Indian Oil to build USD1.8-billion petchem complex at Paradip, India

MOSCOW (MRC) -- Indian Oil says it will build an integrated paraxylene (PX) and purified terephthalic acid (PTA) facility at Paradip in Odisha State, India, at an estimated investment of 138 billion Indian rupees (USD1.84 billion), reported Chemweek.

The project will be completed by early 2024, with the complex planned to produce 800,000 metric tons/year of p-xylene and 1.2 million metric tons/year of PTA, it says.

The complex will be integrated with the company's refinery at Paradip. The PX and PTA facilities, along with a previously announced 357,000-metric tons/year monoethylene glycol (MEG) plant at Paradip, would provide feedstock for a 300,000-metric tons/year textile yarn manufacturing project at Bhadrak, Odisha, and will facilitate other textile and polyester projects in the region, Indian Oil says. The MEG plant is being developed with an investment of Rs47.87 billion and is due to be completed in early 2021. The company also plans to produce up to 50,000 metric tons/year of toluene, it says.

Indian Oil says that with the commissioning of both the PTA and MEG projects, “the petrochemical intensity index of Paradip refinery will increase to 14.7 from the present level of 4.5.” The company commissioned a 680,000-metric tons/year polypropylene (PP) plant in February 2019 at Paradip.

The complete ecosystem of bulk petrochemicals would be available in the petroleum, chemicals, and petrochemicals investment region (PCPIR), which would catapult Odisha's petchems industry to global standards, according to Indian Oil. Paradip has been identified as one of India's PCPIR zones.

Indian Oil is the anchor tenant at Paradip and the major source of feedstocks for downstream industries in the region. Odisha, located on India's east coast, has the potential to cater to increasing demand for chemicals and petchems in Southeast Asian countries, the company says.

As MRC informed before, the state-owned Indian Oil Corp Ltd shut its (PTA plant in India for maintenance in early-February, 2019. The plant remained under maintenance until end-February, 2019. Located in Panipat, India, the PTA plant has a production capacity of 550,000 mt/year.

PTA is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report,Russia's estimated PET consumption totalled 367,720 tonnes in the first six months of 2020, up by 19% year on year. Russian companies processed 62,910 tonnes of material in June.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.

Petkim posts USD20M profit in Q2 2020

MOSCOW (MRC) -- Turkey's first and only integrated petrochemical plant, Petkim, a subsidiary of the State Oil Company of the Azerbaijan Republic (SOCAR), reported a TL 145 million (approximately USD20 million) profit in the second quarter of 2020, reported Chemweek.

According to the statement made by the company on Monday, Petkim’s sales revenue reached TL 2.2 billion with domestic sales recording a 10% increase in the March-May period compared with the previous quarter.

During the period, the plant, located in the Izmir province in the Aegean region, prioritized the production of medical supplies and raw material for packaging to help the country’s fight against the pandemic.

Anar Mammadov, head of SOCAR Turkey's refining and petrochemicals department, said the STAR refinery located near Petkim continued to supply the plant with the raw material naphtha without any interruptions.

“This situation demonstrated the importance of the STAR Refinery as an investment and how the STAR-Petkim integration was based on a correct strategy,” Mammadov noted.

He added that the company was able to reach its 2020 budget targets despite the pandemic.

The STAR Refinery stands as the largest investment made by a foreign direct investor in Turkey. It became fully operational in 2019 after it was launched in October 2018 and was carried out with an investment of USD6.3 billion by SOCAR Turkey.

The STAR refinery and Petkim are located in the same area in the Aliaga peninsula of Izmir.

As MRC informed earlier, SOCAR has plans for another petrochemical facility investment in Izmir in partnership with British Petroleum (BP) with an estimated cost of USD1.8 billion. Earlier it was reported that SOCAR and BP applied to the relevant institutions in Turkey to establish a joint petrochemical company, which will be called Mercury complex, in April 2020.

The construction of the new petrochemical complex is expected to enable Turkey to cover the current account deficit by USD6 billion annually. Moreover, the project will increase the share of SOCAR in petrochemical market of Turkey to 35-40%. Construction of the complex was planned to begin during the current year in order to put the enterprise into operation in 2023-2025. However, due to low oil prices and to the COVID-19 pandemic, the project implementation has been postponed until 2021. The enterprise will produce 1.25 million tons of purified terephthalic acid (PTA), 840 thousand tons of paraxylene (PX), 340 thousand tons of benzene.

PTA is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, Russia's estimated PET consumption totalled 367,720 tonnes in the first six months of 2020, up by 19% year on year. Russian companies processed 62,910 tonnes of material in June.

Petkim is the leading petrochemical company of Turkey. Specializing in petrochemical manufacturing, the company produces ethylene, polyethylene, polyvinyl chloride, polypropylene and other chemical building blocks for use in the manufacture of plastics, textiles, and other consumer and industrial products.

COVID-19 - News digest as of 21.08.2020

1. Siegfried profits plummet on higher costs, sales remain resilient

MOSCOW (MRC) -- Siegfried (Zofingen, Switzerland) says net profit for the first half of 2020 shrunk 33.2% year on year (YOY) to 20.67 million Swiss francs (USD22.62 million) on revenue that was slightly lower at SFr388 million, down 1.4% YOY, said Chemweek. The fall in profit is due mainly to higher cost of sales and negative currency effects, while the more resilient revenue performance is attributed to the company's crisis management that began in January, it says. Siegfried was able to largely maintain its production activities at all sites, it adds. Operating profit was down 24.9% for the period, to SFr30.79 million. The company has "coped well with the significant challenges posed by COVID-19," says Wolfgang Wienand, Siegfried's CEO. Multiple national governments identified the company as a manufacturer of essential pharmaceutical products, creating the basis for the continued operation of its plants during the crisis, he says.


Crude rally pauses, prices slide on profit-taking as market awaits fresh drivers

MOSCOW (MRC) -- Crude oil futures were lower in mid-morning trade in Asia on Aug. 18 as investors took some profit and paused for fresh drivers after an overnight rally on improved fundamental outlook buoyed the global crude complex, reported S&P Global.

At 10:19 am Singapore time (0219 GMT), the ICE Brent October crude futures were down 17 cents/b (0.37%) from the Aug. 17 settle at USD45.20/b, while NYMEX September light sweet crude contract was down by 19 cents/b (0.44%) at USD42.70/b.

"This morning's (Aug. 18) activity looks like some profit-taking but mostly a pause to reassess the tug-of-war between the financials and the fundamentals," Vandana Hari, Founder and CEO of oil consultancy firm, Vanda Insights told Platts on Aug. 18.

"The dollar's continuing slide is the biggest support for crude's ascent. The growing unease that global oil demand recovery is plateauing is a counter-force, but may need to be validated by data to become a full-blown bearish pull," she added.

Oil prices moved higher overnight on strong support from ramped-up China crude purchases, a faster-than-expected US economic recovery and liquidity injections from China's central bank, or the People's Bank of China.

"Still, oil's rally could remain capped by recent surges in coronavirus cases around the world, which never stray far from the primary demand narrative," Stephen Innes, chief global markets strategist at AxiCorp, said in a note Aug. 18.

Global COVID-19 case counts continued to rise steadily amid a resurgence of infections worldwide with total cases at 21,809,170, while total deaths reached 772,479, latest data from John Hopkins University showed.

Separately, OPEC+ is expected to discuss about compensation cuts through September for members who overproduced and exceeded their output quotas from May to July during its Joint Ministerial Monitoring Committee meeting scheduled on Aug.19, S&P Global Platts reported earlier.

The coalition exceeded its quotas by 357,000 b/d from May to July according to Platts calculations and the overall cut compliance was pegged at 95% for July, compared to 107% in June and 87% in May.

While no further changes are expected for the OPEC+ production accord which eased into 7.7 million b/d from August, a focus on compliance and compensation cuts is ultimately supportive to the global crude complex.

"This week's JMMC could prove to be a catalyst as the meeting may address continued failure to comply with past quotas by Nigeria, Iraq, and others. Still, the incentive will be to emphasize overall compliance (around ~95%) and possibly to provide more detail on the framework for the principle of compensation over the next few months by OPEC+ members who have lagged so far," Innes added.

Meanwhile, US crude inventories likely fell by 3.8 million barrels last week, on the back of soaring exports and higher refinery demand, an S&P Global Platts analysis showed Aug. 17. This would mark the fourth consecutive week of decline, and the longest stretch of weekly draws since September 2019.

Market participants will look to fresh cues from the inventory reports by the American Petroleum Institute and the Energy Information Administration on Aug. 18 and 19 respectively.

As MRC wrote previously, China’s massive build-up of crude oil inventories this year slowed somewhat in July, but remained elevated by historical standards as imports stayed near record levels.

We remind that Chinese polyethylene (PE) producers have been running plants at around 80-90%, and inventories were heard around 640,000 mt, stable in the first week of August.

We also remind that four large new crackers are poised to start operations in China in the next 3-6 months, in a sharp expansion of the country's petrochemical cracker sector.

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.

Reduced pipeline volumes and gas processing activity hits Enterprise results

MOSCOW (MRC) -- Enterprise Products Partners' second-quarter profit slid as declines in natural gas and crude pipeline volumes and reduced activity at processing plants - due to producer shut-ins and weak NGL prices - caused revenue to plunge, reported S&P Global.

The company is cutting its combined spending on growth projects in 2021 and 2022 by a total of USD700 million from its previous expectations. It is also talking seriously with a joint venture partner about helping it fund existing build-out plans, executives said during an investor conference call in late July.

The cautious approach reflects uncertainty in the midstream sector about the future trajectory of supply and demand fundamentals amid the coronavirus pandemic, geopolitical tensions that could disrupt market flows and the November US presidential election that could lead to trade and tax policy changes.

"We're discussing some JVs with some of our largest projects, but I wouldn't say we're highly engaged with more than one," co-CEO Jim Teague said on the call. "But we are highly engaged with one."

Teague declined to elaborate.

Just 18 months ago, the operator of gathering and processing facilities, pipelines, storage and import and export terminals across oil, gas, NGLs and petrochemicals touted enthusiastically its plans to get bigger, believing that greater scale would enhance its market position and generate higher profits and investor returns.Then the coronavirus started to spread globally in January.

Enterprise still plans to get bigger - it has USD6.6 billion in projects currently in its construction queue, including in Texas an 11th NGL fractionator and a new segment of a crude pipeline that are expected to begin initial service by the end of September.

What's different now is the breadth of the growth and how much risk it is comfortable shouldering on its own, as it believes that the pace and scope of the reopening of energy markets as the virus eases in parts of the world is uncertain and may extend well into 2021.

It still expects to spend USD2.5-USD3 billion on growth capital projects this year. For 2021 and 2022, it expects growth capital investments will be reduced from previous guidance to approximately USD2.3 billion and USD1 billion, respectively.

Preferred joint venture partners, meanwhile, would ideally "bring more than money," Teague said. "They've got to bring throughput or offtake typically.".

For the April-June quarter, Enterprise reported net income attributable to limited partners of USD1.03 billion, or 47 cents/share, a 15% drop from the USD1.21 billion, or 55 cents/share, in the second quarter of 2019. Revenue in the latest quarter fell over 30% to USD5.75 billion from $8.28 billion in the year-ago period.

The company would consider a strategic acquisition if it complemented an existing business, but has not seen any opportunities over the last several months that would be compelling, executives said during the call. It is more focused on executing its existing assets, they said.

There also are no current plans to change its master limited partnership structure, amid its concerns that depending on who wins the upcoming US presidential election tax obligations and the cost of energy infrastructure could increase, executives said.

Looking ahead, Enterprise is optimistic there is a recovery on the horizon.

"I think you're going to get a price signal next year on hydrocarbons that turns some things back on," Teague said.

As MRC wrote before, 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 (PDH 2) plant currently under construction at EPP’s operations in Mont Belvieu, Tex., for supply to global customers. 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.

We remind that in July, 2020, Enterprise Products conducted maintenance at its propane dehydrogenation (PDH) unit in Mont Belvieu, Texas. This PDH unit has the capacity of 750,000 mt/y of propylene.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's DataScope report, 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.