Saudi Aramco slows diversification plans amid industry downturn

MOSCOW (MRC) -- Oil company Saudi Aramco is reviewing plans to expand at home and abroad in the face of sharply lower oil prices and a heavy dividend burden, reported Reuters with reference to the Wall Street Journal, citing people familiar with the matter.

Aramco will review a USD6.6 billion plan to add petrochemical output at its Motiva refinery in Texas, as well as a big natural-gas project with Sempra Energy in the same state, according to the report.

The state-run company is also pausing investments in refineries in China, India and Pakistan, the WSJ said.

Oil companies globally have been cutting spending across the board to shore up cash as the industry contends with a realization that lower crude prices could be the norm for a long period of time after the COVID-19 pandemic sapped fuel demand.

In Saudi Arabia, Aramco is delaying plans by a year to boost crude production capacity to 13 million barrels a day, from currently about 12 million, the report added.

The company plans to cut its capital spending to between USD20 billion and USD25 billion this year to pay a USD75 billion dividend it pledged to investors during its initial public offering last year, the Financial Times reported last month.

Aramco did not immediately respond to a Reuters request for comment.

As MRC informed earlier, Saudi Aramco has recently suspended plans to participate in a joint venture (JV) to build a USD10-billion refining and petrochemicals complex at Liaoning, China, as the company cuts spending in response to continued low oil prices.

Besides, Saudi Aramco exited plans to participate in a refinery and aromatics JV with Pertamina in Indonesia earlier this year.

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.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
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ExxonMobil weighs global job cuts after unveiling Australian lay-off plan

MOSCOW (MRC) -- ExxonMobil Corp is assessing possible worldwide job cuts, a spokesman said, after the company announced a voluntary lay-off program in Australia, according to Hydrocarbonprocessing.

Exxon is the latest oil major to embark on axing jobs spurred by a historic collapse in fuel demand because of the coronavirus pandemic.

The company has slashed capital spending this year by 30% to around USD23 billion and said in August it planned both capital and operating expense cuts to defend its dividend after reporting losses in the first and second quarters.

“We have evaluations underway on a country-by-country basis to assess possible additional efficiencies to right-size our business and make it stronger for the future,” spokesman Casey Norton, based at the company headquarters in Irving, Texas, said in emailed comments to Reuters.

The comments mark a shift, after Exxon told Reuters in July it had no plans for layoffs due to the pandemic and no percentage targets to reduce its workforce through this year’s employee reviews.

In Australia, Exxon said on Wednesday it had completed a review of its current and future project work in the country and was seeking volunteers to quit the company.

“This program will ensure the company manages through these unprecedented market conditions,” it said in a statement.

“Until other study work is complete, it would be premature to draw conclusions for other countries,” Norton said.

Exxon is looking to sell its 50% stake in the Bass Strait oil and gas joint venture in southeastern Australia, which analysts have estimated could fetch up to USD3 billion.

Analysts have speculated it could also sell or close its Altona plant in Melbourne, Australia’s oldest refinery.

As MRC informed earlier, ExxonMobil has put off for a year work on its refinery expansion in Beaumont, Texas. The expansion project is now slated to be online sometime in 2023, versus the original 2022 proposal. Bloomberg first reported the delay. ExxonMobil declined to confirm the story, noting that it does not comment on the status of individual projects. The company "is evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term as a result of market conditions caused by the COVID-19 pandemic and commodity price decreases," the company said in a statement.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

COVID-19 - News digest as of 03.09.2020

1. High petrochemical inventories in China dampen trade activity in August

MOSCOW (MRC) -- High levels of petrochemicals stored in China's tanks and warehouses, much of which was purchased during the price trough in March-April, are slowing import demand into China in August, reported S&P Global with reference to market sources. Despite inventory drawdowns in recent weeks, styrene monomer stockpiles remain above 300,000 mt in East China, keeping shore tanks filled to the brim, due in part to concentrated arrivals and a slowdown in consumption. Tank shortage and port congestion have led to an average 8-10 day waiting time for vessels offloading, one market source said, while traders were heard to be bearing higher demurrage costs, especially for import cargoes. "Given ample supplies and tight storage space, nobody in China is in a hurry to buy styrene cargoes at present," a downstream producer source said. Benzene commercial storage swelled to more than 283,000 mt in the last week of July, with further increases expected in the first week of August.

MRC

High petrochemical inventories in China dampen trade activity in August

MOSCOW (MRC) -- High levels of petrochemicals stored in China's tanks and warehouses, much of which was purchased during the price trough in March-April, are slowing import demand into China in August, reported S&P Global with reference to market sources.

Despite inventory drawdowns in recent weeks, styrene monomer stockpiles remain above 300,000 mt in East China, keeping shore tanks filled to the brim, due in part to concentrated arrivals and a slowdown in consumption.

Tank shortage and port congestion have led to an average 8-10 day waiting time for vessels offloading, one market source said, while traders were heard to be bearing higher demurrage costs, especially for import cargoes.

"Given ample supplies and tight storage space, nobody in China is in a hurry to buy styrene cargoes at present," a downstream producer source said.

Benzene commercial storage swelled to more than 283,000 mt in the last week of July, with further increases expected in the first week of August.

With deepsea parcels from Europe and the US set to discharge over the next few weeks, benzene stocks are set to rise further and tank companies are likely to impose stricter rules to ensure a smooth flow of material in and out of tanks, one source said.

The protracted storage of material in tanks has prompted tank companies to consider imposing overdue fees to encourage faster drawdown. It has also proven a challenge for earlier-traded CFR China cargoes, with at least one trade heard unwound because buyers were not able to place cargoes in tanks.

Isomer-grade mixed xylene inventory in East China hit a five-year high at 134,000 mt August 2; it was last higher in mid-March 2015, S&P Global Platts data showed.

"There is a huge issue on tank storage in China, hence the low prices," an aromatics trader said, referring to aromatics spot prices, which have recently hit record lows against feedstock naphtha.

With supply chains disrupted by the COVID-19 pandemic, producers and end-users of paraxylene and its downstream purified terephthalic acid said they have become accustomed to high inventories, but this has led to operational difficulties as producers look to load at the earliest possible laycan and buyers request that cargoes arrive later in the month. The result is an "operational mess," one source said.

PTA inventories in East China are estimated at 3.8 million-3.9 million mt in early August.

Adding further bearishness to PX, more PTA turnarounds are expected over second-half August to October due to the high inventory. Heightened US-China tensions in recent days pose further challenges, market sources said.

China's domestic yarn and fiber grade polyethylene terephthalate inventories remain high for both producers and buyers, with the overall textile-making inventory at 37.8 days in East China and limited export orders from the clothing sector resulting in weak buying interest for PET.

Inventories of another fiber-related product, monoethylene glycol, have eased to around 1.38 million mt, although this level is still considered high. Operating rates were heard at around 50% as end-users adjust to poor demand and high stock levels.

High MTBE inventories in China have dashed expectations of demand improving prior to the festive season in China.

"There are long holidays at end September and early October in China, which tend to increase the stockpile demand prior to that, however the positive demand expectation is increasingly pressured by the current high inventory level," a market source said, adding buyers were reluctant to import as they grappled with high tank storage costs and demurrage risks.

High toluene stockpiles have pressured some domestic suppliers in China to export to neighboring countries, with several market sources saying two parcels of toluene totaling 8,990 mt were exported in June.

The Asian phenol market has also been significantly impacted by tank shortages and severe flooding.

"Many vessels in China (are) lining up for discharging and need to wait for at least seven to 10 days," a Chinese phenol source said August 4.

China's coastal methanol inventory has also swollen to around 1 million-1.3 million mt in the past two weeks on the back of ample oversesas supply and lackluster domestic demand, with the discharging rate slowing as flooding impacts some downstream demand, trade sources said.

As MRC wrote previously, China's crude stockpiles reached a record high level in July as refiners struggle to digest mass crude oil cargoes purchased during the second quarter, while domestic fuel consumption slowed amid widespread flooding across 23 provinces during the month. As a result, the high inventory has dampened China's crude oil demand for delivery in the third quarter as it might take a while to destock, industry officials and market sources said July 29.

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 in June. Russian plants reduced their PET output in January-June 2020 by 25% year on year. Overall PET chips production at four Russian plants reached 281,100 tonnes in January-June 2020.
MRC

Mitsui Chemicals runs its Osaka cracker normally after restart

MOSCOW (MRC) -- Mitsui Chemicals has operated its naphtha cracker normally following a maintenance turnaround, according to Apic-online.

A Polymerupdate source in Japan informed that, the company resumed operations at the cracker on July 19, 2020. The cracker was shut for maintenance on June 11, 2020.

Located in Osaka, Japan, the cracker has an ethylene capacity of 500,000 mt/year and a propylene capacity of 280,000 mt/year.

As MRC informed before, the company last conducted a turnaround at this cracker from mid-June, 2018, to 11-22 August, 2018.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, 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.

Mitsui Chemicals is a leading manufacturer and supplier of value added specialty chemicals, plastics and materials for the automotive, healthcare, packaging, agricultural, building, and semiconductor and electronics markets. Mitsui Chemicals is a Japanese Chemicals company, a part of the Mitsui conglomerate. The company has a turnover of around 15 billion USD and has business interests in Japan, Europe, China, Southeast Asia and the USA. The company mainly deals in performance materials, petro and basic chemicals and functional polymeric materials.
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