COVID-19 - News digest as of 20.05.2021

1. 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.

MRC

Crude oil futures rangebound in Asia after overnight fall on US-Iran talks, stronger dollar and bearish EIA data

MOSCOW (MRC) -- Crude oil futures were rangebound during mid-morning Asian trade May 20, following an overnight slide, on increasing prospects of the restoration of the Joint Comprehensive Plan of Action, the strengthening US dollar and bearish Energy Information Administration (EIA) data, reported S&P Global.

At 10:49 am Singapore time (0249 GMT), the ICE Brent July contract rose 5 cents/b (0.08%) from the May 19 settle at USD66.71/b, while the June NYMEX light sweet crude contract was up 6 cents/b (0.09%) at USD63.41/b.

According to media reports, the EU official leading the nuclear negotiations between the US and Iran, Enrique Mora, was optimistic that the JCPOA will soon be reinstated. He told reporters at the end of a fourth round of negotiations in Vienna: "I am quite sure that there will be a final agreement... I think we are on the right track and we will get an agreement."

With a fifth round of talks expected to begin early next week, the market grew anxious of the prospects of the restoration of the JCPOA, which could lead to Iran increasing oil production to pre-sanction levels of about 3.9 million b/d next year, analysts said. Margaret Yang, DailyFX Strategist, told S&P Global Platts May 20 that the progress towards the JCPOA negotiations was one of the main factors pressuring crude, with the risk-off sentiment in the broader financial markets and a rapidly strengthening US dollar also providing headwinds for prices.

The US Federal Open Market Commission's meeting minutes on May 19 showed that some Federal Reserve officials think it might be appropriate at some point "in the upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases." This slightly hawkish slant to the FOMC minutes sent Treasury yields higher, putting upward pressure on the US dollar.

The June contract for the ICE US dollar index was trading at 90.150 at 10:37 am, 0.46% higher than the previous settle.. A stronger US dollar makes dollar denominated assets such as oil more expensive for buyers holding foreign currency.

Adding to the bearishness in the market was the EIA data released on May 19, which showed US crude inventories rising 1.32 million barrels in the week ended May 14.

As MRC wrote earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world's third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.

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

GS Caltex to start up new HDPE plant in South Korea

MOSCOW (MRC) -- GS Caltex, a major South Korean petrochemical producer, is planning to start up its new high density polyethylene (HDPE) plant in Yeosu this June 2021, according to CommoPlast with reference to market sources.

This schedule is earlier than the initial plan of 2022.

The HDPE unit has an annual capacity of 500,000 tons/year that would concentrate on producing the film (TR-144, TRB-115), blow molding (5520BN or BM593), and injection (6060 or 6060UV) grades.

The company also operates the new mixed-feed cracker that produces 700,000 tons/year of ethylene and 180,000 tons/year polypropylene (PP) plant at the same complex.

The project is a 50-50 joint venture between GS Energy Corp. and Chevron Corp., costing 2 trillion won (USD1.84 billion) that started construction work in 2019.

According to MRC's ScanPlast report, Russia's overall HDPE production of totalled 505,800 tonnes in the first three months of 2021, up by 15% year on year. At the same time, only one Russian producer increased its output.
MRC

Chevron Lummus Global starts up renewable base oil unit at Houston facility

MOSCOW (MRC) -- Chevron Lummus Global (CLG) announced the successful startup of a 100% renewable base oil unit in Novvi's Deer Park, Houston facility that employs CLG's patented state-of-the-art ISODEWAXING catalyst and technology, according to Hydrocarbonprocessing.

Chevron, one of the joint venture parents of CLG, is an equity partner in Novvi LLC (Novvi), a California-based company that engages in the development, production, marketing, and distribution of high-performance base oils from renewable sources.

Chevron's Richmond Technology Center is home to CLG's revolutionary ISODEWAXING technology. A research and development facility that has led the development of various technological advancements to bring cleaner fuels, premium base oils, and now renewable base oils to the market to continue to enable cleaner, more sustainable, and affordable energy across the globe in both fuels and lubricants.

As MRC reported earlier, in November 2020, Chevron Lummus Global (CLG) was awarded a contract by China's largest oil and gas producer and distributor, PetroChina Company Limited, for the supply of its proprietary ISOMIX-e reactor internals for two of their RDS units in Liaoning Province.

We remind that in September 2020, Chevron Phillips Chemical, part of Chevron Corporation, deferred a final investment decision on a USD8 billion joint venture petrochemical complex project along the US Gulf Coast that was expected in 2021. The project, in partnership with Qatar Petroleum (QP), was announced in July 2019. It is slated to include a 2 million mt/year cracker and two 1 million mt/year high density polyethylene (HDPE) plants. The FID delay will also push the original target startup date past 2024.

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 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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
MRC

Indonesia plans big changes to its energy infrastructure to stop LPG and fuel imports by 2030

MOSCOW (MRC) -- Indonesia will stop both liquefied petroleum gas (LPG) and fuel imports by 2030 and plans big changes to its energy infrastructure to meet that target, said Hydrocarbonprocessing.

President Joko Widodo has tasked the National Energy Council, a board made up of seven ministries and other stakeholders that plans energy policy, to devise a strategy to allow for a halt on LPG and fuel imports, said the council's secretary general, Djoko Siswanto.

Once a former OPEC member, maturing fields and investment lags has turned Indonesia to a net importer of oil and gas. The president has for years announced steps to cut imports, in a bid to contain the country's current account deficit.

The strategy includes building or upgrading refineries, converting refineries to biodiesel refineries, increasing domestic LPG production and building a gas pipeline with a target of 10 million gas connections, Djoko told CNBC Indonesia in a live telecast. "The government will encourage gas infrastructure development for public transportation," Djoko said, adding that the government was also optimizing biofuel production and promoting electric vehicles.

Indonesia is aiming to increase domestic crude oil production to 1 million barrels per day by 2030 by developing new oil fields, using enhanced oil recovery methods in existing oil fields and boosting production in marginal fields, Djoko added.

Indonesia, the world's top exporter of thermal coal, has long vowed to cut LPG imports while maximizing use of domestic coal assets, and creating jobs in a downstream coal industry, Djoko said, reiterating plans to convert coal to dimethyl ether as a substitute to LPG.

As MRC informed earlier, Enterprise Products Partners LP (Houston) announced Dec. 17 that the first vessel powered by liquefied petroleum gas (LPG) has been loaded at the Enterprise Hydrocarbon Terminal on the Houston Ship Channelm. The Very Large Gas Carrier (VLGC) BW Gemini, which had been retrofitted for dual fuel capabilities, was loaded with a record 590,000 bbl of LPG, including cargo and fuel.

We remind that in July, 2020, Enterprise Products conducted maintenance at its propane dehydrogenation (PDH) unit in Mont Belvieu, Texas. This PDH unit has the capacity of 750,000 mt/y of propylene.

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

According to MRC's ScanPlast report, Russia's 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