Europe refiners benefit from U.S. emergency oil stock releases

Europe refiners benefit from U.S. emergency oil stock releases

MRC -- At least three vessels carrying crude oil from U.S. emergency stockpiles sailed for Europe in April as refiners there scrambled to replace Russian crude supplies, said Reuters.

Releases from the Strategic Petroleum Reserve (SPR) since Russia's invasion of Ukraine were designed to counter supply shortages and stem fuel price gains. A release last fall was aimed primarily at pushing down rising U.S gasoline prices. The Biden administration last month added 180 MM barrels to two smaller releases since November from caverns along the U.S. Gulf Coast. The United States has not prohibited exports of SPR oil and some analysts believe the exports will grow.

U.S. retail gasoline and diesel prices, averaging USD4.40 and USD5.55 per gallon nationally, have remained near record highs despite the releases. Fuel demand is so strong U.S. refiners' average per share earnings this quarter are projected to run four times the first quarter's profit, according to analyst projections. Last month, U.S. oil refiner Phillips 66 loaded about 600,000 barrels of crude from the Bryan Mound cavern in Texas onto tanker Sea Holly. It is on its way to Trieste, Italy, U.S. customs data and Refinitiv Eikon showed. Trieste is home to a pipeline that send oil to refineries in central Europe.

Atlantic Trading & Marketing (ATMI), an arm of French oil major TotalEnergies, sent a little over 1 MM barrels of SPR crude to Rotterdam last month. About 2.25 MM SPR barrels on three vessels were exported to Italy and the Netherlands in April, according to Matt Smith, lead oil analyst for the Americas at data provider Kpler.

ATMI has secured at least 3.5 MM barrels from the SPR, while Phillips has secured at least 10 MM barrels, based on government disclosures. Other companies taking SPR oil include Exxon Mobil, Chevron, Marathon Petroleum and Valero Energy.

Phillips 66 declined to comment on trading activities. ATMI did not immediately respond to a request for a comment. With continued releases of SPR over next several months, "expect to be seeing some of those exported," Kpler's Smith said.

As per MRC, oil prices fell on as concerns over weak economic growth in China, the world's top oil importer, overshadowed fears supply might be crimped by a potential European Union ban on Russian crude. Brent crude futures were down USD3.73, or 3.4%, to $103.41 a barrel at 1403 GMT, while U.S. WTI crude futures fell USD3.98, or 3.8%, to USD100.71 a barrel. Markets in Japan, Britain, India and across Southeast Asia were closed for public holidays on Monday. China released data showing factory activity in the world's second-largest economy contracted for a second month to its lowest since February 2020 because of COVID lockdowns.

We remind, US oil refiners expect strong first-quarter earnings as margins to sell gasoline and diesel strengthened due to a steep dropoff in refining capacity and crude oil supplies tightened because of Russia's war with Ukraine.
Refining capacity worldwide has dropped during the coronavirus pandemic, with several less profitable oil refineries closing in the last two years. However, worldwide fuel demand has rebounded to near pre-pandemic levels, boosting profits for facilities that are still operating.

Bayer Q1 net profit grows 57.5%

Bayer Q1 net profit grows 57.5%

Bayer’s first-quarter net profit increased by 57.5% year on year, thanks to strong gains from its agriculture business, said the company.

March-quarter sales growth was 14.3% year on year after foreign exchange and portfolio adjustments. “Group sales and earnings were not negatively impacted by Russia’s invasion of Ukraine in the first quarter,” Bayer said in a statement.

“In business terms, Russia and Ukraine do not rank among the company’s top ten key countries,” it said, adding that the two countries have a combined share of about 3% of the company’s sales.

Bayer chairman Werner Baumann said: "Our forecast going forward this year remains confident despite the great uncertainties, including the stability of supply chains and energy supplies, and we confirm the currency-adjusted outlook for the full year published in March."

The German firm expects to generate full-year sales of about EUR46bn, up by about 5% from 2021 levels, after adjusting for currency and portfolio effects, with EBITDA before special items projected at around EUR12bn. Click here to read the Ukraine topic page, which examines the impact of the conflict on oil, gas, fertilizer and chemical markets.

We remind, Bayer has announced midterm targets covering margin- and sales growth for 2022-24. The company announced the targets at its virtual capital markets day on 10 March. Bayer is aiming for group net sales of EUR43.0-45.0 billion by 2024, up from EUR41.4 billion in 2020. The Crop Science division is projected to grow at a currency- and portfolio-adjusted rate of 3-5% annually from 2022 through 2024, faster than the market.

As per MRC, Bayer reports a 78.2% decrease in fourth-quarter net profit compared with the corresponding period of the previous year, to EUR308 million (USD376 million) on sales down 7%, to just under EUR10 billion. Fourth-quarter EBITDA before exceptional items decreased 3.4% year on year (YOY) to EUR2.4 billion, missing analysts’ consensus estimate by 2.4% on lower earnings and sales at the company’s agricultural and consumer health businesses, as well as currency effects.

European gas supply crisis grows after Russia imposes sanctions

European gas supply crisis grows after Russia imposes sanctions

Pressure on Europe to secure alternative gas supplies increased on Thursday as Moscow imposed sanctions on European subsidiaries of state-owned Gazprom a day after Ukraine stopped a major gas transit route, said Hydrocarbonprocessing.

Gas prices surged, with the key European benchmark gaining 12% as buyers were unsettled by the mounting threats to Europe's supply given its high dependence on Russia. Moscow has already cut off supply to Bulgaria and Poland and countries are racing to fill dwindling gas reserves before winter.

Russia imposed sanctions late Wednesday mainly on Gazprom's European subsidiaries including Gazprom Germania, an energy trading, storage and transmission business that Germany placed under trusteeship last month to secure supplies. It also placed sanctions on the owner of the Polish part of the Yamal-Europe pipeline that carries Russian gas to Europe.

Kremlin spokesperson Dmitry Peskov said there can be no relations with the companies affected nor can they take part in supplying Russian gas. The affected entities, listed on a Russian government website, are largely based in countries that have imposed sanctions on Russia in response to its invasion of Ukraine, most of them members of the European Union.

Germany, Russia's top client in Europe, said some subsidiaries of Gazprom Germania were receiving no gas because of the sanctions. "Gazprom and its subsidiaries are affected," German Economy Minister Robert Habeck told the Bundestag lower house. "This means some of the subsidiaries are getting no more gas from Russia. But the market is offering alternatives."

The list also includes Germany's biggest gas storage facility at Rehden in Lower Saxony, with 4 Bcm3 of capacity and operated by Astora, as well as Wingas, a trader which supplies industry and local utilities. Wingas has said it would continue operating but would be exposed to shortages. Rivals Uniper, VNG or RWE could be potential sources of supply to the market. Russian gas flows to Germany continue via the Nord Stream 1 pipeline under the Baltic Sea.

If sanctioned firms cannot operate, other companies such as gas utilities could take over contracts, which would likely involve agreeing new terms with Gazprom, including for payment, said Henning Gloystein, director at Eurasia Group. "This may be what Gazprom intends here, beyond also sending a retaliatory signal (for EU sanctions)," he added.

Gazprom said it would no longer be able to export gas through Poland via the Yamal-Europe pipeline after sanctions against EuRoPol Gaz, which owns the Polish section. The pipeline connects Russian gas fields in the Yamal Peninsula and Western Siberia with Poland and Germany, through Belarus, and has a 33 Bcm3 capacity, around a sixth of Russian gas exports to Europe.

However, gas has been flowing eastwards through the pipeline from Germany to Poland for some weeks, enabling Poland - which was cut off from Russian supplies along with Bulgaria last month for refusing to comply with a new payment mechanism - to build stocks. Exit flows into Poland at the Mallnow metering point on the German border stood at 9,734,151 kWh/h on Thursday, down from roughly 10,400,000 kWh/h the previous day, data from the Gascade pipeline operator showed.

Germany's Habeck said Russia's measures seemed designed to drive up prices but the expected 3% drop in Russian gas deliveries could be compensated for on the market, albeit at a higher cost. Dutch gas prices at the TTF hub, the European benchmark, rose by as much as 20% before closing 12% higher. The benchmark has skyrocketed over the past year, adding to the burden on households and businesses.

Although German gas storage is around 40% full, that is still low for the time of year and inventories need to be built up in preparation for winter. Moscow's sanctions came just a day after Ukraine halted a gas transit route, blaming interference by occupying Russian forces, the first time exports via Ukraine have been disrupted since the invasion.

The Sokhranovka gas transit point will not be re-opened until Kyiv obtains full control over its pipeline system, the head of operator GTSOU said, adding that flows could be re-directed to the alternative Sudzha transit point, although Gazprom has said this is not technologically possible. Ukraine's gas transit system operator said Gazprom had booked capacity of 65.67 MMcm3 via the Sudzha entry point for Friday, versus 53.45 MMcm3 for Thursday.

While the European Commission said the Ukrainian suspension does not present an immediate gas supply issue, there are concerns in the market about winter, when heating demand will rise and global supply constraints will bite.

Finnish politicians have been warned that Russia could halt gas supplies to its neighbour on Friday, newspaper Iltalehti reported, citing unnamed sources. Gas accounts for about 5% of Finland's energy consumption. There is also confusion still among EU gas companies over a payment scheme decreed by Moscow in March which the European Commission has said would breach EU sanctions.

Germany's top power producer, RWE, expects Berlin to soon clarify whether payments for Russian gas can be made under Moscow's proposed scheme, its finance chief said on Thursday, as a deadline approaches at the end of the month.

Russia's demand for payment in roubles has been rejected by most European gas buyers over the details of the process, which requires opening accounts with Gazprombank, fuelling fears about potential supply disruptions and their far-reaching consequences for Europe and particularly Germany, which relies heavily on Russian gas.

As per MRC, Uniper remains in talks with Gazprom and the German government over how to implement Moscow's demand to pay for Russian gas in roubles, which the European Commission said would breach sanctions. Uniper, in presentation slides published along with final first-quarter results, cited "ongoing discussions with German government and Gazprom on potential implementation" of the decree, which has stoked fears that supplies may be disrupted. The company, Germany's largest importer of Russian gas in which Finland's Fortum owns 78%, declined to comment on details of the talks, only saying that no binding assessment had been made as of now.

We remind, Germany would be able to weather an EU embargo on Russian oil imports by the end of this year even though a stoppage could result in shortages, Economy Minister Robert Habeck said on Monday, appearing to throw his weight behind a ban. Two European Union diplomats said at the weekend that the bloc is leaning toward a ban by the end of the year as part of a sixth package of sanctions against Russia over its invasion of Ukraine. EU energy ministers will discuss the proposed oil ban in Brussels later on Monday.

Braskem taps Terra Circular to form plastic recycling JV

Braskem taps Terra Circular to form plastic recycling JV

Braskem has agreed with Dutch recycler Terra Circular to enter a joint venture for mechanical recycling, said the company.

Financial details were not disclosed. Terra Circular, through its subsidiary ER Plastics, operates the production facilities, with nominal capacity for mechanical recycling of 23,000 tonnes/year.

The plant is to process mixed plastic waste.

"With the agreement’s execution and once its conditions' precedents are fulfilled, Braskem will become the controlling shareholder of the joint venture, with the possibility to expand the technology’s use to other regions. Terra Circular will transfer to the joint venture the shares in its subsidiary ER Plastics," said Braskem.

Netherlands-based Terra Circular will provide the JV all the shares in its subsidiary ER Plastics, which has a capacity to recycle 23,000 tonnes of plastic waste per year.

As per MRC, Braskem, the largest polyolefins producer in the Americas, as well as a market leader and pioneer producer of biopolymers on an industrial scale, announces the release of three new sustainable 3D printing filament product offerings for the additive manufacturing market. These first of their kind products include 3D printing filaments produced from bio-based ethylene vinyl acetate (EVA) filament derived from raw sugarcane as well from recycled polyethylene and polypropylene (PE/PP) blended filaments with, or without, carbon fiber.

As per MRC, Lummus Technology announced a partnership with Braskem, the largest biopolymer producer in the world, to license green ethylene technology. Lummus and Braskem will license worldwide technology to produce green ethylene and accelerate the use of bioethanol for chemicals and plastics, supporting the industry's efforts towards a carbon neutral circular economy.

As MRC wrote earlier, in late 2020, Braskem announced its latest sustainability ambitions to significantly expand its efforts to eliminate plastic waste in the environment by 2030 and to achieve carbon neutrality by 2050.
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.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).

TAZIZ and Reliance partner with UAE Shaheen on USD2 B chemicals project in Ruwais

TAZIZ and Reliance partner with UAE Shaheen on USD2 B chemicals project in Ruwais

TA’ZIZ announced that Shaheen will join the proposed TA’ZIZ and Reliance Industries Limited TA'ZIZ EDC & PVC joint venture, that will construct and operate a world-scale Chlor-Alkali, EDC and PVC facility, at the TA’ZIZ Industrial Chemicals Zone, in Ruwais, said Hydrocarbonprocessing.

The TA’ZIZ Industrial Chemicals Zone is a joint venture between ADNOC and ADQ. With an investment of more than USD2 B (AED7.34 B), the project will supply local manufacturers, replacing chemicals currently imported, while also exporting to meet growing demand for these chemicals globally.

TA’ZIZ will provide new opportunities for local manufacturers, supporting growth of their knowledge and capabilities, catalyzing local industrial development. Shaheen brings extensive knowledge of the local market and joins the project with a focus on utilizing production for use in local supply chains.

The agreement marks the first direct investment by a privately-owned UAE company in the TA’ZIZ Industrial Chemicals Zone. It also follows the investment agreements between TA’ZIZ and eight UAE-based investors in ADNOC Classification: Public December 2021, which marked the first domestic PPP in Abu Dhabi’s downstream and petrochemicals sector.

Khaleefa Yousef Al Mheiri, TA’ZIZ Acting Chief Executive Officer, said: “We are delighted to welcome Shaheen as a strategic partner in TA’ZIZ. This strategic agreement further consolidates TA’ZIZ’s position as the sought-after partner for local and international investment in the UAE’s chemicals industry. The partnership supports our national strategy to drive the growth and diversification of the country’s industrial base, strengthen domestic supply chains and enable the private sector to “Make it in the Emirates”, in line with the leadership’s wise directives."

The chemicals to be produced by the TA’ZIZ EDC and PVC project have a wide range of industrial applications and will create opportunities for export, as well as providing local industry with a source of critical raw materials manufactured in the UAE for the first time.

Walid Azhari, Managing Director of Shaheen, said: “We are honored to partner with TA’ZIZ and Reliance in this world class industrial plant which will include the largest Chlor Alkali plant in the world. We are looking forward to working with our partners during the development, construction and operation stages of the project. This project will be the cornerstone for many exciting downstream opportunities which will create a whole new industrial cluster in the UAE, in line with the Abu Dhabi Economic Vision 2030”.

Investment in the production of chemicals is a priority for the UAE’s industrial growth strategy, championed by the Ministry of Industry and Advanced Technology, which aims to raise the UAE’s industrial sector’s contribution of national GDP to AED300 B by 2031.

Chemicals are an attractive sector given projected demand growth globally and the opportunity local production creates to grow the UAE’s industrial base. Chlor-Alkali enables the production of caustic soda, crucial to the production of aluminum, and EDC is used in the production of PVC for a wide range of industrial and consumer products including pipes, windows, cables, films and flooring.

TA’ZIZ comprises three zones, the first of which is an Industrial Chemicals Zone that will host chemicals production, with seven world-scale projects already in the design phase. The second is a Light Industrial Zone, which will be home to downstream conversion industries that will convert the outputs of the Chemicals Zone into consumable products. The third is an Industrial Services Zone ADNOC Classification: Public that will house a variety of companies providing the services required by the TA’ZIZ industrial zones and the wider Ruwais Industrial Complex. All projects in the TA’ZIZ Industrial Chemicals Zone are subject to customary regulatory approvals.

As per MRC, Reliance Industries reports a 24.8% rise year on year (YOY) in EBITDA for its oil-to-chemicals (O2C) business, to 142.4 billion Indian rupees (USD1.8 billion) in the fiscal fourth quarter ended 31 March. Downstream product margins were negatively impacted by weak naphtha cracking economics and supply overhang in fiber intermediates. Quarterly sales rose 44.2% YOY to Rs1.4 trillion, due primarily to increased crude oil prices.

As MRC informed before, in November 2021, Reliance Industries and Saudi Aramco decided to re-evaluate their agreement for the Middle Eastern producer to buy a stake in the refining and petrochemical business of India's biggest private refiner, and both companies would look at broader areas of cooperation due to the changing energy scenario.

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.

Reliance Industries is one of the world's largest producers of polymers. The company produces polypropylene, polyethylene and polyvinyl chloride and other petrochemical products.