CPC, Pertamina to build petrochemical complex in West Java

MOSCOW (MRC) -- A joint petrochemical complex planned by CPC Corp., from Taiwan and state-owned energy producer, PT Pertamina is to be built in Balongan, West Java, said senior minister last week, said Theinsiderstories.

The projects is estimating need costs USD12 billion and to start operating in 2026. Coordinating minister for economic affairs, Airlangga Hartarto told reporter through a video conference said, that both have entered the final stage of talks over the investment. Now, the two companies are finalizing details of the plan, which is one of 245 national strategic projects being run by President Joko Widodo’ government, which include toll roads, railroads, airports, harbors and refineries, as well as gas distribution and irrigation systems.

Early January, CPC Corp. announced is committed to investing USD22 billion for the development of the Balongan petrochemical refinery. In 2018, the company and Pertamina has signed a USD6.49 billion framework agreement for the project. Its estimating, CPC it will take an investment around USD700 million to construct a new plant with an annual capacity of 1 million metric tons of ethylene.

The cooperation between the producers is carried out in the form of the construction of a global-scale naphtha cracker plant and a global petrochemical downstream development unit in Indonesia. The Indonesian operator is committed to diversifying its business into new and renewable energy segments to support the government program for an energy mix portions of 25 percent by 2025.

Later the naphtha cracker plant is expected to produce at least one million tons of ethylene per year and build a downstream unit that will produce other refined derivative products to meet the needs of the world industry, especially in Indonesia.

Currently, Pertamina‘ petrochemical processing capacity is only 700 kilotons per annum. Its capacity will increase gradually as the refinery mega project is completed consisting of two new refineries includes Tuban and Bontang, and four revitalized refineries such as Balikpapan, Cilacap, Balongan, and Dumai.

In 2026, the plant will be able to produce around 6,600 kilotons per year of petrochemical products. So far, the country spends USD3 billion per year to import oil and gas which is almost 70 percent of the country’ national needs.

Recently, CPC has been set up to build and operate a lubricant oil blending plant together with a solvent and chemicals storage complex in Vietnam and thence from that base to explore the Southeast Asian market for those products. This project is the second investment case for the company under the New Southbound Policy, the first being Daihai Petroleum Corporation – an LPG import and marketing joint-venture, located in the port city of Haiphong in northern Vietnam – along with TASCO Group, Chin Lead Co., and HPI Co., local branch.

Since CPC closed its fifth naphtha cracker in Kaohsiung in 2015, the Taiwanese firm has been seeking to relocate its naphtha operations to Indonesia. CPC and Pertamina had previously discussed a plan that was scrapped after negotiations failed to make progress.

As mRC informed earlier, PT Pertamina will develop its Cilacap refinery in Central Java “independently”, the state energy company said, dropping a plan to boost capacity through a joint venture with Saudi Aramco. The two companies have been in talks to upgrade the Cilacap refinery since 2016 and last year said that they would finalise a joint venture plan in the first quarter of 2020.

As MRC informed earlier, Pertamina carried out planned maintenances at the liquid catalytic cracking unit in Balongan (Balongan, West Java, Indonesia). Repair work on this installation with a capacity of 180,000 tonnes/year of propylene started on 19 March of this year and ended on 19 April.

Propylene is a feedstock for producing of PP.

According to MRC's ScanPlast report, 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.

Pertamina is an Indonesian state-owned oil and natural gas corporation based in Jakarta. It was created in August 1968 by the merger of Pertamin (established 1961) and Permina (established 1957). Pertamina is the world's largest producer and exporter of liquefied natural gas (LNG).

BP appoints chairman and president of BP America

MOSCOW (MRC) -- BP announced that David Lawler, CEO of BPX Energy (Denver), will add to his portfolio the responsibilities of chairman and president of BP America, succeeding Susan Dio on 1 July 2020, said Chemweek.

Lawler will become BP's chief representative in the United States. With 13,000 employees and USD30 billion invested since 2016, BP has a larger economic footprint in the US than anywhere else in the world, the company says. In 2019, these businesses accounted for a third of BP's global revenue.

Lawler will take the helm as BP embarks on a new ambition to become net zero by 2050 or sooner and to help the world get to net zero. Bernard Looney, BP CEO said, "Beyond a track record of delivering strong safety, environmental and commercial results, [Lawler] brings an authentic and inspiring leadership style. His curiosity and willingness to do things differently will be essential as we reinvent BP and reimagine energy for people and our planet."

Lawler has served as CEO of BPX Energy since 2014. In 2018, he led the USD10.5 billion acquisition and integration of BHP's American shale assets, BP's largest acquisition since buying Arco in 1999. In addition to focusing investment on the highest quality barrels – aimed at delivering returns and cash flow rather than production volumes alone – Lawler's team also developed oilfield infrastructure to lower operational emissions and eventually eliminate routine flaring in the Permian Basin.

We also remind that, 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 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.

BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.


Russia moves to contain Siberian fuel spill after state of emergency declared

MOSCOW (MRC) -- Russian emergency services are working June 4 to contain a major fuel spill at a power plant near the city of Norilsk after President Vladimir Putin declared a statement of emergency following the leak, said S&P Global.

Products spilled from a reserve fuel tank on May 29, resulting in damage both onshore and offshore in the local area. The tank contained 21,163 mt of diesel, Sergei Lipin, head of plant owner NTEK, a subsidiary of Norilsk Nickel said June 3, during a government meeting on the spill.

Oil spills are a frequent occurrence in Russia. Natural resources supervisor Rosprirodnadzor estimates that in 2019 there were 819 oil spills, covering a total area of 93.6 hectares.

Russia's emergencies ministry is currently trying to localize the spread of the spill, install oil booms and collect oil products, contaminated water and soil, emergencies minister Evgeny Zinichev said during the government meeting, according to a statement on the Kremlin website. He added that 100 mt of oil products and contaminated soil have already been collected.

Rosprirodnadzor estimates that the contamination includes 6,000 mt of oil products onshore and a further 15,000 mt in the water.

The clean-up operation, which began June 1 is hampered by the region's remote location, and a lack of access roads or river navigation options. Zinichev also said that the ministry was not informed until 2 days after the incident occurred.

Natural resources minister Dmitry Kobylkin said the clean up operation will likely include reagents and burning spilled fuel. "We must try to extract the fuel as much as possible, mix it with the appropriate chemical reagents, and, where that is completely difficult, probably to burn something. But such a bonfire on such an area, of such an amount, will be a big problem, in my opinion," he said.

Energy Minister Alexander Novak suggested Russian oil companies could provide support in managing the spill. Russia's Investigative Committee is launching an investigation into the incident.

As MRC informed earlier, the Russian energy ministry expects the global oil market to balance in June or July as a result of rising consumption, as well as the drop in production in OPEC+ and other countries.

As MRC informed earlier, China's crude oil imports from Russia rose 17.7% year on year to 7.2 million mt or 1.76 million b/d in April, resulting in Russia overtaking Saudi Arabia to become the country's top supplier in the month.

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.


Tropical Storm Cristobal closes ports in Mexican Bay of Campeche

MOSCOW (MRC) -- Tropical Storm Cristobal forced ports to close in three states in Mexico's Bay of Campeche area June 3, although there has been no major impact on oil, gas or power generation infrastructure, reported S&P Global.

Ports in the states of Veracruz, Tabasco and Campeche have been closed to all ships, said the head of Mexico's civil protection agency, David Leon, in a press conference.

Northern ports in the state of Veracruz remained open, including the ports of Veracruz and Tuxpan, according to a Mexico-based oil broker.

All relevant oil and gas infrastructure is working without disruption due to emergency protocols put in place by Pemex, the state oil company, said Leon. Power generation plants of state utility CFE in the area were also operating normally, he said.

The 220,000 b/d Minatitlan refinery, located in Veracruz, is operating normally, although still below capacity, a source at the plant said.

It was not clear what impact the storm has had on petroleum terminals in the area. Major Mexican oil facilities such as the Dos Bocas marine terminal will likely face loading delays. Other facilities in the storm's path include the Villahermosa terminal, Campeche terminal and Progreso terminal, and Pajaritos terminal.

The Pajaritos terminal and the Tuxpan terminal are the two main loading destinations for US refined products exports into Mexico, according to Kpler vessel tracking software.

However, exports to Mexico have slowed since March as the coronavirus has reduced fuels consumption in Mexico.

Kpler showed very few clean or dirty tankers in the area June 3.

Campeche is also one of the most active oil and gas exploration and production regions in the country.

Pemex was not immediately available for comment.

Cristobal, which was formed with the remnants from storm Amanda, showed maximum sustained winds of 60 mph June 3, according to the US National Hurricane Center, which issued a tropical storm warning for area ports.

The storm is currently on track to head north into the US Gulf of Mexico, home to roughly 1.9 million b/d of crude production, according to the US Energy Information Administration. The storm is expected to weaken before it makes landfall in Louisiana by late June 6.

Offshore oil and gas producers said they are monitoring the storm, and BP has already started to reduce output in preparation.

"With forecasts indicating that Cristobal will begin moving north across the Gulf of Mexico later this week, BP has begun removing offshore personnel and ramping down production at BP's operated facilities Thunder Horse, Atlantis and Na Kika," said BP spokesperson Jason Ryan. "Non-essential personnel are being evacuated from BP's operated Mad Dog platform but production remains unaffected at this time."

Other producers were beginning to reduce personnel as well.

"To ensure the safety of our people and protection of the environment, we are removing non-essential personnel from some of our central GOM facilities," Occidental Petroleum said in a prepared statement. "All of our facilities in the Gulf remain operational at this time."

Likewise, Royal Dutch Shell said it has activated its hurricane team and is closely monitoring the storm.

"We will be reducing personnel on board some assets as work activities and conditions allow," said Shell spokeswoman Cynthia Babski. "There are no planned impacts to production at this time."

Gas liquefaction terminals in Louisiana and Texas are also monitoring Cristobal to determine if they need to implement contingency plans.

At Cheniere Energy's Sabine Pass in Cameron Parish, Louisiana, the operator has emergency preparedness and response plans that it will activate if necessary, spokeswoman Jenna Palfrey said.

In Hackberry, Louisiana, south of Lake Charles, current operations of Trains 1 and 2 as well as commissioning activities underway for Train 3 have not been interrupted at Sempra Energy's Cameron LNG, spokeswoman Anya McInnis said. Maintenance on Train 3 unrelated to the storm continued.

Operators have already been pulling forward maintenance, shutting down units and working to control costs as they seek to manage lower production and trade flow due to the coronavirus pandemic.

Feedgas flows to US Gulf Coast LNG export terminals rose approximately 600 MMcf/d to 3.8 Bcf/d on June 3 versus the day before, but flows are still down substantially from a week earlier amid weak global demand.

With the volume of cargo cancellations reported for July approximately double the count for June, and questions about the extent of a possible recovery in August, the US market is expected to face pressure for the foreseeable future. Decisions on whether to sanction new projects are likely to see further delays.

As MRC reported earlier, Royal Dutch Shell Plc restarted the crude distillation unit, coker and gasoline-producing cat cracker at its 225,300 barrel-per-day (bpd) Norco, Louisiana, refinery. Shell is restarting the hydrocracker, while the reformer and naphtha hydrotreater will remain shut for previously planned work, the sources said. The coker is scheduled to undergo planned work beginning next week, but is expected to remain in operation.

We also remind that Shell Singapore restarted its naphtha cracker in Bukom Island in early December 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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

According to MRC"s ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

FERC rejects BP complaint over bundling of NGPL transportation service

MOSCOW (MRC) -- The Federal Energy Regulatory Commission has dismissed a complaint filed by BP Energy alleging Natural Gas Pipeline Company of America acted improperly by forcibly bundling a systemwide gas transportation service option as a condition of BP exercising its right of first refusal to bid on continuing firm service, reported S&P Global.

The dispute involves the reach of FERC rules meant to protect an existing firm customer's need to continue its historical transportation service.

FERC sided with the pipeline company Wednesday in finding that BP was seeking to alter existing service rather than preserve it. The right of first refusal "does not afford the firm shipper a right to change the essential character of its service, as BP seeks to do here," FERC concluded in a Wednesday order (RP20-481).

BP had contended that NGPL, in violation of its tariff and FERC rules, "required BP to take its 'optional' (systemwide) service to retain capacity subject to a regulatory right of first refusal, even though NGPL's own notice of released capacity stated the current capacity holder my elect to match the bids with or without the (systemwide) option."

BP said it had preferred to continue primary point capacity without systemwide service that provided access to secondary points throughout its system.

The net effect of NGPL's approach was to increase the cost of its exercise of its right of first refusal for a single contract by about USD7.5 million over the life of the contract, BP argued in its January 31 compliant.

Tenaska Marketing Venture also weighed in in support of the complaint.

NGPL for its part countered that BP was trying to use the right of first refusal to change its existing service, contrary to FERC rules, the pipeline's tariff and BP's contract. It argued that BP exercised its right to match the highest bid to keep its firm service with the systemwide option but now sought to downgrade that service.

BP was using the process to get a different service at a rate below the highest bid received, NGPL asserted.

FERC ultimately concluded that the systemwide option was "essential" to BP's existing firm service, which had a higher maximum reservation rate reflecting the right to secondary access points.

Language in the tariff does not provide BP with a right to discontinue a fundamental part of its existing service that includes a systemwide options while keeping a firm transportation service through a right of first refusal, FERC said.

"Rather, this language ensures that a historical shipper without the (systemwide) option in its existing service may not be compelled to add the (systemwide) option in order to match a competing bid in the (right of first refusal) process," FERC said.

As MRC informed before, BP has entered into an agreement to license its latest generation technology for the production of purified terephthalic acid (PTA) to China’s Dongying Weilian Chemical Co., Ltd. Weilian Chemical is a subsidiary of Dongying United Petrochemical Co., Ltd, one of the leading manufacturers and distributors of petroleum and petrochemical products in China. Weilian Chemical intends to build a 2.5 million tonnes per annum PTA production unit at the Dongying Port Economic Development Zone in eastern Shandong province, adding to Dongying United Petrochemical’s existing refineries and paraxylene (PX) facilities portfolio.

PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, April total estimated PET consumption virtually did not change year on year, totalling 60,840 tonnes (in April 2019 - 60,980 tonnes). 235,160 tonnes of PET chips were processed in Russia in January-April 2020.

BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.