Odebrecht-backed energy deal likely cost Mexico USD683 mln

MOSCOW (MRC) -- Mexico’s president said on Aug. 22 an “abusive” ethane supply deal he has pushed to cancel between a consortium backed by Brazilian firm Odebrecht and Mexican state oil firm Pemex had likely cost taxpayers around 15 billion pesos (USD683 million), reported Reuters.

The contract between Petroleos Mexicanos (Pemex) and the consortium made up of Odebrecht-controlled Braskem and Mexico’s Grupo Idesa, was agreed a decade ago during the tenure of ex-President Felipe Calderon, who was in office from 2006-2012.

In a video address on YouTube, President Andres Manuel Lopez Obrador said his estimate was based on what he described as probable unfair subsidies and fines paid out over a failure to meet the terms of the deal he described as “abusive”.

“We’re talking about damages to the nation worth around 15 billion pesos,” said the president, who earlier this week declared the contract should be canceled.

Still, he suggested that about 2.1 billion pesos in penalties that he apparently included in his overall calculation had never been lost to Mexico because his administration ceased to pay the fines after he took office at the end of 2018.

Braskem Idesa did not immediately reply to a request for comment. Earlier this week the consortium rejected any wrongdoing and said it won the supply contract fairly.

Under the terms of the contract, Pemex has had to deliver ethane below current market prices.

Braskem Idesa said the price formula had no preference or advantage and was typical of long-term raw material contracts and consistent with prices Pemex charged in the 16 years before.

As MRC reported previously, Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July. She said during the companyпїЅs recent webinar that Petrobras plans to give more time for potential investors to make offers for the company"s assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras"s stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the companyпїЅs stake in Braskem within a year. Petrobras owns 32.15% of Braskem.

We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem"s back burner for several years.

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.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
MRC

MOSCOW (MRC) -- Indian Oil Corp, the country’s top refiner, is close to winning its first contract to export up to 720,000 tons of clean products to Mauritius under an annual deal from November, reported Reuters with reference to two sources familiar with the matter.

IOC mostly stays away from participating in term tenders for fuel exports as the refiner sells most of its fuel in the local market, besides supplying its retail outlets in Nepal and Bhutan.

This year because of falling local demand due to COVID-19 and weak margins, the company is attempting to lock in sales of its fuels.

IOC this year also won its first contract to supply fuels to Bangladesh.

IOC will deliver 205,000 tons of 95 RON gasoline, 235,000 tons of 10 ppm gasoil, 175,000 tons of jet fuel and up to 105,000 tonne of marine gasoil at Port Louis in Mauritius, sources said.

Other companies that competed for the tender issued by State Trading Corp of Mauritius were the trading arm of France’s Total, Sahara Energy Resources Ltd, OQ Trading and Vitol, according to a document seen by Reuters.

India’s Mangalore Refinery and Petrochemicals Ltd supplied Mauritius’ full requirement for fuel for 12 years to 2018/19. In 2019/20 refined fuels were supplied by Petrochina and Vitol.

IOC had placed a second lowest premium on gasoline after OQ Trading but the lowest premiums on other fuels to emerge as the frontrunner for the annual tender, the document showed.

IOC has offered to sell fuels at premiums of USD50.15 per tonne for gasoline, USD3.58 per barrel for gasoil, USD3.22 per barrel for jet fuel and USD5.91 per barrel for marine gasoil, the document showed.

The tender closed in mid-August.

The sources did not wish to be identified citing confidentiality. IOC and STC did not respond to Reuters emailed requests for comment.

As MRC informed previously, 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). 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.

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.
MRC

MOSCOW (MRC) -- Celanese Corporation, a global chemical and specialty materials company, has increased August list and off-list selling prices for Vinyl Acetate Monomer (VAM) sold in the Americas, said the producer on its site.

The price increases below are effective for orders shipped on or after 14 August 2020, or as contracts otherwise allow, and are incremental to any previously announced increases.

Thus, VAM prices rose, as follows:

- by USD0.03/lb - for the USA and Canada;
- by USD125/mt - for Mexico & South America.

As MRC reported earlier, Celanese last raised its VAM prices in the Americas on 1 July, 2020, as stated below:

- by USD0.05/lb - for the USA and Canada;
- by USD125/mt - for Mexico & South America.

According to MRC's DataScope report, June EVA imports to Russia fell by 22,5% year on year to 2,940 tonnes from 3,800 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-June 2020 by 8,16% year on year to 17,440 tonnes (18,980 tonnes a year earlier).

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

MOSCOW (MRC) -- Occidental Petroleum expects oil and gas output to dip in the second half of the year and will not boost production until it “significantly” reduces debt, reported Reuters with reference to Chief Executive Vicki Hollub's statement.

The company has been struggling with debt taken on during its USD38 billion acquisition of Anadarko Petroleum last year, an ill-timed bet on oil prices rising.

The Anadarko purchase was intended to increase efficiency and profits by boosting oil and gas production. But Occidental’s output will dip in the third and fourth quarters and it will end the year pumping about 1.2 million barrels of oil and gas per day, roughly 200,000 barrels per day less than the year prior.

The production outlook “does not inspire confidence in capital efficiency” or in the ability to “meet sustaining capital requirements next year,” Mizuho Securities USA analyst Vincent Lovaglio said, adding that Occidental needs to finalize a major asset sale.

Occidental did not release 2021 spending plans, but said it would have to spend about USD2.9 billion to keep production flat, based on oil prices at USD40 per barrel.

It has about USD4.5 billion in notes due next year and reported long-term debt of USD36 billion on June 30. Warren Buffett’s Berkshire Hathaway holds about USD9.7 billion in Occidental preferred shares that pay a dividend of about 8%.

Occidental is restarting some activity in the Permian Basin and Gulf of Mexico, but its focus is to “ensure that we have the liquidity to go forward so we have the ability to meet our maturities,” Hollub said on a call with analysts.

It no longer plans to sell Algerian assets it had once hoped to sell to France’s Total to pay down debt, Hollub said, calling Algeria a “core asset.” Algerian authorities had moved to block Total’s acquisition.

Occidental is still marketing assets in Ghana and expects to sell a land and minerals package in Wyoming this year.

In H1 August, it posted an USD8.35 billion second-quarter loss amid lower energy prices and writedowns.

As MRC wrote before, OxyChem, the chemical segment of Occidental Petroleum (Oxy; Houston, Texas) reports second-quarter pre-tax income of USD108 million, down 48% year-over-year (YOY) from USD208 million and 35% ahead of the company’s guidance. Sales totaled USD846 million, down 15% YOY from USD998 million.

We remind that OxyChem conducted a seven-day turnaround at its PVC plant in Pasadena, Texas, USA, in April, 2020. This plant's production capacity is 1 million mt/year.

According to MRC's ScanPlast report, Russia's overall PVC production reached 557,000 tonnes in the first seven months of 2020, up by 1% year on year. Only three Russian producers managed to increase their output.

Occidental Petroleum Corporation (OxyChem) is a California-based oil and gas exploration and production company with operations in the United States, the Middle East, North Africa, and South America. Oxychem is Oxy"s Texas-based subsidiary which manufacture polyvinyl chloride (PVC) resins, chlorine and caustic soda used in plastics, pharmaceuticals and water treatment chemicals.
MRC

MOSCOW (MRC) -- Shenghong Refining and Chemical (Shenghong) has selected Shell Catalysts & Technologies (SC&T) to provide catalyst for its C2 FE selective hydrogenation units, the core reaction unit of its 1100 KTA grassroots ethylene Plant in Lianyungang, China, according to Hydrocarbonprocessing.

The ethylene cracker is part of Shenghong’s grassroots integrated refining and petrochemical complex. The plant is the third largest ethylene cracker, making SC&T the catalyst supplier to the three largest petrochemical plants in China.

The two largest plants, Zhejiang petrochemical (ZPC) and Hengli Petrochemical currently utilize C2 FE selective hydrogenation catalyst from SC&T, and both successfully started up in December 2019 and January 2020 respectively.

Both world scale acetylene convertors started-up right first time with minimal flaring and emission while meeting specification within a short period of time. SC&T C2 FE selective hydrogenation catalyst has proven multiple times to provide reliable operation at multiple feed sources and various operating conditions. These features translate to tangible benefits for ethylene producers such as higher yield from excellent ethylene selectivity and also stability performance which provide extra confidence in day-to-day operations.

Since 2017, C2 FE selective hydrogenation catalyst provided by SC&T has been selected for the majority of high-profile new ethylene grassroot plants in China. Of all the new builds in China, SC&T has managed to capture 60% of the ethylene crackers by capacity and close to 7,000 KTA of ethylene capacity.

SC&T has been awarded seven C2 FE selective hydrogenation catalyst projects which covers four of seven main chemical bases in China. Combined with other catalyst business in ethylene plants, SC&T has expanded its catalyst sales to 17 ethylene producers in the China market.

The business growth for SC&T in China for C2 FE selective hydrogenation catalyst is driven by a strong technical team and high-quality catalyst.

Technical advantages of C2 FE catalyst from SC&T in terms of selectivity and minimal flaring during start up.
SC&T provides a value-based model of C2 FE which shows demonstrated advantages in startup (little runaway, quick startup process) and non-planned shutdown in normal operation, lower pressure drop and high selectivity.
Strong technical service not only in startup, but also in routine operation by helping the customer troubleshoot process issues and optimize the operation to achieve increased profitability.

SC&T continues to build upon the recent achievements in project completion and successful petrochemical plant operation in the China market. SC&T provides technical services and licensed technologies which reflect many years of experience in the designing and building, and as an operator of large, complex industrial process plants.

As MRC reported earlier, Zhejiang Petrochemical Co Ltd started up its ethylene cracker in late December, 2019. Based in Zhejiang, China, the cracker is able to produce 1.4 million tons/year of ethylene.

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