COVID-19 drives new round of planning

MOSCOW (MRC) -- LyondellBasell CEO Bob Patel says COVID-19 has cast uncertainty over both short- and long-term plans. Although he is optimistic about the overall economic outlook, he believes the pandemic could leave a deep imprint on the energy markets and global trade, challenging basic assumptions about project returns, supply, and demand, said Chemweek.

Patel discussed business conditions last week during a webcast with Lyn Tattum, vice president/events at IHS Markit and publisher of Chemical Week. "Near term, [we're] preparing for recovery and working through scenarios," Patel says. "Could there be a reduction in activity again? It's hard for me to imagine that we would go back to a complete lockdown like we just went through around the world, but we have to contemplate scenarios of a second wave and what might happen."

The company's medium-term planning revolves around finishing its large capital projects, particularly the propylene oxide/tert-butyl alcohol (PO/TBA) facility at Channelview, Texas. The project was originally slated for completion during the second half of 2021, but in late March, LyondellBasell announced that it would push the date back one year in response to the pandemic.

A new 550,000 metric tons/year high-density polyethylene (HDPE) plant at La Porte, Texas, the first to employ LyondellBasell's Hyperzone dual-reactor technology, has been online since February. "I think by July/August we should be running the operation very well and producing the grades we intended," says Patel.

LyondellBasell's longer-term planning has been complicated by the crude oil price collapse, which has significantly undercut the cost advantage of ethane-based polyethylene production in the US.

"We're thinking through feedstock scenarios," says Patel. "I believe that there will be advantage in the US, but the thing that we're really trying to assess is how wide that advantage will be. And then the implications on end-use demand--will people fly less, drive more? Will there be more work from home? And other market trends. What are the implications of all of that on demand for our end products? So we're also thinking through strategically what we need to do long-term." Patel says 2-3 years are likely to pass before the company decides to pursue another PE project.

Another major question is the effect of the pandemic on trade flows. "For the last 10-15 years, global trade has increased, [but] I do think that as a scenario we should contemplate whether what has happened in the last 90-120 days could slow that down," says Patel. "I don't think we significantly go backwards, but I could see that in China, for example, more of the local growth is met with local production."

LyondellBasell's polyolefins joint venture with China's Liaoning Bora, announced in September 2019, could play a key role in responding to such a shift. Patel says the project, which includes a steam cracker and downstream polyethylene (PE) and polypropylene (PP) units, is expected to begin production during the fourth-quarter of 2020.

"This could be a platform for us for future investment in China, in terms of adding onto the existing facilities over the next decade or so," says Patel. "While we didn't predict something like this at the time we undertook the Bora project, we were firmly of the mind that we want to be [both] where the market is and where the feedstock is. We wanted to kind of have diversity of investment, and I think it will prove out to be quite a good investment."

Patel points to the August 2018 acquisition of plastics compounder A. Schulman to illustrate the benefits of LyondellBasell's diversification strategy. "Our legacy compounding business was 95% automotive, and with the acquisition of A. Schulman, we're able to get into applications like food packaging, medical, other durable goods, and some other products in areas that are not just polypropylene based," he says. "With the slowdown in automotive in our compounding business, it's actually the A. Schulman part that's doing quite well, so I think this notion of diversifying our participation in end-use has really paid off."

As MRC reported earlier, global petrochemical producer LyondellBasell has reduced rates across its system to accommodate lower demand wrought by shutdowns around the globe to stem the spread of the coronavirus pandemic, said the company's CEO Bob Patel. LyondellBasell's overall global petrochemical and refining assets were expected to operate at 60% to 80% of nameplate capacity through the second quarter, Patel said during the company's first-quarter earnings call. European crackers were seen running at 80% to 85%, while US crackers were expected to run at about 75%, he said.

We also remind that to further aid in the fight against the COVID-19 pandemic, LyondellBasell (LBI) donated a key ingredient to Huntsman Corporation to produce hand sanitizer for US first responders.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 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, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

Sika acquires Modern Waterproofing Group

MOSCOW (MRC) -- Sika has acquired Modern Waterproofing Group, a leading manufacturer of roofing and waterproofing systems in Egypt, said the company.

The acquisition supplements and rounds off the product portfolio of Sika Egypt and offers new opportunities for growth in the Egyptian construction market. The acquired business generates annual sales of CHF 26 million.

The Egyptian company manufactures solutions for the waterproofing and roofing markets, focusing on a comprehensive range of modified bitumen membranes; as well as offers liquid coatings and insulation boards.

“The expanded product portfolio will significantly strengthen our position in the Egyptian construction market,” said Ivo Schadler, regional manager for Europe, Middle East and Africa (EMEA) at Sika.

As MRC informed earlier, French building materials group Saint-Gobain (Paris, France), through its subsidiary Schenker-Winkler Holding AG (SWH), has started to dispose of its entire 10.75% stake in the Swiss construction chemicals company Sika (Baar, Switzerland) through a private placement to institutional investors.

As MRC informed earlier, Russia's output of products from polymers grew in April 2020 by 11.2% year on year due to quarantine restrictions. However, this figure increased by 3.4% year on year in the first four months of 2020. According to the Russian Federal State Statistics Service, April production of unreinforced and non-combined films decreased to 107,000 tonnes from 110,400 tonnes a month earlier. Output of films products grew in the first four months of 2020 by 12.5% year on year to 402,800 tonnes.

Sika, a specialist in sealants and adhesives with origins dating back to 1910, employs some 25,000 people and has more than 300 plants worldwide. The group reported sales of CHF8.1 billion in the financial year 2019.
MRC

Iraq reiterates commitment to OPEC+, but seeks new future rules

MOSCOW (MRC) -- Iraq wants OPEC+ to take into consideration the economic and living conditions of countries when assigning quotas in oil production cuts, the country's finance minister said, as OPEC's second-largest oil producer struggles to adhere to it production limits, said S&P Global.

"Iraq's decision to comply with OPEC+ agreement is good and sound and we are committed to it until its expiry," Ali Allawi said in a televised press conference June 7. "But we want also to have new future rules in order to distribute this burden on countries, taking into consideration economic conditions of these countries and living standards when these amounts of cuts are implemented."

Allawi, who used to be acting oil minister in the cabinet of Prime Minister Mustafa al-Kadhimi, blamed on June 2 "technical issues" for the country's failure to further cut its output and reiterated the country's commitment to the OPEC+ agreement.

Iraq pumped 4.213 million b/d in May and exported 3.63 million b/d, oil marketer SOMO said June 7. The production figure was above the country's 3.592 million b/d quota for May under the OPEC+ agreement.

OPEC+ agreed on June 6 to extend its record 9.7 million b/d cut for May and June to July and mandated oil quota busters such as Iraq to over-comply with cuts in July, August and September to make up for overproduction.

Iraq has failed over the past three years to stick to its quota as it grappled with the aftermath of its war with the Islamic State group between 2014-2017 and ensuing financial problems.

The country has also struggled with internal political upheavel, with protests erupting in October and leading to the resignation of the government of Adel Abdul Mahdi.

Iraq stayed under the caretaker government of Abdul Madhi until the appointment of the Kadhimi government in May. The outbreak of the coronavirus has also taken a toll on Iraq.

As MRC informed earlier, Iraq's oil exports, excluding those from the semi-autonomous Kurdish region, fell 6.6% in May, according to the oil ministry, indicating that OPEC's second-biggest oil producer may have struggled to cut its output by about 23% in accordance with the new OPEC+ agreement. Iraq's oil exports in May averaged 3.212 million b/d, the ministry said in a statement on June 1. In April, exports were 3.438 million b/d.

As MRC informed previously, 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.

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

Shell, Murphy evacuating non-essential workers from US Gulf due to storm

MOSCOW (MRC) -- Royal Dutch Shell Plc and Murphy Oil Corp began evacuating non-essential workers from the U.S. Gulf of Mexico because of the threat from Tropical Storm Cristobal, reported Reuters.

Shell said its production and drilling operations in the US-regulated northern Gulf were unaffected despite the evacuations.

Gulf Coast spot gasoline prices remained steady, traders said. Gulf CBOB gasoline traded on Thursday at 12.50 cents per gallon below the futures benchmark, little changed from Wednesday.

The storm’s impact on prices at the pump is expected to be limited because of the loss of demand from the COVID-19 pandemic, said an analyst with Gas Buddy.

“We aren’t expecting an impact on gas prices from Cristobal at this time given its relatively weak forecast,” said Patrick De Haan at Gas Buddy.

Five companies are removing workers from the Gulf because of Cristobal, which is forecast to pass through offshore oil production areas before striking the Louisiana coast by Monday, according to the US National Hurricane Center.

BP Plc said on Wednesday that workers were being evacuated as it shuts in production at its Thunder Horse, Na Kika and Atlantis platforms. The company is also pulling non-essential workers from the Mad Dog platform, but production was unaffected.

Norwegian state-oil company Equinor ASA and Occidental Petroleum Corp began evacuating non-essential workers on Wednesday. Equinor plans to shut the Titan platform on Friday, if necessary.

The Louisiana Offshore Oil Port LLC (LOOP), Exxon Mobil Corp , Chevron Corp and Hess Corp said their operations were normal.

The US Energy Information Administration expects the Gulf of Mexico to account for 15% of total US crude oil production in 2020.

As MRC wrote previously, 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.

We remind that 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.
MRC

S-Oil starts maintenance at No. 2 MTBE unit

MOSCOW (MRC) -- S-Oil has taken off-stream its No. 2 Methyl tertiary butyl ether (MTBE) unit for a turnaround, according to Apic-Online.

A Polymerupdate source in South Korea informed that, the company has started maintenance at the unit on June 4, 2020. The unit is slated to remain off-line for about four weeks.

Located at Onsan in South Korea, the No. 2 MTBE unit has a production capacity of 370,000 mt/year.

As MRC reported earlier, S-Oil's new residue upgrading complex (RUC) and olefin downstream complex (ODC) was inaugurated at the company's Onsan Refinery in Ulsan, South Korea, in July, 2019. The project, which cost around USD4-billion, involved construction of a plant to upgrade low-value residue oil to high-value gasoline and propylene. The propylene is to be used for the production of 405,000 t/y of polypropylene (PP) and 300,000 t/y of propylene oxide.

Separately, S-Oil and Saudi Aramco, a majority shareholder in S-Oil, signed a memorandum of understanding (MoU) to collaborate on a USD6-billion steam cracker and olefin downstream project. Completion is expected by 2024. PCN earlier reported that the project would include a 1.5-million-t/y steam cracker, which would produce ethylene and other basic petrochemicals from naphtha and refinery off-gas. The downstream units would include the production of polyethylene and PP.

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