Idemitsu halves its profit outlook for 3 years to March 2023 as COVID-19 pandemic hits fuel demand

MOSCOW (MRC) -- Japanese oil refiner Idemitsu Kosan Co more than halved its profit forecast for the three years to March 2023 as the COVID-19 pandemic hit fuel demand, forcing it to make a tougher assumption for longer-term demand, reported Reuters.

Idemitsu revised its 3-year business plan unveiled in November 2019, now predicting an accumulated net profit of 220 billion yen (USD2 billion) for the three years ending March 2023, instead of its earlier target of 480 billion yen.

“It has only been a year and a half, but the environment has undergone tremendous changes with the unprecedented crisis of coronavirus pandemic, green recovery and carbon-neutral declaration by the Japanese government,” Idemitsu President Shunichi Kito told a news conference.

The company now estimates local demand for petroleum products will fall 30% by 2030 from 2019 levels, and 80% by 2050, instead of its 2019 assumption of 20% and 70% respectively.

“But we want to work positively by taking this as a turning point and an opportunity,” Kito said, citing a plan to turn some of its refineries into platforms for advanced materials such as lithium solid electrolytes and for cleaner fuels such as renewable energy, hydrogen and ammonia.

The company also aims to achieve carbon neutrality by 2050 through energy and material transition, including a plan to slash its thermal coal output by making no investment in new mines. Idemitsu, however, will continue the development of natural gas assets in Vietnam and other Asian countries to meet growing demand for the fuel, Kito said.

For the year to next March, Idemitsu forecast a 143% increase in net profit to 85 billion yen, with an estimated refinery run rate of 83%, up from 78% a year earlier.

Its domestic sales and exports of fuels are expected to rise 2.6% and 6.6% respectively.

As MRC informed earlier, Japan's Idemitsu Kosan took off-stream its naphtha cracker in Japan for a turnaround on September 7, 2020. The cracker remained under maintenance by end-October, 2020. Located at Tokuyama, Japan, the cracker has an ethylene production capacity of 690,000 mt/year and propylene production capacity of 110,000 mt/year. Idemitsu Kosan also operates another cracker in Chiba, Japan, with an ethylene production capacity of 410,000 mt/year.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.

Idemitsu Kosan is a Japanese petroleum company. It owns and operates oil platforms, refineries and produces and sells petroleum, oils and petrochemical products. The company runs two petrochemical plants in Chiba and Tokuyama. The two naphtha crackers can produce up to 997,000 tonnes of ethylene per year.
MRC

Colonial brings back online customer communications system after experiencing problems

MOSCOW (MRC) -- Colonial Pipeline's communications system for shippers came back online late May 18 after experiencing problems for most of the day, again disrupting operations even though the petroleum products artery is up and running again after being halted for nearly a week following a cyberattack, reported S&P Global.

Refined products shippers were unable to make nomination changes on Colonial for most of the day, despite the line resuming normal operations May 13, sources said.

Colonial halted all pipeline operations May 7 because of a ransomware attack, restricting the primary artery for gasoline and refined products from delivering more than 100 million gal/d of fuels. Colonial stretches more than 5,500 miles from the Houston refining hub to New York Harbor, supplying about 45% of all the gasoline and diesel fuel consumed on the East Coast.

A combination of regional shortages and panic-buying caused 50% or more of gas stations in North Carolina, South Carolina, Georgia, Virginia, Florida, and Washington to run out of fuel, and some regional shortages were continuing May 18.

The Colonial attack comes just as US fuel demand was quickly growing since bottoming out in January from the ongoing coronavirus pandemic, and just ahead of the busy summer driving season.

The cyberattack exposed the particular vulnerability not only of the US' energy infrastructure, but particularly of the pipeline sector that has only voluntary federal guidelines and multiple potential weak points in older technology in more rural field offices.

The Colonial restart came after the federal government had taken several steps to expedite fuel transportation, including waiving certain fuel standards, eliminating restrictions on truckers' driving hours, and preparing to issue waivers on Jones Act-qualified tankers to move waterborne products.

As MRC informed previously, Valero Energy chartered an oil products' tanker for storage in the US Gulf Coast on Friday amid a cyber attack that shut the Colonial pipeline, the biggest US fuel pipeline.

Besides, last week, Marathon Petroleum, the largest US refiner, said it could meet its supply commitments but was working to find alternative ways to ship motor fuels to the eastern United States if the Colonial Pipeline shutdown is extended.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.
MRC

BP and Eni to form energy company in Angola

MOSCOW (MRC) -- BP and Eni have entered into talks to merge their oil and gas operations in Angola to form one of Africa's largest energy companies, said Reuters.

The two companies have signed a non-binding memorandum of understanding and are in discussions on a joint venture that will include their LNG facilities, they said in a statement. A business plan will be agreed to allow the companies "to capture future opportunities in exploration, development and possibly portfolio growth, both in Angola and regionally."

Spinning off oil and gas assets is seen as a way for BP and Eni to squeeze more out of their oil and gas assets as the two companies prepare to shift towards renewable energy. The two companies have successful joint ventures in Norway, which serve as a model for the Angolan model.

"We see the combined Angola asset JV position providing for improved capital allocation, cost synergies, business efficiencies and an enhanced focus on value over volume," Santander analyst Jason Kenney said in a note. Reuters reported last month that Eni was considering spinning off oil and gas operations in West Africa and the Middle East into new joint ventures to help reduce debt and fund its shift to low-carbon energy. The report said Eni had held discussions with BP.

Oil and gas production from both Angolan portfolios would reach around 200,000 barrels of oil equivalent per day, BP and Eni said in a statement. The 50-50 joint venture will also be self-funded, the companies said.

"The aim is to create a long-term future for operations in the country that will have a material portfolio of production, reserves and exploration prospects - one of the largest in sub-Saharan Africa," BP's head of production and operations Gordon Birrell said in an internal statement seen by Reuters. The talks are expected to last several months, according to a company source.

As per MRC, Rosneft, the largest state oil company in the Russian Federation, was the first Russian oil company to decide to develop its hydrogen business. British BP will act as a partner. Together they will study the prospects for new projects using renewable energy sources (RES), as well as the use of technologies for capturing, utilizing and storing CO2. Earlier in Russia, Gazprom and Novatek spoke about their intention to create a hydrogen business and new technologies for the disposal of harmful emissions.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.

BP plc (until May 2001 - British Petroleum) is a British oil and gas company, the second largest publicly traded oil and gas company in the world.
MRC

Shin-Etsu Chemical receives lower FY profit, raises dividend

MOSCOW (MRC) -- Shin-Etsu Chemical Co. Ltd. has reported that its fiscal year ended March 31 net income attributable to owners of parent declined 6.5 to 293.73 billion yen from last year's 314.03 billion yen, said the company.

Earnings per share were 706.26 yen compared to 755.01 yen last year.

Operating income declined 3.4 percent from last year to 392.21 billion yen.

Net sales were 1.50 trillion yen, down 3 percent from 1.54 trillion yen a year ago.

Further, the company announced that the year-end dividend for the fiscal year is planned to be 140 yen per share, compared to previous forecast of 130 yen per share. The annual dividend will be 250 yen per share, 30 yen up from the last fiscal year.

As MRC reported earlier, Shin-Etsu has declared force majeure (FM) on shipments of all polyvinyl chloride (PVC) grades from its plant in Pernis, the Netherlands. Thus, FM was declared on PVC supplies from this plant with the capacity of 450,000 mtyear on 6 May, 2021, following a critical and unforeseen leakage at the upstream vinyl chloride monomer (VCM) production plant in the Netherlands.

We remind that the completion of Shintech's USD1.49 billion expansions across the PVC chain at its Louisiana complex has been pushed back to the first quarter of 2021 from late 2020 because of a slowdown in the work to ensure safety protocols on coronavirus pandemic concerns. Shintech, the North American division of one of the largest Japanese companies - Shin-Etsu Chemical Co. Ltd.
MRC

Two crude oil traders to leavet ExxonMobil team in Singapore next month

MOSCOW (MRC) -- Two senior crude oil traders will be leaving ExxonMobil Corp's trading team in Singapore next month, reported Reuters with reference to sources familiar with the matter.

Ruddin Dhilawala will join Norwegian energy major Equinor, while Edward Ang will go to Hengyi Petrochemical, which runs a refinery in Brunei, the sources said.

Exxon Mobil said it does not comment on personnel matters. Equinor and Hengyi did not respond to requests for comment.

Dhilawala and Ang declined to comment.

As MRC informed previously, Sinopec Engineering (Group) and ExxonMobil (Huizhou) Chemical (EMHCC) have just entered into a BEPC (basic design, engineering, procurement and construction) contract for the proposed Huizhou Chemical Complex Project (Phase I). The main units of the project include a 1.6 million tonnes/year ethylene flexible feed steam cracker, downstream polymer and derivative units and utilities. The main product units include two performance polyethylene (PE) lines and two differentiated performance polypropylene (PP) lines.

Ethylene and propylene are the main feedstocks for the production of PE and PP, respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers 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.
MRC