Fluor JV achieves final provisional turnover of the facilities on clean fuels megaproject

MOSCOW (MRC) -- Fluor Corporation announced that its joint venture with Daewoo Engineering & Construction and Hyundai Heavy Industries has successfully achieved final provisional turnover of the facilities for Kuwait National Petroleum Company’s (KNPC) Mina Abdullah Package 2 (MAB2) Clean Fuels Project in southern Kuwait, said Hydrocarbonprocessing.

"This significant milestone marks the completion and successful handover of MAB2 facilities to KNPC,” said Mark Fields, president of Fluor’s global Energy & Chemicals business. “It has been an honor to complete this megaproject alongside KNPC, training hundreds of their personnel and leveraging multiple local suppliers and contractors. We look forward to providing ongoing support to the refinery’s commercial operations and helping KNPC deliver on its mission to strengthen Kuwait’s economy by producing high-quality fuels to meet both local and international demand."

The Clean Fuels Program is being executed on the three KNPC-owned and operated refineries in Kuwait. As part of the program, KNPC plans to retire existing processing facilities at the Shuaiba Refinery and perform a major upgrade and expansion of the MAB and Mina Al-Ahmadi refineries to integrate the refining system into one complex with full conversion operations.

The MAB2 package facility is comprised of a world-scale hydrogen plant (steam reformers), sulfur block (sour water stripper, amine regeneration unit and sulfur recovery unit) and utilities, off-sites and non-process buildings. It also covers extensive modifications to the existing Mina Abdullah refinery units.

"Working together with the Fluor-led joint venture team to achieve this important milestone for the CFP is a true success not only for KNPC but for the State of Kuwait as well, as it will bring further prosperity for all of us,” said Abdulla F.S. Al Ajmi, deputy CEO of KNPC. “It has been a long, but truly amazing journey that now has reached its destination."

At peak, more than 12,000 craft workers were on site supported by a joint venture team that spanned three continents. The project team executed more than 127 million workhours at site and, through an intense and effective HSE program, together achieved a world-class total case incident rate (TCIR) of 0.046.

“Through our unwavering commitment to safety, integrity, teamwork and execution excellence, we are proud to have teamed with KNPC to complete this exciting project and build on our legacy of successful project delivery in Kuwait,” said Menko H. Ubbens, senior vice president and project director. “It has been a privilege for the project team to be able to meet the needs of KNPC while conducting business in a socially, economically and environmentally responsible manner to the benefit of current and future generations.”

Following commissioning, both refineries will have a capacity of 800,000 barrels per day to meet local and international demand for clean fuels.

As MRC informed earlier, Advanced Global Investment Co. (AGIC), a subsidiary of Advanced Petrochemical Co. (APC), has let a contract to Fluor Corp. to provide project management consulting (PMC) for the operator’s proposed propane dehydrogenation (PDH) and polypropylene (PP) complex at APC’s existing operations in Jubail Industrial City, on Saudi Arabia’s eastern coast. As part of the contract, Fluor will deliver PMC services for front-end engineering design, detailed engineering, procurement, and construction phases of the project, including associated utilities and off sites. Once completed, AGIC’s complex will produce 843,000 tonnes/year of propylene and 800,000 tpy of PP that will be used for production of specialty polymers by manufacturers in the face mask, automotive, pipes, food packaging, and textiles industries, according to the service provider.

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.

VCI survey reveals impact of COVID-19 on German chemical industry R&D

MOSCOW (MRC) -- Germany's chemical industry association VCI (Frankfurt) says a survey of its members has highlighted the impact of the COVID-19 crisis on the R&D plans of chemical companies, with 60% stating that they intend to carry out research projects as planned and about 30% saying individual R&D projects have been postponed for at least several months, reported Chemweek.

Only 2% say they have scrapped projects altogether. The chemical industry in Germany is, however, increasingly showing restraint about external research contracts during the crisis, VCI says.

The industry will not this year reach the record research budget set in 2019 of EUR13 billion (USD15.51 billion), as a result of the uncertain economic environment caused by COVID-19, it says. Thomas Wessel, chairman/committee for research, science and education at VCI, however, is convinced the industry will further strengthen its innovation ability in the long term with high R&D investments, and notes that to do so “Germany must undergo a metamorphosis in order to emerge stronger from the crisis.”

Wessel says that this presupposes favorable framework conditions for research and innovation that include ensuring liquidity of companies to carry out their R&D projects; improving funding for start-ups to support their growth; making funding procedures less bureaucratic and thus more flexible and agile; strengthening biotechnology by utilizing it more widely; and increasing education spending, to intensifying STEM teaching and drive forward digitalization in schools.

As MRC informed before, Germany's VCI says that production of chemicals, excluding pharmaceuticals, went up 1.5% on a year-on-year basis, in the country during the first quarter, and increased 3.6% compared with the final quarter of 2019. This is mainly because of strong demand for hygiene products and packaging materials, VCI says. Nevertheless, the “full force” of the pandemic caused by the coronavirus disease 2019 (COVID-19) has not yet been felt by the industry, VCI says.

We remind that 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. 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.

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.

Crude futures rangebound in Asia trade as weak demand outlook counters bullish US jobs report

MOSCOW (MRC) -- Crude oil futures were largely stable in mid-morning trade in Asia Aug. 14 as better-than-expected US jobs data was countered by expectations of a slow global demand recovery as the easing of COVID-19 movement restrictions was impacted by a resurgence of cases in several countries, reported S&P Global.

At 10:50 am Singapore time (0250 GMT), the ICE Brent October crude futures were up 9 cents/b (0.20%) from the previous settle at USD45.05/b, while NYMEX September light sweet crude contract was up 7 cents/b (0.17%) at USD42.31/b.

"Crude markets are trading in a tight range around the Brent $45/b mark with little progressive news flow on the macro front," AxiCorp chief global markets strategist Stephen Innes said in a note Aug. 14.

"This week's inventory data was supportive, but the next significant catalyst that the market is focused on could be the US coronavirus stimulus package, which should positively impact the broader economic recovery and, by extension, energy demand," he added.

US Department of Labor data released Aug. 13 showed weekly initial unemployment claims fell to 963,000 in the week ended Aug. 8 from 1.19 million the week before, below 1 million for the first time since mid-March, and beating market expectations of 1.1 million.

This came on the heels of US Energy Information Administration data released Aug. 12 reporting a 4.51 million-barrel draw in US commercial crude inventories, exceeding market expectations for the third consecutive week. Total gasoline and distillate stocks also fell in the week, with distillates notably snapping three consecutive weeks of builds.

However, negotiations between the US administration and Congress for another coronavirus fiscal stimulus package remained at a stalemate, with the Senate joining the House for recess for the rest of August, according to media reports.

The International Energy Agency also lowered its 2020 world oil demand estimate by 140,000 b/d from the month before to 91.95 million b/d in a report published Aug. 13, the first downgrade in the IEA's oil demand forecast in several months and coming a day after OPEC revised down its 2020 forecast by 100,000 b/d to 90.63 million b/d.

"The downbeat view on demand mirrors our view on the market. The easing of restrictions in many parts of the US and Europe has slowed amid a pick-up in infections," the ANZ analysts said in a note Aug. 14.

"Traffic levels have plateaued and are sitting at 50% below 2019 levels. Air traffic is also weak, with commercial flights in July 50% below 2019 levels. With supply also rising over the coming months, we struggle to see Brent crude remaining above USD45/b in Q3," the analysts said.

As MRC informed before, US crude oil inventories moved sharply lower during the week ended July 24 as exports and refinery demand climbed to multi-month highs, US Energy Information Administration data showed July 29. Commercial crude stocks fell 10.61 million barrels to 525.97 million barrels that week, EIA data showed. While the draw pushed stockpiles to 14-week lows, they remained more than 17% above the five-year average for this time of year.

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.

And 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.

COVID-19 - News digest as of 19.08.2020

1. US petroleum inventories show gradual rebalancing

MOSCOW (MRC) -- US petroleum inventories show clear signs of trending lower as consumption slowly recovers from the epidemic and lockdowns, while Saudi Arabia restricts production and directs volumes away from North America, according to Hydrocarbonprocessing. Total petroleum inventories fell last week for the fourth time in five weeks, and are now down more than 17 million barrels since early July, according to data from the USEnergy Information Administration. The drawdown has started to whittle away some of the 222 million barrels built up between the end of March and the end of June.


PCG Q2 net profit falls sharply

MOSCOW (MRC) -- Petronas Chemicals Group Bhd's (PCG) net profit plunged 83.4 per cent to RM186 million in the second quarter (Q2) ended June 30, 2020 from RM1.12 billion recorded in the same quarter a year ago, said NST.

In a filing to Bursa Malaysia today, PCG said the lower net profit recorded in Q2 was due to compressed margin and lower interest income generated from fund placement. The group recorded lower plant utilisation rate, production volume and sales volumes as compared to the corresponding quarter.

Overall average prices for the group decreased from the corresponding quarter in tandem with declining crude oil price arising from OPEC+ fallout and softer demand following global Covid-19 pandemic. Revenue in the same quarter decreased 26.7 per cent to RM3.18 billion from RM4.34 billion.

For the first half of 2020, PCG's net profit was 63.9 per cent lower at RM692 million from RM1.92 billion, while revenue eased 16.5 per cent to RM7.07 billion from RM8.47 billion.

PCG operations are expected to be primarily influenced by global economic conditions, petrochemical products prices which have a high correlation to crude oil price, particularly for the olefins and derivatives segment, utilisation rate of its production facilities and foreign exchange rate movements.

"The Covid-19 pandemic continues to adversely affect the global economy and PCG was also not spared.

"The utilisation of our production facilities is dependent on plant maintenance activities and sufficient availability of feedstock as well as utilities supply. "The group will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation level at above industry benchmark," it said.

PCG has declared an interim single tier dividend of five sen per ordinary share to be paid on September 25.

As MRC wrote before, in early May, 2020, Petronas Chemicals (Kuala Lumpur), Malaysia’s leading petrochemicals player, reported a drop in first-quarter sales and earnings citing the coronavirus disease 2019 (COVID-19) pandemic. The sharp decline in petrochemical product prices following the outbreak of COVID-19, the deepening industry downcycle as crude oil prices collapsed due to the OPEC+ fallout, and the recessionary global economic outlook have hurt results, the company says.

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.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.