Crude oil prices fall as China developer downgrades add to fears of demand outlook and on new restrictions to fight Omricon

MOSCOW (MRC) - Oil prices fell on Thursday on fears about the economic outlook in the world’s biggest oil importer following ratings downgrades to two Chinese property developers, and after some governments took measures to fight the Omicron varaint of the coronavirus, reported Reuters.

Brent crude futures fell USD1.01, or 1.3%, to USD74.81 a barrel by 12:05 p.m. EDT (1705 GMT), backing off a session high of USD76.70. US West Texas Intermediate (WTI) crude futures were down USD1.00, or 1.4%, at USD71.36 after hitting a peak of USD73.34.

On Thursday, ratings agency Fitch downgraded property developers China Evergrande Group and Kaisa Group to “restricted default” status, saying they had defaulted on offshore bonds, while a source said that Kaisa had started work on restructuring its USD12 billion offshore debt.

“The ... news ... exacerbates the Chinese GDP growth fears and ultimately could impact the oil-buying appetite of the world’s biggest crude customer,” said Rystad Energy analyst Louise Dickson.

On Wednesday, British Prime Minister Boris Johnson imposed tougher COVID-19 restrictions in England, saying people should work from home where possible, wear masks in public places and show COVID-19 vaccine passes for entry to certain events and venues.

“Although laboratory tests showed that the Pfizer vaccine has a neutralising effect on Omicron ... new measures are being introduced to try to stop the spread of the virus,” said Tamas Varga of oil brokerage PVM.

Denmark also plans new restrictions, including closure of restaurants, bars and schools, while China has halted group tourist trips from Guangdong. South Korea has registered record infections while cases remain elevated in Singapore and Australia.

The number of Americans filing new claims for unemployment benefits dropped to the lowest level in more than 52 years last week as labor market conditions continued to tighten amid an acute shortage of workers, according to new data published by the US Labor Department.

“The oil market doesn’t always respond well to good economic news either, because it could prompt the Federal Reserve to tighten monetary policy,” said John Kilduff, partner at Again Capital LLC in New York.

The Omicron outbreak sparked a 16% slump in Brent prices from Nov. 25 to Dec. 1. More than half of the drop has been recouped this week, but analysts say a further recovery could be limited until Omicron’s impact is clearer.

US inventory data released on Wednesday also weighed on prices.

Energy Information Administration (EIA) data showed that crude inventories were down by 240,000 barrels last week, much less than analysts in a Reuters poll had expected, with stocks at the Cushing delivery hub in Oklahoma rising by 2.4 million barrels. Fuel stocks also rose by a combined 6.6 million barrels, the data showed.

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, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- W. R. Grace & Co., the leading independent supplier of polyolefin catalyst technology, polypropylene (PP) process technology, and technology services, has licensed its UNIPOL PP process technology to Oriental Energy for its Maoming, China, plant, said Hydrocarbonprocessing.

This is Oriental Energy’s fifth PP line, and its fourth using Grace’s UNIPOL PP process technology with a production capacity of 400 KTA. Laura Schwinn, President of Grace’s Specialty Catalysts business said, “We are extremely pleased that Oriental Energy has chosen our UNIPOL PP process technology once again for its newest polypropylene line in Maoming. Our continuous cooperation over the last ten years has created a solid and lasting relationship between our businesses, and we are excited to watch Oriental Energy achieve their goal of becoming one of the top polypropylene producers in the world using our technology."

Mr. Wu, Yinlong, General Manager of Oriental Energy, commented, “We selected Grace’s UNIPOL PP process for our site in Maoming because of our confidence in the technology. We know from experience with our other UNIPOL PP lines that we can produce the advanced polypropylene resins we need for our customers. We also know Grace will be a trusted advisor to provide support and service for the life of our plants."

Oriental Energy currently has the largest UNIPOL PP operating capacity in China, and there are plans to build additional PP lines at their sites in Ningbo and Maoming in the years to come. UNIPOL PP technology provides licensees with a competitive advantage, allowing them to successfully participate in today’s highly competitive global PP market. The UNIPOL PP technology family, with over 100 reactor lines licensed worldwide, manufacture the broadest range of PP homopolymers, random copolymers and impact copolymers in the industry with a choice of close to 300 standard grades.

Earlier it was reported that Oriental Energy-Ningbo, a subsidiary of a major producer of petrochemical products in the country - Oriental Energy, on September 28 unscheduled production at the polypropylene (PP) plant No. 1 in Ningbo (Ningbo, Zhejiang province, China) due to the policy of dual control of energy consumption in the region. The timing of restarting this enterprise with a capacity of 400 thousand tons of PP per year has not been reported.

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.

Oriental Energy operates two subsidiaries, Oriental Energy-Ningbo and Oriental Energy-Zhangjiagang, each of which, in turn, operates a plant with a capacity of 400 ktpa PP and a propane dehydrogenation unit with a capacity of 600 ktpa. These companies were renamed in April 2017 as follows: Ningbo Fuji Petrochemical was renamed Oriental Energy-Ningbo and Zhangjiagang Yangzijiang Petrochemical was renamed Oriental Energy-Zhangjiagang.
MRC

MOSCOW (MRC) -- Mammoet continues to provide client L&T Hydrocarbon Engineering with heavy lifting services for the construction of its Barmer oil refinery and petrochemical complex in Rajasthan, India, according to Hydrocarbonprocessing.

Mammoet and L&T have a long-term relationship, dating back to 2012, which saw Mammoet lift a 750t chemical reactor with the in-house designed PTC35-DS 1600te ring crane. The most recent project completed was at Paradip refinery earlier this year where Mammoet lifted modules using PT 50 ring crane.

For this latest partnership, Mammoet will be utilizing PTC ring cranes to lift and install a range of modules at HPCL Rajasthan Refinery Ltd. The lifting works are expected to start taking place on site in the middle of 2022.

Specifically, two ring cranes will be employed: the PT50 ring crane will lift and install reactors, regenerators and fractionators, while the PTC35-DS will lift and install a 127m long C3 rectifier (in three parts) and a quench water tower.

The ring cranes will allow L&T to install the reactors and regenerators in just two sections, instead of four sections if a conventional crawler crane is used. The PTC35-DS will prevent unnecessary sectioning and lifting of the equipment into five parts. Therefore, there will be a reduction in total lead time and overall cost savings for the customer.

The Barmer refinery and petrochemical complex is developed for the production of cleaner fuels and is the first of its kind in Rajasthan. Once completed, it will have a total processing capacity of nine MM metric tpy. Expected to be in production by end of 2023, the development is also expected to create approximately 1,500 direct jobs and contribute to Rajasthan’s economic development.

As MRC informed previously, tasked by company Grupa Azoty ((Tarnow, Poland), one of the main players on the European fertilizer and chemical market, Mammoet has recently completed the first scope of work that will lead to the construction of the propane dehydrogenation and polypropylene (PDH/PP) blocks of its client’s chemical facility. The project took place in the town of Police, in the northwest of Poland, and involved the lifting and transport of more than 480 items from a small port to the construction site six kilometers away.

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

MOSCOW (MRC) -- ExxonMobil on Monday announced a plan to reduce greenhouse gas (GHG) emissions from its operations to reach net-zero emissions by 2030 in its Permian Basin operations, said the company.

The company will eliminate routine flaring in the Permian Basin by the end of 2022, invest in electrification of operations in New Mexico and Texas to include low-carbon power sources and accelerate its methane-monitoring system to reduce flaring. The company plans to reduce Permian Basin flaring volumes by more than 75%, compared with 2019 flaring volumes, by the end of 2021. And this year, the company is expected to show a reduction of about 15-20% in GHG intensity from upstream operations, compared with 2016 levels.

The Permian Basin operations account for more than 40% of the company’s US net production, producing an average of 500,000 barrels of oil equivalent/day (boe/day). ExxonMobil plans to reduce carbon dioxide (CO2) intensity across its businesses by deploying technology that the company said is “foundational”.

To achieve GHG emission-reduction efforts, ExxonMobil will continue investments in methane mitigation and detection technology, upgrading equipment and employing emissions-offset technology. The company plans to use low-carbon power to electrify its operations, which may include wind, solar, hydrogen and natural gas with carbon capture and storage (CCS). It will also use methane-detection programmes utilising satellite surveillance and a network of ground-based sensors for continuous monitoring and aerial flyovers.

As per MRC, ExxonMobil Chemical has acquired California-based Materia for an undisclosed sum. Materia makes thermoset resins based on dicyclopentadiene (DCPD). They are designed to be alternatives to epoxy resins, vinyl ester resins and unsaturated polyester resins (UPR). The materials can be used in a number of applications, including wind turbine blades, electric vehicle parts, sustainable construction, and anticorrosive coatings.

ExxonMobil and SABIC have announced that their joint venture, Gulf Coast Growth Ventures located near Corpus Christi, Texas, has reached mechanical completion of a monoethylene glycol (MEG) unit and two polyethylene (PE) units. Project startup is expected to begin ahead of schedule, likely in the fourth quarter of 2021.

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

MOSCOW (MRC) -- Rabigh Refining and Petrochemical Co (Petro Rabigh) plans a Saudi riyal (SR) 1.21bn (USD321m) capital reduction, followed by a rights issue of up to SR7.95bn (USD2.12bn), said Argaam.

“The purpose of this Petro Rabigh capital reduction and capital increase is to eliminate the accumulated losses incurred due to the large deficit in FYfiscal year 2020 and strengthen Petro Rabigh’s financial position,” Japan’s Sumitomo Chemical said in a statement.

Petro Rabigh is a joint venture between Saudi Aramco and Sumitomo Chemical - each with a 37.5% stake in the company, while the remaining 25% is held by Saudi investors. The planned twin exercise is still subject to regulatory approvals.

Under the plan, about 120.5m Petro RaUSDigh shares will be cancelled, bringing the total down to 755.5m shares after the reduction. The rights issue of up to $2.12bn will be done soon after the capital reduction, with both Saudi Aramco and Sumitomo Chemical chipping in USD795m, equivalent to their respective stakes in Petro Rabigh.

Petro Rabigh’s financial performance in the current fiscal year “continues to be healthy to date due to its stable operations and improvements in market conditions, such as prices for crude oil and petrochemical products”, the Japanese shareholder said. In the third quarter of 2021, the Saudi manufacturer of refined petroleum products and petrochemicals swung into a net profit of SR221m on the back of improved product margins.

Petro Rabigh posted a nine-month net profit of SR1.59bn, compared with the SR3.85bn loss recorded in the same period last year. In October 2020, Sumitomo Chemical and Saudi Aramco jointly loaned out a total of $2bn to Petro Rabigh, which faced shortfall of working capital following a deterioration in the market environment since end-2019 amid the coronavirus pandemic.

As per MRC, Saudi Arabia’s Rabigh Refining and Petrochemical Co (PetroRabigh) has no overhaul schedule for its polypropylene (PP) plant at the moment. The company operates two lines at this plant, which can produce 350,000 mt/year of PP each.

As MRC wrote previously, the company conducted a 55-day scheduled turnaround at its PP units in Rabigh since end-February 2020. Besides, the company has a 300,000 mt/year high density polyethylene (HDPE) unit, a 160,000 mt/year low density polyethylene (LDPE) unit and a 600,000 mt/year linear low density polyethylene (LLDPE) plant at the same site.

PetroRabigh, a joint venture between Saudi Aramco and Japan's Sumitomo Chemical, has an annual output capacity of 18 million tonnes of refined products and 2.4 million tonnes of petrochemicals. Thus, the complex currently has a cracker to produce 1.6-million t/y of ethylene, as well as downstream production of polyethylene, polypropylene, propylene oxide, ethylene glycol and butene-1.
MRC