Total, Exxon demobilize PNG LNG expansion workers due to COVID-19

MOSCOW (MRC) -- Oil and gas companies Total and ExxonMobil have idled workers at the troubled Papua New Guinea LNG expansion project due to the COVID-19 pandemic, project partner Oil Search said July 21 in its earnings statement, said S&P Global.

The lower staffing is part of a reduction in Oil Search's global workforce of around 34% by year end as part of its restructuring and cost cuts. This signals further complications at the project that has already been delayed due to disagreements between the new Papua New Guinea government and the project partners.

"Due to COVID-19 and its impact on oil and gas prices, Total and ExxonMobil have demobilized the majority of their LNG expansion technical and commercial staff," the Australian Securities Exchange-listed Oil Search said. Oil Search did say that it was maintaining its 2020 investment expenditure guidance of USD440 million-USD530 million, of which the LNG expansion activities in PNG are part of.

ExxonMobil and the government of PNG had suspended negotiations around a key project component, the P'nyang Gas Agreement, in January as they couldn't reconcile over production sharing. The parties conducted informal exploratory discussions that were completed in May when the parties re-engaged in negotiations, Oil Search said.

But the pandemic has generally stalled project work across Australia's oil and gas sector, and Oil Search said it is undertaking a strategic review whose outcome will be announced in the fourth quarter of 2020. RBC Capital Markets analyst Gordon Ramsay that Oil Search benefited in terms of pricing during the April-June quarter by a comparatively lesser exposure to spot LNG prices. "LNG pricing was significantly stronger than what Woodside reported last week," he said.

He said this was due to Oil Search's proportion of spot sales to overall volumes being 22% compared to Woodside's 46%. Oil Search reported its average realized LNG and gas price of USD7.34/MMBtu in the April-June quarter, which was down from USD9.30/MMBtu in the same period last year and USD9.08/MMBtu in the January-March period.

Ramsay said this fell slightly below RBC's estimate of around USD7.80/MMBtu, which reflected a two to three month lag reported by Oil Search on its LNG pricing. The company also increased its PNG LNG production guidance for 2020 to 24.5 million-25.5 million barrels of oil equivalent, up from a previously expected 24 million-25 million boe. The increase was due to a strong first half production resulting from a decision to defer maintenance to 2021, which had previously been scheduled for May.

Oil Search reported the company's net production from PNG LNG at 6.4 million boe for the June quarter, up from 6.16 million boe a year earlier and from 6.35 million boe in the January-March quarter. That represents an annualized rate of 8.8 million mt/year.

As MRC informed before, Total has recently disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.

Covestro launches partially biobased polycarbonate film

MOSCOW (MRC) -- Covestro has recently introduced a new polycarbonate (PC) film with more than half of its carbon content sourced from plant-based raw materials, reported Chemweek.

The partially biobased film, in which a portion of oil-based primary products are replaced by biomass material, will be the first in the company’s product portfolio and will reduce the film’s carbon dioxide (CO2) footprint by approximately 20%, it says. Increased use of alternative resources for in-house production is part of the company’s long-term strategic program as it “fully commits” to a circular economy, it adds.

The new film can be used in applications in the electrical, consumer, and automotive industries, as is typical for conventional PC films, Covestro says.

As MRC informed earlier, Covestro has closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

According to MRC's ScanPlast report, Russia's estimated PC consumption (excluding imports and exports to/from Belarus) rose in January-May 2020 by 19% year on year to 38,900 tonnes (32,700 tonnes a year earlier).

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc. With 2018 sales of EUR 14.6 billion, Covestro has 30 production sites worldwide and employs approximately 16,800 people (calculated as full-time equivalents) at the end of 2018.

AkzoNobel profits, sales fall on sharply lower demand

MOSCOW (MRC) -- AkzoNobel says that its net profit in the second quarter of 2020 dropped 44% year on year (YOY), to EUR129 million (USD149 million), said Chemweek.

Sales went down 19%, to €1.98 billion from EUR2.45 billion in the same period of the previous year. The fall in sales, which dragged profits down, is mainly due to the impact of COVID-19 on end-market demand that resulted in 18% lower volumes YOY, the company says. EBITDA fell 25% YOY, to EUR297 million, the company says. Margin-management and cost-saving programs were able partly to offset the negative effect of lower demand, the company says. AkzoNobel announced preliminary results last week.

"Despite lower end-market demand, our business return on sales increased 30 basis points to 14% for the second quarter as a result of continued focus on margin-management and cost-saving measures,” says Thierry Vanlancker, CEO at AkzoNobel. Total cost savings delivered EUR116 million, of which EUR38 million in structural savings related to transformation initiatives, the company says.

The company's performance coatings business was hurt most severely by the impact of COVID-19 on end-markets, especially the automotive and aerospace industries, recording a 24% YOY decline in sales, to €1.09 billion, AkzoNobel says. Sales of the company's decorative paints business went down 10% YOY, to EUR899 million, it says. Raw material and other variable costs in the second quarter were EUR32 million lower compared with the year-earlier quarter, the company says.

For the first half of 2020, the company’s net profit was 18% lower YOY at EUR243 million, AkzoNobel says. Sales were down 13%, to €4.04 billion compared with EUR4.63 billion in the first half of 2019. EBITDA decreased by 4%, to EUR574 million, the company says.

Earlier this year, AkzoNobel suspended its 2020 financial ambition in response to the significant market disruption resulting from the pandemic. Despite the easing of headwinds related to COVID-19 during the second quarter, with sales almost 30% lower in April and almost 5% lower in June, the economic environment will remain uncertain in the second half due to the pandemic, the company says. Raw material costs are expected to have a favorable impact, and continued margin-management and cost-saving programs are in place to address the current challenges, the company says.

As it was written before, AkzoNobel finalized the acquisition of BASF’s global Industrial Coatings business, which supplies a range of products for industries including construction, domestic appliances, wind energy and commercial transport, strengthening its position as the global number one supplier in coil coatings.

As MRC informed earlier, BASF would expand the capacity of ethylene oxide and ethylene oxide derivatives at its Verbund site in Antwerp, Belgium. The total investment adds about 400 000 tpy to BASF’s production capacity for the corresponding products with an expected investment amount exceeding EUR500 million.

Ethylene is a feedstock for producing polyethylene (PE).

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.

Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people. Established in 1992 and specializing in sustainable water-based and advanced eco-friendly products, Mapaero operates a production facility in France and has around 140 employees.


Shell stops leak at Deer Park, Texas FCC, preparing unit for repair

MOSCOW (MRC) -- Royal Dutch Shell Plc stopped a leak in the shut gasoline-producing fluidic catalytic cracker (FCC) at its 318,000 bpd joint venture Deer Park, Texas, refinery, reported Reuters with reference to sources familiar with plant operations.

Shell is stripping insulation from the main fractionator column of the 70,000-bpd FCC to repair the leak that led to a fire on Saturday night, forcing the unit’s shutdown, the sources said.

Shell spokesman Curtis Smith said a leak has stopped at a unit that had a fire on Saturday at the Deer Park Manufacturing Complex, which includes the refinery and an adjoining Shell chemical plant, and maintenance work is underway.

Shell did not identify the unit where the fire broke out. No injuries were reported.

Shell is also blocking off pipes in the FCC ahead of repairing the leak, the sources said.

The FCC uses a fine, powder catalyst to convert gas oil and other feedstock into unfinished gasoline and naphtha. The catalyst behaves like a fluid within the unit.

The Deer Park refinery is a 50-50 joint venture between Shell and Pemex, Mexico’s national oil company. Shell is the managing partner.

As MRC wrote previously, Royal Dutch Shell Plc plans to idle a sulfur recovery unit (SRU) at the joint-venture Deer Park, Texas, refinery in 2021, said Shell spokesman Curtis Smith in July 2020. Currently, the refinery is operating at about 75% of its 318,000 barrel-per-day capacity because of reduced demand due to the COVID-19 pandemic.

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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.

Nord Stream 2 warns of sanctions risk to gas link completion as European dissent grows

MOSCOW (MRC) -- The developer of the Nord Stream 2 gas pipeline said July 20 the investments needed to complete the 55 Bcm/year link could be blocked if the US imposed sanctions against companies involved in the project, reported S&P Global.

In a hardening of its position against Russian energy export projects, the US State Department on July 15 updated part of its Countering America's Adversaries Through Sanctions Act (CAATSA) legislation from August 2017.

Companies involving in building the Nord Stream 2 link to Germany and the second line of the TurkStream pipeline to southern Europe -- both still under construction - can now be targeted, whereas before they were exempted from potential measures under the CAATSA legislation.

European opposition to the latest US move has become increasingly strong in recent days, with the EU and governments of individual member states again saying European energy policy was a matter for Europe alone.

Congress is also considering another iteration of Nord Stream 2 sanctions, called the Protecting Europe's Energy Security Clarification Act, which would target more companies involved in building the project's final segment, including vessel insurers and service companies doing surveying, trenching, welding and other tasks.

In emailed comments, a Nord Stream 2 spokesman said US sanctions - if imposed - could directly hit more than 120 companies from more than 12 European countries.

"In an economically difficult time, the sanctions would block investments of around Eur700 million ($800 million) for the completion of the pipeline," the spokesman said.

"These sanctions would also undermine investments of approximately Eur12 billion in EU energy infrastructure," he said.

That is made up of Eur8 billion in investments in Nord Stream 2 as well as a further Eur3 billion in investments by European companies in downstream infrastructure in Germany and Eur750 million in the Czech Republic.

Any sanctions to be imposed under the terms of the CAATSA legislation are discretionary, however, and can only be imposed after coordination with US "allies".

Asked directly whether work on completing Nord Stream 2 would be suspended as a result of the latest sanctions guidance, the project spokesman said: "Nord Stream 2 is a fully permitted project, constructed in accordance with applicable national and international legislation."

"A total of over 2,300 km out of approximately 2,460 km of the Nord Stream 2 pipeline had been laid by December 20, 2019, when our contractor Allseas was forced to suspend the pipelay due to the threat of sanctions by the US," he said.

"Therefore, we are forced to look for new solutions to lay the remaining 6% of our pipeline."

Opposition to the sanctions update from the US's European allies continues to strengthen.

On July 17, the EU High Representative Josep Borrell said he was "deeply concerned" at the growing use of sanctions by the US against European companies and interests.

"As a matter of principle the EU opposes the use of sanctions by third countries on European companies carrying out legitimate business. Moreover, it considers the extraterritorial application of sanctions to be contrary to international law," Borrell said.

The mood among those countries home to five of Nord Stream 2's key investors has also become increasingly reactive.

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.

German foreign minister Heiko Maas said that by announcing measures that threaten European companies with sanctions, "the US Administration is disrespecting Europe's right and sovereignty to decide itself where and how we source our energy".

"European energy policy is decided in Europe and not in Washington," Maas said.

Austria's foreign ministry said it too rejected US moves to threaten extraterritorial sanctions against Nord Stream 2. "Among trusted partners, we believe in direct talks, not unilateral measures," it said.

France went a step further, with a parliamentary official calling on the EU to react.

"It is time for Europe to assert its power. It cannot tolerate such an attack on its energy sovereignty," Claude Kern, rapporteur for the French Senate Committee on European Affairs, said July 17.

The committee said there was no legal justification for "US interference" with companies operating on European soil and that the US may "in no way" sanction companies operating in the EU in accordance with the law of the EU and its member states.

Not all of Europe is unhappy with the US policy, however. Ukraine's Naftogaz said it welcomed the latest sanctions guidance.

"This decision demonstrates US continued support for Ukrainian and European security," it said. "Naftogaz will continue to work closely with US and European partners to counter Nord Stream 2 and protect the collective interests of the transatlantic community."

Nord Stream 2 is crucial to Russian plans to scale down from 2021 the use of the Ukrainian transit corridor in its gas supplies to Europe.

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.