Pemex studies reconfiguration of petchems facility at Cangrejera, Mexico, into refinery

MOSCOW (MRC) -- Petroleos Mexicanos (Pemex; Mexico City) is advancing a refinery rehabilitation program that will enable it to process 1.2 million b/d of crude oil by the end of 2020 and evaluating a reconfiguration of its petrochemical facility at Cangrejera, Mexico, into what would be its eighth refinery, said Chemweek.

The state-owned company will conclude viability studies in the coming weeks for the building of a 200,000-b/d crude processing train at Cangrejera, Pemex CEO Octavio Romero Oropeza said during a webcast at the weekend. Pemex is close to defining construction times, costs, and profitability, as well the availability of light crude oil over the lifetime of the project, Romero said.

Reconfiguring Cangrejera is an idea that has been explored for decades, with the potential project discarded by Pemex in 2008 and brought out again by trading group Vitol in 2016 under a joint venture. Vitol proposed the project, but Pemex wasn't interested at the time, according to local media.

Cangrejera currently has a 12,000-b/d crude processing unit to produce naphtha as a petrochemical feedstock and other components, for the production of gasoline at Pemex’s 285,000-b/d Minatitlan refinery, said Romero. Pemex currently imports 25,000 b/d of naphtha to operate Cangrejera, he added.

Mexican president Andres Manuel Lopez Obrador said that the reconfiguration was an attractive brownfield project, with multiple advantages such as a low environmental impact and the ability to use existing infrastructure. If the decision is taken to reconfigure Cangrejera, Pemex must complete the work no later than 2023, the year the current presidential term ends, Lopez Obrador said. This would ensure the project is completed and not abandoned by future administrations, he added.

Crude oil availability will be a challenge for this project amid the reluctance from Mexico to import light crude oil. The government expects to refine 1.6 million b/d of crude oil by 2022. Pemex has a goal of producing 2.4 million b/d of crude oil by 2024. However, IHS Markit forecasts Mexico’s crude output will be 1.5 million b/d by that year.

Mexico’s energy secretary, Rocio Nahle, said that Mexico expects to process 1.2 million b/d of crude oil by the end of 2020, a level last reached during a handful of months in 2014, according to Pemex data. The country is moving to boost its crude processing levels despite having negative refining margins in the last two quarters: minus USD2.64/bbl in the fourth quarter of 2019 and minus USD12.51/bbl during the first quarter of 2020.

Pemex CEO Romero said works are also moving ahead for the rehabilitation of the Minatitlan refinery, which will allow the facility to reach a reliable processing level of 170,000 b/d by the end of the year, a significant recovery from 26,000 b/d processed in 2018 and 96,000 b/d in 2019. Minatitlan only operated for five months in 2018 and four months in 2018.

Pemex currently has two ethane-based steam crackers, at Cangrejera and Morelos. Mexico has been a net importer of ethane since 2018, with its domestic ethane production for 2020 put at around 77,000 b/d, according to a recent IHS Markit North American Light Olefins monthly report. A total of approximately 67,000 b/d is required to feed its own two crackers, while Pemex must also fulfil its long-term contract requirements to Braskem-Idesa of 66,000 b/d.

Ethylene and propylene are feedstocks for producing PE and 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.

MRC

MOSCOW (MRC) -- Westlake Chemical is issuing new senior bonds, which will be used to redeem USD254 million in tax-exempt revenue bonds issued by a Louisiana economic development authority on behalf of Westlake, said Chemweek.

The bonds to be redeemed have three tranches: a USD100-million tranche due in 2029; an USD89-million tranche due in 2035; and a $65-million tranche also due in 2035. All three tranches carry an interest rate of 6.5%.

The timing, exact size, and interest rate of the new debt offering has yet to be determined. The new bonds will be subject to optional redemption at Westlake’s discretion at par on or after 1 August 2020.

The move indicates a return of liquidity to debt markets, as the US Federal Reserve has taken steps to shore up liquidity in the wake of the COVID-19 pandemic. Interest rates are currently quite low, with Westlake being the latest chemical company to take advantage of the situation to refinance.

In February 2018, as MRC informed before, Westlake Chemical announced plans to expand its capacities for the production of PVC and VCM at three of its chemical facilities. Two of the plants are located in Germany (Burghausen, Gendorf) and one is located in Geismar, Louisiana. The expansions in Burghausen and Geismar are expected to be completed in 2019. The Gendorf expansions are expected to be completed in 2020 and 2021.

Ethylene and propylene are feedstocks for producing PE and 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.

Westlake Chemical Corporation is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, chlor-alkali and derivative products, PVC suspension and specialty resins, PVC Compounds, and PVC building products including siding, pipe, fittings and specialty components, windows, fence, deck and film.
MRC

MOSCOW (MRC) -- Indorama Ventures Public Company Limited (IVL) announced that the company has, through its indirect subsidiary Indorama Ventures Polimeros S.A., acquired 100% equity stake of AG Resinas Ltda. (AG Resinas), a limited liability company incorporated under the laws of Brazil and completed thetransaction on June 8, 2020, said Chemweek.

AG Resinas is a PET recycling facility in Juiz de Fora, Brazil and processes post-consumer PET into Recycled Polyethylene Terephthalate (rPET) flakes and pellets with a combined capacity of approx. 9,000 tonnes/annum. The facility is close proximity to a large supply of recovered PET bottles, bringing benefits through logistics advantage.

This acquisition is strategically in-line with the IVL’s long-term sustainability objectives and will complement IVL’s PET business in Brazil and provide a unique opportunity to create an immediate recycling presence with further expansion opportunity.

As MRC informed earlier, Indorama Ventures Company Ltd (IVL) plans in June to carry out planned preventive work on the line for the production of purified terephthalic acid (PTA) in Map Ta Phut (Map Ta Phut, Thailand). It is expected that repairs on this line with a capacity of 771,000 tonnes of PTA year will continue for about 10 days.

As per MRC's ScanPlast, Russia's PET imports decreased by 35% in April to 11,200 tonnes against 17,400 tonnes in March; last April material imports amounted to 22,900 tonnes. Imports of Chinese injection moulding PET chips in Russia increased by 16% in January-April, compared with the same period a year ago and reached 40,400 tonnes. The same indicator in January-April 2019 amounted to 48,200 tonnes.
MRC

MOSCOW (MRC) -- Iran expects gas exports to Turkey to resume by mid-July at the latest, a senior Iranian gas official said June 7, following an explosion on a pipeline in Turkey that forced supplies to be suspended at the end of March, said S&P Global.

Mehdi Jamshidi-Dana, former director for dispatching at state-owned National Iranian Gas Company and now interim caretaker of its Gas Transfer Company, also said NIGC rejected a claim from Turkey that the suspension of supplies represented a force majeure event.

"We predict that the repair of the Iran-Turkey gas pipeline will end in the month of Tir (June 21-July 21) and gas flow will resume," he told the oil ministry news agency Shana.

Turkey's energy ministry and gas importer Botas have not made an announcement on progress in repairing the pipeline, but Jamshidi-Dana said Turkey had claimed the pipeline explosion was a force majeure event, meaning Ankara could avoid paying for gas not taken under the two sides' 25-year take-or-pay contract that came into effect in 2001.

Neither the Turkish energy ministry nor Botas responded to requests for comment June 8. The explosion on the line took place on March 31, but repairs had still not been completed despite work following such attacks usually taking around three to seven days, Jamshidi-Dana said previously.

"Iran has announced in writing that it does not accept this is a force majeure event. In several correspondences, we said Iran is ready to repair this pipeline within eight days but the Turkish side didn't welcome that," Jamshidi-Dana said.

Turkey imported 7.7 Bcm of gas from Iran in 2019, or some 17% of its total gas imports, under the long-term contract that allows Ankara to buy 9.6 Bcm/year.

As MRC informed earlier, Iran's petrochemical products will reach 100 million tons by the end of 2021.

Ethylene and propylene are feedstocks for producing PE and 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.
MRC

MOSCOW (MRC) -- BP says it will reduce its operating costs by USD2.5 billion in 2021 and cut close to 10,000 jobs, mostly before the end of this year, due to the collapse in oil demand because of COVID-19 and as part of its strategy to become a lower-carbon company, said Chemweek.

The UK major in early April announced a cut of around 25%, approximately USD2.5 billion, in its planned capital expenditure (capex) to USD12.0 billion for 2020. BP’s CEO Bernard Looney now says those capex cuts will total around USD3.0 billion. It will also now reduce its operating costs, currently USD22 billion, by USD2.5 billion. The company has not specified any specific business divisions that will be affected.

“It was always part of the plan to make BP a leaner, faster-moving and lower-carbon company. That is how we will deliver on our net zero ambition. And that is how we will seize opportunities throughout the energy transition. Then the COVID-19 pandemic took hold,” he says. Flagging the widespread economic fallout of the pandemic, Looney says the oil price has plunged “well below the level we need to turn a profit. We are spending much, much more than we make – I am talking millions of dollars, every day.” The company’s net debt rose by USD6 billion in the first quarter of this year as a result, he says, adding, “We have to spend less money.”

The previously flagged 25% cut in capex for this year is a reduction of “around USD3 billion,” but it “currently costs around USD22 billion a year to run the company—of which around USD8 billion is people costs,” says Looney. The company will reduce those operating costs by USD2.5 billion in 2021, he says, “and we will likely have to go even further."

BP introduced a three-month freeze on redundancies in March, a moratorium that ended today, 8 June. “We will now begin a process that will see close to 10,000 people leaving BP—most by the end of this year,” adds Looney, who took on the role as CEO in February. The majority of those affected, around 15% of its worldwide workforce, will be in office-based jobs and not in its retail business, according to the company. BP employs around 15,000 people in the UK and over 70,000 worldwide.

The statement by Looney also says the company will give no pay rises to senior employees and group leaders until March 2021 and that employees should not factor any cash bonuses into their financial plans this year. Pay raises will be reintroduced for less-senior employees as of 1 October. BP announced a round of senior management appointments last month that halved the size of its leadership team as part of Looney’s plans to reshape the company’s structure, with the company looking to reduce the number of group leaders “by around one third.”

“To me, the broader economic picture and our own financial position just reaffirm the need to reinvent BP. While the external environment is driving us to move faster—and perhaps go deeper at this stage than we originally intended—the direction of travel remains the same,” Looney says. The moves will “help strengthen our finances” and help create a more competitive company, he adds.

In April BP reported a 61% fall in its first-quarter petrochemical earnings to USD65 million from USD169 million a year earlier on an underlying replacement-cost (RC) basis before interest and tax, while group underlying RC profit before interest and tax plunged 50% YOY to USD2.39 billion. The price of Brent crude declined 74% during the first quarter. The energy industry had been “hit by supply and demand shocks on a scale never seen before,” Looney said at the time, adding that it would take decisive actions to strengthen its finances.

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.
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