BP aims to stick with oil and gas to benefit from rising oil prices

MOSCOW (MRC) -- BP will continue producing hydrocarbons for decades to come and will benefit from rising oil prices even as it reduces output as part of its shift to low-carbon energy, Chief Executive Bernard Looney told Reuters.

The recent rally in crude prices, which climbed on Tuesday to a more than two-year high above USD75 a barrel, is likely to continue, Looney said in an interview at the Reuters Events: Global Energy Transition conference. "There's a very strong possibility that these prices will sustain over the coming years, and if they do, that's very good for our strategy."

Higher oil prices mean BP will be able to raise more cash from selling assets that will go towards building its renewables and low-carbon business, as well as returning money to shareholders via share buybacks, he said. The 50-year old Irishman brushed aside investor concerns that BP might miss out on the rally because of its plan to slash oil output by 40% and grow its renewables output 20 fold by 2030 as part of its energy transition.

"As people understand we're going to be in the hydrocarbons business for decades to come, that concern has gone away a little bit," Looney said. "We want to run the best hydrocarbons business possible. We don't want to run the biggest hydrocarbons business possible."

BP's shares hit their lowest since the mid-1990s late last year, a bigger drop than any of its rivals, amid falling oil prices and investor concerns over its strategy. They have recovered strongly so far this year but are still around 30% below their pre-COVID-19 crisis levels.

"What we offer investors is a stable, resilient dividend," Looney said. "We're going to grow value from this company over the next five years." "We're going to offer you a sustainable investment proposition that I believe will grow value," he added. Looney said BP's energy transition will continue to evolve over time but added that he feels "at a good place" at the moment, even as investor pressure mounts on oil companies to tackle greenhouse gas emissions.

"We have leaned into this as hard as we can," Looney said. "We will continue to evolve the strategy, we will continue to evolve our targets. They will undoubtedly get bolder over time."

As per MRC, BP said it expected to hit its USD35 bn net debt target during the first quarter of 2021 after faster-than-expected progress on its disposals programme and a "strong" quarter driven by recovering oil prices. The oil giant had said previously it expected to meet its debt forecast by the fourth quarter of 2021 at the earliest, down from a level of USD51.4 bn a year ago and USD38.9 bn at the end of 2020.

As MRC informed earlier, Rosneft together with BP will develop the hydrogen business. 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.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- Westlake Chemical Corporation has announced that it has entered into a definitive agreement with Boral Industries, a wholly owned subsidiary of Boral Limited, under which Westlake will acquire Boral’s North American building products businesses in roofing; siding, trim and shutters; decorative stone; and windows for USD2.15 billion in an all-cash transaction, according to Indian Chemical News.

The proposed transaction has been unanimously approved by the boards of directors of both companies and is expected to close in the second half of 2021, subject to the receipt of regulatory clearance as well as other customary closing conditions.

The combination of Westlake’s leading building products with Boral’s product lines creates a stronger business with significantly increased scale, greater product and geographical diversity, and enhanced growth prospects throughout the North American building products market. Westlake expects the proposed transaction to be accretive to its earnings in the first full year of combined operations and expects cost synergies of approximately USD35 million per year.

Boral’s North American building products businesses employ approximately 4,600 employees at 29 manufacturing sites in the United States and Mexico. Boral’s North American building products businesses generated revenues in excess of USD1 billion during the fiscal year ended June 30, 2020.

Westlake will purchase Boral’s building products businesses for USD2.15 billion in cash. The purchase price is subject to customary adjustments, including working capital adjustments.

As MRC reported earlier, Westlake Chemical, US petrochemical major, has lifted its force majeure (FM) on US polyvinyl chloride (PVC) and upstream vinyl chloride monomer (VCM), the company announced in a customer letter dated May 17. The letter said the company was "formally lifting the systemwide force majeure condition for PVC and VCM manufactured and shipped from its North American operations that was originally declared on Feb. 19" as a result of mid-February's deep freeze that "resulted in a shutdown/curtailment of our plant operations." The winter storm brought sustained subfreezing temperatures to the US Gulf Coast and much of the US, forcing widespread petrochemical shutdowns that included at least 57% of US PVC capacity.

According to MRC's ScanPlast report, Russia's overall PVC production reached 346,100 tonnes in the first four months of 2021, down 1% year on year. All producers decreased production volumes over the reported period, with the exception of the Bashkir Soda Company.

Westlake Chemical Corporation is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, chlor-alkali and derivative products, PVC suspension and specialty resins, PVC Compounds, and PVC building products including siding, pipe, fittings and specialty components, windows, fence, deck and film.
MRC

1. Limetree Bay refinery to shut indefinitely

MOSCOW (MRC) -- Limetree Bay Energy will shut its St. Croix refinery indefinitely due to financial problems, the company said, after a series of operational setbacks shuttered the facility, reported Reuters. The 210,000-barrel-per-day refinery had only restarted in February after being idle for nearly a decade, but was forced to shut in May after the facility sprayed nearby neighborhoods with a petroleum mist and residents complained of breathing problems. Last month, the US Environmental Protection Agency ordered the plant shut for at least 60 days after those incidents, which also contaminated the community's water supply. The EPA also ordered the plant to install and operate 18 sulfur dioxide and hydrogen sulfide monitors on St. Croix in order to restart.

MRC

MOSCOW (MRC) -- Crude oil futures were steady during mid-morning Asian trade June 22 in the absence of new developments, although bullish demand outlooks continue to support the market, reported S&P Global.

At 11:11 am Singapore time (0311 GMT), the August ICE Brent crude futures contract was up 23 cents/b (0.31%) from the previous settle at USD75.13/b, while the NYMEX July light sweet crude contract slipped 2 cents/b (0.03%) at USD73.64b.

The stability in prices this morning comes after both markers closed at landmark highs on June 21. The front month ICE Brent marker closed at USD74.90/b, the highest on record since Oct. 31, 2018, while the front month NYMEX light sweet crude marker closed at USD73.60/b, the highest since Oct. 9, 2018.

Market analysts attributed the elevated crude prices to a US-led recovery in global demand.

In the US, analysts surveyed by S&P Global said they expected a 0.5 percentage point increase in refinery utilization to 93.1% of total capacity to have pushed commercial crude stocks 6.3 million barrels lower in the week ended June 18. Such a draw would have left stocks 5.5% behind the five-year average of US Energy Information Administration data at 460.4 million barrels, they said.

The increase in refinery utilization is driven by strong downstream products demand.

Apple Mobility data showed US driving activity pushed to around 164% of the index's January 2020 baseline in the week ended June 18, up six percentage points from the week prior and a fresh record high for the dataset. Furthermore in an encouraging sign for distillate demand, Apple data also showed US transit readership averaging 95% of baseline last week, the highest since the first week of March 2020.

ANZ analysts also noted that demand for aviation travel in the US was also on an uptrend, providing further thrust to the crude complex.

Moving away from the US, rising vaccination rates and easing mobility restrictions in much of Europe also portend well for oil demand, which is expected to receive another boost as the pandemic situation in key Asian economies such as India and Japan abate.

We remind that as MRC informed 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 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- Dow Chemical plans to resume operations at its propane dehydrogenation (PDH) unit in Freeport, Texas by July, 2021, after the completion of a scheduled turnaroun, reported S&P Global.

This PDH unit with the capacity of 750,000 mt/year of propylene was taken off-stream for maintenance works on 18 May, 2021.

As MRC informed earlier, last year, Dow Chemical conducted a scheduled maintenance at its PDH unit in Freeport. Thus, the planned turnaround started in the week ended July 10 and lasted for 45 days.

And this year, the company shut this unit from 16 February to end-February-early March because of very low temperatures in the region.

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

According to MRC's ScanPlast report, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC