Oil demand to peak by 2040 as transport demand stagnates post-coronavirus: IEEJ

MOSCOW (MRC) -- Global oil demand is forecast to peak by around 2040 because transport-fuel demand will decline steeply and economic growth will slow in the post-coronavirus world, the Institute of Energy Economics, Japan, said in its annual IEEJ Outlook 2021 on Oct. 15, reported S&P Global.

"In the post-coronavirus era, we expect demand for transport fuels will be curbed significantly," Shigeru Suehiro, senior economist and manager at IEEJ's econometric and statistical analysis group, told an online press briefing.
"We see oil demand peaking in around 2040 as a result of a slowing economy, together with less fuel demand for cars, aircraft and ships."

In its post-pandemic scenario, the IEEJ forecasts global oil demand will peak at 106 million b/d in 2040 and fall further to 102 million b/d in 2050 mainly due to dwindling demand for cars, Suehiro said.

"In such a world, oil exporting countries such as those in the Middle East may suffer a major impact, and it will be critically important for them to diversify their economies," Suehiro said.

Stressing that oil demand would remain strong after having peaked, upstream investment would be vital to preventing a supply crunch and the destabilization of the oil market in the future, he said.

The IEEJ, an affiliate of the Ministry of Economy, Trade and Industry, releases its global energy outlook until 2050 on an annual basis.

In its reference scenario, under which it assumes the impact of the pandemic on global energy demand will dissipate in few years, the IEEJ expects energy demand will increase toward 2050 due to the growth in Asian demand, Suehiro said.

The reference scenario is based on assumptions that current energy and environmental policies will be maintained without the introduction of radical decarbonization policies.

The IEEJ forecasts oil demand will increase to 116 million b/d in 2050 mainly due to growing demand for transport fuel and petrochemical feedstocks based on its reference scenario, Suehiro said.

Roughly half of the oil demand growth of about 20 million b/d by 2050 will be met by OPEC producers in the Middle East because of their abundant reserves and low production costs in the IEEJ reference scenario.

"In Asia, we expect to see a major change in the landscape. The significant growth in Asian energy demand has been led mainly by China's increased energy demand [in recent years]," Suehiro said. "In the next 30 years, India and ASEAN will be the main drivers of demand growth rather than China."

By 2050, India will account for over a third of the increase in global energy demand as Chinese demand will peak in the late 2030s, under the IEEJ reference scenario.

While the IEEJ forecasts fossil fuels will account for 80% of global energy demand in 2050 under its reference scenario, in its advanced technologies scenario it puts it at 67%, with demand for oil, coal and natural gas having peaked by then.

The advanced technologies scenario is based on assumptions that the maximum amount of innovative technologies have been introduced as countries enforce strict energy and environmental policies to combat climate change.

In its latest outlook, the IEEJ has introduced a Circular Carbon Economy scenario, under which it looks at how countries around the world could pursue both using fossil fuels and reducing carbon dioxide emissions by advancing Reduce, Reuse, Remove and Recycle, or 4Rs technologies.

CCE is among key agenda to be discussed during the Saudi Arabia-hosted G20 summit in November.

The CCE scenario assumes the same 67% share of fossil fuels in energy demand in 2050 as in the advanced technologies scenario, but CO2 emissions will be reduced by another 5 billion mt.

"By maximizing the utilization of decarbonization technology, CO2 emissions could be significantly reduced even though the share of fossil fuels in the energy mix remains unchanged," senior economist at IEEJ's planning & administration unit, Yoshikazu Kobayashi, said at the briefing.

"In other words, the use of fossil fuels and a reduction in CO2 emissions can be pursued at the same time by maximizing the use of decarbonization technologies," Kobayashi said.

The IEEJ expects introduction of hydrogen to replace some of coal-fired power generation and replace some oil products in transport to be among the possible options to reduce CO2 significantly, Kobayashi said.

Hydrogen is forecast to account for 5% of the 2050 global energy mix for power generation in the IEEJ's CCE scenario.

As MRC wrote before, 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.

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

LyondellBasell puts Americas PO and derivatives on force majeure

MOSCOW (MRC) -- LyondellBasell, the world's lartest polyolefins producer, puts Americas propylene oxide (PO) and derivatives on force majeure, according to Chemweek.

A leak on a PO refining column at LyondellBasell's plant in Bayport (Texas, USA) with the capacity of 600,000 mt/year of PO on 7 October caused the company to significantly reduce capacity utilisation at its Bayport facility, and subsequently declare force majeure on PO and derivatives, according to a customer letter.

The letter did not say how long the disruption was expected to last.

Products affected include PO, p-glycols, allyl alcohol, butanediol and derivatives, p-series glycol ethers, and p-specialties glycol ethers.

As MRC informed earlier, LyondellBasell (Rotterdam, the Netherlands) announced that Duqm Refinery and Petrochemical Industries Company LLC (DRPIC) has selected LyondellBasell’s world-leading polypropylene (PP) and high-density polyethylene (HDPE) technologies for a new facility. The new plants will comprise of a PP plant that will utilize LyondellBasell’s Spheripol PP process technology to produce 280,000 metric tons per year (m.t./yr) of PP and a 480-m.t./yr HDPE plant which will utilize LyondellBasell’s Hostalen ACP process technology and will be built in Al Duqm, Oman.

Propylene is the main feedstock for the production of PP.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

Zhejiang Petrochemical to shut LLDPE plant for maintenance

MOSCOW (MRC) -- Zhejiang Petrochemical is in plans to take off-stream its linear low density polyethylene (LLDPE) unit, according to Apic-online.

A Polymerupdate source in China informed that the company is likely to shut the unit for a brief maintenance in the middle of October, 2020. The unit is expected to remain off-line for about 5 days.

Located at Zhoushan, China, the LLDPE unit has a production capacity of 450,000 mt/year.

As MRC reported earlier, Zhejiang Petrochemical Co Ltd started up its ethylene cracker in late December 2019 and its polyolefin plants in late December 2019-January 2020.

Market sources reported then that one of its polypropylene (PP) plant with capacity of 450,000 tons/year started up by 30 December 2019, followed by another line with same capacity by 15 January 2020.

Meanwhile its 450,000 tons/year of linear low density polyethylene (LLDPE) and 300,000 tons/year of high density polyethylene (HDPE) were launched around similar time with PP plants.

According to MRC's ScanPlast report, August LLDPE shipments to Russia fell to 17,200 tonnes from 48,950 tonnes a month earlier, exports increased, whereas production decreased. Russia's overall LLDPE shipments totalled 257,100 tonnes in the first eight months of 2020, down by 5% year on year. Russian LLDPE C4 was sold at Rb76,000-78,000/tonne CPT Moscow, including VAT, in September.
MRC

Sinopec Zhongke to shut cracker on technical difficulties

MOSCOW (MRC) -- Zhongke Refinery and Petrochemical is in plans to shut its cracker in Guangdong Province on 20 October, 2020, due to a persistent technical difficulty, reported CommoPlast with reference to a source close to the company.

The restart date of this 1 million tons/year cracker is not acertain at the time of this report. The shutdown at the cracker would also affect the downstream 350,000 tons/year high density polyethylene (HDPE)/linear low density polyethylene (LLDPE) swing unit.

As MRC informed earlier, the company has also taken its No. 1 polypropylene (PP) unit in Guangdong Province offstream on 12 October 2020 - just a week after recovering from the earlier explosion at the 3thylene oOxide (EO) line that affected the entire complex. The No. 1 PP line has an annual capacity of 350,000 tons/year. Meanwhile, the No. 2 PP unit with 200,000 tons/year output are operating at stable rates.

Meanwhile. the 100,000 tons/year low density polyethylene (LDPE) line remains idled without a specific startup schedule.

Sinoepc Zhongke Refinery and Petrochemical has been attempting to start-up the newly constructed plant since June 2020. The producer might need more time to reach stable production.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

MEGlobal raises ACP for November 2020 by USD10 per tonne

MOSCOW (MRC) -- MEGlobal has announced its Asian Contract Price (ACP) for monoethylene glycol (MEG) to be shipped in November 2020, according to the company's press release.

Thus, on 14 October, the company said ACP for MEG would be at USD650/MT CFR Asian main ports for arrival in November 2020, up by USD10/MT from October.

The November 2020 ACP reflects the short term supply/demand situation in the Asian market.

As MRC reported earlier, MEGlobal announced its October ACP for MEG at USD640/MT CFR Asian main ports, up by USD20/tonne from September.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to ICIS-MRC Price report, contract prices of Russian plants increased by Rb1,000-1,500/tonne this month under the pressure from the growth of the dollar exchange rate against the rouble.

MEGlobal is a fully integrated supplier of monoethylene glycol (MEG) and diethylene glycol (DEG), collectively known as ethylene glycol (EG).
MRC