COVID-19 - News digest as of 12.11.2020

1. Total production slammed by OPEC+ cuts, but finances show 'resilience' in Q3

MOSCOW (MRC) -- Total's oil and gas production dropped 11% on the year in the third quarter, to 2.72 million b/d of oil equivalent and it forecast full-year output below 2.9 million boe/d on the back of OPEC+ cuts, as its third-quarter results showed financial improvement Oct. 30, reported S&P Global. In a results statement, Total said its Q3 production had been affected by OPEC+ cuts in Angola, Iraq, Kazakhstan, Nigeria and the UAE as well as voluntary reductions in Canada and disruption in Libya, noting in particular the "reinforcement" of cuts by Nigeria. The company's liquids production was down 16% on the year at 1.44 million b/d, although it noted OPEC+ cuts were offset by increases from the UK's Culzean gas field, Norway's Johan Sverdrup, Brazil's Iara and Italy's Tempa Rossa.In the context of strong OPEC+ compliance and lower North American production, Total "anticipates full-year 2020 production below 2.9 million boe/d," compared with 3.01 million boe/d in 2019, it said. However, CEO Patrick Pouyanne noted a "more favorable" business environment, and the company highlighted its July sale of the UK's Lindsey refinery, as well as its conversion of the Grandpuits refinery to a "zero-oil" producer of biofuels and bioplastics. "The oil market environment remains uncertain and will depend notably on the speed of the global demand recovery, affected by the COVID-19 pandemic," Total said.



MRC

MOSCOW (MRC) - Imports of polyethylene (PE) into Ukraine in the ten months of 2020 were about 224,900 tonnes, which practically corresponded to the last year's figure. Imports of all PE grades increased, with linear low density polyethylene (LLDPE) being the exception, according to MRC's DataScope report.

Last month, external supplies of polyethylene to Ukraine amounted to slightly less than 20,700 tonnes against 21,900 tonnes in September, local companies reduced their purchases of linear low density polyethylene (LLDPE). Thus, overall PE imports reached 224,900 tonnes in January-October 2020, compared to 224,200 tonnes a year earlier.

Imports of all grades of ethylene polymers increased, with LLDPE, demand for which subsided in all consumption sectors, being the only exception. The supply structure by PE grades looked the following way over the stated period.

October imports of pipe HDPE into the country increased to 7,500 tonnes, compared with 6,800 tonnes in September, Ukrainian companies have increased their purchases of pipe and blow moulding polyethylene. Overall HDPE imports exceeded 80,900 tonnes in the ten months of 2020 versus 79,400 tonnes a year earlier.

October imports of low density polyethylene (LDPE) into Ukraine were about 6,400 tonnes, which almost the same as a month ago. Overall LDPE imports reached 67,300 tonnes over the stated period, compared to 66,000 tonnes a year earlier.

Last month's imports of linear low density polyethylene (LLDPE) were about 5,900 tonnes, compared to 7,400 tonnes in September, shipments of Middle Eastern film LLDPE decreased. Overall LLDPE imports reached 65,100 tonnes in January-October 2020, compared to 68,200 tonnes a year earlier.

Imports of other PE grades, including ethylene-vinyl-acetate (EVA), totalled about 11,500 tonnes over the stated period, compared to 10,500 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Wanha Chemical has started up the LPG feed steam cracker in Yantai, China earlier this month and managed to produce on-spec ethylene cargoes on 9 November 2020, reported CommoPlast.

The cracker has an annual capacity of 1 million tons/year of ethylene, 530,000 tons/year of propylene, and 50,000 tons/year of butadiene.

The cracker is part of the company’s newly constructed petrochemical complex. Downstream units at the same site are integrated with the cracker, however, these units have yet to come online.

The conpany's petrochemical plants will include the following production capacities: 400,000 mt/year of PVC, 150,000 mt/year of ethylene oxide (EO), 350,000 mt/year of high density polyethylene (HDPE), 450,000 mt/year of linear low density polyethylene (LLDPE) an 300,000 mt/year of polypropylene (PP).

As MRC wrote previously, in January, 2020 Wanhua Chemical Group disclosed plans for a second ethylene cracker project at its Yantai, China, site with local government officials. The project will include a 1.2-million metric tons/year (MMt/y) ethylene unit; pyrolysis gasoline hydrogenation; aromatics extraction; and production facilities for butadiene, HDPE, low-density (LDPE), polyethylene (PE) plastomers and elastomers, PP, and other derivatives. Timing and other details were not disclosed. The second ethylene project will use naphtha and C4s as feedstock.

Ethylene and propylene are feedstocks for producing 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.
MRC

MOSCOW (MRC) -- MOL Group announced its financial results for the third quarter of 2020, said the company.

During the pandemic and economic crises, Clean CCS EBITDA strongly rebounded from the Q2 lows and came in at USD 610mn in Q3 2020, only 12% lower than in the same period last year.

This result brought Q1-Q3 2020 EBITDA to USD 1.59bn, 14% lower year-on-year, implying full year 2020 EBITDA likely to be at the higher end of the guidance range, around USD 1.9bn. Simplified free cash flow jumped in Q3 to USD 306mn on continued capex discipline, bringing year to date simplified free cash flow to USD 662mn, 42% higher than in the first three quarters of last year. Organic capital expenditure was down by 33% in the first three quarters, reflecting strong capex control as well as some COVID-19-related slowdown.

Downstream segment Clean CCS EBITDA strongly rebounded and nearly doubled from the Q2 lows but remained 26% weaker than in 2019 due to depressed refinery margins and slightly weaker petchem margins. The polyol project exceeded 70% overall completion at the end of Q3, although progress is somewhat behind schedule as a result of the pandemic situation. Pandemic protocols have been introduced to mitigate the risk of infection within the construction community and to safeguard business continuity. In Q3, a new 20kt rubber bitumen plant, for recycling tire waste, has been completed in Hungary.

As MRC informed before, MOL Petrochemicals Company (formerly known as TVK, part of the MOL Group), the only Hungarian producer of olefins and polyolefins, announced force majeure on the supply of polypropylene (PP) from plant No. 4 at the petrochemical complex in Tiszaujvaros (Tiszaujvaros, Hungary) on 23 September 2019.

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.

MOL Group operates three refineries and two petrochemicals plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of 1940 service stations across 10 countries in Central & South Eastern Europe.
MRC

MOSCOW (MRC) -- OPEC has turned more bearish on global oil demand due to the second wave of COVID-19 infections, providing sobering analysis as a key minister said Nov. 11 that the producer group and its allies may consider deepening its production cuts in 2021 to shore up the market, reported S&P Global.

In its latest oil market forecast, OPEC's analysis arm revised down its projections of global demand by 280,000 b/d for 2020 and by 580,000 b/d for 2021. OPEC was more mixed in its outlook last month, when it slightly raised its 2020 demand estimate, citing economic growth in China.

"These downward revisions mainly take into account downward adjustments to the economic outlook in OECD economies due to COVID-19 containment measures, with the accompanying adverse impacts on transportation and industrial fuel demand through mid-2021," OPEC said in the report.

The new outlook puts pressure on members of the OPEC+ alliance, in their role as the oil market's swing producers, to reconsider plans to add output to the market starting in January.

The market appears to be largely expecting OPEC+, which meets Nov. 30-Dec. 1, to extend its current 7.7 million b/d in output cuts through at least the first few months of 2021, instead of tapering them to 5.8 million b/d as scheduled.

Algerian energy minister Abdelmajid Attar, who holds OPEC's rotating presidency, said the cuts could even be increased, confirming what several delegates have told S&P Global Platts in recent days.

Speaking at a Gas Exporting Countries Forum ministerial roundtable convened ahead of the body's formal meeting Nov. 12, Attar said OPEC and its partners remained committed to taking action to prevent a slide in prices, which have hovered around $40/b over the past few weeks before rallying close to USD45/b on news that a potential COVID-19 vaccine was showing promising results.

"This includes the possibility of extending today's production adjustment into 2021 as well as deepening this adjustment should market conditions so require," he said.

OPEC pegged global demand for its crude for 2020 at 22.1 million b/d, about 300,000 b/d lower than last month's forecast. For 2021, the call on OPEC crude rises to 27.4 million b/d, a 600,000 b/d downward revision from the previous forecast.

OPEC pumped an average of 24.39 million b/d in October, according to secondary sources used by the organization to track output.

That indicates some room for the organization to raise its quotas, but surging production from Libya and the uncertain prospects for the global economy, even with a COVID-19 vaccine potentially available in the next few months, will likely keep ministers erring towards the side of caution, OPEC+ officials have said.

Libyan production almost tripled in October to 454,000 b/d, according to secondary sources. The country's state oil company reported that as of Nov. 7, output had reached more than 1 million b/d.

A key OPEC+ monitoring committee, co-chaired by Saudi Arabia and Russia, will convene online Nov. 17 and provide the first indications of how the coalition may decide on 2021 production policy.

The OPEC report estimated non-OPEC supply will average 62.73 million b/d for 2020 and 63.68 million b/d for 2021, the latter figure a 60,000 b/d upward revision from last month's outlook.

World oil inventories fell in September for the third consecutive month, according to the report, to hit 3.18 billion barrels, still 211.9 million barrels above the five-year average that the OPEC+ alliance has said it is targeting with its production cuts.

As MRC informed previously, 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).

ccording 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.
MRC