Chemical recycling of plastics is scaling quickly, say CEOs

MOSCOW (MRC) -- The chemical recycling of plastics, also known as molecular or advanced recycling, is scaling quickly, according to Chemweek with reference to Bob Patel, CEO of LyondellBasell, and Jim Fitterling, chairman and CEO of Dow.

The two spoke last Tuesday at the CERAWeek 2021 by IHS Markit virtual conference.

Chemical recycling does not require the degree of sorting required by mechanical recycling, noted Patel, and it yields virgin resin completely identical to resins produced from traditional petrochemical feedstocks. "With molecular recycling, you can take mixed plastic waste, convert it back to feedstock, and then put it back in the front end of the cracker (to make olefins) and then polyethylene (PE) or polypropylene (PP)," he said.

Patel said chemical recycling has the additional advantage of much larger scale than mechanical recycling. "I think we're probably three to five years way from being at the scale that our industry is used to," he said. "I think it has to be some form of pyrolysis, and then it's a matter of how do you scale that up and manage any sort of environmental impacts from the pyrolysis process itself."

Fitterling noted that many pilot operations are underway. "Everybody is learning how to deal with this new raw material supply and how to manage it through existing assets, and I think we're making great progress," he said. "We're also getting good traction on the methodology for how to account for it and make sure you can prove that it's sustainable, and that it's an auditable, traceable closed loop."

Closing the loop is not a purely technological problem, however.

"I think great way to think about it is, you're trying to create an entire ecosystem," said Fitterling. "We talk a lot of times about policies around circularity at a very high level, maybe a national or global level, but in reality the waste issues are very local, and so you have to deal with the local consumer and sorting out waste plastics, making sure they don't go to a landfill in the first place, and getting them to a recycling facility."

A fundamental challenge is that the cost of recycling is greater than business as usual, Fitterling noted. "But policies and that whole system can help close that loop by creating an incentive that brings private investment in, that creates jobs for the local community, and that creates a way for that material to get back in," he continued. "Because we've changed the equation… from just being low cost to trying to reduce waste and get the carbon footprint down, and that's a different objective.

As MRC informed earlier, LyondellBasell Industries is restarting the gasoline-producing fluidic catalytic cracker (FCC) after completing the restart of the large crude distillation unit (CDU) at its 263,776 barrel-per-day (bpd) Houston refinery. The 147,000-bpd Unit 537 CDU is the first to restart since the refinery was shut on Feb. 15 by severe cold weather. The 90,000-bpd FCC could be back in production by early next week.

Ethylene and propylene are feedstocks for producing PE and 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, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.

New plant helps lift earnings at Russian petrochemicals producer

MOSCOW (MRC) -- Russia's largest petrochemicals producer, Sibur, said its core earnings rose 5% in 2021 as it expanded production with the launch of a new plant, but was also hit by lower prices of liquefied petroleum gas and naphtha, said Hydrocarbonprocessing.

Sibur has been looking to do an IPO for years, and said last year that it would be better placed for an initial public offering once the new plant, ZapSibNeftekhim in Western Siberia, was completed. However, it has yet to confirm IPO plans or give a timeframe.

The company said on Thursday that another plant under construction in Eastern Siberia, the Amur Gas Chemical Complex, could start operations six months ahead of schedule by mid-2024 and the cost of the project will probably be USD10 billion, down from previous estimates of between USD10 billion and USD11 billion.

The Amur Gas complex is expected to produce 2.3 million tons of polyethylene and 400,000 tons of polypropylene a year. China's Sinopec has acquired a 40% stake in the project and Sibur's Chief Financial Officer Peter O'Brien said the Chinese company paid around 18.27 billion roubles (USD248 million) for the stake.

Sibur said core earnings last year rose by 5.4% to 179 billion roubles (USD2.4 billion), with petrochemical product sale volumes rising 37% to 5.15 million tons. Revenue, however, slipped 1.6% to 523 billion roubles partly due to lower prices for liquefied petroleum gas and naphtha in the first half of the year. Adjusted net income fell 0.4% to 93 billion roubles.

As MRC reported before, earlier this weak, Sibur Holding 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 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, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.

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.

ExxonMobil slashes 2025 production outlook as it focuses on Permian, Guyana

MOSCOW (MRC) -- ExxonMobil has slashed its 2025 global oil and gas production estimate to 3.7 million boe/d, even as it focuses on growing output at the Permian Basin and in Guyana, reported S&P Global with reference to the company's top executives' statement on March 3.

Production will remain flat from 2020 levels through 2025 at 3.7 million boe/d, the company said during its Investor Day 2021 webcast. That is down from the 5 million boe/d production estimate for 2025 ExxonMobil released last year in its 2020 Investor Day, just as the coronavirus was beginning to take its toll on global oil demand and prices.

While global production will remain flat, the company's operations in Guyana and the Permian Basin will ramp up over the next several years.

ExxonMobil expects its Permian operation, which produced 370,000 boe/d in 2020, to average 400,000 boe/d this year and potentially 700,000 boe/d by 2025, assuming favorable market conditions, Neil Chapman, ExxonMobil's senior vice president of upstream, said on the webcast.

That is down from the 1 million boe/d target the major had set for 2024 just a couple of years ago.

A major ExxonMobil objective for the Permian this year is to achieve double-digit returns while maintaining five to seven rigs in the play, where it has a resource potential of 10 billion boe with 70% higher-margin liquids at oil prices less than USD35/b WTI. As well, it also aims to decrease emissions 50% from its Permian operation by 2025 versus 2016 levels, Chapman said.

ExxonMobil currently has eight rigs working in the play, compared with 57 a year ago, according to investment bank Tudor Pickering Holt.

In Guyana, ExxonMobil operates the country's offshore Stabroek block, which produced the country's first oil under a partnership with Hess Corp. and China's CNOOC in December 2019.

The block ramped to peak first-phase output in the fourth quarter of 120,000 b/d, although two additional projects are under development that will begin production in 2022 and 2024, respectively. Those projects will utilize floating, production, storage and offloading vessels with capacities of 220,000 b/d each.

The partners envision more than 750,000 b/d from five FPSOs by 2026, as well as a sixth Guyana project producing by 2027 from Stabroek, which currently has a resource potential of more than 9 billion boe. The projects aim to deliver more than a 10% rate of return, and potentially more than 20%, at an oil price less than USD35/b - and zero routine flaring by 2030.

"It's possible that 10 FPSOs will be needed to develop the resource we've discovered so far," Chapman said. "We expect the potential of the basin to be more than double what we've already discovered," or more than 18 billion boe.

Even as climate-change initiatives and goals are gaining ground in the company's priorities, upstream investment remains a critical part of its forward plan.

"The upstream will need continuous investment going forward," Andrew Swiger, ExxonMobil senior vice president, said during the webcast.

The company's chief aims for the next several years are to grow its cash flow and earnings and cut costs, Swiger said, while working toward commercialization of lower emission technologies. It will continue to high-grade its portfolio, and retain capital investments that generate the highest returns.

"That's the foundation on which we've established the low-carbon futures business," company CEO Darren Woods said on the webcast.

For instance ExxonMobil will reduce its North American dry gas position 50% by 2025 - which it considers a lower-value asset, Chapman said. The company took a total impairment charge of USD19.3 billion in Q4 to reduce the carrying value of dry gas assets in the US, western Canada and Argentina.

ExxonMobil's total 2021 capex will remain at the USD16 billion-USD19 billion level released last month in the company's Q4 conference call, as well as its earlier-stated longer-term 2022-2025 average of USD20 billion-USD25 billion. At that time, ExxonMobil also said it expects permanent structural cost savings of USD6 billion per year by 2023.

Oil and gas is expected to play a smaller role in the shift towards a lower carbon footprint, with demand focused mostly for making petrochemicals and transportation fuels so the "cost of supply will be absolutely critical," said Woods, adding that its upstream strategy is key.

Woods noted that International Energy Agency data showed in 2019 that oil and gas accounted for 55% of global energy demand, the equivalent of about 98 million b/d of oil.

In 2040, oil is expected to have a 48% share, with demand at about 75 million b/d of oil and natural gas, under a scenario used by the United Nation's Intergovernmental Panel on Climate Change.

While the lion's share of ExxonMobil's reduction in greenhouse gases come from the upstream sector, in the downstream and chemical sectors, the company is "very focused on energy efficiency", said Jack Williams, ExxonMobil's senior vice president for downstream and chemicals.

"It's the best way to reduce greenhouse gas emissions," he said.

ExxonMobil is also shifting the product mix from its refineries and petrochemical facilities toward higher margin products by reducing output of fuel oil and gasoline and increasing output of diesel and jet. In Singapore, it is turning uneconomic fuel oil into higher value lubricants and distillates.

Refining product upgrades are underway around the world, including adding a hydrofiner to the Fawley refinery in the UK to increase diesel output, adding light, sweet crude processing capacity at the Beaumont, Texas, plant to match increased Permian output, and connecting its other two US Gulf refineries to its Permian crude assets.

ExxonMobil's previously announced creation of a new business unit - ExxonMobil Low Carbon Solutions - is focusing on creation of hydrogen and using carbon capture and sequestration technologies to mitigate carbon emissions.

While the carbon sequestration project underway at Rotterdam is cutting edge today, the new business unit is looking to find uses for captured carbon beyond sequestration, such as in steel and cement as well its application for e-fuels.

"It's promising, but there's a long way to go," said Swiger.

As MRC wrote before, ExxonMobil's recent operational shutdowns include polyethylene (PE) facilities amid power outages prompted by the deep freeze that has enveloped the US Gulf Coast. "This event has caused widespread power outages across Texas and Louisiana" Feb. 15," the letter, dated Feb. 16, said. "As a consequence, several ExxonMobil Chemical operations have experienced loss of power and other key utilities, impacting our ability to resume full operations." ExxonMobil operates three PE units in Mont Belvieu, Texas, with combined capacity of 880,000 mt/year, according to S&P Global Platts Analytics.

Exxon is among many petrochemical producers that shut Feb. 14 and subsequent days because of sustained extreme sub-freezing temperatures in the region. ExxonMobil previously confirmed Feb. 16 that the company had shut all refining and chemical operations at its Baytown and Beaumont, Texas, complexes. Ethylene produced at Baytown feeds the Mont Belvieu PE operations.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world's energy.

North American petrochemical producers might see long-term cost advantage by reducing CAPEX

MOSCOW (MRC) -- The shale gas advantage of North American petrochemical majors provides a boost for investments in the region, primarily in the U.S., said Hydrocarbonprocessing.

However, the oil price crash narrowed this advantage and is likely to affect profitability. North American petrochemical majors that strive to pace investments efficiently, in line with market trends, will boost their competitiveness and seize further opportunities for growth over the long-term, says GlobalData, a leading data and analytics company.

John Paul Somavarapu, Oil and Gas Analyst at GlobalData, comments: “The sudden decline in crude oil prices have distinctly affected the planned investments by the North American producers and they now need to efficiently pace investments while preserving long-term gains. GlobalData expects companies to lower their operating expenses and capital expenditures and focus on less capital intense investments to position themselves well while the market recovers."

The pandemic and the resulting impact on feedstock costs have prompted petrochemical majors in North America to announce project delays. The progress of under-construction projects was also affected due to limitations in the movement of contract personnel and travel restrictions. Petrochemical capacity additions in North America are largely concentrated in the US, leveraging low-cost feedstock through the abundant supply of ethane from shale. The U.S has around 27.2 MM metric tpy of petrochemical capacity under construction. It is followed by Canada, which is a distant second with 3.2 MM metric tpy.

Somavarapu continues: “The global petrochemical industry is experiencing a paradigm shift, and feedstock options, demand patterns, government policies, and so on will play a pivotal role. North America, particularly the U.S, is at a greater advantage when considering these factors in the longer term."

The demand for polymers in North America in 2020 was affected due to weaker demand in end markets such as automotive and construction. However, as the global economy progresses towards a gradual recovery, and industrial and business activities are slated to return to normal, demand for polymers is set to strengthen and will likely reach pre-COVID levels in the medium- to long-term.

Somavarapu adds: “Producers should remain flexible and manage near-term constraints to reap benefits in the mid-long term. The US, being one of the largest producers and supplier of petrochemicals globally, will look forward to seizing the right opportunities for growth."

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, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.

Evonik misses estimates in fourth quarter, hits full-year targets

MOSCOW (MRC) -- Evonik Industries reports fourth-quarter net profit of EUR73 million (USD88 million), down 54% from the corresponding period of the previous year, on a 2% decline in sales, to EUR3.2 billion, according to Chemweek.

The fall in net profit reflects the inclusion in the prior-year period of proceeds from the sale of the company’s methacrylates business, the company says. Weaker demand, caused by COVID-19, drove down sales.

Evonik’s fourth-quarter adjusted EBITDA decreased 17% year on year (YOY) to EUR418 million, 4.3% below analysts’ consensus estimate, on a EUR15-million adjusted EBITDA loss at the company’s services operation, which swung from positive adjusted EBITDA of EUR24 million in the year-earlier period. Services’ external sales declined 15% YOY to €188 million in the quarter on lower revenue from process technology and engineering.

Evonik says it achieved its full-year 2020 financial targets partly as a result of measures taken to tackle the pandemic. Last May, Evonik was one of the few companies to give an outlook for the full year. The company says that with 2020 adjusted EBITDA of EUR1.91 billion and sales of EUR12.2 billion, the target was fully met. Adjusted EBITDA decreased 11% and sales were down 7%.

"The pandemic impacted our actions, but it did not determine our agenda," Christian Kullmann, chairman of Evonik, told a press briefing on Thursday. "We kept Evonik on track."

Evonik’s results in 2020 also benefited from the company’s strategy to focus more on its specialty businesses, which has included the methacrylates divestment. "In the crisis, our transformation towards more specialty chemicals has paid off," says Kullmann. "We are in the midst of this transformation process, which we will continue to drive forward, and which will generate new growth in 2021 and beyond."

Evonik forecasts adjusted EBITDA of at least EUR550 million in the first quarter of 2021. For the full year, the company expects a rise in adjusted EBITDA to EUR2.0-2.3 billion on sales of EUR12-14 billion. “We fended off the crisis in 2020 and now we are switching to growth,” Kullmann says.

Measures taken last year enabled Evonik to increase its free cash flow to EUR780 million and double the cash-conversion rate to above 40%. "We raised our forecast for free cash flow twice during the year and then even exceeded that," said Ute Wolf, CFO, at the briefing. "Our outlook points in a clear direction: We expect rising earnings, a persistently high cash-conversion rate, and thus an increase in free cash flow in 2021."

Evonik also expects to exceed its cost-cutting target for 2021. The company announced a program in 2017-18 to reduce selling and administrative expenses by an annualized EUR200 million by the end of 2021. The company says it will likely have reached EUR230 million of cost cuts by the end of this year, having achieved EUR60 million of cost reductions in 2020, Kullmann says. “In past years cost discipline was not a particular strength of Evonik, but this has changed,” he told the press briefing.

Evonik announced 1,000 job cuts as part of the cost-reduction plan and has not reached the full number of reductions, Thomas Wessel, board member/human resources and industrial relations, told the briefing. “We remain below that target but are nevertheless achieving the cost cuts,” he said.

Evonik launched a new corporate structure in July 2020, consisting of four operating divisions. Three of the divisions - specialty additives, nutrition and care, and smart materials - have been designated as growth divisions and their combined full-year 2020 earnings were down by just 3%. The other operating division is performance materials.

The three growth divisions now account for about 95% of the operating business’s earnings, Evonik says. The reorganization has made Evonik “more comparable with our competitors,” Kullmann told the press briefing.

Sales at the specialty additives division declined 5% to EUR3.23 billion in 2020 with adjusted EBITDA down 3% to EUR857 million. Demand for additives for the automotive and coating industries initially declined significantly due to the challenging economic situation but showed a “clear recovery” at the end of the year, Evonik says. Additives for products in the construction industry and renewable energies saw robust demand throughout the year, it says.

Sales at the nutrition and care business rose 2% to EUR2.99 billion in 2020 with adjusted EBITDA rising 21% to EUR560 million, mainly due to improved selling prices and “successful cost management,” Evonik says. At the animal nutrition segment, essential amino acids generated higher sales than in the previous year. In the methionine business, sales volumes increased with higher demand worldwide. Overall, selling prices were stable in the second half of the year, the company says.

The smart materials division's sales decreased 4% to EUR3.24 billion in 2020 as adjusted EBITDA fell 19%, to EUR529 million. Business was particularly affected by the worldwide economic slowdown in the second- and third quarters but was able to return to the previous year's level in the fourth quarter, Evonik says. Overall, however, this led to a “noticeable decrease” in volumes, it says. This was particularly the case for high-performance plastics for the automotive sector, and for silica used in the tire industry. The first-time inclusion of PeroxyChem, acquired in February 2020, had a positive earnings contribution, Evonik says.

Revenue at the performance materials division fell 25% to EUR1.98 billion in 2020. Adjusted EBITDA decreased by 65% to EUR88 million. Sales of C4-based products decreased as a result of weakening demand, particularly from the automotive and fuel industries. The superabsorbents business, which Evonik is carving out, faced below-average capacity utilization across the industry, the company says. However, Kullmann expects the business to “catch up a lot” in 2021.

As MRC informed earlier, in February, 2020, Dow and Evonik entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.

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).

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.