Asia distillates-jet fuel cash premiums slip on Omicron-led travel restrictions

MOSCOW (MRC) -- Asia's cash premiums for jet fuel slipped to their lowest in more than three weeks on Friday, posting a weekly drop, as airlines continue to struggle with weak capacity amid Omicron-led travel restrictions, reported Reuters.

Cash premiums for jet fuel dropped to 28 cents per bbl to Singapore quotes on Friday, the lowest since Nov. 29. The differentials have shed nearly 63% this week.

"Jet fuel demand this year has been largely undermined by travel restrictions. Even with the re-opening of borders across several Asian countries in recent months, international air travels are still limited, and jet fuel demand recovery has been relatively weak," said Serena Huang, Asia lead analyst at Vortexa.

Asia's jet fuel refining margins are on track to double by end-2021 from the previous year, but traders and analysts say it would likely take until the middle of this decade for aviation demand to return to pre-COVID levels.

Just as vaccinations and re-opening of national borders raised hopes for a pick-up in air travel, the highly contagious COVID-19 Omicron variant emerged last month, prompting governments to impose lockdowns and travel curbs again.

The refining margins, also known as cracks, for jet fuel dipped to USD11.05 per bbl over Dubai crude during Asian trading hours, 34 cents lower from a day earlier.

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.
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MOSCOW (MRC) -- SHV Energy and UGI Receive European Union Approval to Create Joint Venture to Advance the Production and Use of Renewable Dimethyl Ether, said the company.

SHV Energy and UGI International, a subsidiary of UGI Corporation, distributors of off-grid energy, today received approval from the European Commission to create a joint venture to advance the production and use of renewable dimethyl ether (rDME).

The proposed joint venture was approved, marking an important step that will enable both parties to form the joint venture and commence operations in early 2022. As previously announced, the joint venture is intended to gain market acceptance and accelerate the use of rDME as a renewable solution for the LPG industry.

The parties anticipate the development of up to 6 production plants within the next 5 years, targeting a total production capacity of 300,000 tons of rDME per year by 2027. The aggregate investment in production capacity is estimated to be up to USD1 billion which is expected to involve third party investment.

In May 2021, SHV Energy and UGI International, a subsidiary of UGI Corporation, leading distributors of off-grid energy, announce the intention to launch a joint venture to advance the production and use of Renewable Dimethyl Ether (“rDME”), a low-carbon sustainable liquid gas, to accelerate renewable solutions for the LPG industry.

SHV Energy, via its subsidiary Pinnacle Propane, has acquired 100% of the assets and customers of United Propane and Collins Propane in the United States.

SHV Energy is a leading global distributor of off-grid energy such as LPG and LNG and is active in the area of sustainable fuels and renewable energy solutions. SHV Energy is a wholly owned subsidiary of SHV, a family-owned multinational, and consists of a group of specialized energy companies. The company’s brands include Calor, Ipragaz, Liquigas, Pinnacle, Primagas, Primagaz and Supergasbras.
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MOSCOW (MRC) -- Japan's industrial production grew by 5.4% year on year in November, supported by higher output of motor vehicles and plastic products, said The Financial Times.

Japanese industrial output jumped in November by the largest margin since 2013, providing hope that the country’s automotive sector could finally be moving beyond its semiconductor supply struggles. Industrial production increased 7.2 per cent last month compared with October, significantly exceeding economists’ forecasts. The improvement was driven by a 43.1 per cent month-on-month resurgence in car production, said analysts, who noted that other manufacturers appeared to be rebuilding exhausted inventories more rapidly than expected.

Takuji Aida, chief economist at Okasan Securities, said that while overseas parts procurement was stagnant, it appeared that supply chain problems that have afflicted Japanese manufacturers were gradually being resolved. The monthly data released by the Ministry of Economy, Trade and Industry represent Japan’s last major economic release of the calendar year. The November increases followed October’s more modest 1.8 per cent gain from the previous month.

The government also issued an upward revision of its overall assessment of industrial production, saying the manufacturing sector was “showing signs of recovery” after having previously rated the situation as “at a standstill”. Analysts at Goldman Sachs, who had forecast a 4.8 per cent increase, noted that the production index had recovered to just below its pre-pandemic level in January 2020.

“While monthly production will likely fluctuate amid lingering supply shortages for semiconductors and other components, it appears to be returning steadily to a solid growth track,” wrote Yuriko Tanaka, a Goldman Sachs economist, in a note to clients.

Investors reacted positively to the data, with the benchmark Topix closing up 1.37 per cent higher on Tuesday. But while some interpreted the numbers as a potential leading indicator of more sustained gains during the final quarter of the financial year ending in March 2022, others were more guarded.

As per MRC, Japanese refineries may be forced to shut down capacity once again unless they see a strong recovery from the coronavirus pandemic. They’ve been hit by declining use for fuel at home, competition from newer refineries in China and South Korea dominating in other markets, as well.

As MRC wrote before, JXTG Nippon Oil and Energy is in plans to restart its cracker following an unplanned outage. The company is likely to resume operations at the cracker early this week. The cracker was shut owing to technical issues on May 4, 2020. Located at Kawasaki in Japan, the cracker has an ethylene production capacity of 460,000 mt/year and propylene production capacity of 235,000 mt/year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,047,100 tonnes in the first ten months of 2021, up by 17% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,226,530 tonnes in January-October 2021, up by 26% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding stat-copolymers of propylene (PP random copolymers) decreased significantly.
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MOSCOW (MRC) -- Shell Integrated Gas Oman BV, a subsidiary of Royal Dutch Shell plc, along with its partners, OQ and Marsa Liquefied Natural Gas LLC (a joint venture between TotalEnergies and OQ), have signed a concession agreement with the Ministry of Energy and Minerals on behalf of the government of the Sultanate of Oman to develop and produce natural gas from Block 10, as per Shell's press release.

The parties also signed a separate gas sales agreement for gas produced from the block. The two agreements follow an interim upstream agreement signed in February 2019.

Shell’s entry into this block signifies a further commitment to Oman, while enhancing and diversifying Shell’s gas supply.

“These agreements represent a major step for Shell and for our relationship with Oman. They generate value and strengthen our Integrated Gas business, which we need to deliver the energy Oman and the world need today. And we are looking at how Shell can help Oman with developing low-carbon energy in the future,” said Wael Sawan, Shell Integrated Gas, Renewables and Energy Solutions Director.

The concession agreement establishes Shell as the operator of block 10, holding a 53.45% working interest, with OQ and Marsa Liquefied Natural Gas LLC holding 13.36% and 33.19% respectively. For the initial phase, Petroleum Development Oman (PDO) is building the infrastructure for the project, including the main pipeline to the Saih Rawl gas processing facility, on behalf of the Block 10 venture partners. The venture will drill and hook up wells to maintain the production beyond the initial phase. The block is expected to reach production of 0.5 billion standard cubic feet of gas per day (bscf/d). Start up is expected within the next two years.

In addition, Shell and Energy Development Oman (EDO) signed an agreement to process the natural gas from Block 10 in EDO’s Saih Rawl facility.

Shell and the government have agreed that, in parallel to the development of Block 10, Shell will develop options for a separate downstream gas project in which Shell could produce and sell low-carbon products and support the development of hydrogen in Oman. Any project would be subject to further agreements and future investment decisions.

As MRC reported earlier, Royal Dutch Shell plans to build a pyrolysis oil upgrader to turn plastic waste into chemical feedstock at its petrochemical complex in Singapore, part of its shift from oil and gas to renewables and low-carbon energy. The company is also considering building a CCS regional hub and a 550,000 tpy biofuels plant at its 60-year-old Pulau Bukom manufacturing site, one of five remaining energy and chemical parks owned by Shell globally. The projects form part of Shell Singapore's plans to cut emissions from its own operations by half by 2030, from 2016 levels on a net basis, Shell Downstream Director Huibert Vigeveno said in November, 2021.

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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Singapore’s non-oil domestic exports (NODX) surged 24.2% year-on-year in November, marking the biggest jump in nearly a decade and 12th straight month of growth, said Channelnewsasia.

The rise extended the 17.8% increase in the previous month, and is the highest since February 2012. Both electronics and non-electronics exports grew, according to data released by Enterprise Singapore (ESG) on Friday (Dec 17).

On a month-on-month seasonally adjusted basis, NODX increase by 1.1% in November, following the previous month’s increase of 4.1%. Electronic exports continued to grow, recording a 29.2% increase on a year-on-year basis, driven primarily by integrated circuits, personal computers and disk media products, said ESG.

Shipments of non-electronic products grew by 22.7%, led by specialised machinery, petrochemicals and primary chemicals. "NODX to the top markets as a whole rose in November 2021," said ESG, although exports to Thailand declined.

The largest contributors to this increase were China, Taiwan and South Korea. Exports to China grew by 45.3 per cent due to specialised machinery, petrochemicals and pharmaceuticals. Shipments to Taiwan expanded by 36.5% due to integrated circuits, measuring instruments and petrochemicals.

Exports to South Korea rose by 57.9% due to specialised machinery, integrated circuits and personal computers. Shipments to emerging markets grew by 54.2%. This growth was mainly due to South Asia, Cambodia, Laos, Myanmar and Vietnam, as well as Latin America.

As it was written before, Japan's chemical exports in November rose by 20.2% year on year to yen (Y) 907.1bn ($7.95bn), supporting the overall growth in shipments abroad. Exports of organic chemicals rose by 39.5% year on year to Y191bn in November, while shipments of plastic products were up by 14.4% at Y250.6bn, according to data from the Ministry of Finance (MOF).
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