ADNOC USD20.7-bil gas deal seen helping finance self-sufficiency projects

MOSCOW (MRC) -- Abu Dhabi National Oil Co., the UAE's biggest energy producer, is expected to use proceeds from its USD20.7 billion gas pipeline deal to help finance projects aimed at boosting production to eventually reach gas self-sufficiency and even become a net exporter, reported S&P Global with reference to analysts.

ADNOC said on June 23 it had signed a deal worth more than USD10 billion with six investors to sell a 49% stake in its gas pipelines, valued at USD20.7 billion, a year after striking a similar transaction for its oil pipelines. The consortium includes Global Infrastructure Partners, Brookfield Asset Management, Singapore's sovereign wealth fund GIC, Ontario Teachers' Pension Plan Board, South Korea's NH Investment & Securities and Italy's Snam.
ADNOC, which currently produces around 10.5 Bcf/d, is undertaking multi-billion dollar projects with international oil companies to develop its costly sour and unconventional gas assets to ramp up production.

"The diversification of asset ownership in the Abu Dhabi midstream sector is an important element of ADNOC's new gas strategy," said Siamak Adibi, head of the Middle East gas team at consultancy FGE.

"Asset sales provide new source of funds for ADNOC and they can spend on development of gas resources."

It has sold stakes in its oil and gas concessions, in its drilling business, refining unit and pipelines to international oil companies as it seeks to monetize its assets and generate financing for its mega-projects.

Last year, it became the first Middle East national oil company to strike a deal with institutional investors for its midstream assets.

ADNOC clinched a USD5-billion deal, with a consortium that includes GIC, BlackRock, KKR and Abu Dhabi Retirement Pensions and Benefits Fund, to invest in select oil pipeline infrastructure and collectively hold a 49% stake in the assets.

"The funding will be important for the overall gas strategy -- it's an important source of capital, and we have to remember that ADNOC has a lot of costly ambitions such as downstream and petrochemicals, sour gas development and so on," said Ben Cahill, Senior Fellow, Energy Security and Climate Change Program at the Center for Strategic and International Studies. "It also allowed them to strike a new partnership with Snam, an experienced gas infrastructure player."

Last year, Abu Dhabi's Supreme Petroleum Council announced increases in hydrocarbon recoverable reserves of 7 billion stock tank barrels of oil and 58 Tcf of conventional gas, bringing the total to 105 billion STB of recoverable oil, 273 Tcf of conventional gas and 160 Tcf of unconventional gas resources.

With the help of Germany's Wintershall and Italy's Eni, ADNOC is developing the Ghasha ultra-sour gas concession, which is expected to produce over 1.5 Bcf/d by around 2025. In addition, it is also partnering with Dubai's gas supplier DUSUP to develop a new shallow gas reservoir with estimated reserves of 80 Tcf.

"Boosting gas self-sufficiency is critical, given the desire to wean the UAE off dependence on gas imports from Qatar via Dolphin Gas," Cahill said. "We still don't know how much it will cost to develop Jebel Ali, how many development wells will be required, and what the recovery rate is."

Qatar pipes 2 Bcf/d of gas to the UAE under an agreement that expires in 2032.

"Other Gulf states are also selling oil and gas assets and privatizing stakes as they search for funds, especially Oman, but the scale is a lot bigger in Abu Dhabi,"

"They are first movers in generating this much capital from the midstream segment, which is often overlooked relative to the upstream and downstream. And for ADNOC this strategy isn't unique to the midstream, they're looking to unlock capital and partnerships across the value chain."

However, ADNOC's gas ambitions may be stymied by the coronavirus.

ADNOC terminated USD1.65 billion worth of contracts awarded in February to a Petrofac-led group for the ultra-sour gas project Dalma Gas Development project, part of Ghasha project, the oil service company said in April.

Eni, which has a 25% stake in Ghasha, also plans to review its projects in the UAE with its partners due to the coronavirus outbreak and the oil price crash, executive vice-president for the Middle East at Eni, Fuad Krekshi, said in March.

"The depressed state of the energy-price complex does present serious challenges to the country's goal of becoming a net natural gas exporter, with major partners in UAE gas projects like Eni and Total cutting capital expenditure globally, a dynamic that will bring headwinds to Abu Dhabi's natural gas production growth goals," senior analyst at S&P Global Platts Analytics, Samer Mosis, said.

As MRC informed earlier, in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Danish recycler Plastix set alliance with Titan Bioplastics

MOSCOW (MRC) -- Danish recycler Plastix (Lemvig) has entered into an alliance with US nanotechnology and biocomposite specialist Titan Bioplastics (Seattle, Washington) to expand the use of recycled plastics waste in products to comply with upcoming European legislation, said Plasteurope.

Plastix is dedicated to mechanically recycling used maritime fibres, such as abandoned fishing nets and ropes that would otherwise end up in the ocean or in landfill. It said its recycled product “OceanIX” is currently used in a range of applications.

Titan Bioplastics’ proprietary “Titan Nanofill” is a mineral additive supporting physical barrier properties in a variety of polymers that has been approved by the US Food and Drug Administration (FDA) for food contact. According to Plastix, small loading rates of Titan Nanofill can potentially provide a 100% increase in barrier properties as well as preventing leaching. When blended with plastics during recycling, the additive can also prevent other plastics from leaching.

The companies added that a barrier test using Titan Nanofill with Plastix recycled materials convinced them of the technology’s potential success and its benefits for a variety of plastics. “We see this as an advancement to many packaging solutions, as well as a serious technology contender supporting companies working to adapt production towards directives by the European Commission and the Extended Producer Responsibility Act,” said Tanya Hart, CEO of Titan Bioplastics.

The EU commission has set a collection target of 90% for plastic bottles by 2029. It has also mandated that plastic bottles should contain at least 25% recycled plastics by 2025 and 30% by 2030 (see of 28.03.2019). It is worth noting that recycled plastics and additives can only be used in food and drinks packaging in the European Union after review by the European Food Safety Authority (EFSA, Parma / Italy).

As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.

COVID-19 - News digest as of 30.07.2020

1. Axalta posts Q2 sales decline

MOSCOW (MRC) -- Axalta Coating Systems Q2 sales fell 43.6% year on year as demand declined because of impact of the coronavirus, said the company. The company swung to a Q2 net loss, driven primarily by volume decline impacts. Sequentially, sales improved month on month, following a bottom in April. June net sales were 82% higher than in April. In the current Q3, Axalta continues to be impacted by the coronavirus pandemic across its business, although impacts on customer demand related to the virus continues to gradually improve month-to-month, it said.


Linde signs MoU with China Power to develop green hydrogen energy in China

MOSCOW (MRC) -- Linde has announced today that it has signed a Memorandum of Understanding (MoU) with Beijing Green Hydrogen Technology Development Co., Ltd., a subsidiary of China Power International Development Ltd., to jointly promote the application and development of green hydrogen in China, according to Linde's press release.

Under the terms of the MoU both companies will collaborate on a variety of green hydrogen initiatives, including hydrogen technology research and development, and the implementation of green hydrogen mobility solutions during China's inaugural hosting of the 2022 Winter Olympics.

"Sustainability is a key priority for Linde and our mission is making our world more productive," said Sanjiv Lamba, Executive Vice President and CEO Asia Pacific, Linde. "Linde is a global leader in hydrogen technology and mobility solutions, and we look forward to collaborating with China Power to develop local green hydrogen and clean energy solutions to support China's energy transition."

"Linde is widely recognized for its sustainability agenda and is the industry leader in hydrogen technology and mobility solutions," said Mr. Tian Jun, Party Secretary, Chairman of the Board and President of China Power International Development Ltd. "We are delighted to partner with Linde to pilot the application of green hydrogen at the Winter Olympics, and work towards establishing a model for China's transition to clean energy."

Linde is a global leader in hydrogen. It has the largest liquid hydrogen capacity and distribution system in the world and has installed over 180 hydrogen refueling stations worldwide for cars, buses, trucks and trains. Linde operates 80 hydrogen electrolysis plants and the world's first high-purity hydrogen storage cavern.

As MRC informed before, in February 2020, Linde PLC received 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 NIPIgazpererabotka (Nipigaz). As per the agreement, Linde will deliver engineering, procurement, and site services based on its proprietary technology for the GCC’s cracker.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Linde is a leading global industrial gases and engineering company with 2019 sales of USD28 billion (EUR25 billion). The company serves a variety of end markets including chemicals & refining, food & beverage, electronics, healthcare, manufacturing and primary metals. Linde's industrial gases are used in countless applications, from life-saving oxygen for hospitals to high-purity & specialty gases for electronics manufacturing, hydrogen for clean fuels and much more. Linde also delivers state-of-the-art gas processing solutions to support customer expansion, efficiency improvements and emissions reductions.

Crude rises on weaker US dollar, GOP stimulus plan

MOSCOW (MRC) -- Crude prices edged higher July 27 as a weakened US dollar offset renewed demand growth concerns, reported S&P Global.

NYMEX September WTI settled up 31 cents at USD41.60/b, and ICE September Brent was up 7 cents on the day at USD43.41/b.

The US dollar was on pace to decline for a seventh straight session July 27 as the market waited for Congressional Republicans to announce a new round of federal stimulus spending expected to total around USD1 trillion. Front-month ICE US dollar index futures fell to around 93.66 in afternoon trading, on pace for the lowest close since September 2018. Oil prices and dollar strength are typically inversely correlated.

The GOP stimulus plan, details of which were released after the close of trading July 27, includes a second round of direct payments to US citizens, however it scales back federally funded unemployment assistance. A USD600 weekly unemployment stipend expired over the weekend.

The government spending, while adding pressure on US dollar strength, is likely to boost consumer spending and at a time when oil recovery outlooks appear to have stalled.

Flight tracking data provider by flightradar24 shows the seven-day moving average of total flights has trended lower since July 19, the longest down stretch since global flight traffic bottomed in mid-April.

Total product supplied for gasoline, a proxy for end user demand, has declined in the wake of the July 4 Independence Day holiday and was nearly 12% behind year-ago levels in the week ended July 17, according to US Energy Information Administration data.

NYMEX August ULSD settled 22 points lower at USD1.2541/gal, and August RBOB was down 1.01 cents at USD1.2747/gal.

WTI forward structure weakened amid uncertain demand outlooks. The contango in the front-to-sixth month NYEMX WTI contract opened to 97 cents/b, the widest since June 16.

US commercial crude stocks are expected to have fallen 1.2 million barrels to around 535.4 million barrels during the week ended July 24, analysts surveyed by S&P Global Platts said.

The draw comes as crude exports surged to 3.89 million b/d last week, according to data from cFlow, Platts trade-flow software. The cFlow figure marks a nearly 1 million b/d jump from an EIA-reported 2.99 million b/d during the week ended July 17.

Weekly US crude exports have risen above 3 million b/d just twice since late May as the market worked through a glut of crude in floating storage built up during the spring. But as the COVID-19 pandemic recedes in some regions global crude demand has begun to clear the backlog of crude on the water, possibly offering some support to exports going forward.

The amount of oil on idle tankers fell 20 million barrels last week to 344 million barrels, according to S&P Global Platts Analytics data, on pace for the first monthly decline February.

As MRC wrote before, refiner Irving Oil will lay off 6% of its global workforce due to economic challenges presented by the coronavirus pandemic, according to the company's statement. The layoffs will affect 250 workers across its operations in Canada, the United States, Ireland and the UK.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.