since our merger in 2017. We will adjust our production facilities to reflect weakening demand.”

JXTG, which accounts for about half of the market, has already decided to shut a refinery in Osaka with partner PetroChina and shut its Muroran refinery in Hokkaido.

Japan’s oil refining capacity peaked at 5.6 million barrels per day (bpd) in 1982, data from the BP Statistical Review of Energy shows.

It currently has about 3.4 million bpd of capacity in mostly aging refineries and industry ministry estimates suggest that could fall to 2.3 million bpd by the end of the decade.

As MRC wrote before, JXTG Nippon Oil and Energy is in plans to restart its cracker following an unplanned outage. The company is likely to resume operations at the cracker early this week. The cracker was shut owing to technical issues on May 4, 2020. Located at Kawasaki in Japan, the cracker has an ethylene production capacity of 460,000 mt/year and propylene production capacity of 235,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- LyondellBasell, the world’s largest licensor of polyolefin technologies, today announced that Sinopec Hainan Refining & Chemical Co., LTD. (Sinopec) will use the LyondellBasell Hostalen “Advanced Cascade Process” (Hostalen ACP) technology for a new facility, said the company.

The process technology will be used for a 300 KTA high density polyethylene (HDPE) facility to be built in Yangpu, Hainan Province, P.R. China.

“Multi-modal HDPE resins play a key role in addressing the growing demand for higher value polyethylene products,” said Neil Nadalin, Director of Licensing at LyondellBasell. Nadalin added: “The Hostalen ACP process is the leading low-pressure technology to deliver those benchmark polymer products."

With these new capacity additions, LyondellBasell has licensed over 8500 KTA of benchmark multi-modal HDPE resins. The Hostalen ACP low-pressure slurry process technology manufactures high performance, multi-modal HDPE resins with an increased stiffness/toughness balance, impact resistance and high stress-cracking resistance used in pressure pipe, film and blow-molding applications.

The Sinopec Hainan HDPE plant will commence operations using Avant Z501 and Avant Z509 catalysts to produce a full range of multi-modal HDPE products.

New licensees can take advantage of LyondellBasell’s in-house expertise of continuous process, operating and product improvements by optionally joining our Technical Service program.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges?like?enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances. LyondellBasell sells products into more than 100 countries and is the world's largest producer of polymer compounds and the largest licensor of polyolefin technologies.
MRC

MOSCOW (MRC) -- Overall imports of acrylonitrile-butadiene-styrene (ABS) to the Belarusian market dropped in the first quarter of 2020 by 15% year on year to 1,360 tonnes, according to MRC's DataScope report.

This figure was at 1,590 tonnes in January-March 2019.

March ABS imports to Belarus decreased by 31% year on year. Thus, imports of material into the country were 457 tonnes over the stated period versus 667 tonnes in March 2019. Imports were at 467 tonnes in February 2020.

Belgium, Russia and South Korea are the main countries-importers of ABS to Belarus.

Imports of material from Belgium increased in the first three months of 2020 by 23% year on year: from 446 tonnes to 550 tonnes. The share of Belgian material imports in the total shipments was 41%, compared to 33% in the first quarter of 2019. However, March ABS imports from Belgium fell by 22% from February, totalling 154 tonnes.

Deliveries of Russian material decreased in the first quarter of 2020 by 16% year on year: from 468 tonnes to 392 tonnes. The share of Russian companies' ABS in the total imports to the country remained in January-March 2020 at the last year's level - 29%. Shipments of Russian material to Belarus reached 169 tonnes in March 2020 versus 116 tonnes a month earlier, whereas imports of Russian material were 134 tonnes in March 2019.

Imports of Korean material to the Belarusian market slumped in January-March 2020 by 56% year on year: to 231 tonnes from 522 tonnes a year earlier. The share of ABS imports from South Korea in the total shipments to the country decreased in the first quarter of 2020 to 17% from 33% a year earlier. March 2020 shipments of Korean ABS into the Republic of Belarus were 169 tonnes versus 115 tonnes in February, whereas imports of material were 134 tonnes in March 2019.

MRC

1. Crude hits 10-week high as economic restarts prompt demand optimism

MOSCOW (MRC) -- Crude futures settled higher amid signs that the continued reopening of economies in the US and Europe could bring balance to oversupplied oil markets in coming weeks, reported S&P Global. NYMEX July WTI settled USD1.10 higher at USD24.35/b and ICE July Brent climbed 64 cents on the day to finish at USD36.17/b. Front-month WTI and Brent was last higher on March 10. Oil demand outlooks continue to improve as more state and local governments ease restrictions on non-essential travel and trade aimed at slowing the COVID-19 coronavirus pandemic.


MRC