Petrobras swaps CEOs amid political blowback on fuel prices

The chief executive of Brazilian state-run oil company Petrobras resigned on Monday in the face of mounting pressure from politicians following a fuel price hike last week, with a high-ranking company insider quickly tapped to replace him on an interim basis, said Reuters.

Petroleo Brasileiro SA, as the company is formally known, said in a securities filing that CEO Jose Mauro Coelho had resigned on Monday morning. In a separate filing, it said that Chief Exploration and Production Officer Fernando Borges had been appointed interim CEO until a new boss is elected by shareholders.

Preferred shares in the company fell 5% shortly after the resignation announcement, but quickly snapped back to trade roughly flat following Borges’ appointment.

Borges will become Petrobras’ fourth CEO since Brazilian President Jair Bolsonaro took office in 2019. Coelho had succeeded Roberto Castello Branco and Joaquim Silva e Luna, both ousted after disagreements with Bolsonaro on the company’s fuel pricing policy.

While political interference and high turnover at Petrobras is a major investor concern, analysts said Coelho’s departure was largely priced in, as Bolsonaro had announced in May his intention to push Coelho out.

Borges, who was appointed by the company’s market-friendly board until shareholders can vote on a more permanent replacement, has far more technical expertise than many other names that have been floated for the position.

An engineer by training with an MBA from the Federal University of Rio de Janeiro, Borges has worked at Petrobras for some 38 years, largely in the company’s hyper-profitable offshore division, according to Petrobras’ website.

We remind, Petrobras said it has signed a deal with TSE and Toyo Engineering Corp to build a new diesel hydrotreating unit at its Paulinia refinery. The move will require USD458 million in investments and is in line with Petrobras’ 2022-2026 business plan, the company said in a securities filing. Petroleo Brasileiro SA, as the company is formally known, said the hydrotreating unit is expected to enter production in 2025.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
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Sinopec Shanghai Petrochemical Co has shut its crude oil refining and ethylene units to evaluate hidden safety risks after a fire on Saturday that hit a chemical facility, said Reuters.

The spokesperson did not specify the duration of the shutdown but said the firm will ensure stable domestic fuel supplies.

The Shanghai-based plant, controlled by state refiner Sinopec Corp, operates 16 MMtpy (320,000 bpd) crude oil refining capacity and 700,000 tons of ethylene capacity annually.

Head of China Petrochemical Corporation (Sinopec Group), the parent firm for Sinopec Shanghai and Sinopec Corp, was summoned by China's ministry of emergency management on Monday after recent safety incidents, the ministry said in a statement.

Sinopec Group is asked to improve areas such as aging facilities and inadequate on-site management, the statement added.

As per MRC, Sinopec Maoming Petrochemical, a subsidiary of Sinopec, one of the world's largest energy and chemical companies, has stopped HDPE and LDL production in Maoming, China, due to a fire. So, on 8 June, the company shut the production of LDPE on line No. 2 with a capacity of 280,000 tonnes and HDPE with a capacity of 400,000 tonnes per year for an unknown time.

As per MRC, SIBUR plans to revise its strategy for developing the Amur Gas Chemical Complex (AGCC) with Sinopec.
The company reported that a decision on the matter would be made soon. Sources told Reuters in March that the state-run Sinopec Group had suspended talks on a major petrochemical investment and a gas marketing venture in Russia.
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Neste, Covestro and South Korean petrochemical company SK geo centric are cooperating to enable the production of a major polyurethane raw material based on renewable raw materials via mass balance, said Hydrocarbonprocessing.

The cooperation will see Neste provide SK geo centric with renewable Neste RE, an ISCC certified feedstock for polymers and chemicals made from 100% renewable raw materials such as waste and residue oil and fats. SK geo centric will process this feedstock into benzene at the company’s facilities in South Korea and supply it to Covestro to use as raw material for methylene diphenyl diisocyanate (MDI) at its site in Shanghai, China. MDI is a key raw material for the manufacture of rigid polyurethane foam, which is a well-proven insulating material for buildings and used in the cold chain helping to save CO2 emissions and reduce energy consumption during its product life.

The cooperation marks the start of possible future collaborations between the three companies, aiming at replacing fossil feedstocks by more sustainable ones in the production of polymers and chemicals in the APAC region and beyond.

"With renewable solutions available, we are now entering the phase of scaling up their usage in the chemical industry," says Mercedes Alonso, Executive Vice President, Renewable Polymers and Chemicals at Neste. "This will be crucial in replacing the vast amounts of fossil resources the industry is currently depending on. To make this ramp-up a success, we’ll need to establish collaborations along the value chain – and this one between three sustainability-minded partners is a prime example of how the industry can do just that."

Replacing the common crude oil based fossil feedstock with Neste RE provides a significant reduction in greenhouse gas (GHG) emissions, thereby improving the carbon footprint of the polyurethane raw materials produced by Covestro and of downstream industries. Neste RE is produced with renewable raw materials such as waste and residue oils and fats.

"I am much pleased that through this collaboration we continue to ramp up the market for such sustainable alternative materials. This enables us to supply our customers in Asia-Pacific with more sustainable MDI based on mass-balanced raw materials," says Sucheta Govil, Chief Commercial Officer of Covestro. "Using such materials is attractive because it will also help them achieve their climate goals. Another core benefit of this line of products is that it is a technical drop-in solution that our customers can use immediately without a major changeover in their plants."

“We are delighted to ship and export our first renewable-Benzene produced with 100% renewable Neste RE feedstock,” Woohyuk-Choi, Vice President of SK geo centric’s Aromatic Business Unit says. “SK geo centric will actively work with Covestro and Neste as we mark the first collaboration of this kind in the Asia-Pacific region. We remain committed to expanding this cooperation."

Under the strategy of ‘Green for Better Life’, SK geo centric announced its ambitious target to become ‘Net-Zero’ before 2050. To fulfill its responsibility, the company will drive its business transformation by expanding its high-quality renewable products portfolio. SK geo centric will respond to increasing global demands in the market by leveraging the strong synergies between collaboration partners.

As per MRC, Neste and United Airlines announced that they have signed a new purchase agreement that provides United the right to buy up to 160,000 mtons (52.5 MM gallons) of Neste MY SAF over the next three years to fuel United flights at Amsterdam Airport Schiphol, and potentially other airports, as well. With this agreement, United became the first U.S. airline to make an international purchase agreement for SAF.

As MRC reported earlier, Neste has a target to process annually over 1 MM tons of waste plastic from 2030 onwards. The company plans to use liquefied plastic waste as a raw material at its fossil oil refinery to upgrade it into high-quality drop-in feedstock for the production of new plastics.
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Invista celebrated the completion of its technical lab expansion in Lugoff after six months of successful operation, said the company.

The company invested more than USD5 million in research and development at the site, a nylon fiber manufacturing facility. “We are very pleased with the investment that was made … and the confidence it demonstrates in our site and its employees,” said Site Manager Paul Liddle.

Invista says demand growth for nylon-6,6 resin is being driven by trends, such as e-mobility and the Internet of things, that require engineered plastics that can support electrification and increased complexity across a range of challenging operating conditions. “Over the past several years, market trends have shown an ongoing shift downward in our BCF [bulk continuous filament] products and a shift upward in polymer demand,” says a company spokesperson. “The transformation at the site is a reflection of that ongoing shift."

Invista has 130,000 mt/year of nylon-6,6 resin capacity in Camden and another 390,000 mt/year of capacity divided between sites in Canada, the Netherlands, and mainland China, according to data from S&P Global Commodity Insights. The total global capacity of all producers is 3.1 million mt/year.

As per MRC, Invista, a Koch company and affiliate of Flint Hills Resources, has recently acquired the Flint Hills Resources propylene business. This includes chemical facilities in Houston and Longview, Texas, as well as support employees. Ownership of the pipelines that supply these facilities also transferred to Invista, and they will continue to be operated by Flint Hills Resources under contract.
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U.S. refiners last month imported the most heavy crude in nearly two years, customs data showed, as they cranked up motor fuel production and sought to replace sanctioned Russian oil, said Hydrocarbonprocessing.

Higher heavy-crude imports are common in summer-driving months, but this year's increase comes as the Biden administration is calling on for refiners to ramp up output and shave profit margins to ease soaring prices. The administration has asked for a parley to explore further efforts.

Heavy crudes are cheaper than lighter shale oils produced in the United States and typically make more diesel and less gasoline. Diesel stocks are draining, with U.S. inventories down 19% last month, and margins are soaring, boosting refiners' profits.

Refiners imported 33.5 MM barrels of heavy crude in May, the highest in nearly two years, customs data showed, with 56 vessels discharging nearly 1.1 MMbpd of Mexico's Maya, Ecuador's Napo and Oriente and Iraq's Basra heavy, among other grades.

"We have healthy demand, low products inventories, and strained refining capacity," said Refinitiv senior energy analyst Corey Stewart. "Refiners are looking to bring feedstocks into the U.S. to most economically meet what products the markets demand," he added.

As per MRC, U.S. Energy Secretary Jennifer Granholm is expected to meet with refining executives on June 23 as tensions between the White House and the oil industry mount over soaring gasoline prices. The planned talks come as President Joe Biden, under pressure over high gasoline prices, has demanded that oil refining companies explain why they are not putting more fuel on the market as they reap windfall profits.
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