Italy issues comfort letter to stave off Lukoil refinery shutdown

Italy issues comfort letter to stave off Lukoil refinery shutdown

Italian authorities have provided Lukoil with a "comfort letter" to help a refinery it owns in Sicily get bank financing to buy non-Russian oil and remain operational, two people familiar with the matter told Reuters .

The move is aimed at staving off worries that Lukoil's ISAB refinery, which accounts for around 20% of Italian refining capacity, stops working due to an embargo on seaborne Russian oil that comes into force on Dec. 5. ISAB has been forced to rely solely on Russian oil after creditor banks halted financing and stopped providing guarantees needed to buy oil from alternative suppliers.

Though Lukoil has not been hit by international sanctions against Russia, ISAB's suppliers and creditor banks have been wary of dealing with a Russian entity. The letter says that Lukoil should not be restricted in its operations given that it has not been sanctioned, in a bid to reassure ISAB's suppliers and creditors.

The government's safe pass comes from the Financial Security Committee, which is run and chaired by the Italian Treasury and is responsible for enforcing sanctions against Russia. Lukoil was not immediately available for comment.

The ISAB plant directly employs some 1,000 workers in the southern island of Sicily and unions welcomed the government's move. "The plant is an important pillar of the local economy and it's reassuring to know that it can keep functioning," Fiorenzo Amato, a local leader of the CGIL union, told Reuters.

With the letter, the new government of Prime Minister Giorgia Meloni tries to buy time to agree the sale of the plant. U.S. Crossbridge Energy Partners, an investment platform specializing in energy transition projects, is among parties interested in buying the refinery. Antonio Nicita, a senator with the opposition Democratic Party who had urged the government to act swiftly, said the letter would allow banks to open credit lines to ISAB.

"I hope the banks will immediately provide funding to ISAB," Nicita said, adding the government should also consider taking control of the plant. ISAB discussed the issue with government authorities in an Oct. 17 meeting, which included representatives from Intesa Sanpaolo and UniCredit banks, with state-owned export credit agency SACE also present.

Talks centered around the possibility of state-backed financing from Intesa and UniCredit with guarantees from SACE.

We remind, Italy is working on ways to keep a Lukoil-owned refinery in business despite new sanctions against Russia kicking in next month, as Rome tries to buy time to agree the sale of the plant. Lukoil's ISAB refinery in Sicily stands to be hit by an embargo on seaborne Russian oil that comes into force on Dec. 5, putting at risk jobs in Italy's poorer south and the country's refining capacity.

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Chevron USD11.2 bn quarterly profit soars past estimates

Chevron USD11.2 bn quarterly profit soars past estimates

Chevron reported its second-highest ever quarterly profit, blasting past analysts' estimates, driven by soaring global demand for its oil and gas and rising production from its U.S. oilfields, said Reuters.

The surge comes as oil companies book mounting profits with prices near record levels and supplies tight on output cuts during the COVID-19 pandemic, as well as market disruption from the war in Ukraine. Chevron posted a third-quarter net profit of USD11.2 B, or USD5.78 per share - almost double the $6.1 B from the same period last year, and well ahead of Wall Street's USD4.86 estimate.

The results will back higher project spending and increased oil and gas production next year, Chief Financial Officer Pierre Breber told Reuters. That production was roughly flat last quarter on contract expirations in Asia. U.S. oil executives have been loath to crow about this year's earnings gains - surpassing the once-sizzling tech sector - preferring to emphasize investment commitments. But soaring profits are feeding criticism in the United States and Europe as inflation climbs.

The company's cash flow from operations soared to a record USD15.3 B, far higher than the previous quarter. Chevron's return on capital employed - a measure of how much it earns from each dollar invested in the business - jumped to 25%.

"We delivered another quarter of strong financial performance," Chevron Chief Executive Michael Wirth said in a prepared statement, noting its oil and gas production in the top U.S. shale field reached "another quarterly record."

Output from the U.S. Permian basin topped 700,000 barrels of oil equivalent per day (boed), up 12% from a year ago and above the second quarter's 692,000 boed. But global production in the first nine months of the year is down by about 100,000 boed from the 3.093 MM boed from the same period last year.

Chevron reaffirmed its goal of pumping 1 million bpd in the top U.S. shale oil field in 2025, and achieve a 3% annual growth rate compounded between 2023-2026 for its overall output. CFO Breber said Chevron will increase project spending by 20% next year, to up to USD17 B. This year's spending will be less than USD15 B excluding acquisitions, Breber said.

Chevron has pledged to put profits into raising shareholder dividends, into fossil fuel and clean energy projects, and to cut debt. "Our fourth priority, after we have met the first three, is to do share buybacks" at $15 B a year, Breber said. Its oil and gas business posted an operating profit that surged 81% to USD9.3 B, while its oil refining business nearly doubled to USD2.5 B.

Still, profit from refining cooled from the second quarter, keeping overall earnings below the company's all-time record of USD11.6 B. Refineries processed about 13% fewer barrels per day from the year-ago period, primarily due to planned maintenance, the company said. However, refined product sales of 1.25 MMbpd were up 5% from the year-ago period, mainly due to higher renewable fuel sales following its acquisition of biodiesel supplier Renewable Energy Group.

We remind, Air Liquide, Chevron, Keppel Infrastructure, and PetroChina announced they have signed an MoU to form a consortium which will aim to evaluate and advance the development of large-scale carbon capture, utilization, and sequestration (CCUS) solutions and integrated infrastructure in Singapore. The consortium intends to research, test, and develop technological, logistical, and operational solutions for CCUS in Singapore. In doing so, the consortium will look to provide industry-wide CCUS integrated infrastructure, primarily to support the energy and chemicals sector, by capturing and aggregating carbon dioxide (CO2) from large industrial emitters at a centralized collection facility.
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Large explosion in CPC Dalin oil refinery, no injuries

Large explosion in CPC Dalin oil refinery, no injuries

An explosion hit Taiwan's state-backed CPC Dalin Refinery in the southern city of Kaohsiung on Thursday night, videos and images from the Fire Department showed with heavy fire seen above the plant, officials said, adding nobody was hurt in the incident, as per Hydrocarbonprocessing.

Fire was seen raging above the plant and thick smoke billowed into the sky above for more than an hour, according to an online video posted on Youtube. Residents from several kilometers away were able to view the explosion.

The fire broke out at 10.35 p.m. local time in Siaogang district. The city's fire department said flames were put out early on Friday and no one was injured or trapped as per an initial investigation.

CPC spokesperson Ray Chang said there was "very limited impact" on the company's output, as it has several other such units in its facilities across the island. "We are moving quickly to look into the cause of the incident and make improvements," Chang said, adding that an initial probe pointed to gas leakage but further checks were needed.

Kaohsiung mayor Che Chi-Mai asked CPC to suspend its operations at the plant until an inspection was completed, adding that labour and environmental authorities have imposed a total fine of T$5.3 MM (USD165,098.75) on the company.

The fire occurred at the resid hydrotreater No. 3 unit, CPC's Chang said. The unit, which has a capacity of 40,000 barrels per day according to Refinitiv Eikon, is used to remove sulfur from oil products. The incident happened during routine maintenance at the plant, the city government said.

We remind, Malaysian state energy firm Petronas said a fire and explosion occurred on Thursday at the Pengerang refinery-petrochemical complex, a joint venture it operates with Saudi Aramco in the southern Malaysian state of Johor. No casualties were reported and the incident poses no immediate threat to the surrounding communities, Petronas said in a statement. The fire occurred at one of the interconnecting pipes at the Pengerang Integrated Complex at 1540 local time and was completely extinguished in about an hour, Petronas said.
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Shell, Zeon agree on supply of bio-butadiene for sustainable SSBR

Shell, Zeon agree on supply of bio-butadiene for sustainable SSBR

Zeon Corp. has signed an MoU with Shell Eastern Petroleum (Pte) Ltd for the supply of bio-based butadiene to be used in the production solution styrene butadiene rubber (SSBR), said European-rubber-journal.

The agreement, signed by subsidary Zeon Chemicals Singapore, is part of the group’s carbon-neutrality ambitions and its shift to sustainable raw materials, Zeon said.

Zeon is also in the process of obtaining international certification for biomass-derived raw materials, including bio-based SSBR, according to the group's 25 Oct announcement.

Shell has also entered into an agreement with Asahi Kasei concerning the production of 'circular' SBBR in Singapore, under a deal announced last November.

Under the arrangement, Shell is to convert scrap plastics into pyrolysis oil at its site in Bukom and feed it to a naphtha cracker for the production of butadiene feedstock.

We remind, Neste's Engineering Solutions and CNOOC and Shell Petrochemicals Company Limited (CSPC), an important petrochemicals joint venture in China, have signed an agreement for CSPC to utilize Neste's proprietary NEXPAO technology at its new synthetic base oil production unit in Daya Bay Economic & Technological Development Zone, Huizhou City, China.
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Indian Oil reports lower Q2 loss on government cash support

Indian Oil reports lower Q2 loss on government cash support

India's largest oil PSU, Indian Oil Corporation reported a net loss of Rs 272.3 crore on Saturday, down from a net loss of Rs 1,992 crore in the June quarter. Analysts in a CNBC-TV18 poll expected the company to report a net loss of Rs 14,476 crore for the July-September period, said Indiainfoline.

The fuel retailing major IOC has used 50 percent of the one time grant of Rs 22,000 crore given by the government to compensate the three government owned oil companies on their LPG under recoveries.

Under recoveries is the gap between the cost and the selling price of fuel. In case the selling price is lower than the cost price, higher is the under recoveries. The grant is a first by the finance ministry as generalised subsidies for cooking gas have stopped and is being targeted only for the Ujjwala consumers.

This has helped the company sharply reduce its quarter on quarter net loss from Rs 1,993 crore during April-June to Rs 272 crore in the July -September quarter. Of course the Indian basket of crude oil too declined during the second quarter, from ГЫВ105.49/bbl in July to ГЫВ90.71/bbl in September.

But the company has still reported a net loss of Rs 2,265 crore for H1 April-September FY23 vs a net profit of Rs 12,300 crore in H1 FY22.

Given the price freeze on petrol and diesel sales since last eight months industry estimates an over one lakh crore under recovery on fuel and LPG , while the actual cash loss to companies is roughly estimated at Rs 50,000 crore.
The Petroleum Ministry said last month “Fuel price rise in India have been contained in comparison to exponential rise in developed countries. Most of the developed nations have witnessed significant inflation rise in gasoline price by almost 40 percent during July 21 to Aug 22, while in India, gasoline price has reduced by 2.1 percent."

We remind, Indian Oil Corporation Limited is expanding the petrochemical capacity of its Gujarat refinery (LuPech Project). Nuberg EPC, the leading Indian Global EPC and turnkey project management company today announced that it has been selected by Indian Oil for the construction of Rs 650+ crore Sulfur Recovery Plant consisting of Sulfur Recovery Unit (1 x 400 TPD) including control room and substation for sulfur block under international competitive bidding. Indian Oil, a Government of India Enterprise, is the country's top refiner and fuel retailer. The Sulphur Recovery Plant is being built with in Indian Oil's existing facility of Vadodra, Gujaratfor Petrochemical and Lube Integration Project.

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