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

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

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex binders and synthetic rubber, and its affiliate companies in Europe have announced a price increase for all polycarbonate (PC) grades in Europe, as per the company's press release.

Effective November 1, 2021, or as existing contract terms allow, the contract and spot PC prices for the products listed below increased as follows:

- CALIBRE PC resins - by EUR300 per metric ton.

The present price increase is in response to unprecedented and escalating pressure from energy prices and apply to all current agreements and contracts for deliveries as of November 1, 2021 and are subject to further potential adjustments linked to fluctuating energy prices.

As MRC reported earlier, Trinseo last raised its prices for all PC grades in Europe on August 1, 2021 by EUR100 per metric ton.

According to MRC's ScanPlast report, Russia's consumption of PC granules (excluding imports and exports to Belarus) decreased by 14% and reached 62,000 tonnes in January-August 2021 against 72,100 tonnes in the same period of 2020.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.8 billion in net sales in 2019, with 17 manufacturing sites around the world, and approximately 2,700 employees.
MRC

1. Sinopec net profits up 149% in Jan-Sep on recovering demand

MOSCOW (MRC) -- Sinopec posted a net profit increase of 148.5% in the first nine months amid strengthening crude and firming products demand, the company said. In accordance with IFRS, net profit attributable to shareholders of the Company was RMB 60.755 billion, increased 148.5%. Basic earnings per share were RMB 0.502. In accordance with CASs, the Company's operating income in the first three quarters was RMB 2.0034 trillion, up by 29.0% year on year. Net profit attributable to equity shareholders of the Company reached RMB 59.892 billion.


MRC

MOSCOW (MRC) -- Crude oil futures dipped in mid-morning trade in Asia Nov. 1 following weak economic data out of China and Beijing's announcement that it would release state oil product reserves to the domestic market, reported S&P Global.

At 11:01 am Singapore time (0301 GMT), the ICE January Brent futures contract was down 23 cents/b (0.27%) from the previous close at US83.49/b, while the NYMEX December light sweet crude contract fell 41 cents/b (0.49%) at USD83.16/b.

"Oil markets got off to a rocky start after weak weekend official China PMI releases," said OANDA senior market analyst Jeffrey Halley.

China's manufacturing PMI fell to 49.2 in October from 49.6 in September -- its second straight month of decline, data from the National Bureau of Statistics showed Oct. 31. Any number below 50 indicates a contraction of activity.

IG market strategist Yeap Jun Rong said the figures underscored the fragility of the global economic recovery underway.

"PMI figures out of China over the weekend continue to highlight the weakness in economic conditions. A confluence of risk factors continues to be reflected on the Chinese economy, such as the global supply chain shortages and ongoing energy crisis," Yeap said.

China's National Food and Strategic Reserves Administration said Oct. 31. that it will release state oil product reserves to the domestic market to offset a supply shortage and stabilize prices in certain regions. The announcement shows the government's efforts to ensure domestic supplies and to control inflation by capping energy prices. It did not announce the volume to be released or targeted regions.

Latest Commitments of Traders data from the US Commodity Futures Trading Commission showed investors have turned sour on the outlook for oil prices, with speculative net longs in the NYMEX oil contract posting its first decline in four weeks as of Oct. 26. Speculative net longs in the NYMEX contract fell by 5,992 lots to 340,844 in the week to Oct. 26, CFTC data showed.

OANDA's Halley said oil prices will struggle to trade higher this week amid a slew of key dates and economic releases, including an OPEC+ meeting on Nov. 4 and a meeting of the US Federal Reserve's Open Market Committee on Nov. 3.

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.
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