South Korea fuel demand improves in October; but major refiners wary of potential new lockdowns

South Korea fuel demand improves in October; but major refiners wary of potential new lockdowns

MOSCOW (MRC) -- South Korea's oil product demand in October rose 11.7% from a year earlier, driven by robust transportation fuel consumption amid rapidly easing COVID-19 restrictions, but major refiners raised concerns that new coronavirus variant could spur a new phase of lockdowns and curb consumer fuel demand recovery, reported S&P Global.

The country consumed 78.19 million barrels, or an average of 2.52 million b/d, of refined oil products last month, compared with 69.97 million barrels a year earlier, data released by Korea National Oil Corp. showed Nov. 29.
For the first 10 months of 2021, South Korea's oil product consumption rose 5.6% year on year to 770.89 million barrels, the KNOC data showed.

Transportation fuels, especially gasoline and jet fuel, led the country's October oil consumption increase as the government started to rapidly ease movement restrictions across the nation since mid October.

Gasoline demand in October rose 1.4% year on year to 6.72 million barrels. Over January-October, gasoline consumption increased 4.6% year on year to 69.87 million barrels, the KNOC data showed.

In addition, jet fuel demand climbed 13.1% year on year to 1.99 million barrels in October, rising for the third straight month, with an increased number of people taking domestic flights. Some international flight routes also started to open up from October, with fully vaccinated individuals permitted to travel between South Korea and Singapore without quarantine since last month.

Seoul's decision to shift to a phase of living with COVID-19 from Nov. 9, could further support South Korea's demand for the middle distillate fuels, refinery and industry sources told S&P Global .

In addition, the government has lowered taxes on auto fuels by as much as 20% for six months from November in an effort to lower retail automotive fuel prices and tame accelerating consumer inflation. Taxes account for about 50% of the retail gasoline price, 40% of the diesel price, and 30% of the butane price, which have prompted consumers to ask for a tax reduction.

Despite the recent improvement in domestic consumer demand, as well as rising middle distillate exports, South Korea's major refiners including SK Innovation, S-Oil Corp. and Hyundai Oilbank indicated that the industry is wary of a rapidly spreading new coronavirus variant that the health minister of South Africa announced Nov. 25.

In addition, middle distillate marketers and distribution managers at the refiners warned that there is a growing possibility the South Korea government may consider scrapping the 'living with COVID-19' phase and implement new rounds of restrictions, or lockdowns, should the number of infection cases continue to move higher.

"The major refiners have been ramping up crude throughput but the rising refinery runs could come to a halt if new rounds of restrictions or lockdowns are announced," a middle distillate marketer at S-Oil Corp. said.

The country's nationwide run rates averaged around 81% in the first 10 months, according to latest data from Korea Petroleum Association and industry information collected from major the refiners by Platts.

As MRC informed earlier, Hyundai Chemical, a JV between South Korea’s Lotte Chemical and Hyundai Oilbank, has started to market cargoes from the new polypropylene (PP) plant in Daesan in mid-November. Chinese customers informed CommoPlast of having received offers for on-spec cargoes of homopolymer of propylene (homopolymer PP) from its newly launched plant.

According to MRC's ScanPlast report, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
MRC

Vietnam plans to cut environment tax on jet fuel by 50% due to coronavirus pandemic

Vietnam plans to cut environment tax on jet fuel by 50% due to coronavirus pandemic

MOSCOW (MRC) -- Vietnam plans to further cut environment tax on jet fuel to help the airline industry, which is struggling from the impacts of the coronavirus pandemic, said Reuters citing finance ministry.

The ministry is seeking government approval to lower the jet fuel tax by 50% for the whole of 2022, compared with the current 30% cut, which is due to expire at the end of this year. "It's necessary to continue cutting environment tax in 2022 to help local airlines weather the impact of the coronavirus pandemic," it said in a statement. "Jet fuel tax will be at 1,500 dong (USD0.0662) per liter after the cut."

Vietnam imposed tight border controls at the start of the pandemic and suspended almost all inbound flights to keep out COVID-19, which dealt a blow to its airline industry. Official data showed the industry suffered a loss of 16 T dong (USD705.78 MM) in 2020, when Vietnam was only mildly affected by the virus.

This year's loss is expected to be greater as domestic flights were halted for nearly six months while movement curbs were imposed to contain the country's worst outbreak so far. According to the ministry, environment tax reduction would help the aviation industry to overcome difficulties, especially when the country was seeking to resume international flights next year.

As per MRC, Nghi Son Refinery and Petrochemical (NSRP) resumed operations at its new polypropylene (PP) plant in Vietnam on 17 October, 2021, after an unscheduled maintenance. The 400,000 mt year of PP plant was unexpectedly shut on 7 October, 2021, due to a technical glitch.

According to MRC's ScanPlast report, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
MRC

ExxonMobil preparing final development plan for gas project in central Vietnam

ExxonMobil preparing final development plan for gas project in central Vietnam

MOSCOW (MRC) -- International oil major ExxonMobil is working on a final development plan for the Ca Voi Xanh gas project in central Vietnam, amid moves by the government to refocus on domestic upstream development while dialing back on imported LNG projects, reported S&P Global.

The move will also provide Vietnam with a solution to its energy security concerns, as coal-fired power projects are getting difficult to fund and its large offshore discoveries have remained untapped for decades.

"ExxonMobil continues to progress preparatory work (for) Ca Voi Xanh. We completed front-end engineering and design for the project in May 2020, and are working on the final development plan," an ExxonMobil's spokesperson told S&P Global recently in response to inquiries about speculation that the oil major had plans to exit the gas project.

Ca Voi Xanh, one of the largest gas fields discovered in Vietnam, also involves building a pipeline connecting the field to a gas processing plant and associated power and plants.

ExxonMobil said in 2011 that it found hydrocarbons while drilling in the field, and encountered additional hydrocarbons in the area in July 2012. The gas field, located in South China Sea, is located about 80 km (50 miles) off the coast between Vietnam's Quang Nam and Quang Ngai central provinces.

The US energy giant has since partnered with state-owned PetroVietnam to conduct preparatory work for exploiting gas from the field, which is estimated to hold reserves of 150 billion cubic meters.

However, the company has not made any final investment decision for the project yet as it will have to take into consideration several factors such as regulatory approvals, government guarantees, executed gas sales agreements and economic competitiveness, the spokesperson said.

Vietnam has expressed its intention to reduce planned power capacity produced by imported LNG and coal as part of its commitment to implement its 2050- net zero target announced at COP26.

Beside additional power from offshore wind which will need time to develop, the country will have to rely on its domestic gas fields to ensure energy security. However, work at both Ca Voi Xanh and another major gas project, the Block B, has been delayed for several years.

As MRC informed before, ExxonMobil said earlier this month it is on track to meet its 2025 emissions reduction targets by the end of this year - four years earlier than planned - and has vowed to ramp up investments to further cut emissions.

We remind that ExxonMobil plans to build its first, large-scale plastic waste advanced recycling facility in Baytown, Texas, and is expected to start operations by year-end 2022. By recycling plastic waste back into raw materials that can be used to make plastic and other valuable products, the technology could help address the challenge of plastic waste in the environment. A smaller, temporary facility, is already operational and producing commercial volumes of certified circular polymers that will be marketed by the end of this year to meet growing demand.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.
MRC

New COVID-19 variant rattles oil markets but impact unclear

New COVID-19 variant rattles oil markets but impact unclear

MOSCOW (MRC) -- The Omicron coronavirus variant kicked oil prices lower late last week and has sapped refining margins, but with crude futures rallying on Monday, the impact could be limited, reported Reuters.

Governments worldwide have imposed curbs on travelers to try limit the spread of Omicron, first detected in southern Africa, as scientists race to determine the level of risk.

Oil prices plunged more than 10% on Friday - their largest daily drop since April 2020 - but recovered some of those losses on Monday, standing up nearly 5% on the day. Analysts said the Friday sell-off had been excessive.

Refining margins fell further, increasing the impact of new coronavirus curbs that had already been rolled out in Europe.

On Friday, European diesel barge refining margins touched a three-month low of about USD8 a bbl, although oil price volatility kept trading liquidity low. Jet fuel cargo margins were assessed at about USD7.7 a bbl, near a two-and-a-half month low.

"This broad-based correction reflected fears that the Omicron variant would turn into a major headwind to oil demand," bank JP Morgan said, referring to Friday's price move.

But it said it expected demand recovery from the pandemic to continue even though consumption forecasts had weakened before last week's sell-off.

We remind that, as MRC informed before, earlier this month, TotalEnergies and Daimler Truck AG signed an agreement on their joint commitment to the decarbonization of the road freight in the European Union. The partners will collaborate in the development of ecosystems for heavy-duty trucks running on hydrogen, with the intent to demonstrate the attractiveness and effectiveness of trucking powered by clean hydrogen and the ambition to play a lead role in kickstarting the rollout of hydrogen infrastructure for transportation.

We also remind that TotalEnergies has recently inaugurated the extension of Synova in Normandy, the French leader in recycled polypropylene (PP) production. TotalEnergies is therefore doubling its mechanical recycling production capacity for recycled polymers, to meet growing demand for sustainable polymers from customers, such as Automotive Manufacturer (Auto OEM) and the construction industry.

According to MRC's ScanPlast report, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
MRC

BP announces huge green hydrogen project at UK Teesside

BP announces huge green hydrogen project at UK Teesside

MOSCOW (MRC) -- BP unveiled its largest green hydrogen initiative so far in the UK, with plans for renewable hydrogen production in north-east England it believes could grow to half a gigawatt of electrolyser capacity by the end of the decade, according to Upstream.

The UK supermajor aims to build an initial 60-megawatt green hydrogen plant by 2025 as the first step in its HyGreen Teesside project.

That could then grow in stages that “match production to demand” to 500MW of electrolysis by the end of the decade, adding to 1GW of planned blue hydrogen capacity – based on gas linked to carbon capture - under the already-announced H2Teesside initiative.

Matt Williamson, a vice president for hydrogen at BP, said the early focus of the planned electrolysis would be supplying a new generation of heavy trucks using fuel cells. BP signed a memorandum of understanding with Daimler Truck late last month to jointly develop a network of UK refuelling stations, releasing a joint statement that explicitly referred to green hydrogen from renewable-powered electrolysis.

“HyGreen is the supply end of that,” Williamson told Upstream's sister publication Recharge, adding that the first 60MW would be able to fuel about 1300 large trucks, replacing heavy vehicles that would otherwise rely on diesel.

HyGreen and H2Teesside - which BP said between them could account for 30% of the UK government's 5GW 2030 target for hydrogen production - are themselves part of a wider push to turn the region into the UK’s first integrated hydrogen hub and a major source of the fuel for heavy industry.

The scale of the first phase outstrips a 20MW electrolyser planned by Iberdrola in Scotland, which earlier this year was claimed as the largest so far planned in the UK.

BP is pursing one of the most ambitious renewable power build plans of any oil and gas group, with a target to have 50GW net on its books globally by 2030 and a pipeline that already includes a half-stake in 3GW of offshore wind in the Irish Sea that’s due in service later in the decade, with the potential for more major projects off the UK that could see part of their production allocated to renewable hydrogen. It is also in line to produce green hydrogen on a smaller scale in Aberdeen.

The company expects to make a final investment decision on the first phase of HyGreen by 2023, but like others advancing hydrogen projects in the UK, it is waiting with bated breath to see what support will be available from the nation's government.

As MRC wrote previously, in October, 2021, BP announced plans for a USD269 million investment in three projects at its Cherry Point Refinery in Washington state, aimed at improving the refinery’s efficiency, reducing its carbon dioxide (CO2) emissions and increasing its renewable diesel production capability. The investment is aligned with bp’s aims to be net zero across its operations by 2050 or sooner and to reduce the carbon intensity of the products it sells by 50% by 2050 or sooner.

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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

BP is one of the world's largest oil and gas companies, serving millions of customers every day in around 80 countries, and employing around 85,000 people. BP’s business segments are Upstream (oil and gas exploration & production), and Downstream (refining & marketing). Through these activities, BP provides fuel for transportation; energy for heat and light; services for motorists; and petrochemicals products for plastics, textiles and food packaging. It has strong positions in many of the world's hydrocarbon basins and strong market positions in key economies.
MRC