MOSCOW (MRC) - Portugal's oil and gas company Galp will fully cease processing hydrocarbons at the smaller of its two refineries, in Matosinhos near Porto, from next year due to the impact of the COVID-19 pandemic and the regulatory environment, Reuters said.
Instead, it will concentrate its downstream operations and their future development at the 220,000-barrels-per-day Sines refinery equipped with deep conversion units.
Production at Matosinhos, with a 100,000 bpd capacity, has been suspended since Oct. 10. The book value of the Matosinhos assets to be decommissioned is around 200 million euros (USD244 million), Galp said, expecting annual fixed costs and capital expenditure to drop by about 90 million euros as a result.
It said it would maintain the import, storage and distribution facilities there and that fuel supply in Portugal would not be affected.
Traditionally a refiner, Galp has joined the world of big oil over the past decade thanks to its stakes in various major offshore oil and gas fields in Brazil.
As MRC informed earlier, Galp Energia temporarily suspended fuel production at its smallest oil refinery at Matosinhos due to unstable national and international markets shaken by the coronavirus pandemic.
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% 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 1,760,950 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