Crude oil prices slump as new COVID-19 variant renews demand concerns

Crude oil prices slump as new COVID-19 variant renews demand concerns

MOSCOW (MRC) -- Crude oil futures posted sharp losses in London trading Nov. 30 as the World Health Organization said the new omicron variant poses a high global risk, and a major pharmaceuticals company said currently available COVID-19 vaccines are less effective against it, reported S&P Global.

At 1200 GMT Nov. 30, ICE January Brent crude futures was down USD2.36/b from the previous settlement at USD71.08/b while the NYMEX January WTI futures contract was down USD1.91/b at USD68.04/b.

Oil prices posted losses once again and almost completely eliminated the partial gains of the previous day, bringing current levels close to the Nov. 26 close. The main trigger for the more bearish sentiment was comments made by Moderna's chief regarding current vaccines' efficacy being limited against the omicron variant, adding that development and production of a more effective version could take months.

All financial and physical markets, particularly in Europe, reacted strongly to the comments, with sharp losses observed across asset classes once again.

The FTSE 100 was observed trading at GBP7,024 during the late morning session, down 1.20% from the previous close, while the Stoxx 600 index was at Eur460.76, down 1.39% day on day.

At the same time, all eyes were on the OPEC+ meeting Dec. 2, which could decide not to increase further crude supply temporarily according to the previously decided levels.

The market had already showed concerns over the previous weeks regarding a potential oversupply in 2022, while demand forecasts could have been too bullish, contributing as well to the recent pressure for oil prices.

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

Petrobras to build base-oils plant in in Rio de Janeiro

Petrobras to build base-oils plant in in Rio de Janeiro

MOSCOW (MRC) -- Petrobras plans to invest USD2.5bn expanding a refinery in northern Brazil and completing a base-oils project in Rio de Janeiro state, the state-controlled energy producer said.

Under the base-oils project, Petrobras will invest USD1.5bn integrating the Duque de Caxias refinery (REDUC) with the GasLub Itaborai project. GasLub should produce 12,000 bbbl/day of Group II base oils and 93,000 bbl/day of S-10 diesel and jet fuel, Petrobras said.

For the expansion project, Petrobras plans to invest USD1bn to complete the second train of its Abreu e Lima refinery (RNEST) in Pernambuco state. The second train will add 145,000 bbl/day of crude-processing capacity, increasing the refinery's throughput rate to 260,000 bbl/day from 115,000 bbbl/day.

Petrobras plans to complete the refinery expansion in 2027, it said. RNEST is one of the refineries that Petrobras plans to sell. Petrobras could spend USD600m on projects that would allow it to co-process soybean oil in its existing refinery units and to produce renewable diesel and jet fuel at new units.

REPAR is another refinery that Pertrobras plans to sell. Another project would allow the co-processing of soybean oil at the Paulinia (REPLAN) and Presidente Bernardes (RPBC) refineries in Sao Paulo state. These projects would allow the refineries to produce diesel with 5-7% renewable content. Petrobras plans to keep these two refineries.

We remind that in August 2021, Petrobras hired JPMorgan Chase & Co as an advisor to sell its stake in the petrochemical company Braskem SA.

We also remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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 the first nine months of 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 PP random copolymers decreased significantly.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

ZPC studies direct processing of crude into olefins to cut carbon emissions

ZPC studies direct processing of crude into olefins to cut carbon emissions

MOSCOW (MRC) -- Privately-controlled Zhejiang Petrochemical Corp (ZPC), China's single-largest refiner and petrochemical producer, is exploring new technologies such as direct processing of crude into olefins to cut carbon emissions, reported Reuters with reference to a company executive's statement.

Refining and petrochemical manufacturing contributes about 5% of China's total carbon emissions, or about 400-500 MM tons, told Liu Minghui, ZPC's vice president, at a live-streamed oil seminar hosted by Zhejiang provincial government in Zhoushan.

ZPC is working with China's Tsinghua University to develop crude-to-olefin know-how that is expected to reduce carbon footprint by nearly half compared to the traditional process of obtaining feedstock for petrochemicals during the crude refining process, Liu said.

There are no plants in China, as yet, with the technologies needed for production on a commercial scale.

Meantime, the Zhoushan-based company is also advancing plans to capture and utilize CO2, with annual usable volume of around 5.2 MM tons, for the production of synthetic gas and acetic acid, the latter used for making paints.

Citing a report from state refiner Sinopec Corp, Liu said downstream consumption of refined oil products including diesel, gasoline, kerosene and fuel oil emits 1 B tons of CO2 each year. China, the world's largest green-house gases emitter, last month laid out an action plan aiming to bring its carbon emissions to a peak before 2030, including putting a cap on oil refining capacity and promoting renewables.

Liu said ZPC, with a refining capacity of 800,000 bbl per day, has the lowest yield of refined fuel products such as diesel and gasoline among its domestic peers, as it has chosen to maximize production of high-end chemicals such as polycarbonate (PC) plastic used for packaging and ethylene vinyl acetate (EVA) used to make sports wear.

ZPC also operates over 20 MM tons per year hydrocracking facilities, also the largest in China, allowing the firm to make premium quality diesel and gasoline that meet the highest National 6 standards, Liu added.

As MRC informed earlier, in April 2021, ZPC started up its No. 2 cracker in Zhoushan, China, which is part of the company's phase 2 petrochemical project in the cournty. Thus, the cracker with an annual capacity of 1.4 million tons/year of ethylene and 700,000 tons/year of propylene began trial runs in the first week of April. The commercial production at this facility was received later that month.

We remind that ZPC started operations at its No. 1 cracker in the first half of November 2019, whereas the commercial procution at this cracker was received in late December 2019.

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.
MRC

Viridos signs agreement with ExxonMobil about biofuels

Viridos signs agreement with ExxonMobil about biofuels

MOSCOW (MRC) -- Viridos Inc., previously Synthetic Genomics, a privately held biotechnology company harnessing the power of photosynthesis to create transformative solutions to help mitigate climate change, has signed a joint agreement with ExxonMobil Research and Engineering Company with the intent to bring Viridos’ low-carbon intensity biofuels toward commercial levels, said Hydrocarbonprocessing.

"We’re excited to announce that ExxonMobil is continuing this collaboration with us to bring sustainable algae biofuels technology closer to commercial deployment,” said Viridos’ CEO, Dr. Oliver Fetzer. “The recent productivity advances in Viridos’ technology are an opportunity to turn CO2 into renewable diesel and sustainable aviation fuels, providing an essential component for the decarbonization of the heavy-duty transportation industry. In this next phase of the program, we intend to broaden participation and invite others to build the ecosystem required for full-scale deployment."

Viridos’ continued partnership with ExxonMobil seeks to build out the technology and agronomy to enable the commercial launch of Viridos’ low-carbon intensity algae biofuels. In addition to their use in heavy transport, the algae biofuels could be used for aviation, commercial trucking, and maritime shipping. The terms of the renewed partnership with ExxonMobil should enable other interested parties to access and advance the technology to accelerate the deployment of Viridos’ patented technology in pursuit of lowering global GHG 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

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