S.Korean S-Oil expects 2021 refining margins to improve gradually

MOSCOW (MRC) -- South Korea's S-Oil Corp expects refining margins to improve gradually this year, boosted by a continuing recovery in demand as coronavirus vaccines are rolled out, amid limited capacity additions, reported The Economic Times.

The country's third-largest refiner, whose major shareholder is Saudi Aramco, on Thursday posted operating profit of 93 billion won (USD83.19 million) for the quarter to December, up from 9.5 billion in the corresponding year-ago period.

It was S-Oil's first operating profit since the fourth quarter of 2019.

The company's revenue in the fourth quarter was 4.3 trillion won, down 34 per cent from the previous year.

Full-year operating loss was 1.1 trillion won and revenue was 16.8 trillion won.

S-Oil, which has a 669,000 barrel-per-day (bpd) refinery near Ulsan, operated its crude distillate units at 100.8 per cent on average in the fourth quarter, higher than 96.1 per cent for the entirety of 2020, according to the company's statement.

The company said its planned 2021 capital expenditure was 252 billion won, down from 397 billion won in 2020.

Shares of S-Oil closed down 0.9 per cent after the earnings announcement, while the wider market declined 1.7 per cent.

As MRC reported earlier, S-Oil, South Korean petrochemical major, took off-stream its residue fluid catalytic cracker (RFCC) unit for a turnaround in June, 2020. The company undertook a planned shutdown at the unit by early-July, 2020. The unit remained off-line for about two weeks. Located at Onsan, South Korea, the RFCC unit has a propylene capacity of 705,000 mt/year.

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

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).

Oxy Low Carbon Ventures delivers world first shipment of carbon-neutral oil

MOSCOW (MRC) -- Oxy Low Carbon Ventures (OLCV), a division of Occidental announced the delivery of two million barrels of carbon-neutral oil1 to Reliance Industries in India, according to Hydrocarbonprocessing.

This transaction, which was arranged in conjunction with Macquarie Group’s Commodities and Global Markets group (Macquarie), is the energy industry’s first major petroleum shipment for which greenhouse gas (GHG) emissions associated with the entire crude lifecycle, well head through combustion of end products, have been offset.

This transaction is a first step in the creation of a new market for climate-differentiated crude oil. It is also a bridge to the development of a further differentiated petroleum product, net-zero oil2, which Occidental intends to eventually produce through the capture and sequestration of atmospheric CO2 via industrial-scale direct air capture (DAC) facilities and geological sequestration. The transaction is an example of Macquarie’s commitment to innovation in the environmental products space and to being a leader in energy transition.

The oil was produced in the U.S. Permian Basin by Occidental and delivered to Reliance in India. Macquarie arranged and structured the bundled offset supply and retirement. The offsets were sourced from a variety of projects verified under the Verra Verified Carbon Standard meeting eligibility criteria for the UN’s International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The volume of offsets applied against the cargo are sufficient to cover the expected GHG emissions from the entire crude lifecycle including oil extraction, transport, storage, shipping, refining, subsequent use, and combustion.

This type of transaction, which involves the bundling of high-quality carbon offsets with crude oil, is an immediate executable solution that helps promote investments in longer-term, industrial-scale decarbonization strategies. It is also a step in the furtherance of Occidental’s net-zero ambitions and commitment to addressing climate change today.

Occidental, the first US based international energy company to announce an ambition to achieve net-zero GHG emissions associated with the use of its products by 2050, has been using carbon-dioxide in its enhanced oil recovery operations in the Permian for over 40 years. During this time, it has developed market-leading expertise in carbon capture, utilization and storage (CCUS). In 2019, OLCV made an investment in Carbon Engineering’s Direct Air Capture (DAC) technology and announced plans, through its development company 1PointFive, to proceed with engineering the world’s largest DAC and sequestration plant. This project will utilize Occidental’s existing Permian Basin enhanced oil recovery infrastructure and its market-leading carbon management expertise to permanently sequester captured atmospheric carbon-dioxide. OLCV expects net-zero oil from DAC to be available to customers in 2024.

The two companies also recognize that technology will play an important role in decarbonization of the industry. Occidental and Macquarie both invested last year in Xpansiv, a technology-based environmental commodities platform and exchange, which was leveraged in this transaction. At the same time, Occidental is working with Carbon Finance Labs who has supported this transaction and is developing a differentiated, distributed ledger-based carbon accounting platform for tracking end-to-end lifecycle carbon emissions through commodities supply chains.

“We are taking important initial steps to work with our customers in hard-to-decarbonize industries to offer carbon-neutral and other low-carbon products that will leverage our expertise in carbon management to lower their total carbon impact and address Scope 3 emissions,” said Richard Jackson, President Oxy Low Carbon Ventures.

"Macquarie is delighted to have worked with Occidental in developing this innovative solution. We look forward to continued collaboration with the company on realizing their ambitious carbon-neutral goals.” said Ozzie Pagan, Senior Managing Director for Macquarie in the Americas. “Macquarie is working to lead the energy transition through innovation and investments focused on advancing de-carbonization. We seek to develop, along with our clients, actionable strategies today and sustainable innovations for the future.”

The Very Large Crude Carrier (VLCC) Sea Pearl containing the carbon-neutral oil finished unloading in India today.

As MRC wrote previously, in January 2021, Reliance Industries Ltd completed spin-off of the firm's oil-to-chemical business into a new unit that will help it pursue growth opportunities with strategic partnerships. The oil-to-chemical (O2C) business unit holds Reliance's oil refinery and petrochemical assets and retail fuel business but not upstream oil and gas producing fields such as KG-D6 and textiles business.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).

Reliance Industries is one of the world"s largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.

LPG imports into Northwest Europe edge higher in December

MOSCOW (MRC) -- Northwest European LPG trade in December rose marginally month on month to an estimated 715,000 metric tons, up from 675,000 metric tons in November, according to Chemweek with reference to OPIS records.

Imports into the region from the US were 165,000 metric tons in December, up from 95,000 metric tons in the prior month, but down from a record 400,000 metric tons in October.

Main LPG imports into northwest Europe are earmarked typically as feedstock for the petrochemical sector, which had seen favorable economics for cracking propane early in December compared to naphtha. However, the propane/naphtha spread swung positive mid-December, after opening the month at minus USD19/metric ton, led by a strengthening propane price. The spread moved considerably further into positive territory by the end of the month, to USD44/metric ton, leaving propane much less attractive for feedstock end-users.

Imports of LPG from the US also slowed during December as the freight rate for the Houston-to-Flushing route for very large gas carriers (VLGCs) rose by nearly 30% in one month to USD90/metric ton from USD70/metric ton, according to shipbroker data. Delays for vessels waiting to transit the Panama Canal, combined with winter heating demand for LPG in Asia, led to a surprise jump in freight rates.

CIF ARA propane prices in northwest Europe rose by USD141/metric ton through December, topping USD507/metric ton by year-end. By comparison, CIF northwest European naphtha prices were up by 50% in the same month, increasing by USD69/metric ton to end 2020 at USD459.75/metric ton.

During December, local North Sea supplies of LPG entering the petchems feedstock pool totaled 248,000 metric tons, equivalent to 58% of total feedstock intake, and down from 290,000 metric tons in November. The remainder of intake from the sector in December consisted of 23% from the US East Coast, up from 13% in November, while imports from the US Gulf Coast made up 16% of intake, up from 11% in November. The retail and refining sector saw LPG intake slightly softer month on month at 165,000 metric tons for December.

Exports out of northwest Europe increased to 125,000 metric tons in December from 95,000 metric tons in November, with cargoes moving to the Baltic, eastern Mediterranean, and US east coast. Several of the US-Europe transit cargoes moved via the back-haul route, as some shippers looked to take advantage of the high market rates in the month. Exports of LPG from port of Ust-Luga in the Russian Baltic to northwest Europe were an estimated 12,000 metric tons.

OPIS is an IHS Markit company.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).

Firefighters work overnight battling chemical factory fire in Kaohsiung City

MOSCOW (MRC) -- Firefighters in Kaohsiung City worked through the night to extinguish a fire at a chemical plant in the Linyuan Industrial Park after an explosion and fire was reported at around 8:30 pm in the evening, January 29, reported Taiwan English News.

Thirty-six vehicles and 75 personnel were dispatched from 14 fire stations to battle the blaze at the UPC Technology Corporation (1313.TW) plasticizer plant on Gongye 2nd Road.

The fire destroyed around 300 square meters containing plasticizer dioctyl phthalate (DOP) and phthalic anhydride (PA) production lines. No casualties were reported and the cause of the fire is still under investigation.

The fire was described as intense and difficult to control due to the large amount of chemical raw materials involved. Firefighters battled to stop the fire spreading to the adjacent Formosa Plastics, and Taiwan Petrochemical Corporation plants.

The fire was brought under control at around 10:30 pm, but firefighters continued to deal with residual fires overnight, and were still dousing the area with water at 7:00 am this morning.

The Kaohsiung City Environmental Protection Bureau closely monitored air quality around the site saying that the plasticizers were a level one poison. The company will be fined NTD5 million under Article 32 of the air pollution law.

Nearby residents complained that this was the fourth pollution incident in the Linyuan Industrial Park this month, after a biogas explosion at the wastewater plant of the Taiwan Benzene Chemical plant January 12, a smoke incident at the Yaju Linyuan Plant January 22, and an air pollution incident at the Xinchang Chemical Plant January 27.

As MRC informed earlier, 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.

Plasticizers are substances introduced into a polymer material to make it elastic and plastic during processing and operation. In particular, plasticizers are used for the production of polyvinyl chloride (PVC). The share of plasticizers used for the production of PVC products is about 80%.

According to MRC's ScanPlast report, Russia's overall PVC production reached 976,500 tonnes in 2020, up by 0.2% year on year. Only two producers managed to increase their PVC output.

Founded in 1976, Taiwan UPC Technology Corporation is mainly engaged in the research, development and manufacturing of petrochemical products. Its products include maleic and phthalic anhydrides, plasticizers, polyols, fatty esters, epoxy resins and other specialty chemicals.

Kottmann to step down as Clariant chairman, board member in April

MOSCOW (MRC) -- Clariant says that Harolf Kottmann, the company’s chairman since 2018, has informed Clariant’s board that he will no longer be a candidate for the office of chairman and board member, at the company's annual shareholders’ meeting in April, reported Chemweek.

Following Kottmann’s announcement, at an extraordinary board meeting, the Clariant board unanimously proposed to shareholders that Gunter von Au should be elected chairman, the company says.

Sabic, which owns 31.5% of Clariant’s shares, has agreed with the Clariant board's agenda items and withdrawn its request of a time limit of 12 years for members of Clariant’s board including the chairperson, which it had submitted in December 2020 as an item to be discussed at the upcoming shareholders' meeting, the company says. Sabic has instead asked for the time limit to be anchored in the bylaws of Clariant’s board, Clariant says.

Sabic has also withdrawn a proposal for the distribution of a special dividend to Clariant shareholders of up to 2.00 Swiss francs per share (USD2.24/share), the company says. The Clariant board has proposed an ordinary dividend of SFr0.70/share, which includes SFr0.55/share for 2019 and SFr0.15/share for 2020, it says.

According to an earlier Reuters report, adopting Sabic's proposed time limit “would force Clariant chairman Hariolf Kottmann out, though other board members have several years before they would be affected.” Kottmann said during an analysts’ presentation on 8 January that he could not comment on the matter and that Sabic’s request would be discussed at Clariant’s annual shareholders’ meeting.

Kottmann had been serving as Clariant’s executive chairman ad interim since the sudden departure of Ernesto Occhiello in July 2019, only 10 months after replacing Kottmann as Clariant’s CEO. On 1 January 2021, Conrad Keijzer assumed responsibility as Clariant’s CEO and Kottmann returned to his position as chairman of the board.

As MRC reported earlier, 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 feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).

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.