India cuts fuel export taxes, hikes tax on local crude

India cuts fuel export taxes, hikes tax on local crude

India has cut fuel export taxes for the second time in less than two weeks and increased a windfall tax on locally produced crude oil, a government notification said, as per Reuters.

India cut export taxes on jet fuel to zero from 4 rupees per liter and diesel to 5 rupees per liter from 11 rupees per liter, the finance ministry notification said. The changes will be effective from Wednesday.

India, which is the world's third largest oil importer, on Tuesday also raised the tax on domestically produced crude to 17,750 rupees (USD226.14) per ton from 17,000 rupees per ton, the government notification said. India imposed a windfall tax on July 1 on crude oil producers, along with levies on gasoline, diesel and aviation fuel exports.

But on July 20 it said it would cut the windfall tax on oil producers and levies on refiners, and fully exempted gasoline from an export duty. A top finance ministry official told Reuters last month that the Indian government will only withdraw the windfall tax for oil producers and refiners if global prices of crude fall as much as $40 a barrel from present levels.

We remind, BASF completed the installation and start-up of a state-of-the-art acrylic dispersions production line in Dahej, India, serving the coatings, construction, adhesives, and paper industries for the South Asian markets.
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Several refining projects are scheduled in Asia and the Middle East

Several refining projects are scheduled in Asia and the Middle East

In Asia and the Middle East, at least nine refinery projects are beginning operations or are scheduled to come online before the end of 2023, said Hydrocarbonprocessing.

At their current planned capacities, they will add 2.9 MMbpd of global refinery capacity once fully operational. In the International Energy Agency’s (IEA) June 2022 Oil Market Report, the IEA expects net global refining capacity to expand by 1.0 MMbpd in 2022 and by an additional 1.6 MMbpd in 2023. Net capacity additions reflect total new capacity minus capacity that has closed.

The scheduled expansions follow a period of reduced global refining capacity. Net global capacity declined in 2021 for the first time in 30 years, according to the IEA. The new refinery projects would increase production of refined products, such as gasoline and diesel, and in turn, they might reduce the current high prices for these products.

China’s refinery capacity is scheduled to increase significantly this year. The Shenghong Petrochemical facility in Lianyungang has an estimated capacity of 320,000 bpd, and they report that trial crude oil-processing operations began in May 2022. In addition, PetroChina’s 400,000 bpd Jieyang refinery is expected to come online in the third quarter of 2022. A planned 400,000 bpd Phase II capacity expansion also began operations earlier this year at Zhejiang Petrochemical Corporation’s (ZPC) Rongsheng facility.

Outside of China, the 300,000 bpd Malaysian Pengerang refinery (also known as the RAPID refinery) restarted in May 2022 after a fire forced the refinery to shut down in March 2020. In India, the Visakha Refinery is undergoing a major expansion, scheduled to add 135,000 bpd by 2023.

New projects in the Middle East are also likely to be an important source of new refining capacity. The 400,000 b/d Jizan refinery in Saudi Arabia reportedly came online in late 2021 and began exporting petroleum products earlier this year. More recently, the 615,000 b/d Al Zour refinery in Kuwait—the largest in the country when it becomes fully operational—began initial operations earlier this year. A new 140,000 bpd refinery is scheduled to come online in Karbala, Iraq, this September, targeting fully operational status by 2023. A new 230,000 bpd refinery is set to come online in Duqm, Oman, likely in early 2023.

These estimates do not necessarily include all ongoing refinery capacity expansions. Moreover, many of these projects have already been subject to major delays, and the possibility of partial starts or continued delays related to logistics, construction, labor, finances, political complications, or other factors may cause these projects to come online later than estimated. Although the potential for project complications and cancellations is always a significant risk, these projects could otherwise account for an increase of nearly 3.0 MMbpd of new refining capacity by the end of 2023.

As per MRC, PetroChina Urumqi Petrochemical is planning to revamp and upgrade its refining facilities by adding some new refining as well as petrochemical units. A 450,000 tonne/year polypropylene (PP), a 300,000 tonne/year styrene monomer (SM), a 200,000 tonne/year polystyrene (PS), and a 1.2m tonne/year purified phthalate acid (PTA) unit will be installed as the petrochemical part. The refining part will mainly include a new 1.2m tonne/year solvent deasphalting (SDA), a 2.2m tonne/year fluid catalytic cracking (FCC), and a 1m tonne/year gas fractionation units.
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Huntsman reports jump in Q2 earnings despite global challenges

Huntsman reported a jump in earnings despite challenges it said it faced during the second quarter related to high natural gas prices in Europe, shutdowns in China and a contracting U.S. economy, said the company.

The Woodlands-based chemical and materials company said its profit jumped 41 percent to USD242 million from USD172 million in the same period last year. Revenues increased 17 percent to USD2.4 billion compared to USD2 billion last year.

"We remain well ahead or on track to meet the targets that we presented at our Investor Day in November 2021,” said the company’s CEO Peter Huntsman, "despite an increasingly challenging economic environment due to extremely high European natural gas prices, headwinds in China associated with government-mandated shutdowns and monetary tightening in the United States."

Every dollar of price increase adds around USD10 million in annual costs for the company, Peter Huntsman said. "During these past two weeks, European gas prices moved nearly 20 percent upwards, costing us in excess of USD100 million on an annualized basis of added cost," he said.

The company may decide to reduce production at some of its European facilities in response to the crisis and increase its imports from Asia and North America. "It has become fairly clear to us that Europe's energy problems will not likely be fixed anytime soon," Huntsman said. "We will look at further consolidation and site rationalizations as we calibrate our business around what may be a more permanent reality for Europe."

Also during the quarter, the company began operating its new USD180 million splitter of MDI, or methylene diphenyl diisocyanate, in Louisiana. It expects the splitter to add USD45 million a year to the company's earnings before interest, taxes, depreciation and amortization.

We remind, Huntsman Corporation announced the start of commercial operation of a new methylene diphenyl diisocyanate (MDI) splitter at its Geismar site in Louisiana. The USD180 million splitter gives Huntsman the ability to produce more high value, differentiated grades from the crude MDI manufactured at the plant, thereby enabling growth in key customer applications.
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ORLEN Group completes merger with Grupa Lotos

Poland’s ORLEN Group has finalised its merger with Grupa LOTOS, strengthening its leading role in the fuel and energy industry in Central and Eastern Europe, said the company.

The final step in the process that has been successfully completed was the registration of the merger by the District Court of Lodz. The merger paves the way for unlocking synergies inherent in leveraging the potential of the two companies. As an immediate effect, the merger of PKN ORLEN and Grupa LOTOS will help increase capital expenditure, step up the execution of the most profitable projects, increase the country’s energy independence and ensure stable fuel supplies for all customers.

"We are making history,” said Daniel Obajtek, President of the Management Board of PKN ORLEN. “We have merged PKN ORLEN and Grupa LOTOS today. This is the culmination of a transaction which many thought and talked about, but failed to initiate and which we have successfully carried through. The strong business of the new group will be built around the most valuable business segments leveraging the combined capabilities and resources of PKN ORLEN, Grupa LOTOS and, soon, PGNiG."

Indeed, the Management Boards of PGNiG and PKN ORLEN have recently agreed on a plan for the merger of the two companies and on the exchange ratio at which PGNiG shares will be swapped for PKN ORLEN shares. "Building a large, strong multi-utility group is a landmark business project that will stimulate further economic growth and help enhance Poland’s energy security,” said Iwona Waksmundzka-Olejniczak, President of the Management Board of PGNiG. “When PKN ORLEN and the LOTOS Group join forces, it will be easier for us to achieve the energy transition that Poland and all the other countries in Europe simply must undergo."

Its merger with Grupa LOTOS, and eventually with PGNiG, will strengthen PKN ORLEN’s position as the leader in energy transition through investments in low- and zero-carbon energy sources. By investing in green energy, including offshore and onshore wind farms and photovoltaics, as well as alternative fuels, small modular reactors and biomaterials, the new ORLEN Group will significantly contribute to reducing the Polish economy’s dependence on fossil fuels.

Following the merger, the scale of capital expenditure to develop individual businesses formed by the multi-utility group will grow. In 2021 alone the ORLEN Group spent on CAPEX a record amount of 9.9 billion zlotys (approximately 2 billion euros), while this year the figure will break another record of 15.2 billion zlotys (approximately 3.2 billion euros).

We remind, PKN ORLEN has confirmed it is discussing with Aramco and SABIC the possibility of collaborating in investments in various petrochemical business segments. An existing triparty MoU will be extended to evaluate a potential joint development of a large-scale mixed feed steam cracker and downstream derivatives integrated with the Gdansk refinery. Moreover, PKN ORLEN and Aramco continue to explore areas of cooperation in the field of research and development.
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Gazprom halts gas supplies to Latvia

Gazprom halts gas supplies to Latvia

Gazprom stopped supplying Latvia with gas, the Russian gas giant announced on Saturday citing a violation of the conditions for gas withdrawal, said Ceenergynew.

The move comes as a response to the announcement of Latvian energy firm Latvijas Gaze, which said it was buying gas from Russia, but not from Gazprom. During the last month, approximately one terawatt-hour of natural gas was delivered to Latvia from Russia and the payment was made in euros rather than in roubles as required by Gazprom.

"Latvijas Gaze is currently buying gas, but not from Gazprom,” said the company’s head, Aigars Kalvitis, adding that Latvijas Gaze had another supplier in Russia but he did not reveal the supplier’s name.

Latvia’s parliament has passed a ban on natural gas imports from Russia as of January 1, 2023 and amended its energy law to further support the diversification of natural gas supply routes and the provision of strategic reserves.

In recent months, Latvia and the other Baltic countries have been working to secure alternative gas supplies to phase out their dependence on Russian gas. Natural gas consumption of all Baltic states combined was approximately 4 billion cubic metres (bcm) in 2021 (Lithuania – 2.3 bcm, Latvia – 1.2 bcm, Estonia – 0.5 bcm).

Gazprom has already halted or reduced deliveries to 12 EU countries. Poland, Bulgaria, the Netherlands, Finland and Denmark were cut off from Russian gas supplies as they refused to comply with Gazprom’s demands to pay for deliveries in rubles. As a response, EU energy ministers reached an agreement on mandatory, bloc-wide gas rationing in case of winter supply shortages.

We remind, Gazprom has told customers in Europe it cannot guarantee gas supplies because of 'extraordinary' circumstances. The July 14 letter from the Russian state gas monopoly said it was retroactively declaring force majeure on supplies dating from June 14. The news comes as Nord Stream 1, the key pipeline delivering Russian gas to Germany and beyond, is undergoing annual maintenance meant to conclude on Thursday. The letter added to Europe's fears that Moscow could keep the pipeline mothballed in retaliation for sanctions imposed on Russia over the war in Ukraine, heightening an energy crisis that risks tipping the region into recession.
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