Eni CEO working to make the green drive irreversible

MOSCOW (MRC) -- Eni CEO Claudio Descalzi wants to turn the 67-year-old Italian oil and gas firm into a greener business, focusing on clean low-carbon products to build a huge customer base which he believes can steady the ship and attract investors more than ever, reported Reuters.

The veteran oil executive, reappointed as Eni chief for a third time in May, told Reuters he wants to ensure Eni will play a role in the energy transition which he believes has accelerated in the wake of the coronavirus crisis.

“In these next 3 years I want to trace a completely irreversible path for the group,” Descalzi said.

The 65-year-old, who was in charge of upstream business at Eni before taking over the top spot in 2014, is looking to create a slimmer and more flexible company that can switch very rapidly to meet market conditions but which has a clear long-term direction.

“What’s clear is we need to deliver different kinds of energy products to our clients,” he said.

In February Eni pledged to slash its greenhouse gas emissions by 80% in one of the most ambitious clean-up drives in an industry under pressure from investors to go green.

To do that it will have less oil and more gas in its portfolio, build its renewable capacity, convert refineries to biofuels and step up forestry and carbon capture projects.

“The impact of COVID-19 will be with us for a year or two and that’s why we worked extra fast on our new re-organisation,” Descalzi said.

Eni split its business in two this month, creating a division to focus on clean energy to prepare for a decarbonised future.

The plans come as the oil and gas sector faces a collapse in demand following the coronavirus epidemic and uncertainty over longer-term demand as governments battle climate change.

Descalzi dismissed concerns that pivoting away from oil could undermine returns since the new “Energy Evolution” businesses are less capital intensive and less risky with some 80% of the new energy in OECD countries.

The group intends to introduce new raw materials to feed its bio-refineries and power stations including biogas, animal fats, and inorganic waste as it looks to develop the clean products it says will increase its customer base from 9 million to more than 20 million by 2050.

“We’re getting 15% returns on our bio-refineries and that will grow further when we take palm oil out of the mix by end 2022,” Descalzi said. “So we can compare the returns to upstream business - only with lower risk.”

The energy giant is also betting on large-scale carbon capture, utilisation and storage (CCUS) investments to help clean up the gas that will feature large in its fossil fuel portfolio as oil is wound down after 2025.

In January it announced an agreement with ADNOC to develop CCUS facilities in Abu Dhabi and Descalzi said there are plans for carbon storage at Liverpool Bay in Britain.

That is in addition to large-scale investments around Ravenna, the Italian town close to the Adriatic Sea, where the group has a power plant, chemical production and offshore gas reserves. Eni has vast areas of depleted gas fields in the Adriatic it can use to store its CO2 as well as that of others.

“We want to create one of the biggest CO2 hubs in the world,” he said.

Eni’s plans also include developing its own renewable energy business where the aim is to install 15 gigawatts (GW) of capacity by 2030, from 0.2 GW last year, before taking it to more than 55 GW in 2050.

“On the Energy Evolution front our aim is to grow organically but we don’t rule out small affordable M&A if the right opportunity comes along,” he said.

As MRC informed earlier, Italian oil major Eni is planning to create a division to focus on new energy solutions which could be headed by its CFO, as it steps up preparations for a decarbonised future.

We remind that none of the big oil companies currently meet U.N. targets to limit global warming despite the most ambitious targets set by Royal Dutch Shell and Eni.

We also remind that the ongoing transition to low-carbon energy sources may accelerate as economies recover from the impact of the coronavirus crisis, said the head of oil and gas company Royal Dutch Shell in the May statement.

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

MOSCOW (MRC) -- Crude oil futures were rangebound in mid-morning trade in Asia June 24 as the market awaits fresh drivers, reported S&P Global.

At 09:43 am Singapore time (0143 GMT), ICE Brent August crude futures were down 6 cents/b (0.14%) from the June 23 settle at USD42.57/b, while the NYMEX August light sweet crude contract was 8 cents/b (0.20%) lower at $40.29/b.

"We expect crude oil prices to consolidate from USD37-USD43/b in the short term as the market awaits further developments to determine its next direction," OCBC analysts said in a June 24 note.

"Brent failed to close above the resistance of USD43.40/b yesterday, retreating to USD42.63/b after private estimates suggested US crude oil inventories may climb again this week from the current record high," the analysts said.

Signs global oversupply was easing due to recent OPEC+ efforts have provided a floor to prices, but an increase in COVID-19 cases has threatened demand recovery.

Latest developments in US-China trade tensions have also kept sentiment cautious.

"Brent crude was under pressure earlier in the session amid fears it could hinder the economic recovery. However, comments from US President Donald Trump that the deal remained intact seemed to calm nerves," ANZ analysts said in a June 24 note.

Earlier in the week, Fox News reported that White House Trade and Manufacturing Policy Director Peter Navarro said that Trump had decided to terminate the trade agreement. Trump subsequently tweeted June 23 that "the China Trade Deal is fully intact".

Meanwhile, COVID-19 outbreaks continued to cap recovery optimism amid the emergence of new clusters in the US and Beijing. South Korea has also announced a second wave of coronavirus, according to media reports.

As MRC informed 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.

We 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 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

MOSCOW (MRC) -- The fate of Phillips 66's and Trafigura's planned Bluewater oil export terminal offshore of Corpus Christi, Texas, remains uncertain as the coronavirus pandemic has sapped global crude demand, and caused US production to fall, reported S&P Global.

Phillips 66 said June 9 that travel limitations during the pandemic are further delaying the federal licensing process and that a final investment decision from the Houston-based refining giant and Trafigura remains "many months" away. Back in November, the US Maritime Administration suspended the Bluewater application timeline, allowing Phillips 66 more time to submit additional information and analysis.

Trafigura, a global energy trader, joined the Bluewater project as a 50-50 partner in February, opting to abandon its competing Texas Gulf Terminals project.

The update from Phillips 66 comes after MARAD stopped the clock this week on what's considered the leading deepwater project proposal, Enterprise Products Partners' Sea Port Oil Terminal, called SPOT, offshore of Houston. The delayed licensing and market impacts of the pandemic have combined to effectively push the potential completion of SPOT from 2022 to 2023.

As for the Bluewater project, Phillips 66 said the company remains focused on finalizing right-of-way agreements with key landowners, pre-construction engineering and permitting.

"The (Bluewater) joint venture partners believe in the long-term value of this critical energy infrastructure project," Phillips 66 spokesman Dennis Nuss said in a statement. "While we are still many months away from a financial investment decision, we continue to assess its commercial and economic viability despite market uncertainty."

As recently as this spring, Phillips 66 had planned to make a final investment decision by the end of 2020.

Trafigura, which was the first to propose a deepwater crude exporting terminal in 2018, helped ignite the race to build offshore terminals that could accommodate the biggest crude carriers as US crude production and exports surged. There were a bevy of projects in the works, but some have since been canceled or consolidated.

Apart from Bluewater and SPOT, the only other pending application is from Sentinel Midstream's competing Texas GulfLink project offshore of Houston. Enbridge, for instance, dropped its proposal and partnered with Enterprise on SPOT.

And now the coronavirus pandemic has put that race on hold -- if not canceled the race outright. Already, US crude exports in 2020 have fallen from a high of 4.38 million b/d for the week ending March 13 down to 2.44 million b/d for the week ending June 5, according to the US Energy Information Administration. And analysts project crude exports to further plunge in the coming months, as buyers will likely first turn to the roughly 175 million barrels of crude currently sitting in floating storage.

The Bluewater project would be built in deep enough waters to fully load VLCCs to transport crude oil around the world. For now, VLCCs in the area can only partially load at onshore docks and then fill up the rest of the way offshore from other ships in a process called lightering.

Thus far, only one Gulf of Mexico port, Louisiana's LOOP, can fully load VLCCs currently without lightering from smaller ships.

Bluewater, as proposed, would be capable of loading almost 2 million b/d from its offshore position about 21 nautical miles east of the entrance to the Port of Corpus Christi. A VLCC can hold close to 2 million barrels of crude.

Despite its initial first mover advantage, Trafigura's Texas Gulf Terminals proposal fell behind in the permitting process and the Port of Corpus Christi vocally sided with supporting the Phillips 66 terminal instead. Rather than see its project die and have it miss out completely, Trafigura instead partnered with its competitor. Energy analysts argued even before the pandemic that there is demand to only serve one deepwater exporting hub in the Corpus region.

As MRC informed earlier, US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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

MOSCOW (MRC) -- Haldia Petrochemicals Ltd, majority owned by The Chatterjee Group (TCG), together with global private equity firm Rhone Capital, has acquired Texas-based Lummus Technology for an enterprise value of USD2.725 billion (Rs 20,592 crore at current exchange rate), said Vccircle.

Haldia and Rhone have jointly acquired the petrochemicals licensing company through a sale conducted by its parent McDermott International Ltd, which provides engineering and construction for the energy industry, in a bid to exit bankruptcy.

Houston-based McDermott will use the proceeds to repay debtor-in-possession financing as well as fund emergence costs besides providing cash to its balance sheet.

McDermott had entered into an agreement with TCG and Rhone – the stalking horse bidders – in January this year for a base price of USD2.725 billion subject to higher or otherwise better bids received through a court-supervised auction process.

On March 3, McDermott said: “(It) did not receive a higher or better bid during the solicitation period”. It also cancelled its next auction the same month.

Under the terms of the agreement with TCG and Rhone, McDermott had the option to retain or purchase 10% common equity ownership interest in the entity purchasing Lummus Technology.

Lummus is a master licensor of proprietary gas processing, refining, petrochemical, and gasification technologies as well as a supplier of catalysts, equipment and related services.

These technologies are critical in the refining of crude oil into petrol, diesel, jet fuel and lubes besides the manufacturing of petrochemicals and polymers as well as gasification of coal into syngas.

The company has more than 125 licensed technologies and 3,400 patents and trademarks. The acquisition will help TCG with technological improvements. McDermott provides engineering and construction services for the energy industry.

"Our investments are both strategic and long-term, where most span across 25-30 years. We have primarily focused on knowledge-based companies, and Lummus is a great addition to our portfolio. Lummus delivers sustainable value to clients in the area of materials technology," said TCG’s founder and chairman Dr Purnendu Chatterjee.

Besides the sale of Lummus, McDermott also sold The Shaw Group, which was acquired by Chicago Bridge & Iron (CB&I) in 2013. McDermott had acquired CB&I in 2018. In early 2019, TCG had also emerged a winner in acquiring the securities business of IDFC Ltd, outbidding a number of other suitors.

TCG had agreed to pay a total of Rs 161.7 crore. However, IDFC called off the deal with TCG in July 2019. The following month, it struck a deal with Dharmesh Mehta, who resigned as the chief executive of investment banking firm Axis Capital.

As MRC informed before, Haldia Petrochemicals’ plant and Indian Oil’s refinery in East Midnapore district have been put on high alert in the wake of cyclone Amphan.

Several measures have been taken by the Haldia Petrochemicals Ltd (HPL) management in view of the cyclone, said its plant head Ashok Ghosh.

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

MOSCOW (MRC) -- SIBUR Holding, Russia’s largest integrated petrochemicals company, announced today that it has raised USD500 million following the offering of 5-year Eurobonds on the Irish Stock Exchange, said Chemweek.

The coupon rate is 2.95%, which is a record low for Russian corporate issuers. The coupon will be paid twice a year. The Eurobond proceeds will be used to optimize the company’s loan portfolio and for general corporate purposes.

Bank GPB International, Citigroup Global Markets, Goldman Sachs International, J.P. Morgan Securities and VTB Capital acted as the leading coordinators and bookrunners. The order book topped USD1 billion. The Eurobonds were sold to 94 investors and the issue was rated Baa3 by Moody’s and BBB- by Fitch.

“The resilience of Sibur’s business and its growth potential are highly valued by investors, which is confirmed by the reaffirmation of the company’s investment-grade credit ratings from the three leading agencies. The record low coupon rate at which the Eurobonds were offered testifies to investors’ confidence in Sibur as a high-quality borrower," said Alexander Petrov, CFO.

As MRC informed earlier, in February 2020, Linde PLC recieved 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, 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.

SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.
MRC