Chevron in talks with Eni to sell stake in Indonesia Deepwater Development: officials

MOSCOW (MRC) -- Oil major Chevron is in talks with Italy's Eni over the possibility of selling its stake in the Indonesia Deepwater Development project in offshore East Kalimantan in Southeast Asia, reported S&P Global with reference to two senior government officials' statement in August.

The talks are happening against the backdrop of Chevron's recent acquisition of upstream company Noble Energy for USD5 billion and a global slump in oil and gas prices that has upended valuations of hydrocarbon reserves and forced energy conglomerates to reconfigure their portfolios.

If the sale goes through it could provide some certainty to the development of the gas fields under IDD that has been in limbo due to disagreements with the government. It would also mean the exit of yet another oil major from a flagship Indonesian upstream project amid resource nationalization concerns.

"Now (Chevron's stake) is being offered to Eni. What I know is Chevron is offering. We will wait," acting oil and gas director general at the Energy and Mines Ministry Ego Syahrial said.

A second senior government official confirmed that Chevron was in talks with Eni over the IDD project, and a third unnamed upstream investor was also involved in discussions.

A Chevron spokesman said it does not comment on commercial discussions as a matter of long-standing policy, and Eni acknowledged the query but didn't provide an immediate confirmation.

The IDD project includes the production sharing contracts for the Ganal and Rapak blocks in offshore Indonesia, and the gas fields of Bangka and Gehem-Gendalo.

Chevron has a 62% interest in the Bangka field and a 63% stake in Gendalo-Gehem, according to its website. The other partners in the gas fields are Eni, Tiptop Energy and Sinopec.

In January, Chevron said it had opened a data room to facilitate discussions about th potential sale of its interest in IDD but no final decision had been made to sell its interest. It said Bangka, which began production in August 2016 as the first phase of IDD, was not able to compete for capital in Chevron's global portfolio.

Indonesian energy ministry's Syahrial said the IDD development and Rokan block were actually "one package."

The Indonesian government had appointed Pertamina to take over the Rokan block in central Sumatra from Chevron when the contract expires in August 2021, citing a more attractive development proposal from the national oil company. The Rokan issue had only served to exacerbate concerns of resource nationalism.

The IDD project is expected to contain of 2.3 Tcf of gas. Upstream regulator SKK Migas expects the second phase of IDD to be on stream in the fourth quarter of 2026; and peak production is expected to reach 844 million cu ft/d of natural gas and 27,000 b/d of crude oil.

As MRC wrote before, low commodity prices and deep spending cuts in the first half of 2020 could lead US supermajors ExxonMobil and Chevron to write down huge chunks of their proved oil and natural gas reserves if prices remain depressed in the second half.

We remind that Chevron Phillips Chemical, part of Chevron Corporation, declared force majeure Sept. 1 on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations.

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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.

Rethinking plastic packaging and recycling

MOSCOW (MRC) -- Magnum's pint tubs are made using certified circular PP from SABIC's TruCircle portfolio, said Chemweek.

When it comes to food and drink applications, recycled plastic has limited uses. Regulations forbid the use of post-consumer resin (PCR) in food & drink contact, as well as in hygiene and medical applications. However, brand owner Unilever and its partner SABIC have developed a solution and introduced it to some European markets. Their goal: prove that PCR can be transformed for use in food-contact applications safely.

"Unilever and SABIC thought it vital to move fast in bringing this type of solution to the market. Because it helps consumers and regulators become aware of what is currently possible when it comes to plastic recycling technology," says Mark Vester, circular economy leader at SABIC, told CW during a recent phone interview.

In early 2019 the brand owner got together with SABIC to discuss the new packaging concept for one of Unilever's Magnum ice cream tubs. In just over nine months, the collaboration went from concept to market with a packaging solution made from recycled polypropylene (rPP).

"Thanks to this partnership, we are now providing a sustainable product that does not compromise on the functionality or experience that the consumer is expecting, which is critical," Sanjeev Das, global packaging director/foods and beverages at Unilever, told CW during the same call. "[As a brand owner], when you have a product in the market, you cannot just change materials that go into its manufacturing and packaging."

Certified circular PP from SABIC's TruCircle portfolio is used to make the tubs. Products in the range include certified circular polymers from the chemical recycling of used, mixed plastic, certified renewable polymers from bio-based feedstock, and mechanically recycled polymers.

"One of the advantages of chemical recycling is that you can produce the materials with the same properties and if they came from naphtha, suitable for existing applications. That saves a lot of time at the development phase," says Vester as he explains how it was possible to move so quickly from concept to market.

"Many of our partners are looking at conventional mechanic recycling, but one of the main recommendations that we have for supplier partners is to focus on chemical recycling to feedstocks," Das adds.

What began with the launch in 2019 of 600,000 ice cream tubs in Belgium, the Netherlands, and Spain continued in 2020. More than 7 million Magnum ice cream tubs will be introduced across other European countries. By the end of 2020, all Magnum pint tubs in Europe will be produced with rPP, the equivalent to over 160,000 kilograms of recycled plastic, according to Unilever.

The company anticipates that the new packs will be rolled out globally from 2021 onwards, with the goal that all Magnum tubs will be made with recycled plastic by 2025.

Plastic packaging is often used only once before it is discarded. This fact means that about 95% of the value of plastic packaging materials, equating to some USD80-120 billion per year, is lost to the economy, according to a recent Ellen McArthur Foundation report.

The Unilever-SABIC collaboration is just one of many solutions aiming to reroute plastic packaging away from waste streams and back into the materials loop, reclaiming some of those billions of dollars that are otherwise 'discarded' annually.

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.

Chandra Asri commences operation of MTBE, butene-1 plants at Cilegon, Indonesia

MOSCOW (MRC) -- Indonesian manufacturer, PT Chandra Asri Petrochemical Tbk has started the operating of the Methyl Tert-butyl Ether (MTBE) and B1 plants, which are the first in the country, said the company.

The construction of both factories was carried out by Toyo Engineering Corporation and PT Inti Karya Persada Tehnik since 2018. According to the minister of industry, Agus Gumiwang Kartasasmita in an official statement said, the petrochemical industry in Indonesia has an important role in substituting imports. Based on the ministry data, in 2018, Indonesia is still importing methanol chemical products, including derivatives, namely MTBE and B1, worth of Rp174 trillion.

"Apart from import substitution, petrochemical companies like Chandra Asri are also able to attract new investors which will certainly have a positive impact on the Indonesian economy," he added.

President Director of the producer, Erwin Ciputra, stated, with the operation of this new factory, he hope that the government’ goal of reducing imports by 35 percent in 2022 can be achieved. On August 26, the largest integrated petrochemical company has completed the issuance of a Rp1 trillion bond.

The issuance will be used the proceeds to fund Chandra Asri’ working capital as part of its Integration Master Plan, with its MTBE and Butene-1 plant projects. The chemical producer has allocated capital expenditure (capex) USD294 million in 2020.

Director of the issuer, Suryandi explained, the company will use the internal cash to meet the capex. He said, the company still had cash of around $649 million as first half (1H) of 2019. The new factories he said were built with an investment of USD130.5 million with a capacity of 127,000 tons per year.

While the Butene-1 plant will have a capacity of 43,000 tons per year. These new factories will absorb Raffinate-1 to be used as raw material. In October of 2019, Chandra Asri will also complete the construction of a polyethylene and polypropylene factory.

With the operation of these two new factories, the company’ production capacity could increase to 4.2 million tons from the current 3.9 million tons. After operate four new factories in this year, Suryandi revealed, the company will also complete the construction of the CAP 2 factory in June 2024.

The manufacturer will allocate around USD5 billion to build the factory. The company is looking strategic investors to build the plants. The director stated, “After CAP 2 is operational, our production capacity can increase to 8 million tons."

The subsidiary of PT Barito Pacific Tbk as the majority shareholders, is the largest integrated petrochemical company producing olefins and polyolefins. The company factories located in Cilegon and Serang, Banten Province. The company is the only producer who operates a naphtha cracker and is the sole domestic producer of ethylene, styrene monomer and butadiene.

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.

In addition, CAPC is also the largest polypropylene producer in Indonesia, including produces plastic raw materials and chemicals used for packaging products, pipes, automotive, electronics, others.

Emergency shutdown reported at South Korean S-Oil FCC unit

MOSCOW (MRC) -- S-Oil Corporation has shut its No. 2 fluid catalytic cracking unit (FCC) due to unexpected issue since 7 September 2020, according to CommoPlast with reference to market sources.

Based in Ulsan, South Korea, the FCC unit is able to produce 705,000 tons/year of propylene. It is expected to remain off-stream for 4 weeks. Market players informed that their polypropylene (PP) plant is still operating regularly.

As MRC reported earlier, S-Oil, South Korean petrochemical major, took off-stream its residue fluid catalytic cracker (RFCC) unit for a turnaround in June, 2020. The company undertook a planned shutdown at the unit by early-July, 2020. The unit remained off-line for about two weeks. Located at Onsan, South Korea, the RFCC unit has a propylene capacity of 705,000 mt/year.

Propylene is the main feedstock for the production of PP.

According to MRC's ScanPlast report, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.s-oil

VCI forecasts decline in Germany's chemicals output, sales in 2020

MOSCOW (MRC) -- Germany’s chemical industry association VCI (Frankfurt) says it expects the country’s production of chemicals and pharmaceuticals to fall by 3% in 2020 compared to the prior year, with annual sales to decline by 6% year on year (YOY). A return to pre-COVID-19 levels is not expected before the end of 2021 at the earliest, it says, said Chemweek.

Initial signs of a recovery are, however, now being seen, says Christian Kullmann, VCI president and chairman of Evonik Industries. “If another shutdown can be avoided, demand for chemicals and pharmaceuticals is expected to stabilize in the second half of the year," he says.

Production by Germany’s chemical and pharmaceutical industry fell by 2.5% YOY in the first six months of this year, while sales shrank by 6.1% YOY to EUR96 billion (USD113 billion). Excluding pharmaceuticals, chemicals output fell by 3.6% in the first half of the year, compared to the equivalent period last year.

After a positive start to 2020, production in the second quarter fell by 5.8% compared to the prior-year quarter, with average plant capacity utilization falling to 77.5%, according to the VCI. All product areas in the chemicals and pharmaceuticals sector were affected by weak demand both domestically and internationally, with production of specialty chemicals falling by 3.9% in the first six months of the year compared to 2019, it says. Polymers production declined by 8% YOY due to the slump in demand from the automotive industry and plastics processors, it says. Production of pharmaceuticals recorded only a slight fall of 0.3% over the same period, while the decline in soaps and detergents output was 0.7%.

"For one in four companies, the lack of orders continues to have a major impact on business activities,” the VCI says. The chemical and pharmaceutical sector “bottomed out” in the second quarter, with a survey of the VCI’s members showing that disruptions to operations are decreasing, it says. Overcoming the COVID-19 crisis “will take some time,” it adds, with 49% of its member companies expecting the industry to return to pre-pandemic levels by the end of next year. About 20% of those surveyed expect it to take a further year, with 13% expecting only to be able to compensate for the decline at a later date or not at all, it notes.

Acknowledging the “rapid and consistent action” of Germany’s federal government during the crisis, Kullman says it is now important to look ahead. “The emergency aid was right and indispensable, but they will not secure the future of Germany,” he says. A stimulus package must be followed by a political program that provides sustainable growth opportunities and which makes Germany attractive once again for large-scale industrial projects “so that investment and innovation can be mobilized,” he says. He urged the government to take measures including reducing corporation tax to 25%, cutting green energy costs, streamlining planning and approval procedures, and establishing an investment program for climate protection and the circular economy.

As MRC informed earlier, Russia's output of chemical products rose by 4.4% year on year in May 2020 . Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May. Production of benzene was 110,000 tonnes in May 2020, which equalled the figure a month earlier. Overall output of this product reached 615,000 tonnes over the stated period, up by 1.7% year on year.