China 2030 carbon emissions peak action plan provides more opportunities than threats to Sinopec business

China 2030 carbon emissions peak action plan provides more opportunities than threats to Sinopec business

MOSCOW (MRC) -- China's 2030 carbon emissions peak action plan provides more opportunities than threats to Sinopec's business, Secretary to the Board of Directors Huang Wensheng said during the company's third quarter results briefing conference call Oct. 29, reported S&P Glboal.

China's State Council on Oct. 26 released the nation's action plan to peak carbon emissions, including targets to have around 40% of incremental vehicles in the country fueled by new energy sources and reach peak petroleum consumption for land transportation by 2030.

Huang said the company expected China's gasoline demand to peak in 2025 or 2026, with more and more electric vehicles to replace gasoline and gasoil cars.

Output of transportation fuels gasoline, gasoil and jet fuel accounted for more than 50% of Sinopec's production and more than 30,000 oil product retail pump stations in China, which is a threat to the company when consumption peaks, Huang said.

However, the company has started to leverage the retail network to provide integrated energy supplies, with hydrogen refueling and battery service on top of petroleum fuels, to meet demand for energy transition, Huang said, adding that this was an opportunity.

Meanwhile, Sinopec has significantly lifted its capex in the chemical sector, aiming to increase petrochemical product yield while capping oil products output as consumption approaches peaking, Huang added. Sinopec spent Yuan 29.7 billion in its chemical segment over January-September, surging 184% from Yuan 10.46 billion over the same period a year earlier, the company results showed.

The company's yield of the key oil products gasoline, gasoil and jet fuel fell to 57% in the first nine months of the year from 60% a year earlier.

China also targets keeping domestic capacity for the primary refining of crude oil below 1 billion mt/year (20 million b/d) and raising the utilization rate of production capacity for main products to above 80% by 2025, according to the action plan. Huang said there was still room for China's refining capacity to grow, given that the current capacity is about 900 million mt/year and some small and independent capacities were set to be shut.

Sinopec is the world's biggest refiner, with 296.90 million mt/year refining capacity at end 2020.

The refiner and PetroChina slashed their gasoil yields over January-September, which led to a supply shortage in the domestic market when imports of gasoil blending material light cycle oil were impacted by a hefty consumption tax.

Sinopec's gasoil yield fell to 23% over January-September from 27% in a year earlier, resulting in gasoil output dropping 10.3% to 42.92 million mt despite crude throughput rising 9.3% over the same period. The company said it will increase gasoil supplies in Q4 to meet strong domestic demand by lifting throughput and production yields. It has already raised its gasoil supply by about 20% in October from the monthly average level in the first three quarters of the year, and aims to further boost supply in November by 29% month on month. Gasoil production averaged 7.15 million mt/month over January-September, according to the company's results.

As MRC informed before, in August, 2021, Sinopec, the world's petrochemical major, launched the first phase of the Gulei refining complex in Zhangzhou city in China’s southeastern Fujian province. The refining complex, a 50:50 joint venture between Sinopec’s Fujian Petrochemical Company Ltd and Taiwan Xuteng Investment Company Ltd, invested 27.8 billion yuan (USD4.28 billion) in the first phase. That will result in an 800,000 tonnes per annum ethylene plant, a 600,000 tonnes per annum styrene unit and seven other downstream petrochemical units, Sinopec said.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group's key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

Phillips 66 psts higher Q3 2021 financial results

Phillips 66 psts higher Q3 2021 financial results

MOSCOW (MRC) -- Phillips 66, a diversified energy manufacturing and logistics company, has announced third-quarter 2021 earnings of US402 million, compared with earnings of USD296 million in the second quarter of 2021, as per the company's press release.

Excluding special items of USD1.0 billion, primarily an impairment of the Alliance Refinery following Hurricane Ida, the company had adjusted earnings of USD1.4 billion in the third quarter, compared with second-quarter adjusted earnings of USD329 million.

“In the third quarter, we delivered a significant improvement in earnings and cash generation,” said Greg Garland, Chairman and CEO of Phillips 66. “Our Midstream, Chemicals, and Marketing and Specialties businesses continued to deliver strong results. In Refining, we saw a notable improvement in realized margins, operated well and navigated hurricane-related challenges.

“So far this year we have reduced debt by USD1 billion, further strengthening our balance sheet. We recently increased the dividend, reflecting our confidence in the company’s strategy and cash flow recovery, as well as our commitment to a secure, competitive and growing dividend. We will continue to focus on debt repayment, disciplined capital allocation, and delivering attractive shareholder returns.

“Earlier this week we announced an agreement to buy-in Phillips 66 Partners. The transaction simplifies our structure and asset ownership across our integrated portfolio. We believe both PSX shareholders and PSXP unitholders will benefit from the combination.

“In addition, we recently announced our greenhouse gas emissions intensity reduction targets, demonstrating our commitment to sustainable providing energy today and in the future. Our targets are measurable, achievable and meaningful. We believe achieving the targets will drive value for shareholders and other stakeholders. We are expanding our presence in the battery supply chain through our investment in NOVONIX and announced a collaboration with Plug Power to identify and advance green hydrogen opportunities. We will continue to focus on lower-carbon initiatives that generate strong returns.”

The Chemicals segment reflects Phillips 66’s equity investment in Chevron Phillips Chemical Company LLC (CPChem). Chemicals third-quarter 2021 pre-tax income was USD631 million, compared with USD623 million in the second quarter of 2021. Chemicals results in the third quarter included a USD2 million reduction to equity earnings for pension settlement expense and USD1 million of maintenance and repair costs related to Hurricane Ida. Second-quarter results included an USD18 million reduction to equity earnings for pension settlement expense and USD16 million of winter-storm-related maintenance and repair costs.

CPChem’s Olefins and Polyolefins (O&P) business contributed USD613 million of adjusted pre-tax income in the third quarter, compared with USD593 million in the second quarter. The USD20 million increase was primarily due to higher polyethylene sales volumes driven by continued strong demand, partially offset by higher utility costs. Global O&P utilization was 102% for the quarter.

CPChem’s Specialties, Aromatics and Styrenics (SA&S) business contributed third-quarter adjusted pre-tax income of USD37 million, compared with USD82 million in the second quarter. The decrease was driven by lower margins.

As MRC informed earlier, US Refiner Phillips 66 said on 30 September it would cut greenhouse gas emissions by 30% from its operations by 2030, amid mounting pressure on the industry to join the fight against climate change and cut carbon emissions by mid-century.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Headquartered in Houston, the company has 14,100 employees committed to safety and operating excellence. Phillips 66 had USD56 billion of assets as of Sept. 30, 2021.
MRC

Alpla plans new injection moulding facility in Missouri

Alpla plans new injection moulding facility in Missouri

MOSCOW (MRC) -- Austrian plastics packaging firm Alpla will build a new 23,000 square-metre manufacturing plant in Kansas City, Missouri, said the company.

Alpla Group, a global packaging solutions manufacturer and recycling specialist headquartered in Hard, Austria, announced that it has selected the Kansas City region for its new 23,000-square-metre manufacturing plant.

In a facility located at the Blue River Commerce Center in Kansas City, Missouri, the regional organisation Alpla will create 75 jobs while continuing to invest in the city over the next several years.

The new addition in Kansas City will be the company’s fourth site in Missouri and the first dedicated to injection moulding. As such, the manufacturer will produce innovative packaging systems, bottles, caps and injection-moulded parts for a wide range of industries. Led by Cushman & Wakefield, the project is slated to begin in late 2021, with a completion date in the fourth quarter of 2022.

The company cited the Kansas City region’s central location and strong community relationships as key drivers for the decision.

Details about project costs or annual capacities in terms of tonnes or pounds were not disclosed.

As MRC informed earlier, Alpla and Krones developed a returnable PET container that provides an optimal environment for sensitive ESL (Extended Shelf Life) products such as juice and milk in the cold chain.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

Alpla, with about 21,600 employees, produces custom-made packaging systems, bottles, caps and moulded parts at 178 sites across 45 countries. It also operates recycling plants for polyethylene terephthalate (PET) and high density polyethylene (HDPE).
MRC

Pemex back in red in Q3 2021, needs to lower Dos Bocas refinery cost

Pemex back in red in Q3 2021, needs to lower Dos Bocas refinery cost

MOSCOW (MRC) -- Higher tax payments and foreign exchange losses pushed Mexico's Petroleos Mexicanos back into the red in the third quarter, even as crude production recovered somewhat, reported Reuters with reference to the state oil company's statement last week.

Pemex lost 62.8 billion pesos (USD3 billion) compared to a profit of 1.4 billion pesos in the same period last year, and it was also a setback compared to the second quarter, when Pemex logged a net profit of 14.4 billion pesos.

Still, new oil fields in operation since 2019 produced 280,000 barrels per day (bpd), helping to lift average output to 1.74 million bpd in the quarter, Pemex said. Crude processing was up 15% year-on-year in the quarter to 695,000 bpd.

"The timid increase in crude production has not been substantial enough to improve their outlook," said Arturo Carranza, director of energy projects at Akza Consultores.

"Internal factors, like its excessive tax burden, had a negative impact. External factors, like the fluctuation of the dollar versus the peso, also increased costs."

Pemex has the largest tax obligations of any company in Mexico and contributes some 16% to state coffers. Foreign exchange losses were 47 billion pesos for the third quarter, in which Pemex reported revenues of 732.1 billion pesos (USD35.5 billion).

Pemex's financial debt, much of which is issued in dollar-denominated bonds and held widely by investors around the world, stood at USD113 billion. Between October and December, USD1.557 billion in debt repayments are due, the company said.

Alberto Vazquez, chief financial officer, said the company had not ruled out tapping bond markets in 2022, and was in constant talks with the finance ministry. President Andres Manuel Lopez Obrador has pledged to revive Pemex and has pumped billions of dollars in financial support for the company. But some financial experts say it is not enough.

"Instead of seeking to further reduce Pemex taxes, they should reduce their operational and financial burden to bring it in line with that of private upstream companies," said Emily Medina, a fellow at the Energy Policy Research Foundation.

Medina said Mexico should also lower costs in projects like the president's new Dos Bocas refinery, seek efficiency gains and prioritize investment in profitable areas. Lopez Obrador has moved aggressively to strengthen the state's role in the energy sector via Pemex, whose fortunes contrast with those of Brazil's Petroleo Brasileiro (Petrobras), which President Jair Bolsonaro is considering privatizing.

As MRC wrote previously, in September 2021, Brazilian petrochemical producer Braskem said its Mexican subsidiary Braskem Idesa ha reached a new gas supply agreement with Pemex to settle differences between the companies and build a USD400 million ethane terminal.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

Petroleos Mexicanos (Pemex) is a Mexican state-owned oil and gas and petrochemical company. Since the nationalization of the Mexican oil industry in 1938, Pemex has remained a state-owned company and, by law, has exclusive rights to explore and produce oil in the country. Almost 60% of the company's revenues go to the state budget. Petrochemical products include, but are not limited to, polyethylene, polyvinyl chloride.
MRC

SABIC plans to restart the currently idled cracker at Wilton Teesside

SABIC plans to restart the currently idled cracker at Wilton Teesside

MOSCOW (MRC) -- Saudi petrochemicals major SABIC is to restart its Wilton, UK steam cracker after an GDP850m investment, said the company.

With nameplate capacity to produce 865,000 /t of ethylene, alongside 415,000 t/y of propylene, the cracker first commissioned by erstwhile chemical conglomerate ICI in 1979 is Europe’s second largest. Originally run on liquid naphtha, it was later modified to handle both liquid and gas feedstock, including ethane, naphtha, propane and butane.

After being shut down for maintenance a year ago and not restarted, the facility’s future looked in doubt, and several other plants at the Teesside complex, where production activity has been subdued in recent years, had been expected to close.

Local officials, who reportedly negotiated with SABIC and Aramco to help secure the site’s future, said the new investment in the cracker will create hundreds of jobs and support “thousands more.” No update on the fate of the other plants has yet been forthcoming. SABIC also operates an LDPE plant at Wilton.

As MRC informed before, the British government said that Saudi petrochemical firm Saudi Basic Industries Corp (SABIC), the world's fourth-biggest petrochemicals firm, would invest nearly 1 billion pounds (USD1.37 billion) at its Teesside facility in northeast England with the aim of decarbonisation.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

Saudi Basic Industries Corporation (SABIC) ranks among the world's top petrochemical companies. The company is among the world's market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC