Oil prices rise by almost 5% on Omicron coronavirus variant hopes

Oil prices rise by almost 5% on Omicron coronavirus variant hopes

MOSCOW (MRC) - Oil prices climbed by nearly 5% on Monday on hopes the Omicron coronavirus variant would have a less damaging economic impact if its symptoms proved mostly mild and as some OPEC member countries signaled confidence in the market, reported Reuters.

Reports in South Africa said Omicron cases there had only shown mild symptoms and the top US infectious disease official, Anthony Fauci, told CNN "it does not look like there's a great degree of severity" so far.

The White House said on Monday that the US ban on foreign nationals entering the country from eight southern African countries is something President Joe Biden's public health advisers reconsider daily.

Brent crude rose USD3.20, or 4.6%, to settle at USD73.08 a barrel. U.S. West Texas Intermediate crude rose USD3.23, or 4.9%, to settle at USD69.49 a barrel.

Last week, both benchmarks fell for a sixth week in a row.

"All the headlines are bullish today," said Phil Flynn, senior analyst at Price Futures Group. "The momentum seems to be jumping back in."

Global benchmark Brent has risen 38% this year, supported by output curbs led by the OPEC+ group of producers, though it has fallen from a three-year high above USD86 in October.

Iraq's Oil Minister Ihsan Abdul-Jabbar said he expects oil prices to reach over USD75, state news agency INA reported. He added that OPEC is trying to "positively contain" the energy market, INA said.

On Sunday, Saudi Arabia raised January official selling prices for all crude grades sold to Asia and the United States by up to 80 cents from the previous month.

The OPEC+ group, comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, last week decided to continue increasing monthly supply by 400,000 barrels per day (bpd) in January, even after a slide in prices driven by Omicron concerns.

Oil was also buoyed by diminishing prospects of a rise in Iranian oil exports after indirect US-Iranian talks on saving the 2015 Iran nuclear deal broke off last week.

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.

Qingdao Haiwan declared FM on PVC shipments from its plant in Shandong province

MOSCOW (MRC) -- Qingdao Haiwan Chemical (formely Qingdao Soda Ash) has declared force majeure (FM) for shipments of material from its ethylene-based polyvinyl chloride (PVC) plant in Shandong province, China, according to CommoPlast with reference to an official statement to its overseas customers.

The FM was declared due to an ‘unforeseeable problem’, which impact its ability to fulfil contractual obligations.

The producer operates two PVC lines, each with an annual capacity of 400,000 mtyear.

Market sources close to the company said that Qingdao Haiwan Chemical shuts only one PVC line due to environmental control for about 15 days, whereas the other line is operating normally.

Apparently, domestic buyers did not receive any notification from the maker pertaining to the supply disruption.

As MRC reported earlier, Qingdao Haiwan Chemical started up the second PVC line in Shandong province in late September, 2020.

According to MRC's ScanPlast report, Russia's overall production of unmixed PVC totalled 828,600 tonnes in the first ten months of 2021, up by 3% year on year. At the same time, only two producers raised their output.

Qingdao Haiwan Chemical Co., LTD. was founded in 1947, one member enterprise of Qingdao HIWAN GROUP LTD in Dongjiakou Industrial Park, located in NO.66, Gangfeng Road, Poli Town, Huangdao District, Qingdao city, Shandong Province. The company's main product includes 32% and 50% caustic soda, vinyl chloride (VCM), SG-8, SG-7, SG-5, SG-3 type of polyvinyl chloride (SPVC), dichloroethane (EDC), styrene etc.

Rosneft to supply Indian Oil up to 2 mln tonnes of crude in 2022

Rosneft to supply Indian Oil up to 2 mln tonnes of crude in 2022

MOSCOW (MRC) -- Rosneft has signed a deal to supply refiner Indian Oil Corp (IOC) with up to 2 million tonnes of crude next year, the Russian oil producer said in a press release on its website.

"The new oil supply deal confirms the strategic nature of long-term partnership between Rosneft and Indian Oil", head of Rosneft Igor Sechin said in a statement.

The deal was signed on Monday among a number of other agreements made during the visit of Russian President Vladimir Putin to India.

Rosneft will supply up to 2 million tonnes of Russian oil loading from the Black Sea port of Novorossiisk.

The deal follows several supply agreements between the companies in recent years.

India's top refiner is also seeking collaboration with Russian petrochemicals company SIBUR to explore the feasibility of setting up a dual-feed cracker along with downstream units at IOC's 300,000 barrel per day Paradip refinery in eastern Odisha state, an Indian foreign ministry statement said.

A potential technical tie-up between Gazprom Neft and IOC will also be explored, the statement said.

IOC is also a shareholder in several Rosneft production projects in Russia, including Vankorneft and Taas-Yuryah.

As MRC reported earlier, in October 2021, the Indian company Nayara Energy, 49.13% of which is owned by Russia's largest state oil company - Rosneft, launched a USD750 million petrochemical development program. Nayara Energy has the second largest refinery in India with a capacity of 20 million tons per year. The Indian company has already launched a refinery development program: within the first stage, it is planned to build units for the production of polypropylene (PP) with a capacity of up to 450,000 tonnes per year.

Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.

More OPEC production and higher global natural gas prices widen crude oil price spreads

MOSCOW (MRC) -- Recently, prices of high-sulfur crude oils have been declining relative to low-sulfur crude oils. Rising crude oil exports from OPEC members that produce higher-sulfur crude oils, also called sour crude oils, and higher natural gas prices have contributed to lower prices for sour crude oils relative to low-sulfur (sweet) crude oils, said Hydrocarbonprocessing.

Sour crude oils typically sell at a discount to sweet crude oils because they must first be treated with hydrogen to meet low-sulfur fuel specifications. They also require desulfurization to avoid damage to refinery units. In recent months, however, sour crude oil discounts have increased compared with historical averages. For example, Mars crude oil, which is a relatively sour crude oil produced in the Federal Offshore Gulf of Mexico, has decreased in price relative to the sweet Magellan East Houston and Brent crude oils. Brent crude oil is produced in the North Sea of the United Kingdom.

The Mars crude oil spot price averaged $4.92 per bbl less than the Brent crude oil spot price in November. This price spread is higher than the $4.09/b average price difference between Mars and Brent crude oil in August (the first month of recently announced production increases from OPEC+). The spread is also significantly higher than the USD1.47/b average spot price difference between Mars and Brent crude oil in January.

The increasing price of sweet Magellan East Houston crude oil relative to the price of Brent crude oil suggests geography is not the cause of the increasing Mars crude oil price discount to Brent crude oil. Magellan East Houston and Brent are both light, sweet crude oils of similar quality, and therefore, the Magellan East Houston-Brent spread reflects how geographic and logistical factors affect U.S. Gulf Coast crude oil prices relative to Brent prices. Differences in supply and demand for sweet versus sour crude oils likely explain the increasing discount between Mars crude oil and Brent crude oil.

One contributing factor to the widening spread between sweet and sour crude oils is the increasing supply of medium and heavy sour crude oils. OPEC has been increasing its production and exports since the second half of 2021, particularly in countries that produce sour grades. Unlike the sour crude oil supply that has been increasing, supply from OPEC members that produce mostly sweet crude oils has been relatively flat. Likewise, U.S. production in the Lower 48 states (primarily sweet crude oil) has also been relatively flat.

A second contributing factor to the widening spread between sweet and sour crude oils is higher natural gas prices. The hydrogen used to treat sour crude oils is often produced using steam methane reforming, a process that uses natural gas as an input. As a result, the recent increases in global natural gas prices have contributed to higher refinery feedstock costs. Higher costs have led to lower demand for sour crude oils that incur more of these costs, at the same time increasing demand for sweeter crude oils that avoid these extra costs.

As per MRC, the ongoing impacts of COVID-19, surging prices for energy and raw materials, and Forces Majeures destabilising the global supply chain put mounting pressure on the supply chain not only in one industry, but instead represents a global challenge wrought by global issues. Most unprecedented is the COVID-19 pandemic and subsequent lockdowns that have led to a huge shift in consumer behaviour and economic patterns.

As MRC wrote before, oil refiners are ramping up output to meet a synchronized uptick in demand across Asia, Europe and the United States, but plant maintenance and high natural gas prices will constrain supply in the fourth quarter. This comes as profits for producing ground transportation fuels such as diesel and gasoline have rebounded globally for the first time since the start of the pandemic, as countries gradually emerge from COVID-19 movement restrictions.

BASF selected Clariant ammonia synthesis catalyst AmoMax for its plant in Belgium

BASF selected Clariant ammonia synthesis catalyst AmoMax for its plant in Belgium

MOSCOW (MRC) -- Clariant's new AmoMax 10 Plus ammonia synthesis catalyst was successfully started up at the BASF ammonia plant in Antwerp, Belgium, according to Hydrocarbonprocessing.

German BASF, the world's petrochemical major and the inventor of the Haber Bosch process, has already installed Clariant's previous catalyst generation, AmoMax 10, at their BASF/Yara joint production plant in Freeport, Texas, USA. Based on the catalyst's highly favorable performance, BASF elected to use a Clariant catalyst again, this time the new AmoMax 10 Plus, which offers an additional boost in activity, stability, and startup speed.

Compared to the previous generation, AmoMax 10 Plus allows operation at lower pressure (up to 10 bar) and a lower recycle ratio (up to 1% more ammonia at the reactor outlet), thereby conserving more energy and reducing CO2 emissions.

AmoMax 10 Plus is Clariant's latest generation of wustite-based ammonia synthesis catalysts. It is founded on the industry-proven AmoMax 10 and is designed with a further improved promoter set. This optimization leads to higher activity, improved stability, and faster startup. The AmoMax 10 Plus allows operation with a higher per pass conversion at lower operating pressure. Consequently, it can increase ammonia production (up to 3%) and reduce energy consumption and CO2 footprint.

Compared to the previous version AmoMax 10, AmoMax 10 Plus allows significant energy savings with an expected CO2 reduction of up to 125,000 tons CO2 emissions for a 2,000 mtpd ammonia plant over the course of the typical catalyst lifetime of 15 years. On a yearly basis, this equals the CO2 emissions of more than 1,600 cars.

As MRC reported earlier, Air Liquide and BASF plan to develop world largest cross-border CCS value chain. The goal is to significantly reduce CO2 emissions at the industrial cluster in the port of Antwerp. The joint project Kairos@C has been selected for funding by the European Commission through its Innovation Fund, as one of the seven large-scale projects out of more than 300 applications.

We remind that BASF aims is to electrify its production processes for basic chemicals, which are currently based on fossil fuels.

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.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.