Venezuela restarts gasoline output at Cardon refinery reformer unit

MOSCOW (MRC) -- Venezuela’s state-run oil company, Petroleos de Venezuela, has restarted gasoline output at the 310,000-barrel-per-day (bpd) Cardon refinery, reported Reuters with reference to five people familiar with the matter.

The move will provide partial relief to widespread fuel shortages in the once-prosperous OPEC nation, whose 1.3 million- bpd refining network is mostly halted because of years of underinvestment and lack of maintenance, as US sanctions restrict the country’s ability to import fuel.

Cardon’s reformer is currently producing some 25,000 bpd of gasoline for the internal market by processing naphtha and raising its octane levels, according to the people, most of whom spoke on condition of anonymity. The reformer had been halted for several months due to a lack of naphtha supply.

The company is still working to restart Cardon’s fluid catalytic cracking (FCC) unit, which is also crucial for gasoline production, one of the people said. That unit was halted in July, just days after restarting.

PDVSA did not immediately respond to a request for comment.

The only other plant producing gasoline in Venezuela is PDVSA’s 146,000-bpd El Palito refinery, whose FCC is producing some 20,000 bpd of gasoline. That is not nearly enough to satisfy domestic demand, leading to sprawling lines outside service stations across the country.

Union leader Ivan Freites told Reuters that the gasoline being produced at Cardon’s reformer had an octane level of 90, whereas most vehicles in Venezuela required gasoline with an octane level of either 91 or 95.

As MRC informed before, Russian state oil company Rosneft's decision to cease operations in Venezuela and sell its assets there to a Russian government-owned company was a "maneuver" made in reaction to collapsing oil prices, a US State Department official said earlier this year.

We remind that Angarsk Polymers Plant, part of Russian oil giant Rosneft, shut down its low density polyethylene (LDPE) production for a scheduled turnaround on 22 June. The outage was scheduled to last for one month. The plant"s annual production capacity is about 75,000 tonnes.

According to MRC's ScanPlast report, June LLDPE shipments to the Russian market rose to 38,600 tonnes from 31,290 tonnes a month earlier, production increased. Russia;s overall LLDPE shipments totalled 191,700 tonnes in the first six months of 2020, down by 7% year on year. Production increased by 89% year on year, whereas exports grew by several times.

Four missing after dredging vessel fire at Corpus Christi port in Texas

MOSCOW (MRC) -- Four members of a dredging vessel are missing after a fire and explosion near the Port of Corpus Christi, Texas, on Friday, causing the US Coast Guard to close the port’s inner harbor, reported Reuters.

Two injured crew members have been rescued from the dredging vessel Waymon L Boyd after it caught fire, while a search for missing crew members continues, the Coast Guard said.

The fire started shortly after 9:00 AM ET (1300 GMT) in an area referred to as “refinery row” because of its proximity to several refining facilities, according to a spokeswoman for the Corpus Christi fire department.

An investigation into the incident is underway. Authorities have not said what caused the explosion that sent six people to hospital. Local media reported an underwater pipeline was breached and a fiery explosion engulfed the vessel.

Names of the missing crew members have not been disclosed. The Coast Guard said the ship broke apart and sank. The four were working for Orion Marine Group, which was dredging in the Corpus Christi ship channel at the time of the explosion.

“We continue to work alongside the US Coast Guard, the Port of Corpus Christi Authority, TCEQ, and the other agencies to assist in the recovery of our personnel and the wider investigation into this incident,” said Orion Chief Executive Mark Stauffer.

As MRC wrote before, a dredging barge hit a natural gas liquids pipeline of Enerprise Products at the Port of Corpus Christi, Texas early Aug. 21, causing an explosion. "Shortly after 8 a.m. CDT today Enterprise Products Partners ("Enterprise") experienced a release of propane from a portion of its South Texas pipeline system at the Port of Corpus Christi. The incident resulted in a fire and unconfirmed reports of injuries," Enterprise said in a statement. "Initial findings indicate that the pipeline was struck by a third-party dredging barge working in the immediate vicinity, however a full investigation will be conducted to determine the cause." Enterprise "has isolated the affected segment of the pipeline," the company said.

We remind that 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 also 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.

Crude prices fall on weak European data, rise in novel coronavirus cases

MOSCOW (MRC) -- Oil prices fell Aug. 21 as weak European economic recovery news teamed up with concerns about sluggish crude demand amid the ongoing coronavirus pandemic, reported S&P Global.

Crude prices were trading substantially more than USD1/b lower in midday US trading, but finished closer to 50 cents down as the curtain came down on the week. Front-month NYMEX WTI shaved off 48 cents and settled at $42.34/b while ICE October Brent dropped 55 cents to USD44.35/b.

Europe's manufacturing purchasing data hit a two-month low, according to figures released Aug. 21, although US manufacturing purchasing managers' index (PMI) data rose a bit. But the more positive US numbers were not enough to boost crude markets, said Edward Moya, senior market analyst at OANDA.

"Oil prices remained heavy after European PMI data confirmed the V-shaped recovery was not happening, as many regions lost momentum," Moya said. "The demand outlook needs both the US and Europe to be firmly in recovery mode."

Craig Erlam, also of OANDA, said a strengthening US dollar and still rising novel coronavirus cases across much of the world were also dragging on crude markets. And there was a softening risk appetite for oil at the end of the week, he said.

US crude production is down from nearly 13 million b/d before the pandemic to about 10.7 million b/d in August, according to the US Energy Information Administration.

Erlam said he questions whether US output will bearishly begin rising again with oil seeming to stay above USD40/b. This week, both Enverus and Baker Hughes reported small increases in US drilling rig activity.

As for refined products, NYMEX September RBOB dipped 1.24 cents to USD1.2841/gal and front-month NYMEX ULSD fell 3.87 cents to USD1.2080/gal.

Crude markets also could be reacting to continued fallout from the latest OPEC+ meeting and cynicism that the alliance will be able to persuade over-producing nations - Iraq, Nigeria, Angola and Kazakhstan - to comply with their quotas despite verbal agreements, said Bjornar Tonhaugen, Rystad Energy's head of oil markets.

"It looks quite challenging for certain members, such as Iraq, to compensate for their overproduction in previous months and that's taken as bearish news by the market today," Tonhaugen said, referencing OPEC's "naughty corner."

"COVID-19 does not seem to slow down and we see some return of restrictions in Europe and beyond. Even though OPEC+ seemed mostly optimistic about ... demand's recovery, we see it rather lagging," he said. "Demand, in our view, is only likely to near pre-pandemic levels in 2021, and the rest of 2020 will be a muted struggle while facing the effects of the second wave."

The positive spin for oil though, Tonhaugen added, is that most OPEC+ nations are complying with their cuts and there seems to be a solid floor on oil for now at close to USD40/b.

Crude prices could be impacted in the week starting Aug. 24 though as two potential hurricanes simultaneously move across the Gulf of Mexico and near a bevy of oil-producing platforms.

Tropical Storm Laura, which the US National Hurricane Center is projecting could strengthen into a hurricane on Aug. 24, is heading into the Gulf and aiming toward Florida and Alabama.

Likewise, Tropical Depression 14, which also could become a hurricane on Aug. 24, is moving to the Yucatan Peninsula and toward Texas, according to the NHC.

As MRC informed earlier, in advance of two tropical storms headed toward the US Gulf of Mexico, upstream operators have shut in 13% of the region's total oil production and more than 4% of its natural gas, reported according to the Bureau of Safety and Environmental Enforcement's (BSEE) statement Aug. 22. Total shut-in crude amounts to about of 240,785 b/d of oil, along with 19,000 Mcf/d of natural gas, or 4.39% of total US Gulf gas production, BSEE said. Six producing platforms, or just under 1% of all those in the US Gulf, have been evacuated, along with four rigs, which are 40% of all rigs in the Gulf. In the past 24 hours, BP, Shell and Chevron - three of the US Gulf's biggest producers - said they have shut down production on assorted platforms in the projected paths of the storms.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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.

US Gulf of Mexico producers shut in more production ahead of two tropical storms

MOSCOW (MRC) -- US Gulf of Mexico producers have opted to shut more of their production and evacuate crews Aug. 23 as meterologists revised the tracks of two tropical storms, Marco and Laura, that are set to come ashore back-to-back this week, likely along the Louisiana coast, reported S&P Global.

Statoil said that it had shut in production and evacuated crews from its US Gulf platforms on Aug. 22. The company has 123,000 boe/d of offshore US oil and gas production from nine Gulf fields, its website said. The company is also developing two other fields, Vito and North Platte.

And late Aug. 22, Shell had "shut in production at all but one of our assets" in the US Gulf, the company said in a statement, but did not identify the field that continues to produce.

Earlier that day, the company said it had shut in "the majority" of its Gulf assets.

Shell operates the Appomattox field in the eastern Gulf, the Stones and Perdido hubs in the remote ultra-deepwaters, and the Mars, Auger, Ursa, Olympus, Echilada and Salsa in shallower deep waters. All are offshore Louisiana except for Perdido, which is ofshore Texas.

Also, "we are in the process of safely pausing our drilling operations," Shell said.

The US Gulf currently produces about 1.85 million b/d of oil and about 2.7 Bcf/d of natural gas, according to the federal Bureau of Safety and Environmental Enforcement.

As of Aug. 22, BSEE reported that operators had shut in 13% of US Gulf oil output, or about 240,785 b/d, and 4.4% of natural gas, or 19,000 Mcf/d. An update is expected Aug 23.

In addition, the tracks for both storms have changed, as Marco's path has drifted east and Laura has migrated west of earlier forecasts. As a result, the storms are currently both predicted to hit the US Gulf Coast around Louisiana back-to-back early to midweek.

The storms pose a threat to area refineries, with the current storm cones covering roughly Houston, Texas to New Orleans, Louisiana.

Over 50% of US refining capacity is on the coast, with PADD III refining capacity, including condensate splitters, totaling over 10 million b/d, according to S&P Global Platts Analytics. Of that, 9.6 million b/d is in Texas, Louisiana and Mississippi.

"Depending on the severity, disruptions can last for a matter of days and most notably hurricanes Rita and Katrina upended operations during the fall of 2005," Platts Analytics analysts said in a report. "These historic storms led to some refineries being shuttered for weeks/months as extensive repairs became necessary. Overall US downtime amounted to over 3 million b/d for September and October of 2005, around five-six times average outages for the preceding five years for the respective months."

However, they added that refiners are currently cutting refinery runs because of weak demand owing to the coronavirus.

PADD III refinery runs averaged 7.8 million b/d the week ended Aug. 14, according to the US Energy Information Administration, 1.4 million b/d below the five-year average.

And the area is well-supplied with refined products. PADD III diesel inventories at 56.5 million barrels the week ending Aug. 14 were roughly 45% above the five-year average, while gasoline stocks at 89.3 million barrels were 13% above the five-year average.

Marco, which is forecasted to become a hurricane later Aug. 23, has now entered the Gulf of Mexico from the Caribbean Sea, according to the US National Hurricane Center. Storm watches are in effect for a band extending from Alabama to central Louisiana, including New Orleans.

Marco was earlier forecasted to make landfall in southeast Texas but the trajectory shifted substantially to the east late Aug. 22, according to the NHC. The storm is projected to make landfall late Aug. 24 or early Aug. 25 in southeast Louisiana.

Laura early Aug. 23 was passing over Hispanola and is projected to become a hurricane Aug. 26. It is targeted to make landfall along the central or eastern Louisiana coast late Aug. 26 or early Aug. 27, according to NHC.

As MRC wrote before, Shell will announce a major restructure by the end of the year as the company prepares to accelerate its shift toward its net-zero emissions goal by 2050, said CEO Ben van Beurden to employees. The restructuring will include workforce reductions as part of broader cost-cutting measures, although no figures have been decided yet, the CEO reportedly said during an internal webcast.

We remind that 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.

Motiva may shut largest U.S. refinery during storms Marco, Laura

MOSCOW (MRC) -- Motiva Enterprises may shut the largest crude oil refinery in the United States for the passage of Hurricane Marco and Tropical Storm Laura later this week, reported Reuters with reference to sources familiar with plant operations.

The company’s 607,000 barrel-per-day (bpd) refinery in the coastal city of Port Arthur, Texas, could be drenched by both storms between Tuesday and the end of the week based on current forecasts, the sources said.

As MRC wrote before, citing the current economic downturn, Motiva Enterprises (Houston, Texas) said earlier in August that it will slash 10% of its workforce by 1 September, including jobs at its headquarters, terminals, and Port Arthur, Texas, facilities.

We remind that Motiva is evaluating opportunities to build a new polyethylene (PE) line within its proposed steam cracker and aromatics project in Jefferson County, Texas. The new PE capacity will be located at the company’s Port Arthur Refinery Complex in Jefferson County, Texas. The planned capacity of the unit was not specified, while the value of the project is reportedly estimated at around USD3.1 billion.

Besides, in late 2019, Motiva Enterprises acquired 100% of Flint Hills Resources chemical plant, adjacent to its Port Arthur, Texas, oil refinery. The Flint Hills plant operates a 1.57 billion-pound-per-year ethylene cracker, a unit producing nylon component cyclohexane, and a network of pipelines and storage caverns. Saudi Aramco, in its IPO prospectus, said the cash payment will be determined as per the project value at SAR 7.13 billion (USD1.9 billion).

Ethylene and propylene are feedstocks for producing 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.

Motiva Enterprises, LLC, is a fully owned affiliate of Saudi Refining Inc. and headquartered in Houston, Texas, United States with revenue of USD24 billion. Previously, it was a 50–50 joint venture between Shell Oil Company (the wholly owned American subsidiary of Royal Dutch Shell) and Saudi Refining Inc. (controlled by Saudi Aramco).