Asian gasoline to face headwinds as Pertamina Aug imports stay subdued: sources

MOSCOW (MRC) -- Indonesia's Pertamina is likely to keep planned import volumes in August tepid on the back of sluggish demand, adding further downside pressure to an already lackluster Asian gasoline market, industry sources told S&P Global Platts in the week that began July 19, said S&P Global.

Pertamina's August gasoline import volumes are pegged in the range of 5-6 million barrels, according to market participants, within the previously planned range in July, sources said. The muted import volumes come even as Indonesian domestic gasoline consumption witnessed an uptrend following the easing of large scale social restrictions, or PSBB, early-June.

The acting general manager of Pertamina MOR IV, Rahman Pramono Wibowo, said in a statement that the "average fuel consumption of gasoline in early July [has] increased by 20%, where daily consumption is currently at 2,100 kiloliters [per day]." The average daily consumption of gasoline was higher than May's average of 1,750 kilo liters/day, the statement added.

In May, as the country remained in PSBB, Indonesia's gasoline imports fell to 5.929 million barrels, the lowest since Platts started tracking the country's gasoline import volumes in 2013. The uptick in gasoline consumption mirrors increased activity, with driving across Indonesia recorded at 13% below baseline levels in the week ended July 12, in contrast to April's low of 70% below baseline levels, mobility data from Apple showed.

But with the import volumes for August far from the normal range of around 10 million barrels, sources remained bearish over supply-demand fundamentals. "It [the import volumes] is really very bad," a Singapore-based source said.

In 2019, Indonesia -- Southeast Asia's largest buyer of gasoline -- imported an average of 10.294 million barrels per month, according to data from Statistic Indonesia. Another source echoing similar views said "their Pertamina'] domestic refineries are still running. With the lower [gasoline] consumption rates, it seems unlikely that they Indonesia will come out to buy."

"Pertamina has been discharging cargoes at the end of the month. We saw this in June and it will happen in July again. For them [Pertamina] to come out on spot market they have to finish using these gasoline that is going into their tanks," a third source said.

With muted buying from Indonesia, supply-side pressures due to increased gasoline cargoes from China will continue to weigh in the near term, added market participants.

As MRC informed before, 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.

We remind that 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.
MRC

EU to introduce levy on non-recycled discarded plastic, VCI opposes the additional charge

MOSCOW (MRC) -- The European Council decided, after a special meeting held on 21 July, to introduce a levy on non-recycled discarded plastic as part of the EU's COVID-19 recovery plan, reported Chemweek.

However, Germany's chemical industry association VCI (Frankfurt) had, prior to the EU Council’s meeting, expressed opposition to the project because it adds a regulatory and cost burden rather than supporting packaging recyclability.

The EU Council says, “As a first step, a new own resource will be introduced and apply as of 1 January 2021 composed of a share of revenues from a national contribution calculated on the weight of nonrecycled plastic packaging waste with a call rate of EUR0.80 per kilogram with a mechanism to avoid an excessively regressive impact on national contributions.”

The German chemical industry is critical of the project, because the “levy comes at an untimely time and sends the wrong signals. Europe's economy now needs more than ever the framework for more innovation, but not new regulations. The proposal also loses sight of the resource-saving effects plastics have and instead creates a false incentive to switch to less efficient materials," says Wolfgang Gro?e Entrup, CEO at VCI.

VCI notes that using plastics in packaging helps with the conservation of resources and the reduction of greenhouse gases. The recyclability of packaging is already at the heart of product developments in companies and it must be pursued consistently, it says. However, “recycling at all costs cannot be the answer to the problems we also see in the plastics sector, when resource conservation suffers from an overall view,” Gro?e Entrup says.

The proposed fee on non-recycled discarded plastic may also create an additional cost burden for plastics producers in Germany, VCI says. This is because the German government could decide to tax plastics producers in the country to recover the amount it had to pay the EU under the new levy, VCI says. This could hamper these companies' investment plans in resource-conservation technologies, VCI says.

"If we want to strengthen recycling, it only makes sense to promote and recognize sustainable technologies, but not to impose additional levies that slow down the necessary transformation processes," Gro?e Entrup says.

As MRC informed before, members of the European Parliament (MEPs) are proposing ways to step up green energy storage solutions such as hydrogen or home batteries, in a report that was adopted in one of the Parliament’s voting sessions on Friday, 10 July. The proposals outlined in the report are set to play a crucial role in reaching the goals of the Paris Agreement on Climate Change, as more efficient energy-storage options in the EU will help "spur decarbonization," the EU Parliament says. In addition, since solar and wind have a variable electricity output, more storage solutions should become available to secure supply, MEPs say.

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

Crude edges lower as surprise build in US crude stocks deflates rally

MOSCOW (MRC) -- Crude oil futures edged lower in mid-morning trade in Asia July 22 after an unexpected build in US crude inventories derailed an overnight rally on COVID-19 vaccine hopes and a stimulus package agreement in Europe, said S&P Global.

At 10:19 am Singapore time (0219 GMT), ICE Brent September crude futures were down 26 cents/b (0.59%) from the July 21 settle at $44.06/b, while the new front-month NYMEX September light sweet crude contract was 27 cents/b (0.64%) lower at USD41.65/b.

Front-month September ICE Brent futures briefly touched a four-month high above USD44.80/b during the US trading session as promising results from multiple COVID-19 vaccine trials and declining daily infection rates in the US and elsewhere renewed investor optimism.

This was further supported by a unanimous agreement among the 27 European Union member states July 21 for an unprecedented Eur750 billion emergency stimulus package aimed at offsetting the economic impact of the coronavirus and the prospects of a new trillion-dollar stimulus package by the US government, according to media reports.

"Crude oil prices gained as government stimulus packages raised hopes of a strong economic recovery. The unprecedented stimulus package the European Union leaders agreed too was also joined by regulators eyeing the potential approval of the first COVID-19 vaccine this year," ANZ analysts said in a note July 22.

However the rally lost steam after an inventory report released by the American Petroleum Institute July 21 estimated US crude oil inventories rose 7.5 million barrels in the week ending July 17, defying trader expectations of a 2 million-barrel draw, according to analyst reports.

"Oil markets do not have the luxury of looking through the rise in COVID-19 while gaining the same immediate sentiment boost from government stimulus that the forward-looking stock markets receive. When it comes to oil demand or commodities for that matter, it's all about the here and now," AxiCorp chief global markets analyst Stephen Innes said in a note July 22.

Market participants will look to the more definitive weekly US inventory report due for release by the Energy Information Administration later in the day for further cues.

As MRC informed before, 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.

We remind that 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.

MRC

BASF introduces FCC catalyst to increase transportation fuel yields

MOSCOW (MRC) -- BASF announced the commercial launch of Altrium, a new Fluid Catalytic Cracking (FCC) catalyst for mild to heavy resid feedstock, according to Hydrocarbonprocessing.

Altrium incorporates BASF’s newest Advanced Innovative Matrix (AIM) and the proven technology IZY (Improved Zeolite-Y). It has been optimized to increase transportation fuels yield (gasoline and distillate) while having a deeper coke selective bottoms conversion of resid feeds.

Altrium’s commercial trials have confirmed its ability to deliver better economic performance through coke selectivity, deeper resid bottoms conversion, and by improving the gasoline and distillate yields that help increase a refiners’ profitability.

BASF’s AIM technology consolidates several novel matrix technologies that are selectively incorporated into the catalyst design for a broad selection of performance targets and applications. AIM technology enhances the performance of the FCC catalysts through the creation of a unique meso pore architecture to improve access for heavy resid molecules and improves the metals tolerance of the catalyst. Linking the AIM technology together with IZY technology creates this unique catalyst which can help refiners improve margins and provide the operating flexibility needed to quickly react to market changes.

“BASF continues to drive innovation to help our customers be more successful and Altrium is a creative combination of technologies creating value for our customers,” says Detlef Ruff, Senior Vice President, Process Catalyst at BASF. “We are excited to see performance improvement with Altrium and the potential to make the refineries more profitable.”

“BASF continues to rapidly respond to our customers’ needs,” says Jim Chirumbole, Vice President, Refining Catalysts at BASF. “Customers told us they needed a coke selective bottoms upgrading catalyst improvement and this product is a step up to meet the needs of the resid market looking to maximize transportation fuels. We are delighted to deliver this new product to the market.”

As MRC reported earlier, BASF Total's cracker in Port Arthur, Texas, is undergoing maintenance and expected to restart on 23 July, 2020, according to the company's statement in a filing with Texas Commission on Environmental Quality (TCEQ). An unexpected outage occurred at BASF Total Petrochemical’s joint-venture (JV) olefins unit at Port Arthur, Texas, on Thursday afternoon, 11 June, 2020. The cause of the outage is being investigated, with a compressor shutdown cited as a possible factor, according to TCEQ filing. The JV’s steam cracker at Port Arthur has a production capacity of more than 1 million metric tons/year of ethylene and 544,000 metric tons/year of propylene, according to IHS Markit data.

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.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of EUR59 billion in 2019.
MRC

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.
MRC