Pandemic reset pushes energy firms toward renewables, hydrogen

MOSCOW (MRC) -- The economic trauma caused by the coronavirus pandemic has pushed energy companies to step-up investment in renewables, hydrogen and other low carbon alternatives, but fossil fuels will be their dominant business for the foreseeable future, reported Reuters with reference to industry executives' statement.

Reeling from the onset of the pandemic, global oil consumption shrank by more than 20% in the second quarter and prices hit their lowest in decades, making companies rethink how fast they should make the transition away from reliance on oil and gas.

"Everyone's talking about this great reset ... What do we need to do to survive this?" Arif Mahmood, Petronas' executive vice president and CEO of downstream, said at the virtual Platts APPEC 2020.

"Energy transition will be pushed forward much faster," he concluded.

The Malaysian state energy company posted a USD5 billion loss in April-June and has set up a team to reshape its portfolio and expand in solar and wind for power generation.

Malaysia is the world's fourth largest exporter of LNG, and Petronas would maintain its "gas agenda", Arif said, noting that the company was about to begin operations at a second floating LNG plant in Malaysia, and it was also working on an LNG joint venture in Canada.

Oil majors such as BP have set ambitious targets while Chinese state energy companies tiptoed into renewables as they continue to prioritize hydrocarbons for China's energy security needs.

Besides expanding into solar and wind for power generation, more energy companies are researching blue hydrogen produced from natural gas and using carbon capture and storage (CCS) to reduce emissions in the process. The hydrogen could be used in power plants and fuel cell vehicles.

Royal Dutch Shell is involved in biomethane, biofuels and hydrogen and has done "significant work" on CCS as the energy major strikes a balance between energy transition and its core hydrocarbons business, Mark Quartermain, Shell's vice president of crude trading & supply, told the conference.

"We've got to make sure we don't ignore the fact that oil and gas are going to remain essential fossil fuels," Quartmain said, before adding that going forward there will greater focus on climate change and energy transition.

"When it comes to energy transition we need to be in these markets," Quartermain said.

Heads of research at commodity trader Vitol and Citigroup expect CCS to be the next key area of development.

"Hydrogen and carbon capture are more likely in short term to be contributing to decarbonization," Giovanni Serio, Vitol's global head of research, said, calling on the industry to invest more in CCS.

"Some countries are finding ways through credit systems and other mechanisms to price carbons...It's what's really needed for carbon capture to take off," Ed Morse, managing director and global head of commodities research at Citigroup said.

However, "the cost structure of hydrogen is just not competitive enough...it's there but it could be end of the decade phenomenon," Morse said.

In the refining and petrochemical sectors, companies are exploring biofuels, producing chemicals for products that are more widely used in the pandemic such as gloves and for recyclable materials, industry executives said at APPEC.

As MRC informed before, Shell has recently announced that it will replace the ethylene steam cracker furnaces at its Moerdijk petrochemicals complex, The Netherlands, in a move that will reduce its greenhouse gas emissions.

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.
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Aramco facility, Khurais to join prestigious WEF Global Lighthouse Network

MOSCOW (MRC) -- The World Economic Forum (WEF) has recognized Aramco’s Khurais oil facility as a leader in the adoption and integration of cutting-edge technologies of the Fourth Industrial Revolution (4IR), according to Hydrocarbonprocessing.

Khurais is the company’s second facility, after Uthmaniyah Gas Plant, to be included in WEF’s prestigious Global Lighthouse Network.

Amin Nasser, president and chief executive officer of Aramco, said: “We are delighted to be recognized once again by WEF for our deployment of cutting-edge technologies. Aramco continues to push the envelope of technological innovation in the energy sector and, through the adoption of 4IR solutions, we have achieved significant gains at our facilities in terms of efficiency, safety and environmental performance.

“Khurais is the largest intelligent oil field in the world, harnessing advances in Big Data analytics, machine learning, smart sensors and robotics. This recognition of Khurais exactly one year to the day since it was targeted in a 2019 attack is a clear indication of our team’s ability to record the highest level of achievement, despite the most difficult challenges.”

Khurais was one of 10 facilities added to the network this year, taking the total number to 54 worldwide. Uthmaniyah Gas Plant was included in 2019, meaning Aramco is one of only nine companies represented in the WEF network by more than one facility - and the only major energy company in the Lighthouse network.

As MRC reported earlier, 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. 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.

We remind that 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.
MRC

Oil majors renewable drive pushes up price tags on assets

MOSCOW (MRC) -- Plans by European oil companies to increase their renewable power capacity are driving up the price tags on renewable businesses and projects, according to the CEO of British renewables and network company SSE, said Hydrocarbonprocessing.

BP, Shell and Total have all announced renewable expansion plans this year to reduce their reliance on fossil fuels and meet internal climate targets. Analysts say much of the growth will need to come through acquisitions.

"I’m delighted to see some of these companies coming in and paying substantial prices for assets. That will help in terms of pushing up the prices of assets we are selling," SSE’s Alistair Phillips-Davies said in an interview.

BP last week agreed to pay USD1.1 billion for 50% stakes in two U.S. offshore wind developments from Norway's Equinor.

SSE, which is seeking to divest around 2 billion pounds (USD2.6 billion) of assets, has said it would sell at least a 10% stake in its Dogger Bank offshore wind project being developed off the British coast with Norway’s Equinor.

SSE also earlier this year sold a 51% stake in its Seagreen 1 British offshore wind farm project to France’s Total. "Generally, seeing oil companies come in with their experience of offshore is good news for the industry. Although it will make the market more competitive it will also bring new focus and new technology and innovation," Phillips-Davies said.

Ethylene and propylene are feedstocks for producing PE and polypropylene (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.
MRC

LG Chem to spin off battery business into separate company

MOSCOW (MRC) -- LG Chem decided to spin off its battery business into a new company amid growing demand for electric vehicle (EV) batteries, said Chemweek.

It plans officially to launch the new entity with the tentative name LG Energy Solutions on 1 December 2020 after approval from an extraordinary shareholders' meeting to be held on 30 October. LG Chem will possess all the shares issued by the new battery company and it will own 100% of its non-listed shares.

LG Chem says that “it came to the judgment that this is the right time for the corporate spin-off as the battery industry is growing rapidly and structural profits in the EV battery sector are being made in earnest."

LG Chem is targeting sales for the new company of 30.0 trillion South Korean won (USD25.5 billion) in 2024. The expected revenue of the business is about W13 trillion this year. LG Chem has not confirmed if it is planning an initial public (IPO) offering of the new company, but says it will review the situation continuously in in the future.

As worldwide exhaust gas emission and fuel economy regulations are further tightened, major international automakers are advancing the launch of EV models, and the EV battery market is growing rapidly, according to LG Chem. The company is expanding its orders to global automakers to supply the next-generation EV market and plans to strengthen production and quality capabilities.

LG Chem says it will be possible, through the spin-off, to attract large investments, while easing financial burdens by establishing an independent financial structure for each of its business sectors. The company says it will be able to receive appropriate evaluations of the business value for each of its business units including the battery business.

Major battery customers of LG Chem include Hyundai and Kia in South Korea; General Motors (GM), Ford, and Chrysler in the US; and Volkswagen, Renault, Volvo, Audi, Daimler, Mercedes-Benz, Jaguar, and Porsche in Europe.

LG Chem says that it has currently procured more than W150 trillion in EV battery orders and is investing more than W3 trillion annually in production facilities, and so the need to procure large investment funds in a timely manner has also increased. The company plans to expand its total battery production capacity to more than 100 gigawatt-hours (GWh) by the end of 2020.

By 2023, it is expected to more than double capacity to over 200 GWh. It plans to expand its combined annual capacity to 3.3 million EV batteries by 2020. The company currently operates production bases in Europe, the US, and China, which account for about 90% of the pure EV market.

The company in 2018 decided to invest W2.1 trillion to build a second plant to produce EV batteries at Nanjing, China. In 2019, LG Chem and GM decided to invest USD2.3 billion to establish a battery-cell assembly plant on a greenfield site in the Lordstown area of northeastern Ohio. The company in 2019 secured USD5 billion in loans from South Korea to expand its battery business.

LG Chem says that by concentrating investments in its petrochemicals, advanced materials, and bio sectors, it plans to establish itself as a "global top five chemical company" with balanced business portfolios alongside the battery business.

As MRC informed earlier, LG Chem signed a conditional contract with Ningbo, China-based Ningbo Shanshan to sell a large portion of its liquid crystal display (LCD) polarizer business for USD1.1 billion. The sale reflects LG's strategy of exiting from the LCD business as cut-price Chinese electronics makers, such as Beijing-based BOE Technology, dominate the business.

Ethylene and propylene are feedstocks for producing PE and polypropylene (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.

LG Chem Ltd., often referred to as LG Chemical, is the largest Korean chemical company and is headquartered in Seoul, South Korea. According to ICIS report, it is 15th biggest chemical company in the world in 2011. It has eight domestic factories and global network of 29 business locations in 15 countries. LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.
MRC

Agilyx raises USD33 million in private placement

MOSCOW (MRC) -- Agilyx says it has raised about 300 million Norwegian krone (USD33 million) through a private placement implying a pre-money equity value for the company of Nkr1.3 billion (USD144 million), according to Chemweek.

The company, which is developing technologies for the chemical recycling of plastic waste, expects to have its shares admitted to the Merkur Market, a multilateral trading facility operated by the Oslo Stock Exchange, with trading to begin on or about 30 September.

The placement was about 10 times oversubscribed, excluding Nkr100 million in shares preallocated to cornerstone investors, says Agilyx, which intends to use the proceeds for project development and delivery, pipeline development and European expansion, R&D expansion, and development of Cyclyx International, a new feedstock management business.

As MRC reported earlier, Agilyx (Tigard, Oregon) and TechnipFMC said this summer they had agreed to collaborate exclusively on the joint development of a process to purify styrene oil into high-purity styrene. The collaboration is the result of over a year of evaluation, and the desire of both companies to expand their energy transition and circular economy offerings, Agilyx says. The aim is to “enable a new production path of styrene via post-use polystyrene (PS) products,” it says.

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics was 225,870 tonnes in the first half of 2020, down by 8% year on year. PS consumption in the Russian market increased by 2% year on year in June 2020, totalling 39,590 tonnes.
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