US heavy oil prices go up on disruption of supplies from Mexico after fire that cut Pemex oil output by 25%

MOSCOW (MRC) -- Prices of heavy sour crude oil grades have been rising in the US Gulf Coast, traders said, as the market braces for a disruption of supplies from Mexico in the wake of a fire that has cut state-run Pemex's oil output by about 25% since Sunday, reported Reuters.

At least five workers were killed and six injured in the blaze, which broke out on an offshore platform in the southern Gulf of Mexico operated by Petroleos Mexicanos, halting production of more than 400,000 barrels per day (bpd), the company said.

It could take weeks for output and exports to return to normal, people familiar with the matter said, even as work is underway to restore power to the facility by Wednesday, and later connect 125 idled wells at the Ku-Maloob-Zaap (KMZ) cluster, Mexico's largest with a 750,000-bpd average output.

Pemex did not reply to a request for comment.

On Monday, Chief Executive Octavio Romero Oropeza said Mexico's monthly production and exports could fall, but the overall impact of the accident has not yet been estimated.

Prices of sour crudes at the US Gulf Coast, the largest recipient of Mexican oil, have begun rising as refiners begin to seek replacement barrels, traders said.

Chevron Corp, Phillips 66 and Valero Energy are scheduled to receive Mexican crude cargoes in coming days, according to people familiar with the trade. Valero aims to load a cargo on Tuesday, sourcing the barrels from onshore Pemex storage tanks at the Pajaritos terminal, they said. Pemex's Deer Park, Texas, refinery has not been affected, a spokesperson said.

Chevron, Phillips 66 and Valero did not respond to requests for comment.

Refining and trading firms are preparing for cargo delivery delays and the possibility of force majeure by Pemex, traders said.

We remind that, as MRC informed previously, an intense blaze at Mexican national oil company Pemex's largest refinery was quickly put out, but it remained unclear what sparked the fire. Local and social media had published images of bright orange flames burning near the facility's distillation towers from early on Saturday, 7 August, 2021. The Salina Cruz refinery, on the coast of southern Oaxaca state, can process up to 330,000 barrels of crude oil per day and is a key Pemex trading and logistical hub along Mexico's Pacific coast.

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 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).
MRC

MOSCOW (MRC) -- Additives manufacturer Lubrizol Corp. has named Chris Brown, currently the CEO at Berkshire Hathaway Energy Infrastructure, as its new president and CEO, according to Canadian Plastics.

Brown succeeds Eric Schnur, who will remain in an advisory role. Schnur joined Lubrizol in 1987, and held a variety of roles including president of the company’s Advanced Materials business segment, and president and chief operating officer. He became CEO in January 2017.

Lubrizol, headquartered in Wickliffe, Ohio, was acquired by Berkshire Hathaway in 2011.

Brown joined Berkshire Hathaway in October 2020. Prior to that, he served for about eight years at Vestas as president for sales and service operations in the US and Canada, growing the business into a major supplier of wind turbines in North America. His background also includes two years as chief operating officer of the city of Detroit, plus time as a senior executive in the offshore wind industry, a large US utility, and an international utility.

As MRC reported before, this summer, Lubrizol announced the next phase of its staged, multi-million dollar investment in thermoplastic polyurethane (TPU) capacity and capabilities to serve the rapidly growing global Paint Protection Films (PPF) market. This comes on top of investments of over USD20 million over the last three years in capacity, application and testing capabilities, and market insights.

We remind that more than 5,250 tons of chemicals, oil and fuel additives burned in a massive fire at US specialty chemical firm Lubrizol in Rouen, France, in late September, 2019. Lubrizol managed to resume operations at its plant at Rouen in northwest France after the fire only in late December, 2019.

The Lubrizol Corporation, a Berkshire Hathaway company, is an innovative specialty chemical company that apart from its production develops and supplies technologies to customers in the global transportation, industrial and consumer markets. Lubrizol is providing innovative solutions for its customers high-performance application needs and remains committed to ongoing investment in its CPVC capabilities that support future growth. With headquarters in Wickliffe, Ohio, Lubrizol owns and operates manufacturing facilities in 17 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 8,000 employees worldwide.
MRC

MOSCOW (MRC) -- Following the sale of the Bahia refinery to the Arab fund Mubadala, Petrobras has announced the sale of its second facility, according to NewsBeezer.

The state-owned company has signed a contract with Ream Participacoes, which belongs to the distributor Atem, for the sale of the Isaac Sabba (Reman) refinery and the associated logistics facilities in the state of Amazonas.

The sale value is USD189.5 million. Of this, USD28.4 million will be paid upon signature of the contract and the remaining USD161.1 million upon closing of the transaction. Atem is a distributor in the north of the country.

Atem has five sales bases and 300 franchise service stations. The company operates in the states of Amazonas, Acre, Roraima, Rondonia, Para, Mato Grosso, Mato Grosso do Sul, Sao Paulo and Parana.

According to the state-owned company, the company is subject to the fulfillment of conditions precedent, such as approval by the Board of Directors for Economic Defense (Cade). A total of eight refineries belonging to the state-owned company are currently in the sales process.

The Manaus refinery was inaugurated in 1957 in the presence of the then President Juscelino Kubitschek. The plant has a processing capacity of 46,000 barrels per day. The refinery serves the states of Para, Amapa, Rondonia, Acre, Amazonas and Roraima.

As MRC wrote previously, earlier this month, Petrobras hired JPMorgan Chase & Co as an advisor to sell its stake in the petrochemical company Braskem SA.

We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

MOSCOW (MRC) - Sayanskkhimplast, the largest Russian manufacturer of polyvinyl chloride, commissioned Chemieanlagenbau Chemnitz (CAC, Germany) to build a new chlorine drying department, as well as to modernize the existing sulfuric acid concentration unit at the first chlorine and caustic production plant in Russia using membrane electrolysis in Sayansk, the German company said in a statement.

Previously, membrane electrolysis was designed by SAS and launched in 2006, and in 2013 its annual capacity of the electrolysis hall with electrolyzers of the first chlorine and caustic production unit in Russia by the membrane electrolysis method was increased to 180 thousand tons of chlorine gas.

Despite the pandemic that strongly affected supply chains, this project, after a year and a half of design and implementation, was nevertheless completed with successful warranty tests before the end of 2020.

"The Sayanskkhimplast enterprise has been our long-term customer since the establishment of the independent SAS company in 2004. I am very proud that, despite various political circumstances and despite the pandemic, we always manage to maintain trusting cooperation and we were able to contribute to strengthening our leading market positions Sayanskkhimplasta", - said Joerg Engelmann, CEO of SAS.

For this order, CAC developed basic and detailed engineering, supplied equipment, supervised installation, and assisted with commissioning. It is noted that in order to maintain and build up these positions in recent years, Sayanskkhimplast has been constantly working to expand and modernize existing production facilities.

Earlier it was reported that Sayanskkhimplast resumed production of polyvinyl chloride (PVC) after stopping for scheduled preventive maintenance. PVC production was resumed on 5 August after a scheduled preventive maintenance. The idle capacity was long enough and started on 8 July. The annual production capacity is 350,000 tonnes.

According to the MRC ScanPlast, Sayanskkhimplast last month reduced capacity utilization and produced 23,400 tonnes of suspension PVC against 26,500 tonnes in May. In the first six months of this year, the Sayan enterprise managed to produce 156,900 tonnes of PVC against 164,300 tonnes a year earlier.

JSC Sayanskkhimplast (Irkutsk Region), founded in 1998, is a complex of large-scale organochlorine production facilities linked into a single production cycle. The enterprises of Sayanskkhimplast OJSC produce PVC, caustic soda and whiteness. After the commissioning of PVC production RusVinyl (Nizhny Novgorod region), Sayanskkhimplast became the second largest PVC production in Russia.
MRC

MOSCOW (MRC) -- BASF has signed a two-year contract to purchase electricity produced entirely from renewable energy sources – mainly wind – to power its “Mobile Emissions Catalysts” plant in Sroda Slaska, west of Warsaw, Poland, said the company.

The financial terms of the contract were not disclosed. “We set ambitious environmental objectives in BASF to achieve climate neutrality by 2050,” said Katarzyna Byczkowska, managing director of BASF Polska.

“However, to make it a reality, global goals must also translate into local strategies. By signing this new contract, we will now cover 100 per cent of our electrical demand in Sroda Slaska from renewable sources."

The purchased electricity, mainly produced from wind by PGE Obrot, is expected to power BASF’s Mobile Emissions Catalysts plant in Sroda Slaska in south-western Poland.

The BASF Mobile Emissions Catalysts plant in Sroda Slaska provides modern solutions for exhaust gas treatment for light duty and heavy duty segments, the company said.

As per MRC, BASF, the world's petrochemical major, is strengthening its global catalyst development and helping customers to bring new products faster to the market. As part of this strategy, BASF is building a new pilot plant center at its Ludwigshafen site.

We also remind that n June, 2021, Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, and BASF announced the intention to expand their businesses with the production of styrene monomer (SM) based on circular feedstock. Trinseo has procured first supplies of SM based on circular feedstock from BASF for use in its Solution-Styrene Butadiene Rubber (S-SBR) and polystyrene (PS) products. Trinseo supplies S-SBR to major tyre manufacturers while its PS products are used in applications such as food packaging and appliances. The first few customers have already processed the material, said the company.

We remind that Russia's output of chemical products rose in June 2021 by 10.2% year on year. However, production of basic chemicals increased year on year by 8.2% in the first six months of 2021, according to Rosstat's data. June production of polymers in primary form was 937,000 tonnes versus 956,000 tonnes in May. Russia's overall output of polymers in primary form totalled 4,460,000 tonnes over the stated period, up by 12.8% year on year.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC