U.S. fuel industry frazzled as EPA misses 2021 biofuel volumes deadline

MOSCOW (MRC) -- The U.S. Environmental Protection Agency was set to miss a deadline on Monday to announce how much renewable fuel the nation’s refiners must blend into their fuel mix next year, raising uncertainty in the fuel market and prompting one biofuel association to threaten to take the agency to court, said Hydrocarbonprocessing.

Under federal law, the EPA must finalize its decision on the annual biofuel blending volume requirements it imposes on the refining industry for the next year by Nov. 30. The agency did not respond to requests for comment.

“At this point, it likely makes more sense to let the new administration handle the 2021 RVO (Renewable Volume Obligations) rulemaking process entirely,” said Geoff Cooper, the president of the Renewable Fuels Association, one of the nation’s biggest biofuel industry groups. Growth Energy, another U.S. biofuel industry association, said it intends to file a lawsuit to force the Trump administration’s EPA to act “immediately."

The American Fuel and Petrochemical Manufacturers, a top refinery industry association, said it hoped the EPA will “soon provide certainty” to its members. Under the U.S. Renewable Fuel Standard, refiners must blend billions of gallons of ethanol and other biofuels into their fuel pool, or buy credits from those that do - a policy that has created a huge market for corn-based ethanol but which the oil industry loathes.

While the Trump administration has mainly hit its deadlines for setting specific biofuel volumes mandates under the RFS, the process this year has been complicated by the economic fallout of the coronavirus pandemic. Slumping fuel consumption has led refiners to argue for lower volume mandates to match demand, and biofuels producers to argue that doing so would only hurt them more.

The EPA has also left undressed a number of other questions that will likely need to be dealt with by the incoming Biden administration, including requests from oil industry advocates for the EPA to ease 2020 compliance because of the impact of the pandemic, and requests from the biofuel industry for the agency to ditch a waiver program it argued has illegally eroded demand for ethanol.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Saudi-based Advanced Petrochemical Company, a key manufacturer of polypropylene products, said its subsidiary, Advanced Global Investment Company (AGIC), has signed off-take agreements for the sale of polypropylene with two US-based groups - Vinmar International and Tricon Dry Chemicals - and Mitsubishi Corporation of Japan, said Chemweek.

As per the long-term deal, AGIC will supply 250,000 metric tonnes per annum of polypropylene each to Vinmar and Tricon Dry Chemicals, while Mitsubishi will get 120,000 MT, stated Advanced Petrochemical Company in its filing to Saudi Tadawul.

The supply of the entire polypropylene stock will be done from its Advanced Polyolefins Company (APOC) facility in Jubail Industrial City set up as a joint venture with South Korea’s SK Gas Petrochemical, it stated.

Once operational, the APOC plant will have the capacity to produce 800,000 metric tonne per annum of polypropylene.

As MRC informed earlier, Advanced Petrochemical Co. said its 85%-owned subsidiary, Advanced Polyolefins Co. (APOC), obtained a conditional approval to secure SAR 3 billion loan from Saudi Industrial Development Fund (SIDF), according to a bourse statement. The loan, which can be disbursed until June 2025, is repayable in 16 semi-annual installments, starting July 2026, over a period of eight years. The loan will be guaranteed by mortgage on all fixed assets of APOC to SIDF, in addition to providing corporate guarantees from the shareholders of APOC.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- The UK chemical industry has given a mixed reaction to the post-Brexit trade and cooperation agreement announced on 24 December by the EU and UK, said Chemweek.

The Chemical Industries Association (CIA; London, UK) says there is “some relief” that the deal confirms zero tariffs on EU-UK trade. However, a lack of clarity persists around the deal’s regulatory impact, it says. “We have consistently called for the threat of tariffs to be avoided, so we very much welcome the commitment and hard work from both parties in securing that outcome,” says Steve Elliott, chief executive of the CIA. “Failure here would have seen an annual cost of at least GDP1.0 billion [USD1.3 billion] to the chemical industry."

UK prime minister Boris Johnson, announcing the deal last Thursday, highlighted the potential for divergence by the UK from EU chemical legislation. The UK plans to launch its own version of the EU’s Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) regulation, called UK REACH. “The prime minister has mentioned chemicals as an industry where we have the potential to do our own thing. With that in mind we need to see, in particular, the extent of regulatory cooperation agreed with regard to the industry’s REACH responsibilities,” Elliott says.

UK chemical businesses have committed “a decade’s worth of investment” in gathering and presenting data for the EU’s REACH legislation, Elliott says. Failure to access this data following Brexit will leave the UK chemical industry “facing a bill of more than GDP1 billion in unnecessarily duplicating that work for a new UK regime.” Industry should work with the UK authorities to deliver a chemicals regulatory regime that is “efficient, innovation-friendly, and sensitive to international competitiveness. Such an approach will also enable us to provide reassurance over any health and environmental concerns,” Elliott says.

The EU-UK agreement overall “represents a mixed bag for our industry, [but] we shouldn’t underestimate the huge value that a deal brings in terms of certainty,” Elliott says. “Chemical businesses all over the UK have proved to be hugely resilient over this most uncertain and challenging of years, and a predictable trading environment with our most important market-place, coupled with emergence from COVID-19, should make 2021 a year to look forward to."

The Chemical Business Association (CBA; Crewe, UK), the country’s chemical distributor association, also notes regulatory uncertainty, particularly around the workability of UK REACH. “This deal, which has long been called for by business, is a long way from what the chemical sector required,” says Peter Newport, CBA chief executive. It means “a period of pragmatic enforcement by both parties is essential. Industry must be given the detailed information it needs in order to comply with the new rules and regulations. Let’s all hope the ambition of this deal matches its detailed reality,” Newport says. UK REACH is “duplicative and unaffordable,” he says.

Despite zero tariffs, the trade agreement also brings an increase in non-tariff barriers including customs requirements. “The chemical industry still has issues with this agreement,” Newport says. “It imposes unwelcome bureaucracy on access to the UK’s largest export market for chemicals and its major supplier, through new and complex customs processes, as well as creating unnecessary logistic and supply-chain issues."

The chemical supply chain will ultimately judge the deal on whether it can “continue to deliver key chemical components to thousands of manufacturing and process companies in the UK and the EU,” Newport says.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- SIBUR Holding, Russia’s leading petrochemicals company and one of the most rapidly growing petrochemicals businesses globally, and China Petroleum & Chemical Corporation (Sinopec), China’s leading energy and chemical company, have closed the deal to set up a joint venture (JV) at the Amur Gas Chemical Complex after obtaining all the necessary approvals from the regulators of both countries, as per SIBUR's press release.

SIBUR and Sinopec will hold interest in the JV in the amount of 60% and 40%, respectively.

In June 2019, the parties agreed on the main terms and conditions of the potential JV. Following the investment decision, all corporate and regulatory approvals were obtained as required to close the deal. Following the deal, the parties will gain joint control over the JV. (This will result in deconsolidation of the asset from SIBUR’s balance sheet in the consolidated financial statements under the IFRS.)

Set to become the world’s largest basic polymer production facility, Amur GCC will have a capacity of 2.7 mtpa, including 2.3 mtpa of polyethylene (PE) and 400 ktpa of polypropylene (PP), and will be producing a wide range of grades. The construction of Amur GCC proceeds in synch with the gradual ramp-up of Gazprom’s Amur Gas Processing Plant to its full capacity, so that the latter could supply ethane and LPG to Amur GCC for processing into high value-added products. The completion of construction and commissioning is scheduled for 2024.

The Amur GCC project will help attract international investments in the Russian economy while also making a considerable contribution to the national programme of growing the nation’s non-commodity exports. Given the facility’s geography, its products will be targeting Asian markets, primarily China, which is the largest consumer of polymers globally. The Amur GCC project is expected to be included in an intergovernmental agreement between Russia and China.

Amur GCC will set the tone in global environmental and technology standards, in particular through its reliance on renewable energy sources.

Amur GCC’s budget is tentatively estimated at USD 10 bn to USD 11 bn and is subject to adjustments as the project progresses. In December, Amur GCC attracted USD 1.5 bn in bridge financing from a syndicate of Russian banks. Gazprombank acted as the lead arranger and lender, with Otkritie and Sberbank as arrangers and lenders.

Dmitry Konov, Chairman of the Management Board at SIBUR Holding: “SIBUR and Sinopec have a long track record of jointly delivering on large-scale investment projects and implementing advanced production technologies. Creating a joint venture is a major milestone in our Amur GCC project. With Sinopec’s involvement, we will be able to maximise the project’s efficiency, in particular optimising and balancing the facility's future debt portfolio, while also enhancing its expertise in distribution across Asian markets.”

ZHANG Yuzhuo, Chairman of Sinopec: “Amur GCC is a milestone in the cooperation between Sinopec and SIBUR, and will also become a model for Sino-Russian energy cooperation to extend to downstream chemical industry. The success of Amur GCC will inject new impetus into advancing the high-quality cooperation between the two countries in the fields of energy, chemical industry, investment, economy and trade and play a positive role in effectively promoting the sound interaction of domestic and international markets as well as the economic development, employment and social well-being of the Far East region.”

Ethylene and propylene are feedstocks for producing PE and PP.

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.

Sinopec Corp. is one of the largest scale integrated energy and chemical company with upstream, midstream and downstream operations. Its principal business includes: exploring, developing, producing and trading crude oil and natural gas; producing, storing, transporting and distributing and marketing petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products. Its refining capacity and ethylene capacity rank No.2 and No.4 globally. Sinopec listed in Hong Kong, New York, London and Shanghai in August 2001.
MRC

MOSCOW (MRC) -- Formosa Petrochemical Corporation (FPCC) is running its crackers in Taiwan at 100% capacity utilisation in end-December, 2020, according to Chemweek.

The company's crackers have combined ethylene production capacity of 2.935 million metric tons/year.

Meanwhile, FPCC is planning overhaul of the smallest cracker in mid-2021.

As MRC wrote earlier, FPCC undertook a planned shutdown at its No.3 cracker in Mailiao on August 11, 2020. The cracker remained off-line till end-September, 2020. Located at Mailiao in Taiwan, the No. 3 cracker has an ethylene production capacity of 1.2 million mt/year and propylene production capacity of 600,000 mt/year.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC