India asks refiners to diversify, cut reliance on Middle East oil after OPEC+ decision

MOSCOW (MRC) -- India has asked state refiners to speed up the diversification of oil imports to gradually cut their dependence on the Middle East after OPEC+ decided last week to largely continue production cuts in April, reported Reuters with reference to two sources.

India, the world's third biggest oil importer and consumer, imports about 84% of its overall crude needs with over 60% of that coming from Middle Eastern countries, which are typically cheaper than those from the West.

Most of the OPEC+ producers, led by world's top exporter Saudi Arabia, last week decided to extend most output curbs into April.

India, hit hard by the soaring oil prices, has urged producers to ease output cuts and help the global economic recovery. In response, the Saudi energy minister told India to dip into strategic reserves filled with cheaper oil bought last year.

"We have asked companies to aggressively look for diversification. We cannot be held hostage to the arbitrary decision of Middle East producers. When they wanted to stabilize the market we stood by them," said a government source.

India had not cancelled any shipment of crude oil from the Middle East in 2020 when oil demand collapsed due to COVID-19, the source said. Already OPEC's share in India's oil imports declined to a historic lows during April 2020-January 2021, the first ten months of this fiscal year.

While initial costs could be high, the strategy will pay off in the long term, the source said.

Two oil refiners confirmed that the government had asked them to expedite efforts to diversify crude import sources.

One plan is to import oil from new producer Guyana, the sources said. The country's top refiner Indian Oil Corp has also renewed its oil import contract with Russia, they added. India hopes to resume Iranian oil imports this year.

India's oil ministry and IOC did not respond to requests from Reuters for comment.

Iraq and Saudi Arabia are the two biggest oil suppliers to India. This year, Iraq has cut annual supply volumes while Kuwait has shortened the duration of contracts with Indian buyers to 9 months.

After OPEC's last week decision, crude oil prices rose to over USD71 per barrel although the prices eased to USD69.08 a barrel by 1027 GMT. Saudi has also raised April official selling price of its oil for Asia.

"A beginning has to be made. No one had imagined that U.S. oil will account for a significant share in our crude basket. We are trying for shorter-term contracts with new countries and sellers," the first source said.

"The world was together during the pandemic but now it seems some producers are working for their own economies," said the first source.

As MRC informed before, Indian Oil has just announced plans to expand the capacity of its refinery at Panipat, India, from 15 million metric tons/year (MMt/y), to 25 MMt/y. The company will also build a polypropylene (PP) unit and a catalytic dewaxing unit at the site. The cost of the project is 329.46 billion Indian rupees (USD4.45 billion). The plan is the latest in a series of projects approved by Indian Oil to improve integration with petrochemicals at the company's refinery sites. The capacity of the planned PP facility has not been disclosed.

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

MOSCOW (MRC) -- LyondellBasell and Covestro's jointly-owned propylene oxide(PO)/styrene monomer (SM) unit at Maasvlakte, Netherlands, is reportedly producing at a lower rate following an incident at the site on 10 February, 2021, reported Chemweek.

The site produces 313,000 metric tons/year of PO and 680,000 metric tons/year of styrene. A four-week turnaround is planned at the site, beginning in the second half of March, market sources told OPIS.

OPIS is an IHS Markit company.

As MRC wrote previously, LyondellBasell and Covestro declared force majeure on SM supplies from their joint PO/SM plant at Maasvlakte, Netherlands, on 11 February, 2021, because of a mechanical failure, which caused the shutown of the plant.

We remind that LyondellBasell (Houston, Texas), one of the largest plastics, chemicals and refining companies in the world, reports fourth-quarter net income of USD855 million, up 40% year-over-year (YOY) from USD612 million on higher polyolefin volumes and margins. A USD147 million non-cash, lower-of-cost-or-market (LCM) inventory valuation benefit increased net income by USD119 million, or USD0.36 per share. Sales totaled USD7.937 billion, down 3.0% YOY from USD8.179 billion. Adjusted earnings per share of USD2.19 increased 15% YOY from USD1.91 and beat the consensus of USD1.31 as compiled by Zacks Investment Research.

Styrene is the main feedstock for the production of 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 grew by 5% year on year to 47,490 tonnes.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges, like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances. LyondellBasell sells products into more than 100 countries and is the world"s largest producer of polymer compounds and the largest licensor of polyolefin technologies. In 2020, LyondellBasell was named to Fortune Magazine"s list of the "World"s Most Admired Companies" for the third consecutive year.
MRC

MOSCOW (MRC) -- Rosneft is selling its three southern oil assets and could complete deals for all three by the end of May, sources told Reuters, as Russia's top oil company shifts focus to the giant northern Vostok Oil project.

Vostok Oil, in which global commodities trader Trafigura has a 10% stake, is one of Russia's biggest oil projects, comparable in size with the exploration of West Siberia in the 1970s or the US Bakken oil province over the past decade.

Rosneft was selling its southern Stavropolneftegaz, Ingushneft and Dagneft with combined oil output of about 1 million tonnes per year, a fraction of the 205 million tonnes it pumped in 2020 (4.1 million barrels per day), four industry sources familiar with talks said.

Cengeo, a private Russian company which focuses on mature oil fields, has already bought a 51% stake in Ingushneft and was expected to buy Stavropolneftegaz and Dagneft by the end of May, two sources said.

Rosneft and Cengeo did not respond to requests for comment from Reuters.

Rosneft has previously estimated that Vostok Oil, which will start production later this decade, would require more than 10 trillion roubles (USD135 billion) in investments.

After a call with Rosneft, several analysts had said last year Rosneft planned to sell some 'brownfields', or mature assets, in southern Russia, along with underperforming brownfields elsewhere, to raise capital to develop Vostok Oil.

Crude oil from Stavropolneftegaz, Ingushneft and Dagneft is exported via Caspian Pipeline Consortium (CPC) system, in which Rosneft holds a minority stake. CPC pipeline ships Kazakh and Russian oil to the Black Sea.

After the sale, Rosneft is expected to keep exports of gas condensate via CPC at least until the end of 2021, sources said.

A joint venture between Rosneft and Royal Dutch Shell owns a 7.5% stake in CPC and there are no plans to sell it for now, sources added. CPC declined to comment.

As MRC wrote previously, in February 2021, Rosneft Oil Company and BP signed a Strategic Collaboration Agreement focused on supporting carbon management and sustainability activities of both companies. The agreement builds on years of partnership between the two companies and formalises key elements of their collaboration on sustainability and work to identify carbon reduction activities and low carbon opportunities.

We remind that in late January 2020, Russian oil producer Rosneft said that its German subsidiary Rosneft Deutschland GmbH had completed the deal to acquire a 3.57% stake in Germany’s Bayernoil Raffineriegesellschaft mbH from BP.

We also remind that a fire at Ufaorgsintez (a subsidiary of ANK Bashneft, part of PJSC "NK Rosneft") did not lead to a shutdown of low density polyethylene (LDPE) and polypropylene (PP) production capacities. On 25 January, two containers with a methane-hydrogen fraction caught fire at the Ufa plant, and the blaze was extinguished in the morning of 26 January. The plant's customers said the fire was not critical for polymer production. PP production has been operating normally, whereas the LDPE production has temporarily reduced its capacity utilisation, thus, production of 158 grade polyethylene (PE) was suspended.

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).

Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.
MRC

MOSCOW (MRC) -- US crude oil stockpiles jumped by nearly 14 million barrels last week while fuel inventories plunged, as production and refining output slowly came back online in the wake of the Texas winter storms, reported Reuters with reference to the Energy Information Administration's statement.

Crude inventories rose by 13.8 million barrels in the week to March 5 to 498.4 million barrels, compared with analysts’ expectations in a Reuters poll for an 816,000-barrel rise. Crude stocks dropped sharply in February after several days of freezing temperatures forced production to shut.

Refining activity rebounded as well, but with overall utilization rates lower than usual for this time of year, stocks of gasoline, heating oil and diesel continued to decline.

“Basically we’re still seeing the big impact from the storm,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “Crude production numbers are showing that number bounced up, so this could be a little bit of a headwind for prices because the production number is coming up faster than people thought.”

Oil prices rose modestly on the news. US crude gained 35 cents to USD64.38 a barrel while Brent was up 34 cents to $67.86 a barrel as of 10:42 a.m.

Refining processing jumped, with crude runs rose by 2.4 million barrels per day. Overall utilization rates rose by 13 percentage points, in the week, but that only brought overall capacity use to 69%, far below seasonal averages for this time of year.

Crude production rose to 10.9 million bpd, though the EIA weekly figures are based on models and less accurate than monthly figures.

“We are basically back to where we were on domestic production, which came back faster than refinery utilization,” said Robert Yawger, director of energy futures at Mizuho.

US gasoline stocks fell by 11.9 million barrels in the week to 231.6 million barrels, the EIA said, compared with expectations for a 3.5 million-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 5.5 million barrels versus expectations for a 3.5 million-barrel drop, the EIA data showed.

Net US crude imports fell last week by 919,000 bpd, EIA said.

As MRC informed before, the largest US refinery, Motiva Enterprises’ 607,000 barrel-per-day Port Arthur, Texas, plant, returned to normal operations. The refinery was shut on Feb. 15 when freezing temperatures, rarely seen on the US Gulf Coast, knocked out steam supply. Motiva began restarting the refinery on Feb. 24.

Motiva Chemicals has also resumed operations at its mixed-feed cracker in Port Arthur, USA. The process of restart of this cracker with the capacity of 635,000 mt/year of ethylene and 340,000 mt/year of propylene began on 27 February, 2021, and finished late last week. The cracker wa shut along with the refinery at the same site on 14 February, 2021, because of the deep freeze.

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.
MRC

MOSCOW (MRC) -- DuPont on 8 March announced the acquisition of electronic chemicals maker Laird Performance Materials from private equity firm Advent International (New York, New York) for USD2.3 billion, said Chemweeek.

The purchase price represents an EBITDA multiple of about 15 times (x), excluding projected synergies, and will be funded with existing cash balances. Laird is a maker of electromagnet shielding and thermal management products, aimed at managing heat and protecting electronic devices from electromagnetic interference. The company is active in the 5G wireless, automotive and consumer electronics markets, among others. It generated about $465 million in revenue during 2020, and has about 4,300 employees.

The business will become a part of DuPont’s electronics and industrial (E&I) division. “Laird Performance Materials is a strategic and complementary addition to the electronics & industrial (E&I) business, and our applied material science expertise together with Laird Performance Materials’ industry-leading application engineering capabilities further strengthens DuPont as an essential partner for major electronics OEMs and manufacturers,” says DuPont chairman and CEO Ed Breen.

The deal “brings together DuPont’s technology portfolio in films, laminates, and plating chemistry with Laird Performance Materials’ electromagnetic shielding and thermal management solutions," DuPont says. DuPont expects about USD60 million/year in cost synergies to result from the transaction, mostly within 18 months of the deal’s close, which is expected in the third quarter of 2021. DuPont “remains committed to a balanced capital allocation policy that delivers strong returns to shareholders and includes organic growth, targeted M&A, and shareholder remuneration,” Breen says.

J.P. Morgan is DuPont’s financial advisor on the deal, and Skadden, Arps, Slate, Meagher & Flom is its legal counsel. Avent International’s financial advisors are Morgan Stanley and Rothschild & Co., and its legal counsel is Weil, Gotshal & Manges.

As per MRC, Gazpromneft Omsk Oil Refinery (Omsk) in Siberia, Russia significantly lowered its air emissions using BELCO wet scrubbing technology licensed by DuPont Clean Technologies (DuPont). Wiith an installed capacity of 22.23 MM tons of oil per year, the Omsk Oil Refinery is one of Russia’s leading oil refineries. The BELCO wet scrubbing technology was installed at Omsk during a fluidized catalytic cracking unit (FCCU) revamp and efficiently removes process impurities from the flue gas emitted by the FCCU thus reducing air emissions well below detection limits.

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.
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