US crude, refined products stocks drop sharply

MOSCOW (MRC) -- US crude oil and refined product inventories fell sharply in last week due in part to a notable drop in crude imports, reported Reuters with reference to the Energy Information Administration's statement.

Crude inventories fell 7.5 million barrels in the week to July 10 to 531.7 million barrels, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop. The decline was driven by a steep drop in imports, which fell by a net 2 million barrels per day (bpd), the EIA said.

Oil prices rose on the news. U.S. crude futures were up 48 cents, or 1.2%, to USD40.80 a barrel as of 10:53 a.m. ET (1453 GMT) while Brent gained 61 cents, or 1.4%, to USD43.51 a barrel.

US imports of oil from Mexico returned to more typical levels at 490,000 bpd in the most recent week, after a surprising spike to an eight-year high in the previous period.

US gasoline stocks fell by 3.1 million barrels in the week, the EIA said, compared with expectations for a 643,000-barrel drop.

Gasoline demand, meanwhile, dipped modestly as more US states have reimposed lockdowns as coronavirus cases and deaths are spiking anew. Overall gasoline supplied over the last four weeks, a proxy for demand, is 9% below the same period a year ago.

"The gasoline demand number is very weak, and with the coronavirus situation worsening, it's only going to get worse. That's going to be a weight on the market, and that's an increasing focus for everyone," said John Kilduff, partner at Again Capital in New York.

Distillate stockpiles, which include diesel and heating oil, fell by 453,000 barrels, versus expectations for a 1.5 million-barrel rise. However, Gulf Coast distillate inventories rose last week to 58.6 million barrels, their highest on record, the data showed.

As MRC informed previously, 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.

And 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 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.

Qatar Petroleum to slash spending by 30%

MOSCOW (MRC) -- Qatar Petroleum will slash its spending by around 30% this year in the face of the sharp drop in oil and gas prices due to the coronavirus epidemic, its Chief Executive said, said Hydrocarbonprocessing.

Speaking during a webcast organised by the U.S-Qatar Business Council, Saad al-Kaabi however said that plans to sharply expand Qatar Petroleum’s liquefied natural gas (LNG) capacity by the middle of the decade remain on track.

“We are going through budget revisions... In June we will be somewhere in the range of 30% reduction in expenditure, capex and opex,” Kaabi said. The world’s top oil and gas companies sharply reduced spending in the wake of an unprecedented collapse in oil consumption triggered by travel restrictions governments around the world imposed to contain the coronavirus epidemic.

Kaabi said he expected oil demand to recover to pre-crisis levels only within a year or two, adding that natural gas prices have suffered less due to continued demand for electricity. Qatar Petroleum, or QP, the world’s largest LNG producer, will however not cut its gas exports due to the weaker demand, he added.

QP wants to lift its LNG output to around 110 million tonnes per annum by 2024 from today’s 77 mtpa in the first phase of its expansion. Those plans remain on course, Kaabi said, despite delaying the awarding of commercial tenders for the expansion project from April to the end of the year.

“We’re full steam ahead, we’re going to expand,” Kaabi said. Once the project’s capital costs are understood in the coming months, he expects a number of major international companies, including Exxon Mobil, Chevron and ConocoPhillips to take part in the tendering process, he added.

As MRC informed earlier, on 22 July at cracking units No. 23 and 33 in the city of Sweeny, Old Ocean, Texas, USA, the American Chevron Phillips Chemical (CP Chem), one of the world's largest petrochemical companies, suffered a technological failure as a result of a steam failure. the company said in a statement. The company said in a statement that the company has restored this production with a capacity of 1.68 million tons of ethylene per year.

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.

P2 launches product to protect skin amid frequent handwashing, sanitizer use

MOSCOW (MRC) -- Renewable chemicals firm P2 Science (Woodbridge, Connecticut) has begun commercial scales of 24-6, a product case containing 24 bottles of sanitizer and 6 bottles of P2 moisturizer, said Chemweek.

The new P2 moisturizer is formulated around the patented forest-derived, Citropol platform and is designed to mitigate the effects on the skin of frequent handwashing and sanitizer use. The liquid sanitizer is made under an FDA registration.

Any sale or donation of P2 sanitizer is accompanied by P2 skincare products, built around the Citropol proprietary biobased ingredients. Currently the 24-6 is sold only for use by employees of qualified government and nonprofit groups operating in the state of Connecticut. Earnings from sales of the 24-6 will help support the P2 pro-bono work with All Our Kids Inc. (AOK) and other CT nonprofits. P2 is currently supplying AOK with sanitizer to help facilitate safe operation of their childcare facilities.

The Citropol platform is a new class of liquid polymers made from terpenes derived from forest products. The products demonstrate an excellent safety profile and typically impart lubricity, shine, and moisture retention properties in a wide range of skin- and hair-care products.

As MRC informed earlier, an estimated 11 million metric tons (MMt) of plastic waste enter the ocean every year and this will almost triple by 2040, to 29 MMt, if immediate and sustained action is not taken, according to a newly published in-depth report. This is equivalent to dumping 110 lbs (50 kilograms) of plastic on every meter of coastline around the world, it says. However, it is possible to reduce annual flows of plastic into the ocean.

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.

Nord Stream 2 appeals EU court dismissal of discrimination argument

MOSCOW (MRC) -- Nord Stream 2 filed an appeal to the EU Court of Justice against the EU General Court's dismissal in May of the pipeline company's attempt to annul European law on pipelines from non-EU countries, reported S&P Global with reference to a spokesman for the company's statement July 28.

In July 2019, the Gazprom-owned company, which is building a 55 Bcm/year natural gas pipeline from Russia to Germany, brought an action before the EU General Court, requesting the amended EU Gas Directive be annulled due to infringement of European rules on equal treatment and proportionality.

On May 20, the court dismissed the lawsuit as inadmissible on procedural grounds.

"Nord Stream 2 does not share the procedural arguments of the court and maintains that the amendment of the Gas Directive constitutes an unlawful discrimination," a spokesman for Nord Stream 2 told S&P Global Platts.

Nord Stream 2 had hoped to bring the pipeline online by the end of 2019, but first permitting issues in Denmark and now US sanctions have delayed completion of the project.

The pipeline is seen as crucial to Russian plans to scale down use of the Ukrainian transit corridor from 2021 for supply of its gas to Europe.

"We want the General Court to review the content of our complaint," the spokesman said.

The next step would see the EU filing a rejoinder to Nord Stream 2's appeal, he said. A decision on the admissibility of the action by the EU Court of Justice would then be expected within the next 12 months.

On July 20, the developer said investments needed to complete the pipeline could be blocked if the US imposed sanctions on companies involved in the project.

Five European energy companies - France's Engie, Austria's OMV, Anglo-Dutch Shell, and Germany's Uniper and Wintershall Dea - have co-financed the project, each committing to pay Eur950 million (USD1.114 billion).

As MRC reported earlier, Denmark approved a request from the developer of the Nord Stream 2 gas pipeline from Russia to Germany for permission to lay the line in Danish waters using ships with anchors on July 6, 2020.

We remind that Gazprom neftekhim Salavat shut down its dioctyl phthalate (DOP) production for a scheduled maintenance. Market participants and a plant"s representative said Gazprom neftekhim Salavat took off-stream its DOP production for a long scheduled turnaround. The outage began on 12 May and lasted for about 30 day.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia totalled 13,800 tonnes in the first half of 2020, up by 5% year on year, whereas exports grew by 7% year on year.

Pemex to increase oil and gas production in H2 with 20 new exploration wells

MOSCOW (MRC) -- Pemex aims to increase crude and gas production during the second half of 2020 as it pushes forward with its strategy of early production at exploratory wells and the commitments to production cuts with OPEC expire, reported S&P Global.

Pemex will increase crude production by 95,300 b/d by the end of the year as it incorporates 20 new exploration wells, management said July 28 during the company´s Q2 conference call. Eighteen of the new projects contain crude only and two more will also produce natural gas.

The firm already started production in 15 new wells in the first half of the year, which the company has identified as priority to reach its production goal of 2.4 million b/d by 2024. The wells have so far produced 83,000 b/d of crude, Alberto Velazquez, CFO said.

Drilling at these priority fields will increase the firm´s 2020 capex to USD7.8 billion from USD4.9 billion in 2019, Velazquez said.

Total hydrocarbons production in the second quarter was 2.359 million boe/d, a slight year-over-year decrease mainly explained by lower associated gas. Crude production remained unchanged at 1.673 million b/d between April and June.

"The steady production is explained by higher production in offshore fields, mainly at Xanab, which increased production by 30,000 b/d to 82,000 b/d," Velazquez said.

Pemex called Q2 production a "favorable achievement" considering a 100,000 b/d output reduction Mexico committed to as part of an April deal with OPEC+ members that expires in July. The firm also mentioned bad weather had caused the shutdown of operations during seven days in June.

Total gas production of 3.604 Bcf, was 52 MMcf ,or 0.9%, lower year over year as associated gas decreased by 118 MMcf due to the shutting of wells as part of the OPEC+ agreement. Non-associated gas increased by 9%, or 85 MMcf, Pemex said in its report to the Mexican Stock Exchange.

The number of wells in operation decreased 9% to 6,789, Pemex said.

Pemex reported a net loss of USD1.9 billion in the quarter, hit by lower revenues and lower crude prices. Total revenues dropped 51% to USD7.9 billion on the back of local sales that were 54% lower year over year and lower exports. The price of the Mexican export mix during the quarter was 60% lower at USD23.84, Pemex said in its filing.

As MRC informed earlier, Pemex 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.

We also remind that in 2016, Pemex shut its steam cracker at its Cangrejera complex for maintenance on February 15. The cracker was idle for about 14 days. The conducted repairs at the cracker were a part of planned 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.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).