Pemex oil refinery under construction in Mexico is unlikely to come online in 2022

MOSCOW (MRC) -- A major Pemex oil refinery under construction in Mexico is running over budget and unlikely to come online this year as promised, according to documents seen by Reuters and sources close to the project, despite being a presidential priority.

The Olmeca refinery has an official USD8.9 billion price tag approved by the board of the national oil company in 2020. President Andres Manuel Lopez Obrador has long pitched the refinery as essential to weaning Mexico off its dependence on foreign gasoline and diesel supplies, which he argues undermines the country's energy security.

But two sources with direct knowledge of the project's finances say the latest cost estimate has reached USD14-B, or some USD5-B over budget.

Officials at Pemex, the energy and finance ministries did not respond to requests for comment.

Sources within Pemex say the original budget of USD8.9-B was always unrealistic, with internal estimates calculating a range of up to USD12-B. The upper end of the range, which included the possibility of higher costs, administrative expenses or other contingencies, was never made public.

The USD12-B figure was based on 2020 estimates but the sources said the cost of building Olmeca is now around USD14 billion, due largely to already-committed contracts through early 2024. The sources did not give details about those contracts.

Lopez Obrador, a leftist resource nationalist who has pledged to revive the fortunes of state-owned Pemex, early on tapped his close confidant Energy Minister Rocio Nahle to oversee construction of the new refinery, in the president's native Tabasco state in southern Mexico.

Squeezed by higher costs and Lopez Obrador's determination to see the signature project completed in time for an inauguration this summer, the sources say Nahle is scrambling for additional funding.

"The minister is committing resources that have not been authorized by the Pemex board and that the finance ministry wants to avoid due to legal issues," said one of the sources, who spoke on condition of anonymity to discuss the project's finances.

To date, more than USD8.818 billion has already been spent on the Olmeca refinery, according to the government documents.

Designed to be able to process up to 340,000 bpd of crude, Olmeca would be Pemex's biggest domestic refinery.

The documents seen by Reuters reveal a back-and-forth between the finance and energy ministries, and show how the former has so far declined to approve more money, arguing that the Pemex board must first authorize more spending.

As part of her duties as energy minister, Nahle chairs the Pemex board.

A few days ago, Nahle publicly acknowledged that the refinery's costs had risen by USD900 MM to reach USD9.8-B, due to added pipelines, a power plant and aqueduct. Previously, she had repeatedly denied reports that the project was over budget.

In January, Nahle also batted away suggestions that the refinery would not begin operations later this year, which Lopez Obrador promised in 2019, his first full year in office.

She most recently said the first barrels of gasoline will be produced in December, despite the facility's scheduled inauguration in early July, while Lopez Obrador has acknowledged that the refinery would need a few months for production tests after the formal ribbon-cutting ceremony.

As MRC informed previously, Mexico will reduce refining output at state oil company Pemex while it modernizes its oil refineries, according to President Andres Manuel Lopez Obrador's statement earlier this month.

We remind that n late January, 2022, Pemex signed a long-term crude supply contract with Royal Dutch Shell Plc as part of its acquisition of the Deer Park refinery in Texas. Pemex and Shell in May, 2021, announced the transaction, which is worth almost USD600 MM and will make the Mexican firm the sole owner of the refinery near Houston. The facility has capacity to process 340,000 bpd. Shell will supply about 200,000 bpd of foreign and US crude to the plant for at least 15 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 2,487,450 tonnes in 2021, up by 13% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market totalled 1,494.280 tonnes, up by 21% year on year. Deliveries of homopolymer PP and PP block copolymers increased, whreas shipments of PP random copolymers decreased significantly.
MRC

MOSCOW (MRC) -- Solvay, a leading global supplier of specialty polymers, announces the production of the new generation solvent Rhodiasolv IRIS, with eco-friendly properties, according to SpecialChem.

Previously manufactured in China, this solvent will now be produced from 2023 onwards at Solvay's Melle site, France.

Rhodiasolv IRIS is efficient, non-flammable, readily biodegradable, low volatile and non-CMR (carcinogenic, mutagenic and reprotoxic). It is used in many applications such as formulation of resin clean-up, phytosanitary products, paint stripping, graffiti and industrial cleaning and agrochemistry.

Rhodiasolv IRIS is in line with the implementation of Solvay One Planet's sustainability roadmap, which notably aims at transitioning the Group’s portfolio towards more sustainable solutions.

In particular, Rhodiasolv IRIS enables the use of an original manufacturing process that recycles a by-product of its polyamide chain, which was previously burned. This process optimizes the use of petrochemical resources and reduces environmental impact.

As MRC reported before, earlier this month, Solvay partnered with Mitsubishi Chemical Advanced Materials to recycle end-of-life medical components. New collaboration will help customers reach sustainability goals for high-performance Udel PSU polymers in demanding applications.

We remind that Belgian chemicals group Solvay has suspended operations and new investments in Russia after the invasion of Ukraine. The suspension is temporary and will be reviewed in due course, a spokesperson said in early March, 2022, adding that the company had put a task force in place to manage the impact of the measures.

We also remind that in August, 2020, through the acquisition of the Solvay polyamide (PA) business, BASF enhanced its R&D capabilities in Asia Pacific with new technologies, technical expertise, and upgraded material and part testing services. BASF is planning to integrate the R&D centers from Solvay into its R&D existing facilities in Shanghai, China, and Seoul, Korea. The enhanced capabilities will boost BASF’s position as a solution provider to develop advanced material solutions for key industries.

Solvay is a science company whose technologies bring benefits to many aspects of daily life. With more than 24,100 employees in 64 countries, Solvay bonds people, ideas and elements to reinvent progress. The Group seeks to create sustainable shared value for all, notably through its Solvay One Planet plan crafted around three pillars: protecting the climate, preserving resources and fostering better life. The Group’s innovative solutions contribute to safer, cleaner, and more sustainable products found in homes, food and consumer goods, planes, cars, batteries, smart devices, health care applications, water and air purification systems. Founded in 1863, Solvay today ranks among the world’s top three companies for the vast majority of its activities.
MRC

MOSCOW (MRC) -- Adnoc and Mubadala Mubadala announced a strategic transaction involving Borealis, one of Europe’s leading petrochemical companies, said Hydrocarbonprocessing.

Under this agreement, Adnoc will acquire a 25% shareholding in Borealis from Mubadala. Upon completion of the transaction, which is subject to customary closing conditions and regulatory approvals, Borealis will be owned 25% by Adnoc and 75% by OMV, an Austrian multi-national integrated oil, gas and petrochemical company listed on the Vienna Stock Exchange.

Borealis is a leading global provider of advanced and circular polyolefin solutions and a European market leader in base chemicals, fertilizers and mechanical recycling of plastics. The investment in Borealis extends Adnoc’s international footprint in the fast-growing chemicals and petrochemical sector, unlocking new opportunities in key markets where Borealis operates, particularly in Europe and the Americas.

This transaction marks another important milestone as Adnoc accelerates the delivery of its Downstream and Industrial growth program, further expanding the company’s long-standing partnership with Borealis. Commenting on the transaction, Dr Sultan Bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and Managing Director and Group CEO of the Adnoc, said, “Globally, the chemicals and petrochemical sector is poised for significant consumer-led growth in the decades ahead."

“Adnoc is therefore delighted to be making this strategic investment for a 25% stake in Borealis, a world-leading petrochemicals company, with whom we have already collaborated in a close and trusted partnership over two decades through our jointly held Abu Dhabi-based polyolefins company Borouge. Alongside OMV, Adnoc will be a co-shareholder in Borealis, with this investment giving further impetus to our local and international petrochemical and industrial growth program and accelerating our transformation into an integrated and global energy player."

Adnoc is well-positioned to capitalize on growth opportunities in the chemicals and petrochemical sector, building on its world-class refining and petrochemicals facilities in Al Ruwais Industrial City, Abu Dhabi. The Company has already embarked on a major expansion drive, including the recently announced Borouge 4 complex and the TA’ZIZ Industrial Chemicals Zone in Ruwais.

Khaldoon Khalifa Al Mubarak, managin director and group CEO at Mubadala, said, “We have partnered with OMV and Adnoc for two decades to build Borealis into a global champion. Throughout this time, we have been proud of the company’s growth, innovation and continuing success in sustainability. Now the time is right for OMV and Adnoc to take this partnership to the next level capitalizing on synergies with the wider Adnoc portfolio."

This investment represents the latest milestone in Adnoc’s strategic growth and investment approach and reinforces Adnoc’s role as a catalyst for responsible and sustainable investment and value creation for Abu Dhabi and the UAE. Meanwhile TA’ZIZ and RIL have signed the formal shareholder agreement for the TA’ZIZ EDC & PVC project recently.

We remind, Borealis (Vienna), a leading producer of polyolefins, has delayed the start-up of a new, world-scale propane dehydrogenation (PDH) plant at its existing production site at Kallo, Belgium, which is the company's biggest investment in Europe, until Q3 2023, citing Covid-19. The plant in Kallo in the port of Antwerp was previously targeted to begin operations by the end of next year.

Borealis is owned by OMV AG and Mubadala Investment Co., the Abu Dhabi state investment company. Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
mrchub.com

MOSCOW (MRC) – BASF and SINOPEC have broken ground for the expansion of their Verbund site operated by BASF-YPC Co., Ltd. (BASF-YPC), a 50-50 joint venture of both companies in Nanjing, as per BASF's press release.

The expansion includes new capacities of several downstream chemical plants and a new tert-butyl acrylate plant, to serve the growing demand from various industries in the Chinese market.

“BASF-YPC is one of the most successful joint ventures for BASF globally with outstanding safety and business performances,” said Dr. Markus Kamieth, Member of the Board of Executive Directors, BASF SE. “It owes to the trusted partnership between BASF and SINOPEC for more than two decades, which is being further strengthened by this expansion.”

The partners will expand the production capacities of propionic acid, propionic aldehyde, ethyleneamines, ethanolamines and purified ethylene oxide, and build a new tert-butyl acrylate plant. The tert-butyl acrylate plant will be an extension to the downstream using acrylic acid and isobutene of the existing Verbund as feedstock, which marks the first time this advanced production technology is applied outside of Germany. The expanded and new plants are planned to come on stream by the end of 2023.

“We will deploy the state-of-the-art technologies to build the new facilities at the BASF-YPC, which allows us to gain competitive edge in the dynamic Chinese market,” said Dr. Jeffrey Lou, President and Chairman Greater China, BASF. “More importantly, it strongly demonstrates the joint commitments by BASF and SINOPEC to promote sustainable development in China’s chemical industry.”

“The domestic petrochemical industry is in high-quality development. With the support of all involved parties, we will implement the expansion project on the first-class standards,” said Yuefeng Gu, Chairman of Sinopec Yangzi Petrochemical Company Limited and BASF-YPC Company Limited. “The advanced modern petrochemical site will promote the transformation and upgrading of the petrochemical industry and make greater contributions to local economic and sustainable development.”

As MRC reported earlier, in November 2021, BASF increased its production capacity for advanced additives at its wholly-owned site in Nanjing, China. The new asset with state-of-the-art technologies will allow BASF to produce high molecular weight dispersing agents, slip and leveling agents and other additives locally for Asian markets.

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.
MRC

MOSCOW (MRC) -- Repsol's industrial division posted an adjusted net income of €236m in the first quarter of this year, up sharply from the EUR73m it reported in the same period a year earlier, supported by strong refining earnings, said the company.

Operating performance at the industrial business' refining unit was €334m higher year-on-year mainly due to higher refining margins and higher utilization rates at distillation units, the company said in a statement. In chemicals, operating performance was €41m lower year-on-year due to higher input prices and higher energy and CO2 costs.

"This was partially compensated by higher cogeneration results," the company said. Petrochemical product sales fell by 3.37% year on year to 687,000 tonnes in the first quarter.

Repsol posted net income of €1.39bn in the first quarter of 2022, compared with EUR648m in the same period of the previous year, supported by the sharp rise in hydrocarbon prices during the period.

Repsol lifted the force majeure for the supply of butadiene in Tarragona (Tarragona, Spain), announced earlier in February. On February 10, the company stopped two lines for the production of butadiene with a total capacity of 130 tons per year in Tarragona. According to a company source, butadiene production was resumed on 23 March.

Earlier it was reported that against the backdrop of a change in global strategy, the Spanish Repsol, formerly a major investor in the Russian fuel and energy complex, announced its withdrawal from Russia in December last year. The company will sell its shares in the oil assets of Evrotek-Yugra and ASB Geo to a Russian partner, Gazprom Neft.

Repsol is the largest oil and gas company in Spain and Latin America, one of the ten largest oil and gas corporations in the world.
mrchub.com