Total plans to maintain, not shrink, future oil output despite tougher outlook: CEO

MOSCOW (MRC) -- French oil group Total has no plans to shrink its oil production volumes in the coming years but hopes to maintain its current output levels while prioritizing lower-cost, shorter-cycle upstream projects, reported S&P Global with reference to its chief executive officer Patrick Pouyanne's statement Oct. 26.

"We don't want to decline oil on the production side, we'll continue," Pouyanne told an industry event on Oct 26. "It's a bit difficult to grow when you are selective but maintaining our oil production is part of a strategy...When we have opportunities to grow we'll do it...we are proud to be an oil producer."

Like many of its European rivals, Total has signaled a major boost in spending on renewables energy in the coming years as part of its strategy to shift to cleaner, lower-carbon fuels.

The company, which has said it expects global oil demand to peak in the 2030s, last month announced plans to grow its overall energy production by a third in the next decade, with half the growth coming from LNG and half from electricity, mainly renewables. With a shift in focus to cleaner, low-carbon energy, however, it said it expects its oil product sales will be reduced by almost 30% in the same timeframe.

Last year, Total's oil and gas output averaged 3.01 million boe/d, of which 1.67 million b/d, or 55%, was oil.

By 2030, the company expects its total energy sales mix will be: 50% gases, 30% oil products, 5% biofuels and 15% electrons. That compares with 55% oil products, 40% gas and 5% electrons in 2019.

BP in September became the first global oil major to abandon a long-held strategy of growing oil and gas portfolio, announcing plans to shrink upstream production by at least 1 million b/d of oil equivalent, or 40%, by 2030 as part of an ambitious transformation from an integrated hydrocarbons producer to a global energy major.

Although Total has no plans to follow suit, Pouyanne said Total is being more selective in its upstream investments, avoiding projects with multi-year exploration and development cycles such as deepwater offshore given the uncertainties over the future demand for oil and long-term oil prices.

"In order to be safe, we want to be sure that the oil that we invest (in) today - when it faces lower demand - continues to be competitive at a lower price," Pouyanne told the India Energy Forum.

Total has said its new upstream projects must have a breakeven of less than USD25/b, and are able to produce a return of more than 15% at a USD50/b long-term oil price.

Asked whether growing concerns over the climate and long-term oil demand threaten to create more stranded resources globally, Pouyanne said: "I think it will become an issue for countries that want to offer some exploration licenses...because we have to think, (for example) very deepwater, offshore exploration could take time to develop."

In Suriname, where Total and Apache recently made a third "substantial" offshore oil and condensate find, Pouyanne suggested that Total may not even consider developing the discovery unless it is a "giant" in terms of recoverable resources.

"If it's giant it works, if it's only interesting discoveries maybe they will have to stay where there are...So it might be an issue."

In Canada's oil sands industry, Pouyanne said he sees the potential that climate change and oil demand fears "may leave a lot of resources in the ground."

"There are a huge amount of resources which probably will not be all valorized in the long term in this type of environment," he added.

As MRC reported earlier, within the framework of its net zero strategy, Total will convert its Grandpuits refinery (Seine-et-Marne) into a zero-crude platform and will invest more then EUR500 mln into this project. By 2024 the platform will focus on four new industrial activities: production of renewable diesel primarily intended for the aviation industry, production of bioplastics, plastics recycling and operation of two photovoltaic solar power plants.

We remind that in November 2019, Total disclosed that itis evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.

Sinopec Qilu successfully starts up DuPont alkylation technology

MOSCOW (MRC) -- DuPont Clean Technologies (DuPont) announced that the STRATCO alkylation unit at the Sinopec Qilu refinery in Zibo, Shandong Province, China, successfully completed the performance test, certifying that the unit is meeting required performance guarantees, said Hydrocarbonprocessing.

The STRATCO alkylation unit at Sinopec Qilu Petrochemical Corporation (Sinopec Qilu) is designed to produce 400 kmta (10,300 BPSD) of alkylate product from a MTBE raffinate feedstock and enables production of low-sulfur, high-octane, low-Rvp alkylate with zero olefins that meets the criteria of the China V standard.

"It is our great pleasure to see this successful collaboration between DuPont and Sinopec come to fruition. In order to meet extreme plot space limitations within the refinery complex, DuPont worked to design and fabricate the Model 74 Contactor™ reactor, reducing equipment count and providing high reliability to Sinopec. We are very pleased with the implementation of this larger reactor, affording Sinopec Qilu the high on-stream time they have come to expect from our technology. As Sinopec continues to drive towards lower emission specifications, DuPont was excited to assist with a custom-designed solution,” said Kevin Bockwinkel, global business manager, STRATCO® alkylation technology.

The Sinopec Qilu refinery marks the first commercialization of the innovative Model 74 Contactor reactors. Fundamentally the same as commercially operating reactors in service throughout the world, the Model 74 Contactor reactors reduce the total number of reactors and plot space required for STRATCO® alkylation units and result in an overall lower capital cost. These reactors continue to offer the high reliability and productivity refiners have grown accustomed to with the STRATCO® alkylation technology.

The Model 74 Contactor reactor includes the latest reactor improvements and each has a volume of 68.1 m3 (18,000 gallons), increasing volume from the standard size Contactor (Model 63) at 43.5 m3 (11,500 gallons) per reactor. Both reactor models are commercially available from DuPont.

The STRATC® alkylation technology is a sulfuric acid-catalyzed process that converts low-value, straight-chain olefins (propylene, butylene and amylene) into high-value, branched components called alkylate. Alkylate is known for its superior blending properties and is a key component for clean gasoline. The STRATCO alkylation technology helps refiners safely produce cleaner-burning gasoline with high octane, low Reid vapor pressure, low sulfur, zero aromatics and zero olefins.

Licensed and marketed by DuPont as part of its Clean Technologies portfolio, the STRATCO® alkylation technology is the world-leading alkylation technology with more than 100 licensed units worldwide and more than 915,000 bpsd (35,800 kmta) of installed capacity. DuPont is committed to alkylation research and has extensive experience in assisting refiners with alkylation research, design, start-ups, test runs, troubleshooting, optimization, revamps, expansions, analytical testing, operator training, turnarounds and HAZOP studies.

It was erlier reported, DuPont is investing USD400 million in the production capacity of Tyvek nonwoven fabric made from high density polyethylene (HDPE) at its site in Luxembourg. A new building and a third work line at the production site will be constructed. The launch of new facilities is scheduled for 2021.

As per MRC ScanPlast, September HDPE imports were 18,600 tonnes, which corresponds to the figure a month earlier. Overall imports of this PE grade totalled 202,500 tonnes in January-September 2020, down by 27% year on year. The largest decrease in supplies was due to film and pipe HDPE.

DuPont Corporation, founded in the USA in 1802, operates in more than 70 countries. The company produces specialty chemicals, offers goods and services for agriculture, food production, electronics, communications, security and protection, construction, transport and light industry. In Russia, DuPont has 100% control over the DuPont Khimprom plant since 2005, and in 2006 established a joint venture between DuPont - Russian Paints and Russian Paints.

Petrobras says major divestments nearing finish line

MOSCOW (MRC) -- Petrobras is in the advanced stages of several major divestments, executives said, indicating that the company’s ambitious deleveraging program may quicken after a pause during the worst of the coronavirus outbreak in Brazil, said Hydrocarbonprocessing.

Speaking to analysts following the company's third-quarter results, executives at Petroleo Brasileiro SA, as the state-run oil firm is formally known, said it hopes to finalize negotiations to sell its RLAM refinery by the end of the year and has recently received binding offers for its REMAN refinery, in the Amazonian city of Manaus. The company expects to receive binding offers for its REPAR refinery in southern Brazil in December, they added.

Petrobras has been working to sell dozens of non-core assets in recent years in a bid to reduce debt and sharpen its focus on offshore oil production and exploration. Among those divestments are the sale of nine refineries that are expected to rake in well over USD10 billion cumulatively for the company.

But the divestment process had ground to a crawl in recent months amid the crash in crude prices and a more general slowdown in the global economy. The company expects Brazilian antitrust authorities to approve the sale of gas distribution unit Liquigas in November, Chief Financial Officer Andrea Almeida said.

The firm also continues to examine an initial public offering for a collection of offshore midstream assets, she added. Executives were not as sanguine about some other divestments. Chief Executive Roberto Castello Branco said a planned sale of its stake in the TBG gas pipeline unit, which connects Brazil and Bolivia, was being held up by regulatory issues.

The company will not sell its stake in petrochemical company Braskem SA until that firm makes significant improvements related to governance and environmental liabilities, he added. Brazil-listed preferred shares in Petrobras were up 2.3% in late afternoon trade, after the company beat margin estimates on Wednesday evening, even as profit missed expectations due to one-off charges.

Brazil's benchmark Bovespa equities index was up 1.2%. In terms of production, executives flagged a modest decrease in fourth quarter output and increase in lifting costs due to scheduled maintenance. Still, they said, a number of new wells had come online in some of the company’s most promising offshore fields in the fourth quarter.

The company has noticed a short-term decrease in demand for its products in Europe due to the resurgence of COVID-19 there, said Andre Chiarini, the company’s head of logistics and trading. However, demand for Petrobras fuel in China remains strong, he added.

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 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.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras" activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.

AdvanSix swings to loss on lower prices, but nylon volume rebounds

MOSCOW (MRC0 -- AdvanSix today reported a third-quarter net loss of about USD700,000, compared with a net profit of USD7.9 million in the year-ago quarter. Net sales fell 9% year on year (YOY), to USD281.9 million, reported Chemweek.

Adjusted earnings amounted to a 2 cents/share loss, ahead of analysts’ consensus estimate of a 5 cents/share loss, as reported by Refinitiv (New York, New York). Volumes increased 5% YOY, but this was more than offset by a 13% decline in volumes.

“Our diverse product portfolio and global low-cost position continue to serve us well as we navigate through the current environment,” says Erin Kane, president and CEO of AdvanSix. “We have seen nylon volume returning to pre-COVID(-19) levels and we continue to optimize our mix across end uses, applications and geographies through the recovery. The performance of the remainder of our portfolio, including ammonium sulfate, acetone and other high-value intermediates, remains resilient complementing ongoing benefits from our focused cost management and high-return capital investments."

As MRC wrote before, in October 2016, Honeywell International Inc.'s shareholders received a stake in AdvanSix, as part of Honeywell's spinoff of the USD1.3 billion resins and chemicals business. The New Jersey-based industrial conglomerate, best known as a maker of thermostats, has been expanding its industrial software business. Under the terms of the dividend tied to the AvanSix spinoff, Honeywell shareholders of record as of 5 p.m. ET on Sept. 16 received 25 AdvanSix shares on Oct. 1, 2016.

We remind that AdvanSix, a new resin and chemical division of Honeywell, completed a planned turnaround at its phenol and acetone plant in Frankford, PA, USA. The maintenance works at the plant with a capacity of 1.1 billion pounds of phenol per year (about 500,000 tons per year) and 608 million pounds of acetone per year (308,400 tons per year) began at the end of March 2017 and was expected to take 2 -3 weeks. This plant is the third largest producer of phenol and acetone in North America. AdvanSix uses cumene derived from benzene and propylene to produce phenol and acetone.

Phenol is the main feedstock component for the production of bisphenol A (BPA), which, in its turn, is used to produce polycarbonate (PC).

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to/from Belarus) rose in the first three quarters of 2020 by 32% year on year to 75,600 tonnes (57,200 tonnes a year earlier).

LyondellBasell earnings lower on weak margins as volumes recover

MOSCOW (MRC) -- LyondellBasell Industries posted third-quarter net income of USD114 million compared with USD965 million in the year-ago quarter. The combination of an impairment charge on its Houston refinery and an inventory valuation benefit overall reduced net income by USD313 million. Net sales of USD6.8 billion were down 23% year-on-year (YOY), said Chemweek.

Volumes recovered to prior-year levels, led by continued growth in polyethylene (PE), but pricing and margin was lower. Reported adjusted earnings of USD1.27/share were down 55% YOY but 17 cts/share above consensus estimates as reported by Zacks Investment Research.

"Demand for LyondellBasell products improved with increasing global economic activity,” said Bob Patel, LyondellBasell CEO. “Our year-over-year results reflect strong global volumes while margins are still recovering. Sequentially, third-quarter volumes and margins rebounded for most of our businesses. Strong demand for polyethylene in North America and Asia and hurricane-related production constraints on the U.S. Gulf Coast led to tight markets that drove USD420/ton of North American PE contract pricing improvement since June."

Volumes improved in the propylene oxide and derivatives business and advanced polymer solutions segment as automotive manufacturing and other durable goods markets recovered. Reduced demand for transportation fuels continued to pressure refining results, the company said.

LyondellBasell said markets continue to strengthen in the fourth quarter. “Recovery in global economies should continue to benefit the petrochemical industry,” Patel said. “Despite the backdrop of both the pandemic and a recession, we expect global polyethylene demand to grow for the full year. China continues to have a 40% polyethylene trade deficit which supports North American exports and tightens the U.S. domestic market.” The company expects continued strength in North American integrated polyethylene margins during the fourth quarter, perhaps with some seasonal moderation by the end of the year.” Our order books show increased demand from automotive manufacturing and other durable goods markets that should continue to propel further improvement for our Advanced Polymer Solutions segment," Patel said.

Olefins & polyolefins – Americas segment operating income was USD309 million, down 41% YOY. Olefins results decreased about USD135 million driven by decreases in margins partially offset by an increase in volumes. Ethylene margin decreased primarily due to lower co-product prices. Polyolefin results decreased approximately USD60 million due to lower margins as a result of reduced spreads, LyondellBasell said.

Olefins & polyolefins - Europe, Asia, international operating income was USD52 million, down 74% YOY. Olefins results decreased approximately USD115 million YOY due to lower margin driven by declining ethylene prices. Combined polyolefins results decreased about USD45 million primarily driven by a lower polypropylene price spread over propylene.

Intermediates & derivatives segment operating income of USD180 million was down 43% YOY. Propylene oxide & derivatives and intermediate chemicals results were relatively unchanged offset sharply lower oxyfuels results driven by weaker margins due to lower gasoline prices and higher feedstock prices. Compounding & solutions results were relatively unchanged with higher margins offset by lower volumes. Advanced polymers results decreased approximately USD15 million due to lower margins and volumes driven by reduced demand.

Refining segment posted a net loss of USD733 million reflecting a USD582 million impairment charge. The segment posted a loss of USD6 million in the year-ago quarter. Income was lower on weaker margins and volumes in response to lower demand for fuels. Technology segment net income was USD101 million, up 38% driven by higher licensing revenue.

Advanced polymer solutions operating income of USD116 million was up 73% YOY on favorable inventory benefits. Compared with the prior period, compounding & solutions results were relatively unchanged with higher margins offset by lower volumes. Advanced polymers results decreased approximately USD15 million due to lower margins and volumes driven by reduced demand.

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.