Formosa cuts refinery runs after fire last week

MOSCOW (MRC) -- Taiwan’s Formosa Petrochemical Corp has slashed runs at its 540,000-bpd Mailiao oil refinery to about 68%, down from 80%, following last week’s shutdown of a secondary unit due to a fire, its spokesman said, said Hydrocarbonprocessing.

It was unclear when the affected 80,000-bpd residue desulfurizer (RDS) will be able to resume operations as investigations are ongoing, said spokesman K.Y. Lin. “Shipments of gasoline and diesel in August, however, would be affected as a result,” he added, without elaborating on the total volumes affected.

Even before the fire, Formosa had previously said that its gasoline exports this year would be about half of its 2019 volumes as the pandemic has hit demand from overseas markets. Any impact from a reduction in Formosa’s gasoline shipments would be mitigated by ample supplies in the region, said a trader who tracks petrol.

Asia’s gasoline premium to Brent crude was at a three-session low on Friday at USD1.37 a barrel. The Formosa refinery, which operates one of Asia’s 10 largest standalone refineries by capacity, has two RDS units of the same capacity.

A Formosa RDS unit has been hit by fire twice in the past decade, in 2010 and again in 2014, based on Reuters data. Formosa, Asia’s top naphtha importer, also operates three naphtha crackers in Mailiao.

Two of the units with a total capacity of 1.73 million tons per year (MMtpy) are operating at full capacity and the largest unit at 1.2 MMtpy is running at about 90% of its capacity, said Lin. The 1.2 million tpy cracker is scheduled to undergo maintenance in August.

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.
MRC

MOSCOW (MRC) -- Repsol says that its petrochemical sales volumes declined to 1.3 million metric tons (MMt) in the first half of 2020 from 1.5 MMt in the corresponding period of last year, reported Chemweek.

The company says its chemical business “adjusted its operations in accordance with the falling demand of sectors such as the automotive sector and the increase of others associated with health and food, vital to the fight against COVID-19, and those for which its raw materials are essential.”

Income at Repsol’s chemical business was down largely due to lower margins and sales, and a rise in operating incidents and maintenance stoppages at the company’s Sines, Portugal, and Tarragona, Spain, petchem complexes, the company says.

Repsol does not break out earnings and sales figures for its chemical business. The company’s industrial business, which includes refining and chemicals, saw a big drop in second-quarter adjusted net income to EUR8.0 million (USD9.3 million) from EUR177 million in the year-earlier period. First-half adjusted net income for the industrial business dropped to EUR296 million from EUR448 million a year before, on sales of EUR8.2 billion, down from EUR12.2 billion.

Repsol says that higher international margins in the petchem industry, caused by the collapse in crude oil prices, were offset by lower selling prices for petrochemicals and a narrow naphtha-propane differential. Nevertheless, “margins have been solid and demand has remained at reasonable levels,” Repsol says. Falling prices also reduced the value of Repsol’s chemical inventories, the company says.

The company says that the gradual recovery of the Chinese economy has been countered by the effective closure of other major markets. Meanwhile, “the increased reliance on propylene oxide and styrene units was somewhat successful in compensating for the lack of any real market for polyols and polyurethanes destined for the automotive sector,” the company says.

Separately, Repsol says that the Quimicas del Oxido de Etileno (Iqoxe) ethylene oxide and derivatives complex at Tarragona came back onstream in May after a big explosion and fire in January.

As MRC reported earlier, Repsol's refinery at Puertollano in central Spain will carry out an upgrade of its olefins unit. The modernization will be a part of planned maintenance of the cracker and chemical derivative plants at the end of 2020.

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.

Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.
MRC

MOSCOW (MRC) -- The Chinese government has mandated a broad ban on ultra-thin plastic bags and munch film used in the agriculture sector across the country starting 1 January 2021, according to CommoPlast.

The move is in addition to the Five-year plan to reduce the use of single-use non-biodegradable plastic products reported earlier.

The latest ban once come to effect would prohibit company/individual from producing, distributing, selling, storing of plastic bags under 0.025 millimeters thick and plastic mulch - used to retain moisture in the soil - of less than 0.01 millimeters.

According to industry experts, the ban would cause domestic demand for plastic bags to fall from 1.6 million tons/year currently to about 1.1 million tons.

Chinese plastic manufacturers are now facing more challenges aside from the rising labor costs and hiking raw material prices. Many are looking to diversify product lines to mitigate the impact of the curb.

As MRC reported before, in September 2019, The Verkhovna Rada of Ukraine introduced a bill of banning plastic bags in stores since January 2022.

Earlier it was reported that, according to the UN, about 80 countries have already introduced a ban on disposable packages. European Parliament, in the fight against pollution of the oceans, voted to ban disposable plastic products - disposable tableware, drinking straws, thin plastic bags and others in October last year. Republic of Belarus also began to consider the prohibition of free plastic bags in stores and the restriction of the use of disposable polymer glassware in catering establishments in July of this year.

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,
MRC

MOSCOW (MRC) -- International industrial gases major Linde plans to work with a subsidiary of Chinese energy and petrochemicals firm China National Offshore Oil Corp (CNOOC) to jointly develop China’s hydrogen energy industry, Linde said.

"This MoU builds on a history of close cooperation between Linde and CNOOC. Linde is a global leader in hydrogen technology and mobility solutions, and we are proud to work with CNOOC to develop the hydrogen energy industry in China," said Sanjiv Lamba, Executive Vice President and CEO Asia Pacific, Linde. "Together, we will leverage our complementary strengths and work towards a more sustainable, low-carbon future for China."

"Developing the new energy industry is an important priority for CNOOC," said Li Xinzhong, President of CNOOC Energy Technology & Services. "Linde has industry-leading expertise in hydrogen and hydrogen refueling technology and we look forward to collaborating with Linde to jointly develop China's hydrogen energy industry."

Linde is a global leader in the production, processing, storage and distribution of hydrogen. It has the largest liquid hydrogen capacity and distribution system in the world. The company also operates the world's first high-purity hydrogen storage cavern coupled with an unrivalled pipeline network to reliably supply its customers. Linde is at the forefront in the transition to clean hydrogen and has installed over 180 hydrogen fueling stations and 80 hydrogen electrolysis plants worldwide. The company offers the latest electrolysis technology through its newly formed joint venture ITM Linde Electrolysis. The company is a founding member of the global Hydrogen Council and the China Hydrogen Alliance, which was formed to explore the contribution and potential of hydrogen as a key element of the clean energy transition.

CNOOC Energy Technology & Services is a new energy subsidiary of CNOOC, China's third largest national oil company. CNOOC has a strong hydrogen production capacity and large footprint of filling stations in the coastal areas of the country.

As MRC informed earlier, 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 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.
MRC

MOSCOW (MRC) -- Top oil exporter Saudi Arabia may raise its August official selling price (OSP) for crude sold in Asia, hiking for a third straight month due to rising Middle East benchmarks and a rebound in Asian refining margins, reported Reuters with reference to industry sources.

Three sources from Asian refineries expect the August OSP for flagship Arab Light crude to rise, although forecasts range from USD1 a barrel to as much as USD3 a barrel, a Reuters survey showed.

A fourth source expects prices to remain flat or rise just 10-20 cents a barrel, while another called on Aramco to roll over its July prices to August or cut by some 50-60 cents a barrel.

“Looking at market structure and margins, OSPs should go up, but actually refiners are not making much money now ... Prompt refining margins improved but forward margins still look lackluster. If OSPs rise by USD1-USD2, refiners will have a hard time,” the source said.

The front-month Dubai cash futures spread rose by USD3.60 in June, thanks partly to tighter supply, while Asia’s margins for gasoline, naphtha, gasoil and jet fuel improved on demand recovery.

LSFO margins were pressured by weak demand and excess supplies, while HSFO margins held relatively firm.

Saudi OSPs for lighter grades such as Arab Extra Light and Arab Light could rise less than for heavier grades, with August-loading peer light sour grades from Abu Dhabi - Murban and Das - traded at discounts to their OSPs in the spot market.

From August, the supply of Middle East crude could increase as OPEC and Russia will likely ease record oil production cuts.

Four OPEC+ sources told Reuters no discussions have taken place so far about extending record 9.7 million barrels per day (bpd) in cuts into August, meaning they were most likely to be eased to 7.7 million bpd until December.

Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million bpd of crude bound for Asia.

State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.

Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.

As MRC informed earlier, on June 17, Saudi Aramco said it completed the share acquisition of a 70% stake in petrochemicals company Saudi Basic Industries Corporation, or SABIC, from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyal 259.125 billion (USD69.1 billion). However, the transaction terms have been changed to increase the timeline over which Aramco makes the payments by almost three years. An upfront cash payment of 36% of the deal value has also been eliminated from the deal.

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.
MRC