Petrobras targets oil output of 2.7 mil b/d by 2025

Petrobras targets oil output of 2.7 mil b/d by 2025

MOSCOW (MRC) -- Brazilian state-led oil company Petrobras plans to spend USD55 billion over the next five years to develop subsalt fields that will boost the company's crude oil output nearly 20% to 2.7 million b/d by 2025, reported S&P Global with reference to the company's statement in a regulatory filing Nov. 25.

"The capital allocation adheres to our strategic position, with a focus on world-class assets in deep and ultradeep waters," Petrobras said.

Petrobras' latest five-year investment plan, which covers 2021-25, continued the company's strategic shift toward Brazil's subsalt region, where a single record-setting well at the Buzios Field recently pumped about 69,000 b/d of oil equivalent. The massive potential of the subsalt led to the sale of most of the company's high-cost legacy onshore and shallow-water production. Petrobras also reached antitrust agreements with local regulators to end monopolies in refining and natural gas.

The asset sales and ongoing coronavirus pandemic likely mean a short-term retreat in output, Petrobras said. Petrobras estimated production of 2.23 million b/d in 2021, down from an expected 2.28 million b/d in 2020, the company said. Total hydrocarbons output was forecast at 2.75 million boe/d in 2021, down from an expected 2.84 million boe/d in 2020.

"Oil production in 2021 reflects the impacts associated with the COVID-19 pandemic and the divestments that take place in 2020," Petrobras said.

Petrobras was forced to delay a hefty portion of a wide-ranging subsalt maintenance program that was expected to shutter each major floating production unit in the subsalt for 15-20 days in 2020. Social-distancing measures limited the number of people allowed on board vessels, which caused a cascade of delays that will stretch into 2021, according to Petrobras.

In addition, output could be trimmed further by asset sales that are still expected to close in 2020, Petrobras said. The production forecast didn't include adjustments for such sales, which include the recently close sale of the Bauna Field to Australia's Karoon Energy, Petrobras said. The sales could further reduce production by about 600,000 boe/d, Petrobras said.

Petrobras plans to add 13 new production systems to its fleet of floating production, storage and offloading vessels, or FPSOs, over the five-year period, the company said. That was the same number of vessels expected under the 2020-2024 plan. All of the new production systems will be installed at deep- or ultradeep-water fields, Petrobras said.

Investments will also be limited to projects that have a breakeven production price of $35/b during the plan, Petrobras said.

Crude oil output was estimated to rise to 2.3 million b/d in 2022, 2.5 million b/d in 2023 and 2.6 million b/d in 2024, Petrobras said. Total hydrocarbons output was forecast to jump to 2.9 million boe/d in 2022, 3.1 million boe/d in 2023, 3.3 million boe/d in 2024 and 3.3 million boe/d in 2025, Petrobras said.

"The oil and gas production curve estimated for the 2021-2025 period, without considering divestments, indicates continuous growth focused on development of projects that generate value, with an increase in the share of subsalt assets holding lower extraction costs," Petrobras said.

Petrobras' commercial production volume, which subtracts the volumes of natural gas that is re-injected, consumed on board floating production units or burned off during production, the company said. Petrobras expects commercial production to average 2.45 million boe/d in 2021, with the measure rising to 3 million boe/d in 2025, the company said.

Petrobras also joined the plethora of international oil companies reining in spending amid reduced demand caused by the ongoing coronavirus pandemic. The USD55 billion investment budget represents a significant retreat from the USD75.7 billion earmarked for spending under the previous 2020-2024 investment plan.

CEO Roberto Castello Branco also said last year, after investments failed to meet spending targets, that the company would make more-realistic spending estimates going forward.

Spending will remain muted in the near term, with Petrobras budgeting USD10.2 billion in 2021, the company said. That will rise to USD11 billion in 2022, USD11.9 billion in 2023, USD11.6 billion in 2024 and USD10.5 billion in 2025, Petrobras said.

Most of the investment capital will go to exploration and production, which accounts for 84% of the total budget, Petrobras said. About 70% of the USD46 billion was earmarked for exploration and production investments, Petrobras said.

Petrobras' latest five-year plan also included measures to reduce emissions, including a zero-flare policy by 2030, the company said. The company also wants to reduce water consumption in its operations by 50% over the next 10 years, Petrobras said.

As MRC informed previously, Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July, 2020. She said during the company's recent webinar that Petrobras plans to give more time for potential investors to make offers for the company"s assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras's stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the company's stake in Braskem within a year. Petrobras owns 32.15% of Braskem.

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 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, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

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.
MRC

Crude settles higher on OPEC+ expectations, weaker dollar

MOSCOW (MRC) -- Oil futures settled higher Nov. 25 as the US dollar tested multi-year lows and the market increasingly priced in an extension of the OPEC+ production quota into next year, according to S&P Global.

NYMEX January WTI settled 80 cents higher at USD45.71/b and ICE January Brent was up 75 cents at USD48.61/b.

Oil prices saw a boost from a continued slide in the US dollar. The front-month ICE US dollar index fell below 92 in afternoon trading and was on pace to close at the lowest level since April 2018.

NYMEX December RBOB settled 2.93 cents higher at USD1.2875/gal and December ULSD was up 2.71 cents at USD1.3866/gal.

The US dollar has come under renewed pressure as the administration of President-elect Joe Biden starts to take form. A Biden presidency is expected to be more supportive of stimulus spending, fostering faster economic growth and a weaker dollar, according to S&P Global Platts Analytics. Both are bullish for oil prices.

Biden announced Nov. 23 that former US Federal Reserve chairwoman Janet Yellen would serve as Treasury Secretary. The appointment of Yellen, who was generally dovish on monetary policy during her tenure at the Fed, underscores the bearish outlook for the US dollar.

Adding to bullish sentiment, US Energy Information Administration data showed US crude supply contracted by 750,000 barrels during the week ended Nov. 20 to 488.72 million barrels. The counter-seasonal draw narrowed the surplus to the five-year average to 6.2%, the weakest since early April.

The market was also increasingly pricing in an extension of the current level of OPEC+ production cuts beyond their scheduled easing in December. OPEC and OPEC+ ministers are set to meet virtually Nov. 30-Dec 1, when they are expected to discuss extending production cuts as lockdowns in several key oil-consuming countries restrict demand.

Various key figures within the alliance have indicated the group may take action to undergird markets. Saudi Arabia's energy minister, Prince Abdulaziz, said during the ADIPEC virtual conference Nov. 9 that the current supply cut of 7.7 million b/d may even be deepened, but most market analysts are currently expecting the meeting to confirm a three- to six-month extension of current cuts.

"Given the current wave of lockdowns across the US and Europe, the consensus is that OPEC+ will roll over the current oil output deal next week," OANDA senior market analyst Edward Moya said in a note. "Now is not the time fight for market share, that will be sometime late next quarter."

While progress on COVID-19 vaccines has pushed energy prices steadily higher in recent sessions, the pandemic continues to weigh heavily on the near-term demand outlook. US gasoline demand edged down 130,000 b/d to 8.13 million b/d in the week ended Nov. 20, according to EIA data - the lowest since the week ended June 12 and nearly 12% behind year-ago levels.

The demand slowdown helped boost total US gasoline inventories 2.18 million barrels last week to 230.15 million barrels, a 10-week high, EIA said.

As MRC reported 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% 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 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, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

Clariant Chemicals reports Rs 191.8 Cr net profit for Q2 FY20-21

MOSCOW (MRC) -- Clariant Chemicals Limited., an Indian subsidiary of specialty chemicals giant Clariant AG, announced its results for the second quarter ended September 30, 2020, reported Kemicalinfo.

The company reported a net profit of Rs 191.8 crores for the period ended September 30, 2020 as against net profit of Rs 2.7 crores for the previous quarter.

Net sales grew 40% to Rs 180.8 crores during the period ended September 30, 2020 as compared to Rs 129.0 crores during the previous quarter.

The company reported a net profit of Rs 191.8 crores for the period ended September 30, 2020 as against net profit of Rs 9.2 crores for the prior-year quarter.

Net profit grew mainly due to a gain of Rs 254.83 crore from sale of its business unit.

Net sales decreased 4.6% to Rs 180.8 crores during the period ended September 30, 2020 as compared to Rs 189.7 crores during the prior-year quarter.

The company reported a net profit of Rs 194.5 crores for the 6 months period ended September 30, 2020 as against net profit of Rs 14.9 crores for the prior-year 6 months period.

Net sales dropped 22.4% to Rs 309.8 crores during the 6 months period ended September 30, 2020 as compared to Rs 399.5 crores during the prior-year 6 months period.

In the filing, the company said it gained Rs 254.83 crore from the sale of its business unit Masterbatches to Polyone Polymers India Pvt Ltd in July.

Clariant Chemicals Vice-Chairman and Managing Director Adnan Ahmad said that coming out of a strong performance in the previous fiscal year, the COVID-19 pandemic impacted the company’s sales during the first quarter of the current fiscal. However, the latest quarter has already seen a good recovery.

“We look forward to continued growth in the months ahead,” he added.

As MRC reported before, in October 2020, Clariant (Muttenz, Switzerland) announced the construction of a new state-of-the-art catalyst production site in China. This project represents a significant investment which further strengthens Clariant’s position in China and enhances its ability to support its customers in the country’s thriving petrochemicals industry.

The new facility will be primarily responsible for producing the Catofin catalyst for propane dehydrogenation, which is used in the production of olefins such as propylene. Thanks to its excellent reliability and productivity, Catofin delivers superior annual production output compared to alternative technologies, resulting in increased overall profitability for propylene producers, says the company. Construction at the Dushan Port Economic Development Zone in Jiaxing, Zhejiang Province was scheduled to commence in Q3 2020, and Clariant expects to be at full production capacity by 2022.

Propylene is the main feedstocks for the production of polypropylene (PP).

According to MRC's ScanPlast report, 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, excluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.
MRC

Repsol to invest USD22 billion by 2025 in energy transition toward net zero carbon goal

MOSCOW (MRC) -- Repsol (Madrid, Spain) will invest EUR18.3 billion (USD21.8 billion) between 2021 and 2025 to accelerate the company’s energy transition toward its long-term goal of achieving net-zero carbon emissions by 2050, reported Chemweek.

The company says it will decarbonize its asset portfolio and establish a new operating model, with EUR5.5 billion of the total investment by 2025 to be spent on low-carbon and renewable energy businesses. Repsol’s current organization will evolve into four business areas: upstream, customer, low-carbon generation, and industrial - which includes its chemicals, refining, and biofuels activities. In 2019 Repsol’s chemicals sales volumes totaled 2.8 million metric tons.

“We will be more efficient and increase our renewable energy objectives as well as our manufacture of products with a low, neutral, or even a negative carbon footprint. We will promote circular economy initiatives, develop new energy solutions for our customers, and boost cutting-edge projects to reduce the industry’s carbon footprint,” says CEO Josu Jon Imaz.

Repsol says the new strategy will be “highly flexible” in the current macroeconomic environment, with the next two years focusing on ensuring its financial strength and efficiency, while also prioritizing energy transition and renewable projects. From 2022 onward the focus will increasingly shift toward the acceleration of growth, it says. The low-carbon business also includes the possible involvement of partners or investors, or a potential stock exchange listing, to “decisively accelerate the achievement of objectives and guarantee a higher return from our operations,” it adds.

The strategic plan will see the industrial business maintain its competitiveness, adjust its capacity, build new carbon-neutral platforms, and reduce carbon dioxide (CO2) emissions by more than 2 million metric tons/year, it says. Repsol’s seven large industrial sites in Spain, Portugal, and Peru will become multi-energy hubs, with the four key pillars for their transition being the circular economy, renewable hydrogen, energy efficiency, and the capture and use of CO2. Repsol says it aims to be a leader in renewable hydrogen in the Iberian Peninsula by achieving production of 400 megawatts by 2025, with the target of over 1.2 gigawatts in 2030. “The capture and use of CO2 will also be key to this transformation process,” it says. Investments in its industrial business will be kept at an average of EUR900 million per year, it adds.

Repsol is aiming to cut its CO2 emissions by 12% in 2025, 25% in 2030, and 50% in 2040. The company first unveiled its 2050 net-zero goal in December.

As MRC informed earlier, Repsol has just selected Axens Vegan technology for its first production plant for advanced biofuels in Spain at its Cartagena refinery. This new plant will be capable of producing 250,000 TPA of biodiesel, biojet, bionaphtha, and biopropane. Repsol’s project outlines Axens’ expertise in hydrotreated vegetable oils (HVO) and its commitment to power sustainability in transport.

We remind that Repsol shut down its cracker in Tarragona (Spain) for maintenance in the fourth quarter of 2019. The turnaround at this steam cracker, which produces 702,000 mt/year of ethylene and 372,000 mt/year of propylene, was pushed back from Q3 2019. The exact dates of maintenance works were not disclosed.

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 density 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, excluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.
MRC

OCI NV net loss narrows as higher volumes boost revenue

MOSCOW (MRC) -- Methanol and nitrogen fertilizer producer OCI NV (Amsterdam, Netherlands) reports an adjusted net loss of USD67 million for the third quarter compared with an adjusted net loss of USD120 million in the same period last year. Revenue increased 19% year on year (YOY) to USD752 million and adjusted EBITDA jumped 79% to USD192 million, reported Chemweek.

A 30% YOY rise in sales volume to 2.8 million metric tons boosted revenue, the company says.

Industrial end markets for methanol strengthened significantly through the third quarter and into the fourth quarter, the company says. Nitrogen fertilizer prices have also improved, but the US nitrogen market remains challenged with prices at steep discounts to global benchmarks due to intense price-based competition for urea ammonium nitrate (UAN), and urea imports into the US priced below the point of origin, OCI says.

“We reported another quarter of healthy volume growth in both our methanol and nitrogen segments, driving a material increase in adjusted EBITDA year over year,” says CEO Ahmed el-Hoshy. “We remain on track to deliver robust volume growth in 2020 and, as we reach run-rate production, we expect to benefit from a further step-up in volumes in 2021.”

Hoshy confirms that the COVID-19 pandemic has not had a direct impact on OCI’s operations, “but our results were held back by significantly lower nitrogen and methanol prices compared to a year ago. However, we have recently started to benefit from an improving price environment, as global nitrogen markets enjoy positive tailwinds for the remainder of this year and into 2021 and the outlook for our methanol end markets has strengthened significantly,” he says.

Worldwide urea prices have rebounded since reaching “a trough” in the second quarter and ammonia started to recover in October, according to Hoshy. “However, US nitrogen prices are trading at severely discounted prices relative to global benchmarks. Despite being a deficit market, US urea imports continue to be priced below the point of origin in the Arab Gulf, a situation which could trigger antidumping investigations. UAN has been impacted by increased domestic volumes contributing to intense price-based competition in the US Gulf. Since July, it has been more favorable for Russia and Trinidad to export UAN to Europe inclusive of duties than to the US Gulf,” he says.

OCI expects nitrogen fertilizer demand in importing countries to remain healthy, supported by rising corn prices. Ammonia prices have lagged urea, but have started to benefit from a recovery in industrial markets, high-cost capacity shutdowns, and higher feedstock prices, the company says.

Meanwhile, US methanol spot prices have roughly doubled since reaching a bottom below USD150/metric ton in June, OCI says. Rising utilization rates of methanol-to-olefin (MTO) plants in China on the back of healthy MTO economics versus naphtha crackers have been a key driver of a rebound in methanol demand, it says.

The outlook for downstream demand for methanol has improved, with fuel consumption picking up, and a gradual return of industrial and construction activity worldwide, it says. Following record methanol production for OCI in the third quarter of 2020, normalization of production and improved onstream efficiency is expected to drive volume growth in the second half of 2020 and in 2021, the company says.

Separately, OCI’s board has formally ratified a decade-long group policy to not produce, sell, or trade solid ammonium nitrate (AN) and has committed not to do so in any future partnerships or transactions. “Given the increasing concerns surrounding the explosive nature of AN, the product is easily substituted by much safer other nitrogen products,” the company says.

As MRC informed earlier, worldwide demand for methanol is forecast to expand at rates below GDP growth for the first time, said Mike Nash, vice president/syngas chemicals at IHS Markit. Speaking last Tuesday in a panel session at the 38th World Methanol Conference, being held by IHS Markit in a virtual format, Nash said that global methanol demand is predicted to grow on average 2.8%/year during the next 10 years, lagging world GDP growth of 3.2%/year. The methanol market is “at a turning point,” Nash said. The current and forecast lower crude oil price means less demand for methanol from the fuels industry, according to Nash. Meanwhile, low crude prices are helping to weaken the economics of methanol-to-olefins (MTO) production. Growth in MTO capacity in China has kept methanol demand growth above GDP growth in recent years, Nash said. MTO plants have operated at high rates and generated high margins in 2020, but there is “a challenging time to come,” he said.

We remind that in early September 2020, Ningxia Baofeng Energy Group Co. (Baofeng Energy) selected KBR's proprietary cracker technology for its new methanol-to-olefins (MTO) project to be built in Ningxia, China. Under the contracts, KBR will provide process technology licensing and process design packages for Baofeng Energy's 500,000-t/y coal-to-olefins facility and its 500,000-t/y C2-C5 comprehensive utilization project. Once complete, the complex will be the "largest" single-train MTO plant in the world, KBR noted.

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.
MRC