COVID-19 - News digest as of 01.09.2021

1. Phillips 66 refinery sale offers test of investors views on pace of transition to electric vehicles

MOSCOW (MRC) -- US refiner Phillips 66's decision to market a Louisiana oil processing plant offers a key test of investors' views on the pace of the transition to electric vehicles, reported Reuters with reference to refinery industry experts. Phillips 66, the fourth largest US refiner, on Tuesday said it has put its 255,600 barrel per day (bpd) Alliance plant on the market, citing "the evolving energy landscape." The 50-year-old plant makes gasoline, diesel and jet fuel for US and Latin American markets. Reuters on Tuesday reported Phillips 66 is in talks with a potential buyer. A spokesman declined to comment, calling any talks confidential. Analysts said potential buyers may be willing to make a contrarian bet on motor fuel demand, pointing to private equity firms and rival Gulf Coast refiners Motiva Enterprises, Valero Energy Corp and PBF Energy.


MRC

MOSCOW (MRC) -- Crude oil futures were higher in mid-morning trade in Asia Sept. 1 amid the tightening of US inventories and bullish demand conditions in China, reported S&P Global.

At 11:15 am Singapore time (0315 GMT), the ICE November Brent futures contract was up 57 cents/b (0.79%) from the previous close at SD72.20/b, while the NYMEX October light sweet crude contract was 52 cents/b (0.75%) higher at USD69.02/b.

"The market is starting to digest the fact that the oil production outage is probably going to take some time in resuming, which will cause a tightening of crude inventory along with the rising demand, resulting in bullishness in the market," said Vandana Hari, CEO of Vanda Insights on Sept. 1, adding that China's appetite for crude oil seems to be recovering after successfully curbing the resurgence of delta variant.

Edward Moya, senior market analyst from OANDA noted there was optimism for crude demand across Europe as 70% of the adults in the EU are fully vaccinated.

In the offshore Gulf of Mexico, or GOM, roughly 1.7 million b/d of crude production remained offline Aug. 31, which is 94% of the total GOM output, the US Bureau of Safety and Environmental Enforcement noted. That was down slightly from 1.72 million b/d a day prior.

Meanwhile, the OPEC+ alliance is scheduled to meet Sept. 1 to decide whether to press on with plans to hike crude production by 400,000 b/d every month, as it is looking to eventually remove its output cuts implemented at the start of the pandemic.

As MRC informed previously, crude oil stockpiles fell modestly in early August, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- Polypropylene (PP) imports into Russia rose in the first seven month of 2021 by 19% year on year to 145,400 tonnes. Propylene copolymers accounted for the main increase in imports, according to MRC's DataScope report.

Last month, Russian companies virtually maintained June quantities of PP purchases in foreign markets, imports were 23,200 tonnes. Thus, overall PP imports into Russia reached 145,400 tonnes in January-July 2021, compared to 122,000 tonnes a year earlier. Procurement of propylene copolymers in foreign markets increased, whereas imports of propylene homopolymers (homopolymer PP) decreased.

Overall, the structure of PP imports by grades looked the following way over the stated period.

July imports of homopolymer PP were slightly over 9,600 tonnes versus 7,500 tonnes a month earlier, shipments of injection moulding homopolymer PP from Azerbaijan grew significantly. Thus, overall imports of homopolymer PP totalled 54,500 tonnes in the first eleven months of 2021, compared to 51,100 tonnes a year earlier.

Last month's imports of block-copolymers of propylene (PP block copolymers) were 6,600 tonnes versus 7,600 tonnes in June, demand for European injection moulding Psubsideed from Russian companies. Imports of PP block copolymers into Russia reached 42,800 tonnes in January-July 2021, compared to 33,300 tonnes a year earlier.

July imports of statistical copolymers of propylene (PP random copolymer) dropped to 3,400 tonnes from 5,000 tonnes a month earlier, with pipes producers accounting for the main reduction in shipments due to an increase in supply of domestic material. Overall imports of this grade of propylene copolymers were 24,700 tonnes in January-July 2021, compared to 19,400 tonnes a year earlier.

Imports of other propylene polymers totalled 23,400 tonnes over the stated period versus 18,200 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Widespread flooding from Hurricane Ida and power outages slowed efforts on Tuesday by energy firms to assess damages at oil production facilities, ports and refineries, reported Reuters.

Nearly all of Louisiana lost electrical power on Monday after one of the most powerful hurricanes to hit the region downed transmission lines and flooded communities. Coastal areas were swamped by a storm surge so great it reversed the flow of the Mississippi River.

Analysts said it could take two to three weeks to restart producing platforms and fully resume output at Louisiana refineries. Restoring power, critical to refineries, also could take weeks, utilities officials said.

"This restoration is not going to be a likely quick turnaround," said Rod West, head of utility operations at Entergy Corp. "This was a significant catastrophic wind event, whereas Katrina was a water event by comparison."

Disruptions at oil infrastructure are testing the country's fuel distribution systems. Operators shut offshore oil and gas pipelines that feed processing plants, and the largest line that connects with the fuel-thirsty East Coast was shut for days.

Phillips 66 has not been able to begin damage assessments at its 255,600-barrel-per-day refinery on the Mississippi River in Belle Chasse, Louisiana, a spokesman said. The plant, which was put up for sale last week, was swamped from a failed levee in Alliance.

Floods have also been reported at other facilities in Louisiana. Nine refineries have reduced production or shut-in operations, including Exxon's 520,000-bpd Baton Rouge, taking offline 2.3 million bpd of capacity or 13% of the country's total, the US Department of Energy estimated.

Offshore, 95% of the Gulf's oil production and 94% of its gas output remained shut on Monday, the Bureau of Safety and Environmental Enforcement said. A total of 288 production platforms and 11 rigs remained evacuated.

Trying to avoid over-costs of getting imported gasoline or domestic fuel shipped in tankers, some consumers are relying on the country's key pipelines to fully restart soon, especially since many ports have not reopened, traders said.

Pipeline operator Enbridge temporarily suspended some contacts under force majeure, while Energy Transfer informed shippers that its Stingray Pipeline, which brings gas from the US Gulf to Louisiana, would not accept deliveries. Nearly a dozen ports from New Orleans to Pascagoula, Mississippi, remained closed on Monday, including Louisiana Offshore Oil Port (LOOP), the largest US privately-owned crude export and import terminal.

As MRC informed earlier, Colonial Pipeline, the nation's largest fuel line, has restarted its main gasoline and distillate lines after it shut the lines as a safety precaution ahead of Hurricane Ida.

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.
MRC

MOSCOW (MRC) - PJSC "Nizhnekamskneftekhim" (NKNKh, part of TAIF) received 27.6 billion rubles in the first half of the year. net profit under the international financial system (IFRS) against 4.6 billion rubles. a year earlier, according to Kommersant.

This is six times more than the same period last year. Revenue in the reporting period increased 1.7 times - up to Rb121.5 bn. Income from operating activities amounted to Rb30.3 bn against Rb10 a year earlier.

Profit before tax rose to Rb34.6 bn against Rb5.8 bn in the same period last year.

Earlier it was noted that Nizhnekamskneftekhim continues construction of the Ethylene-600 olefin complex in accordance with the schedule, despite the claims of Rostekhnadzor due to the adjustment of the project documentation, the general director of the company Ayrat Safin said in April this year at the international forum on energy efficiency and ecology in Kazan.

The construction of the olefin complex is carried out within the framework of a memorandum of strategic cooperation concluded in June 2017 between TAIF Group, which includes Nizhnekamskneftekhim, and the German company Linde AG. The basic agreement on the design, supply of equipment and the provision of services for the commissioning of the first stage of the future plant was signed between Nizhnekamskneftekhim and the Linde Engineering division. In February 2019, a contract for construction and installation work was signed with the Turkish company Gemont.

As MRC reported, NKNK's revenue in 2020 amounted to Rb153.989 bns, which is Rb24.981 bn less than in 2019. The spread of the new coronavirus infection had a significant impact on the financial performance of Nizhnekamskneftekhim. Quarantines have been introduced in many countries of the world, restrictions have negatively affected economic growth and demand and, as a result, economic results.

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.

PJSC "Nizhnekamskneftekhim" (NKNKH) is one of the largest Russian producers of petrochemical products. The production complex of the company includes ten factories of the main production and ten departments (railway transport, main ethylene pipelines, etc.). NKNKh produces over 120 types of chemical products, including synthetic rubber, polyethylene, polypropylene, polystyrene, surfactants. Nizhnekamskneftekhim is part of TAIF Group.
MRC