Iran oil storage almost full as sanctions and pandemic weigh

MOSCOW (MRC) -- Iran has slashed crude oil production to its lowest level in four decades as storage tanks and vessels are almost completely full due to a fall in exports and refinery run cuts caused by the coronavirus pandemic, industry data showed, said Hydrocarbonprocessing.

Total onshore crude stocks surged to 54 million barrels in April from 15 million barrels in January, and swelled further to 63 million barrels in June, according to FGE Energy. Market intelligence firm Kpler estimated Iranian average onshore crude storage for June to be around 66 million barrels.

That is around 85% of available onshore storage capacity. “However, it will technically not be possible to fill tanks to 100% given technical constraints at storage tanks and potential infrastructure bottlenecks,” said Homayoun Falakshahi, a senior analyst at Kpler.

Tensions between Tehran and Washington have ratcheted up since 2018, when the United States withdrew from a 2015 nuclear pact between Iran and six major powers and President Donald Trump reimposed sanctions on Iran, hammering vital oil exports. Iran’s floating storage is also filling up. Shipping sources said Iran was estimated to be using in the region of 30 tankers to store oil – most of them supertankers, each of which can carry a maximum of 2 million barrels of oil.

This would equate to over 50 million barrels of oil being stored, which has been static for some months. This is likely to be a combination of crude and condensate, a very light grade of crude, the sources said. Refinitiv data showed a maximum of 56.4 million barrels were being held in floating storage by July 3.

Iran’s fleet of crude oil tankers numbers 54 vessels, data from valuations specialist VesselsValue showed. “Iran storage is expected to continue as we do not see these vessels being able to trade anytime soon,” a spokesman for shipping group NORDEN said.

“The exact number of Iranian vessels on floating storage is a bit of a black box as they have all turned off their AIS signals,” he said, referring to a vessel’s tracking transponder.

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.

Marubeni inks offtake deal for Enterprise propylene supply

MOSCOW (MRC) -- Enterprise Products Partners LP (EPP), through one of its affiliates, has entered a long-term agreement with Marubeni Corp. of Japan, under which Marubeni will offtake polymer-grade propylene (PGP) produced from a second propane dehydrogenation plant (PDH 2) currently under construction at EPP’s operations in Mont Belvieu, Tex., for supply to global customers, according to Oil&Gas Journal.

Concluded on June 16, the PGP offtake agreement is part of a long-term collaboration between EPP and Marubeni that also includes the export of liquefied ethylene, the first 25-million lb vessel of which loaded and sailed from EPP and Navigator Holdings Ltd.’s 50-50 joint venture marine terminal at Morgan’s Point, Tex., in early January, EPP and Marubeni said on June 30.

While neither company revealed a precise volume of PGP included under the new agreement, Marubeni - the globe’s largest trader of olefins - said access to PGP supply included in the deal will help meet its international customers’ demand for derivative products.

Still on schedule to enter service in second-quarter 2023, PDH 2 will have the capacity to upgrade 35,000 b/d of propane into 1.65 billion lb/year of PGP.

Upon PDH2’s full commissioning, EPP said its Mont Belvieu complex equipped with capacity to produce up to 8 billion lb/year of PGP from its seven propylene fractionators and 3 billion lb/year from PDH1 and PDH2 - will have a total PDH production capacity of 11 billion lb/year to become the largest complex of its kind in the world.

As MRC reported earlier, in June 2020, Enterprise Products Partners' new ethylene export terminal in Texas signed contracts for 95% of its eventual 1 million mt/year capacity, reported S&P Global with reference to executives from Navigator Gas, the company's 50% partner in the venture.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.

Nova Chemicals hires BP veteran as CEO

MOSCOW (MRC) -- Nova Chemicals (Calgary, Alberta, Canada) says its board of directors has named Luis Sierra president and CEO, effective 1 August, said Chemweek.

He will succeed Todd Karran, who is retiring. Sierra joins Nova from BP, where he spent 30 years, most recently as CEO of the aromatic chemicals business.

Sierra "brings a wealth of knowledge and experience from a strong and successful career with BP,” says Musabbeh Al Kaabi, chairman of the board of directors. “The board believes that Todd’s retirement provides the opportunity to introduce new leadership with the external perspective and renewed impetus required to drive the next phase of the company’s development."

As MRC reported earlier, in January 2017, NOVA Chemicals announced the start up of its new world-scale linear low density polyethylene (LLDPE) gas phase reactor at its Joffre, Alberta site.

Besides, NOVA Chemicals expanded ethylene production capacity by 20% at its cracker in Corunna, Ontario from the previous capacity of about 839,000 tpy. The expansion occurred between 2014 and 2018 and was part of a wave of expansions and upgrades to NOVA's existing facilities near Sarnia, Ontario. Other upgrades in the plan included a debottlenecking of the Moore low-density polyethylene (LDPE) line and a retrofit of the Moore high-density polyethylene (HDPE) line.

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.

NOVA Chemicals Corporation is a plastics and chemical company headquartered in Calgary, Alberta, Canada, and is wholly-owned ultimately by Mubadala Investment Company of the Emirate of Abu Dhabi, United Arab Emirates.

COVID-19 - News digest as of 08.07.2020

1. Global recession will hasten refinery rationalization

MOSCOW (MRC) -- Coronavirus and the cyclical slump in petroleum consumption are accelerating a long-term rationalization of the global refining industry and a shift eastwards in its center of gravity to Asia, said Hydrocarbonprocessing. Refinery margins for making middle distillates such as gasoil and jet fuel have plunged to their lowest since 2009 as lockdowns and recession have cut fuel consumption by millions of barrels per day. Much of this is cyclical and will unwind if and when the major economies and their fuel consumption recover and stocks of gasoline and diesel return to more normal levels. But the crisis is compounding the long-term challenge for smaller, older and simpler refineries, especially in North America and Europe, faced with a growing competition from more modern mega-refineries in Asia. Refinery margins, the difference between the prices at which refineries purchase crude and sell refined products, have historically aligned with the business cycle.


Karpatneftekhim increased PVC and HDPE prices in Ukrainian market on higher feedstock prices

MOSCOW (MRC) - Ukrainian company Karpatneftekhim (Kalush, Ivano-Frankivsk region) has increased prices of suspension polyvinyl chloride (SPVC) and high density polyethylene (HDPE) for July deliveries to the domestic market by USD70-80/tonne under the pressure from higher feedstock prices, according to the ICIS-MRC Price Report.

According to the company's customers, SPVC prices for July deliveries rose on average by USD75-80/tonne tonne compared with the level a month earlier. HDPE prices increased by USD70/tonne compared with the level in mid-June.

Demand for polyvinyl chloride and HDPE from the domestic market has grown significantly in the past two months.
Both the seasonal factor and the introduction of import duties on polymers in the amount of 18% in June played a role in increasing demand.

Karpatneftekhim is one of the largest enterprises of Ukraine's petrochemical complex. Currently, the plant can produce annually 300,000 tonnes of PVC, 200,000 tonnes of caustic soda, about 180,000 tonnes of chlorine, as well as 250,000 tonnes of ethylene and 100,000 tonnes of polyethylene.