MOSCOW (MRC) -- Shell’s chemicals division profits are expected weaker quarter on quarter for the closing three months of 2021, the producer said on Friday, as commodity chemicals margins continue to weaken, said the company.
Division profitability and joint venture earnings in the space are expected to be weaker quarter on quarter when the UK-headquartered oil and gas major formally reports its financial results in early February. “Chemicals margins as well as associated JV earnings are expected to be significantly lower than the third quarter 2021, primarily due to weaker base chemicals margins,” the company said in an update note released on Friday.
The forecast indicates that Shell’s chemicals earnings will have fallen for the second half of 2021 as a whole, with the division adjusted earnings of USD395m in the third quarter representing a substantial decline from the $670m generated during the prior three-month period.
Shell had attributed the third-quarter decline to weaker margins for base and intermediate chemicals lines as prices normalised, as well as the impact of Hurricane Ida on the US Gulf Coast in September. The aftermath of Ida has continued to weigh on company chemicals earnings in the fourth quarter, Shell said, as well as the impact of a lengthy maintenance period at its Scotford, Canada, facility.
The company took down several production units at the site for maintenance from the start of September until late October. While most units are back online, a problem at the Scotford ethylene glycol plant discovered during the maintenance means the facility was expected to remain idle at least through early 2022.
Due in part to the maintenance and Hurricane Ida recovery work, Shell projects that total capacity utilisation will be 74-78% for the division during the quarter, compared to 78% during the preceding three months. Total chemicals sales volumes are expected at 3.3m-3.6m tonnes, a substantial decline from earlier projections of 3.5-3.9m tonnes for the period.
The company is expected to post final fourth-quarter earnings on 3 February.
As per MRC, Royal Dutch Shell on December 8 shut down its cracking units and a number of petrochemical plants in Deer Park (Deer Park, Texas, USA). It is currently unknown how long the olefin complex with a capacity of 1.67 million tonnes of ethylene per year and the petrochemical plants will remain closed. The reason for the stop is also not indicated.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.
Royal Dutch Shell is an Anglo-Dutch oil and gas company headquartered in The Hague (Netherlands). Shell conducts geological exploration and production of oil and gas in more than 80 countries around the world. The company fully or partially owns more than 30 oil refineries. In addition, Shell owns a significant number of chemical plants, as well as the production of solar panels and other alternative energy sources.
MRC