Asia Distillates-Jet margins drop but still near multi-month highs

Asia Distillates-Jet margins drop but still near multi-month highs

MOSCOW (MRC) -- Asia's jet fuel refining margins slipped to USD13.42 a barrel on Friday, but were just 8 cents shy of a near two-year high reached in the previous week, reported Reuters with reference to Refinitiv data in Eikon.

This came as oil prices hit a fresh three-year high on Friday, climbing above USD85 a barrel on forecasts of a supply deficit over the next few months as rocketing gas and coal prices stoke a switch to oil products.

Asian refining margins for jet fuel have climbed in October to their highest levels since January 2020 as air travel demand recovers in Asia, according to analysts and Refinitiv data.

Asia-Pacific nations, home to some of the world's strictest pandemic-related travel rules, are gradually easing border restrictions resulting in a surge in flight bookings and travel enquiries.

The recovery in aviation fuel demand coincides with the peak heating season for kerosene - which belongs to the same grade of refined oils - lifting the outlook for the middle distillate fuel which has been the biggest drag on global oil refiners' margins since 2020.

Jet refining margins have also surged in Europe to their highest since the first quarter of 2020 amid a boost to air travel, while excess supplies disappeared as refiners cut output of the fuel, the International Energy Agency said in its monthly report on Thursday.

Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell 2% to a three-week low of 1.99 MM tons in the week ended Oct. 14, according to Dutch consultancy Insights Global.

We remind that slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

We also remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85% to 90% from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

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 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC

Shareholders of Lukoil approved the dividends for the nine months

Shareholders of Lukoil approved the dividends for the nine months

MOSCOW (MRC) - Lukoil's board of directors took a decision to convene an extraordinary general meeting of the company's shareholders in the form of absentee voting on December 2, 2021, the company said in a statement.

The Board of Directors recommended that the Extraordinary General Shareholders Meeting resolve to pay dividends based on the results of the first nine months of 2021 in the amount of 340 rubles per ordinary share, and proposed that the Meeting set December 21, 2021 as the record date for the persons entitled to receive dividends.

The dividends are recommended to be paid in cash no later than January 11, 2022 to nominee shareholders and the trust managers qualified as professional market participants who are recorded in the PJSC "LUKOIL" shareholder register, and no later than February 1, 2022 to other persons recorded in the PJSC "Lukoil" shareholder register.

Lukoil pays dividends twice a year. According to the company's dividend policy, the amount of dividend payments is not tied to net profit, but to free cash flow. The total payout is at least 100% of the company's adjusted free cash flow.

Lukoil paid dividends in the amount of Rb259 per share in 2020, including interim payments for 9 months in the amount of Rb46 per share and total dividends in the amount of Rb213 per share.

According to the ICIS-MRC Price Report, Stavrolen, a subsidiary of Lukoil, has begun a sequential shutdown to repair its high-density polyethylene (HDPE) production facilities. The turnaround will be quite long and will take about 36 days. The annual production capacity is 300,000 tonnes.

Lukoil is the second largest oil company in Russia (the leader is Rosneft). It accounts for 2% of world oil production and 1% of world proven reserves, according to the company's website.
MRC

Gazprom Neft strengthens cooperation with Tatarstan in developing oil production technologies

Gazprom Neft strengthens cooperation with Tatarstan in developing oil production technologies

MOSCOW (MRC) -- Gazprom Neft and the Republic of Tatarstan have signed an agreement on developing oil and gas projects, and on cooperating in developing enhanced oil recovery (EOR) technologies, under a document signed by Alexander Dyukov, Chairman of the Management Board, Gazprom Neft, and Rustam Minnikhanov, President of the Republic of Tatarstan, said the company.

The parties have agreed to cooperate in developing high-tech oil equipment much in demand by the industry, as well as establishing technological test sites in the Volga Federal District and Western Siberia for joint R&D activities. The document also envisages increasing cooperation in geological subsoil investigations, hydrocarbon production and refining, developing the petroleum-products supply system, and a number of other areas.

Modern EOR techniques are a key tool in developing mature fields, and in developing hard-to-recover reserves. These technologies will facilitate the production of significant volumes of hydrocarbon reserves, viable production of which is not possible using existing solutions. The full-scale deployment of innovative EOR methodologies is hindered by their high cost and the need to develop Russian production of the necessary equipment and reagents.

Pilot projects implemented at Gazprom Neft have already confirmed the potential for a 20% increase in oil recovery using surfactant-polymer flooding technologies. Tatneft will be one of Gazprom Neft’s strategic partners in developing this area.

As per MRC, Lukoil and Gazprom Neft concluded an agreement on cooperation in implementation of oil recovery enhancement projects. The agreement provides for joint work on improving chemical methods of enhanced oil recovery. It will lay the foundation for best practices exchange and collaboration in lab research, as well as for studies of surface-active agents and production stimulation chemicals.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.

Gazprom Neft (headquartered in St. Petersburg, part of Gazprom, which owns 95.68% of the shares) is one of the largest Russian oil companies.
MRC

Oil prices jump to three-year high on back of supply shortage

Oil prices jump to three-year high on back of supply shortage

MOSCOW (MRC) -- Oil prices jumped to a three-year high above USD85 a barrel on Friday, on forecasts of a supply deficit over the next few months, spurred by rising demand due to the easing of travel restrictions, reported Reuters.

Brent crude futures were up 77 cents, or 0.9%, at USD84.77 a barrel at 11:48 a.m. EST (15:48 GMT). Front-month prices, which touched their highest since October 2018 at USD85.10, were headed for a weekly rise of 3%, which would be their sixth straight weekly gain.

US West Texas Intermediate (WTI) crude futures rose 87 cents, or 1.1%, to USD82.19 a barrel. The contract is heading for a 3.5% gain on the week, up for the eighth consecutive week.

Demand has picked up with the recovery from the COVID-19 pandemic, with a further boost from power generators who have been turning away from expensive gas and coal to fuel oil and diesel.

The White House said it will lift COVID-19 travel restrictions for fully vaccinated foreign nationals effective Nov. 8, which should boost jet fuel demand.

Meanwhile, a sharp drop in OECD and US oil stockpiles is expected to keep global supply tight.

The International Energy Agency on Thursday said the energy crunch is expected to boost oil demand by 500,000 barrels per day (bpd). That would result in a supply gap of around 700,000 bpd through the end of this year, until the Organization of the Petroleum Countries and allies, together called OPEC+, add more supply, as planned in January.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also 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

Mitsubishi to invest USD17.5 blm by 2030 to drive decarbonisation and cut emissions

Mitsubishi to invest USD17.5 blm by 2030 to drive decarbonisation and cut emissions

MOSCOW (MRC) -- Japan's Mitsubishi Corp will invest 2 trillion yen (USD17.54 B) by 2030 in alternative energies such as renewables and hydrogen to drive its decarbonization efforts and cut emissions, reported Reuters with reference to the company's statement on Monday.

Mitsubishi, a trading house and mineral resources company with energy and metals assets worldwide, aims to halve its greenhouse gas emissions by 2030 on 2020 levels, and to achieve net zero emissions by 2050, it said in a statement.

The move comes as oil and coal producers and consumers worldwide accelerate a move away from fossil fuels by investing in cleaner energy and developing technology to eliminate climate-warming gases.

Of Mitsubishi's 2 trillion yen budget, about half will be spent on expanding its renewable energy assets, mainly wind power, while the rest will go to hydrogen and ammonia, liquefied natural gas (LNG) and metals used in electrification and batteries.

The Japanese company will keep investing in LNG as it believes it will play an important role as a transitional energy, but plans to use carbon capture and storage and other technology to cut CO2 emissions in the LNG supply chain.

As MRC informed earlier, in September 2021, Mitsubishi Corp and Shell Canada Products, by its managing partner, Shell Canada Limited (Shell Canada), signed a Memorandum of Understanding (MoU) relating to the production of low-carbon hydrogen through the use of carbon capture and storage (CCS) near Edmonton, Canada. Mitsubishi Corp said it aims to build and start-up the low-carbon hydrogen facility near the Shell Energy and Chemicals Park Scotford towards the latter half of this decade, and Shell would provide CO2 storage via the proposed Polaris CCS project. The low-carbon hydrogen, commonly called blue hydrogen, would be produced via a natural gas feedstock and exported mainly to the Japanese market to produce clean energy.

We remind that Royal Dutch Shell plans to reduce its refining and chemicals portfolio by more than half, it said in July 2020 without giving a precise timeframe. The move is part of the Anglo-Dutch company's plan to shrink its oil and gas business and expand its renewables and power division to reduce greenhouse gas emissions sharply by 2050.

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 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.

Mitsubishi Chemical with headquarters in Tokyo, Japan, is a diversified chemical company involved in petrochemicals, polymers, agrochemicals, speciality chemicals and pharmaceuticals. The company's main focus is on three business pillars: petrochemicals, performance and functional products, and health care.
MRC