Cenovus closes transaction to combine with Husky

MOSCOW (MRC) -- Cenovus Energy Inc. is pleased to announce that its strategic combination with Husky Energy Inc. has closed, according to Hydrocarbonprocessing.

With the close of the transaction, Husky has become a wholly owned subsidiary of Cenovus and will remain as such until completion of a planned amalgamation among the two entities. Upon amalgamation, Cenovus will become the obligor under Husky’s existing long-term notes and other direct obligations. The combined company will continue to be headquartered in Calgary.

“This is an exciting day for Cenovus as we become a leaner, stronger, more fully integrated oil and natural gas company that is exceptionally well-positioned to weather the current environment and be an energy leader in the years ahead,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “With the closing of this transaction, we will focus on safely and efficiently integrating the assets and teams of these two great companies while working to realize the USD1.2 billion in synergies we’ve identified. These cost and capital efficiencies, combined with our strong portfolio of well-matched upstream production, midstream and downstream assets as well as improved financial strength, are expected to generate strong value for our shareholders.”

The combination creates Canada’s third largest crude oil and natural gas producer, based on total company production, with about 750,000 barrels of oil equivalent per day of low-cost oil and natural gas production. Cenovus is also now the second largest Canadian-based refiner and upgrader, with total North American upgrading and refining capacity of approximately 660,000 barrels per day bpd. In addition, the company has access to about 265,000 bpd of current takeaway capacity from Alberta on existing major pipelines, 305,000 bpd of committed capacity on planned pipelines and 16 million barrels of crude oil storage capacity as well as strategic crude-by-rail assets that provide takeaway optionality.

The commitments both Cenovus and Husky have made to world-class safety performance and ESG leadership will remain core to the combined company. This includes an ongoing commitment to transparent performance reporting, an ambition to achieve net zero emissions by 2050 and a plan to set ambitious new ESG targets for the combined company later this year.

“I want to thank and congratulate everyone at Cenovus and Husky for their dedication and hard work in bringing this transaction to a successful conclusion,” Pourbaix said. “This is truly one of the most significant developments in the history of our two companies, and in the history of the Canadian energy industry, for that matter.”

Cenovus expects to provide additional details on its future plans with the release of its 2021 capital budget and updated corporate guidance in late January. Fourth quarter and year-end financial and operating results for both Cenovus and Husky Energy are scheduled for release in mid-February.

As MRC reported earlier, Canadian oil and gas producer Husky Energy resumed production at its catalytic reformeri n Lima, Ohio, USA, on 15 September, 2020, after an unplanned shutdown. The company shut its production with a capacity of 115,000 mt/year of benzene and 330,000 mt/year of of toluene on 14 September, 2020.

Benzene is a feedstock for the production of styrene monomer (SM), which, in its turn, is a feedstock for manufacturing polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 520,630 tonnes in 2020, which corresponded to the same figure a year earlier. December estimated consumption of PS and styrene plastics in the country grew by 5% year on year to 47,490 tonnes.
MRC

PP imports into Russia up by 23% in 2020

MOSCOW (MRC) -- Polypropylene (PP) imports into Russia increased by 23% year on year to about 224,000 tonnes in 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports, according to MRC's DataScope report.

Last month, Russian companies actually kept the November volume of external PP purchases, imports amounted to 21,300 tonnes. Thus, overall PP imports into Russia reached 224,000 tonnes in January-December 2020, compared to 182,800 tonnes a year earlier. Purchasing of all grades of propylene polymers in foreign markets increased, with homopolymer PP imports accounting for the most noticeable rise.

The overall structure of PP imports by grades looked the following way over the stated period.

December imports of homopolymer PP were 7,600 tonnes versus 10,500 tonnes a month earlier, homopolymer PP shipments from Turkmenistan decreased significantly. Thus, overall imports of homopolymer PP totalled 93,000 tonnes in 2020, compared to 59,000 tonnes a year earlier.


December imports of propylene block-copolymers (PP block copolymers) were 6,500 tonnes versus 5,700 tonnes in November, demand for European injection moulding PP increased from Russian companies. Imports of PP block copolymers into Russia reached 60,300 tonnes in January-December 2020, compared to 54,700 tonnes a year earlier.

December imports of statistical copolymers of propylene (PP random copolymer) dropped to 3,400 tonnes from 1,700 tonnes a month earlier, with the main increase accounted on the producers of film and injection moulding products due to the lack of supply of domestic raw materials.
Overall imports of this propylene copolymers grade totalled 36,700 tonnes in 2020, compared to 33,800 tonnes a year earlier.

Imports of other propylene polymers totalled 34,100 tonnes over the stated period versus 35,300 tonnes a year earlier.

MRC

PE production in Russia grew 61% in 2020

MOSCOW (MRC) -- Russia's overall polyethylene (PE) production totalled 2,987,000 tonnes in 2020, up by 61% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output, according to MRC's ScanPlast report.

December PE production in Russia decreased to 265,100 tonnes, whereas this figure was at 272,800 tonnes a month earlier, as ZapSibNeftekhim decreased its capacity utilisation in the first month of calender winter. Thus, overall PE production reached 2,987,000 tonnes in 2020, compared to 1, 857,600 tonnes a year earlier. Production of all PE grades increased, with low density polyethylene (LDPE) being the exception.

The structure of PE output by grades looked the following way over the stated period.

December high density polyethylene (HDPE) production reached 160,400 tonnes versus 158,600 tonnes a month earlier, Kazanorgsintez and ZapSibNeftekhim raised their output. Russian plants' overall HDPE output reached 1,825,000 tonnes in January-December 2020, up by 90% year on year.

December low density polyethylene (LDPE) production grew to 60,200 tonnes from 55,500 tonnes in November, Kazanorgsintez and Tomskneftekhim increased their output. Thus, overall production of this PE grade totalled 634,800 tonnes over the stated period, down by 1% year on year.

December LLDPE production decreased to 44,500 tonnes from 58,700 tonnes a month earlier, Kazanorgsintez shut production, and ZapSibNeftekhim reduced capacity utilisation. Overall LLDPE production grew to 527,400 tonnes in 2020 from 254,600 tonnes a year earlier.


MRC

Oil tanker market in rougher seas as supply surges, storage sinks

MOSCOW (MRC) -- A plunge in the volume of crude oil stored on ships combined with unexpected cuts from top producer Saudi Arabia have created a glut of vessels available for hire, pressuring the outlook for supertankers this year, reported Reuters.

Earnings for very large crude carriers (VLCCs) in 2020 reached record highs of more than USD240,000 a day as the coronavirus battered demand, creating an oil surplus and a scramble for storage on land and sea. Rates have since dropped to USD7,000 a day.

“Right now, it is really as bad as it gets for the VLCC market. Floating storage has more or less unwound and the return of that tonnage to the spot market has pressured rates,” Aristidis Alafouzos, chief operating officer of Okeanis Eco Tankers, told Reuters.

“The loss of 1 million bpd of Saudi production equates to annualised tanker demand destruction of 23 VLCCs.”

Clarksons Research Services estimated that as of Jan. 22, 95 vessels - the equivalent of 130 million barrels - were being used for storage versus a peak of over 290 million barrels in May last year.

IHS Markit said volumes on ships - also static for 14 or more days - had dropped to 52 million barrels, the lowest level since the peak in mid-2020 when it reached 190 million barrels.

“IHS Markit does not expect a repeat of last year’s explosive floating storage growth in 2021,” said principal lead analyst Fotios Katsoulas.

“Declining floating storage could further support oil prices in the near-term, as it is considered an indication for demand recovering.”

The numbers exclude Iran’s fleet holding oil and non-commercial longer-term storage by companies.

Demand for floating storage at the peak of the crisis last year was also driven by a market contango, a price structure whereby cargoes for delivery in the shorter term are cheaper than those for later delivery. It encourages traders to store fuel until prices pick up.

As MRC reported earlier, Saudi Arabia's "brilliant move" to unilaterally reduce oil output additionally by 1 million b/d has been a great contribution to the stabilization of the global oil market, said Kirill Dmitriev, the head of the Russian sovereign wealth fund RDIF, in his statement on Jan. 27.

We remind that in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.

Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.

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.
MRC

Belgian study highlights potential of green hydrogen imports

MOSCOW (MRC) -- A feasibility study by a coalition of Belgian companies has concluded that imports of green hydrogen will play a key role in establishing the country’s future renewable hydrogen economy, and that ammonia, methanol, and synthetic methane are the “most promising” likely green energy carriers, reported Chemweek.

The study by the Hydrogen Import Coalition, consisting of DEME, Engie, Exmar, Fluxys, Port of Antwerp, Port of Zeebrugge, and WaterstofNet, states that Belgium needs to “look beyond its own production of renewable energy generated domestically or offshore,” to meet the challenge of transitioning to a carbon-neutral society by 2050, it says. The study concludes that this is both technically and economically feasible.

Local production of solar and wind energy will have to be supplemented by the supply of renewable energy from abroad, with hydrogen to play an important role in the blend of end-user solutions, it says. The study mapped out the financial, technical, and regulatory aspects of the entire hydrogen import chain, from production elsewhere to delivery via ships and pipelines to Belgium for internal distribution, also providing a basis for the further roll-out to industrial applications.

“Various types of hydrogen-derived carriers from a range of supply regions will be able to provide cost-competitive renewable energy and raw materials by 2030-2035. The most promising green energy carriers are ammonia, methanol, and synthetic methane,” the consortium states. These can be deployed through existing modes of transport such as pipelines and maritime transport, it says.

Belgium has maritime ports and extensive pipeline infrastructure, is linked to major industrial clusters, and has the capacity to meet both its own domestic energy needs as well as those of surrounding countries, it adds.

Planned next steps will include analysis of how to prepare seaports in Belgium to receive the identified future hydrogen carriers, with the aim of maximizing synergies. Specific pilot projects are also being set up in the area of logistics, industry, and technology for the development of a sustainable economy and the climate transition in the region and a broader hinterland.

“We want to give hydrogen every chance as an energy carrier, a basic element for chemistry and a fuel, and are therefore committing ourselves as an active pioneer in the hydrogen economy,” says Jacques Vandermeiren, CEO at Port of Antwerp. “As a world port and Europe’s largest integrated chemical cluster, we are an important link in this chain. The outcome of this study and its next steps offer promising perspectives for a further large-scale roll-out of hydrogen applications.”

As MRC informed earlier, Shell is teaming up with three partners on a green hydrogen project in Hamburg, Germany, which includes a scalable electrolyser with an initial output of 100 megawatts (MW). Production of green hydrogen at what would be one of the largest electrolyser plants in Europe could begin in 2025, the companies – Shell, Mitsubishi Heavy Industries, Vattenfall, and Warme Hamburg.

Besides, Essar Oil (Mumbai, India) and clean energy specialist Progressive Energy (Stonehouse, UK) say they have agreed to partner on the development of two low-carbon hydrogen production plants at Essar’s Stanlow refinery in Cheshire, UK, that will supply Progressive’s planned HyNet low-carbon regional distribution network. The companies have recently signed a memorandum of understanding to jointly invest GBP750 million (USD1.02 billion) to build two hydrogen production hubs.

We remind that in late September 2019, Essar resumed operations at its cracker in Stanlow, UK with the capacity of 45,000 mt/year of ethylene and 165,000 mt/year of propylene. It was shut on 11 September, 2019, due to the power outage at the site.

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.
MRC