BP warns oil demand may have peaked as pandemic hits fossil fuels

MOSCOW (MRC) -- Global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels, reported S&P Global.

Demand for oil will be the biggest casualty over lower energy demand in the coming three decades as weaker economic growth and a faster shift to renewable energy accelerates the demise of oil-based transport fuels, BP said its Energy Outlook 2020 published Sept. 14.

Global demand for liquid fuels, including oil and biofuels, will almost halve to less than 55 million b/d by 2050, when oil's share of the global energy mix will slip to just 14% from around a third currently, according to BP's new central "Rapid" energy transition scenario.

Even under a more conservative "Business as Usual" scenario, BP now sees global oil demand peaking within a few years at just over the 100 million b/d level seen in 2019.

"There is a risk that the economic losses from COVID-19 may be significantly bigger, especially if there are further waves of infection," BP said.

Under its central scenario, BP sees oil demand around 3 million b/d lower in 2025 and 2 million b/d lower in 2050 as a result of the pandemic. About two-thirds of the impact reflects a weaker global economy, with the remaining third a result of lasting behavioral changes due to COVID-19, BP said.

These "scarring effects" from the crisis will see absolute demand for fossil fuels fall in all future scenarios, BP's chief economist Spencer Dale said, marking an "unprecedented" historical decline for any class of fuel in the world's energy mix.

Oil in transport alone will peak in the mid- to late 2020s in all scenarios, Dale said, driven by progress on efficiency and electrification.

Less global air travel and more home-based work could be a lasting legacy of the pandemic, while policy pressure could accelerate the uptake of electric cars, boost recycling and reduce the use of single-use plastics, he said.

"The diminished role for oil reflects the proportionally higher impact of COVID-19 on the transport sector, faster penetration of electricity and hydrogen in transport, and more stringent policy assumptions regarding the use of plastics," BP said in the report.

By 2050, both bioenergy, such as biofuels, and hydrogen will account for around 7% of primary energy consumption, BP's central scenario predicts, and the share of oil in transport slumps to 40% from 90% in 2018.

"...In all our scenarios, the share of renewables energy grows more quickly than any fuel in history," Dale said.

Renewables are set to see their share of the global energy mix jump from 5% in 2018 to 45% in the "Rapid" scenario, led by a jump in wind and solar capacity. Electricity in the energy mix increases from a little over 20% in 2018 to 45%, with 350 GW of new wind and solar growth alone by 2035.

With clean, renewable energy surging, BP sees the role of natural gas lower than in last year's report, squeezed by a more pronounced shift to renewable energy in power generation and a greater substitution by electricity and hydrogen. Gas demand now peaks in the mid-2030s at 26% of the energy mix in the "Rapid" scenario before slipping to 21% by 2050.

BP makes the shift to its new central scenario to "Rapid" after its new CEO Bernard Looney set out ambitious plans for the oil major's pivot to cleaner energy back in February. Europe's number two oil company wants to shrink its oil and gas production by at least 1 million b/d of oil equivalent, or 40%, over the next decade, in a radical transformation.

Under BP's base-case "Evolving Transition" scenario last year, the company saw global liquids demand holding steady at 108 million b/d to 2040, after peaking in 2035.

BP's more pessimistic outlook for oil demand contrasts with the International Energy Agency, which in November predicted oil demand growth would be flattening out by 2030 to reach 106.4 million b/d in 2040.

Speaking in July, the head of the IEA, Fatih Birol, said he "would not be surprised" if global oil demand fully recovers to over 100 million b/d after the pandemic is brought under control.

S&P Global Platts Analytics sees global oil demand peaking in 2040 at around 120 million b/d before slipping to 116.5 million b/d in 2050 under a "most likely" scenario.

Compared to last year's report, BP's renewable energy's share of global energy in 2040 is now 7 percentage points higher, due to higher-than-expected contributions from bioenergy, wind and solar power, supported by "green" hydrogen production.

Under BP's central scenario, carbon emissions fall by around 70% by 2050, driven by high carbon prices and strong climate policy. Under "Business as Usual," carbon emissions fall by around 10% by 2050, having peaked in the mid-2020s as policy and social preferences continue to evolve as in recent years.

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 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

MOSCOW (MRC) -- Scientific instrumentation equipment maker Thermo Fisher Scientific Inc. is investing USD140 million to expand its existing laboratory plastics production to support global demand for COVID-19 testing and the development of therapies and vaccines, said Canplastics.

"Early in the pandemic, we quickly joined forces with governments, public health agencies and industry to increase capacity across our laboratory plastics production facilities and address the growing COVID-19 threat,” said Fred Lowery, senior vice president and president of Life Sciences Solutions and Laboratory Products at Thermo Fisher. “However, demand quickly exceeded those early expansion projects, so we began a series of additional expansions to meet the growing needs of our customers. These investments, along with many others across the company, will ensure that our customers have the supplies they need to continue meeting the unprecedented demands of the COVID-19 response."

The rapid increase in production related to COVID-19 testing, and development and manufacturing of therapies and vaccines, has created what the company calls “historic demand for laboratory plastics”, including pipette and automation tips, storage tubes and plates, transfer pipettes, and packaging vials and bottles. To support these needs, Waltham, Mass.-based Thermo Fisher is creating more than 1,000 jobs across manufacturing sites globally, increasing automation capabilities, and optimizing warehouse and sterilization capacity to improve supply chain agility.

Among the Thermo Fisher sites currently being expanded are Rochester, N.Y.; Petaluma, Calif.; Monterrey and Tijuana, Mexico; and Joensuu, Finland.

This latest investment comes on the heels of Thermo Fisher’s opening last month of a new US$40 million facility in Lenexa, Kan., for viral transport media production to meet sustained demand for COVID-19 testing.

As MRC informed earlier, European Parliament says that the EU should become more self-sufficient in medicines and medical equipment so that affordable treatments are available at any time. It calls for priority to be given to boosting domestic production of essential and strategic medicines because currently 40% of medicines marketed in the EU originate in non-EU countries and 60-80% of its active pharmaceutical ingredient (API) supplies are produced in China and India.

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

MOSCOW (MRC) -- Borealis (Vienna, Austria) has launched a range of circular polyolefin products produced using renewable feedstock derived from waste and residue streams, reported Chemweek.

The company says the alternative to conventional fossil fuel-based feedstocks can help its customers lower their own carbon footprint for products including hygiene and food-contact applications. While fossil fuel-based feedstocks “will continue to be a mainstay of international Borealis polyolefins production operations, significant strides have been made towards the use of more sustainable feedstocks in large-scale commercial manufacture,” it says. Borealis began producing polypropylene (PP) in March this year based on renewably-sourced feedstocks, such as Neste-produced renewable propane, at its manufacturing facilities in Kallo and Beringen, Belgium.

The renewably sourced feedstocks for the new plastic products are derived from waste sources including vegetable oil production, oil waste and residues, the timber industry, and the food industry, Borealis says. The entire range has also been certified using the International Sustainability & Carbon Certification Plus system, which ensures the traceability of sustainably sourced feedstock from its point of origin through the entire chain of custody, it adds.

As MRC wrote previously, the light-feed 625,000-metric tons/year Borealis steam cracker at Stenungsund, Sweden, is expected to restart operations in the fourth quarter this year after a fire broke out at the plant in May, 2020. The cracker has been under force majeure for almost four months after the blaze at the plant on 10 May, which was subsequently brought under control the following day.

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.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
MRC

MOSCOW (MRC) -- Denka Company Limited announces that as part of its initiatives to reduce greenhouse gas emissions based on its ESG management policy, it has decided to invest approximately 3.7 billion yen in the installation of high-efficiency gas turbine power generation facilities for private power generation at its Chiba Plant (Ichihara-shi, Chiba), its core petrochemical production plant, said the company.

Through the introduction of facilities such as these, Denka will facilitate the reduction of greenhouse gas (CO2) emissions by at least 12,000 tons annually and accelerate its efforts to realize a sustainable society.

The Paris Agreement,1 which was adopted as an initiative establishing an international framework, set out the target of keeping the average global temperature rise to 2 °C or less over pre-Industrial Revolution levels. As a result, the implementation of measures to reduce greenhouse gas emissions became an issue the world needed to address as soon as possible. Denka, taking the Paris Agreement into consideration, established medium- to long-term targets for the reduction of greenhouse gas emissions in an effort to ensure its responsibilities as a chemical product manufacturer are fulfilled.

The introduction of the high-efficiency gas turbine power generator is expected to not only achieve a reduction equal to approximately 2% of Denka’s total reductions and approximately 5% of the energy-origin emission reductions
set forth in the medium-term targets but also improve the intensity of useable energy, thereby contributing to the boosting of the Chiba Plant’s cost competitiveness.

In addition, with the high-efficiency gas turbine power generator expected to achieve a sufficient reduction of emissions and also save energy, the project has been chosen by the Ministry of Economy, Trade and Industry (METI) as being eligible for subsidies, based on METI’s program aimed at supporting entities facilitating the rationalization of energy use, following the energy saving project with the introduction of gas turbine power generator promoted by Ome Plant which was also chosen in 2018.

Denka will increase the amount of clean energy it uses to reduce greenhouse gas emissions on a long-term basis. With this in mind, it is in the process of constructing additional hydroelectric power stations in two locations, in addition to the Denka-owned hydroelectric power stations operating in 15 locations (including five locations owned by Kurobegawa Electric Power Company, a joint venture established with Hokuriku Electric Power Company). When the power stations Denka hopes to establish in two locations begin operations, Denka expects that it will additionally reduce CO2 emissions by approximately 35,000 tons every year.

In line with its SDGs compass, Denka will continue to implement a range of initiatives preserving and protecting the
environment going forward, and contribute to the creation of a sustainable society by promoting environmentally-conscious corporate activities globally.

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

MOSCOW (MRC) -- Arkema announces the start-up of a new world-scale industrial adhesives plant in Japan. Those new capacities will enable Bostik to serve its Japanese customers in the continuously growing markets of diapers, hygiene, packaging, labelling, transportation and electronics, said the company.

This investment is in line with Bostik’s growth and geographical expansion strategy. Bostik, the Adhesive Solutions segment of Arkema, continues the development of its industrial adhesives business and announces the start-up of a new plant in Nara, Japan, within the Bostik-Nitta JV, 80% owned by the Group.

This new facility includes several production lines dedicated, on the one hand, to adhesives for the non-woven industry (diapers and hygiene) and, on the other hand, to the industrial markets of packaging, labelling, transportation and electronics. It will enable Bostik to support the strong growth of its customers in the disposable hygiene sector in Japan and to expand the manufacturing of certain industrial adhesives ranges in Asia.

This investment represents a new step in the geographical strengthening of Bostik, remaining close to its customers, and confirms its commitment to developing innovative and sustainable products at the highest level of quality and performance.

According to MRC's ScanPlast report, 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.

Arkema is a global manufacturer in specialty chemicals and advanced materials, with 3 business segments - High Performance Materials, Industrial Specialties, and Coating Solutions - and globally recognized brands. The Group reports annual sales of EUR8.8 billion. Buoyed by the collective energy of its 20,000 employees, Arkema operates in close to 55 countries.
MRC