Saudi Aramco cuts February crude supply to some Asian refiners

MOSCOW (MRC) -- Top oil exporter Saudi Arabia has cut supplies of February-loading crude for some Asian buyer by up to a quarter while meeting requirements of at least four others, reported Reuters with reference to several refinery and trade sources with knowledge of the matter.

This comes after Saudi Arabia pledged additional voluntary output cuts of 1 million barrels per day (bpd) in February and March under a deal between the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

Most OPEC+ producers will hold production steady in the face of new coronavirus-induced lockdowns. Global oil prices are trading at their highest since February following Saudi’s decision.

Two North Asian refiners have received a 10% supply cut from the state-owned energy giant Saudi Aramco, sources said. February allocations for at least three Indian refiners have been cut between 15% and 26%, the sources said on the condition of anonymity.

Saudi Aramco declined to comment.

Last year, the company cut June-August shipments to Asian term buyers to comply with the OPEC+ agreement.

Saudi Arabia exported about 7 million barrels per day of crude, of which around 70% landed in Asia last year, data on Refinitiv Eikon showed.

While the additional Saudi oil supply cut could help support the spot market this month, Asia’s crude consumption is expected to fall amid seasonal refinery maintenance while arbitrage supplies from the West could supplement demand, trading sources said.

Differentials for Middle East benchmarks cash Dubai and DME Oman to Dubai swaps fell by 20 cents from Tuesday, data compiled by Reuters showed, due to weak demand.

Refiners, including India’s HPCL-Mittal Energy Ltd (HMEL), Taiwan’s Formosa Petrochemical Corp, and Thailand’s IRPC Pcl and Bangchak Corp, are heading into maintenance in the first quarter.

Japan’s Idemitsu Kosan Co has shut a 150,000 barrels-per-day (bpd) crude distillation unit (CDU) following a fire mishap.

As MRC wrote previously, Formosa Petrochemical Corporation (FPCC) was running its crackers in Taiwan at 100% capacity utilisation in end-December, 2020. 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.

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.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC

Wood secures USD120 MM contract with Sinopec for ethylene expansion

Wood secures USD120 MM contract with Sinopec for ethylene expansion

MOSCOW (MRC) -- Wood has secured a contract valued at over USD120 million with Sinopec Hainan Refining and Chemical Limited Company (Sinopec) to provide engineering, procurement and construction (EPC) services to expand its refinery development in the Hainan Free Trade Zone (FTZ) in South China, according to Hydrocarbonprocessing.

Once completed, the ethylene renovation and expansion project will produce up to one million tonnes of ethylene derivatives and refined oil on an annual basis and is expected to boost economic growth in China’s downstream sector by more than 100 billion yuan (USD14.1 billion). Output from the Hainan FTZ will serve ethylene demand across China and globally.

Under the new contract, EPC services for the sitewide pipe rack and associated pipework, cables for power, telecommunications and lighting will be delivered by Wood’s engineering and project management teams based in Shanghai and on site.

Mike Collins, Wood’s Executive President of Projects comments: “We are delighted to win this new contract with Sinopec which demonstrates the strength of our long-standing relationship with the client and their confidence in our extensive EPC expertise in the petrochemical sector.

“We look forward to continuing our partnership to deliver this project safely, sustainably and on-time, making a positive contribution to this significant development.

“Wood is uniquely placed to leverage our engineering design expertise and global petrochemical track record to play a significant role in the growth of Sinopec’s business and the economic development of Hainan, boosting the local supply chain.”

As MRC reported earlier, in late December 2020, 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, 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. SIBUR and Sinopec will hold interest in the JV in the amount of 60% and 40%, respectively.

Ethylene is the main feedstocks for the production of polyethylene (PE).

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.

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

North America chemical rail begins year strong

MOSCOW (MRC) -- During the week ended 9 January, chemical railcar traffic in North America increased 5.3% year-over-year (YOY) and 10% from the previous week, said Chemweek.

Total North American freight railcar traffic fell by 2.5% year on year for the week ended 9 January, but chemical railcar loadings rose by 5.3%, the Association of American Railroads (AAR) reported on Wednesday.

In chemicals, increases in the US (+7.3%) and Canada (+0.6%) more than offset a 10.7% decline in Mexico.

Railcar loadings for motor vehicles and parts were down by 5.0% year on year, and loadings of oil and oil products were down by 21.6%.

As per MRC, during the week ended 12 December, chemical railcar traffic in North America was up 7.4% from 2019 and down 0.8% from 2018 on a four-week moving-average (4wma) basis, extending the recovery that began in late October (chart), according to data released on 16 December by the Association of American Railroads (AAR). For the year to date, chemical railcar traffic in North America was down 2.8% from 2019 and down 5% from 2018. Weekly volume totaled 46,463 carloads, down 6.2% from the previous week and up 7.0% year-over-year (YOY).

We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.
MRC

Third of oil and gas workers faced pay cut in 2020 due to pandemic

MOSCOW (MRC) -- Almost one in three workers in the oil and gas industry faced pay cuts in 2020, a worldwide survey showed on Tuesday, as the coronavirus crisis drove down fuel demand and prices, said Hydrocarbonprocessing.

Oil and gas workers are still among the highest paid in the world, but a majority of those questioned said they felt less secure about their jobs than a year ago, as the shift to low-carbon energy sources pushed down investment in their industry. Salaries in the sector are closely tied to oil prices, which plummeted last year as lockdowns slashed demand for fuel.

About 30% of professionals saw a fall in pay last year and one in four said their salaries and day rates fell by more than 5%, according to a report by staffing firm Airswift’s Global Energy Talent Index (GETI). Almost 20% of oil and gas workers expected a further pay reduction in 2021, according to the report which surveyed 16,000 energy professionals across 166 countries. Only 37% of workers reported a pay rise in 2020, compared to 50% last year, it said.

Permanent workers in North America were the highest paid, with an annual income of around $100,000 on average, the survey showed, while workers in Latin America were the lowest paid with an average annual salary of close to USD50,000.

Job security was low across all energy sectors, with 78% of oil and gas workers feeling less secure than a year ago about their jobs. That figure fell to 66% for those working in renewables and 59% of those working in nuclear power.

Oil and gas firms have cut jobs to survive what is expected to be a long stretch of weak demand. Rystad Energy consultancy said in October more than 400,000 industry jobs had been cut up to that point of 2020, half of them in the United States, where there is a heavy focus on costly shale oil output. “Based on our knowledge and insight into the shale market in the United States, this was one of the hardest hit areas in the world for the pandemic,” Airswift Chief Executive Janette Marx told Reuters.

Nearly nine out of 10 those questioned in the survey expected the pandemic to lead to long-term change in the industry, with the impact ranging from staff headcounts to the way employees operated in the workplace.

As MRC informed previously, global oil demand may have already peaked, according to BP"s latest long-term energy outlook issued in September 2020, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

Earlier last 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 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

ADNOC announces new downstream industry marketing & trading directorate

MOSCOW (MRC) -- Abu Dhabi National Oil Company (ADNOC) has created a new Downstream Industry, Marketing & Trading Directorate, effective January 17, 2021, that integrates the company’s existing Downstream & Industry Directorate and Marketing, Supply & Trading Directorate. Mr. Khaled Salmeen, who previously held the role of Executive Director Marketing, Supply and Trading, will lead the new Directorate, according to Hydrocarbonprocessing.

This strategic organizational change, the latest in ADNOC’s transformation journey, will enable greater value chain optimization across ADNOC’s Downstream and Trading operations, improving performance, profitability and efficiency. The new Downstream Industry, Marketing & Trading Directorate introduces a more integrated operating model that will help ADNOC provide a better service to its customers, while expanding it’s downstream operations, cataylizing the UAE’s industrial and post-covid economic growth, and further advancing its focus on In-Country Value.

As a central and integrated unit, the new Directorate will deliver a more aligned and coordinated effort between customer and market demand and product supply. It will enable a more agile response to market dynamics and customer needs, while supporting ADNOC’s goal to drive synergies and maximize value from every barrel and molecule that the company produces, refines, ships and sells.

As ADNOC delivers on its 2030 smart growth strategy and its ambitious Downstream expansion plans, the new Directorate will be a critical enabler of the company’s goal to responsibly deliver the energy and energy products that the world needs, particularly in its core Asian market, where demand for refined and petrochemical products are set to grow over the next ten years. The Directorate will also drive ADNOC’s activities to catalyze the UAE’s industrial development and economic diversification, overseeing the development of TA’ZIZ and the Ruwais Derivatives Park. This will strengthen the UAE’s position as a globally competitive chemicals hub and destination for foreign direct investment.

The Directorate will also lead ADNOC activities to capitalize on the emerging global market for hydrogen, building on the company’s existing position as a major producer with existing infrastructure, partnerships and customer relationships.

The new Directorate will govern ADNOC’s interests across its refining, gas processing, petrochemicals, product sales, shipping and integrated logistics and trading portfolio.

As MRC reported previously, in early May, 2020, Abu Dhabi National Oil Company (ADNOC) began a gradual restart of its Ruwais oil refinery complex after a scheduled maintenance shutdown. The Ruwais complex, which has capacity of 835,000 barrels per day, was shut down early this year, the ADNOC spokesman said.

And in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

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