China refined product exports may hit record in December

MOSCOW (MRC) - China may close the year with record shipments of key transportation fuels in December as refiners rush to use their export quotas and maximize overseas profits to compensate for tepid domestic fuel demand caused by COVID-related curbs, said Hydrocarbonprocessing.

December exports of diesel, gasoline and aviation fuel combined are estimated at 6.5 million to 7.1 million tons, led by diesel shipments that could reach 3 million tons, according to estimates from Chinese consultancy Longzhong and JLC, Refinitiv Oil Research and several trading sources.

China's diesel exports hit an all-time high of 2.83 million tons in March 2020, followed by a record 6.5 million tons in April for all three products, according to Chinese customs data. Bumper shipments from China will weigh on Asian refining margins, particularly for diesel, as refiners' profit from producing the fuel from Dubai crude has already shed 15%-30% month-on-month amid sufficient regional supplies and a closed arbitrage to European markets.

Beijing's abrupt relaxation of COVID rules this week aren't likely to reverse the outflows as substantial recovery in local demand may take months to materialize, market participants said. Despite earlier expectations that part of the large set of quotas released in October could be extended into 2023, it became clear in recent weeks that refiners were being encouraged to finish them all by end-December, three trading sources said.

"Chinese refiners are still grappling with high domestic inventories, especially for gasoline and more recently gasoil," said Daphne Ho, senior analyst at consultancy Wood Mackenzie. "Healthier export margins has been a key push factor."

State refiners, which control most of the export quotas, have since November been ramping up diesel production to cash in lucrative overseas sales. Despite recent declines, refining profits for both 10 ppm sulfur gasoil and jet fuel have more than doubled this year on tight global supplies.

"State majors are very much margin-oriented and they will only redirect volumes if there is better profit elsewhere," said one China-based trading source. Gasoline exports were pegged at 2.1 million to 2.3 million tons for December, likely to surpass a record 1.9 million tons from April 2020.

We remind, Ineos has agreed a fourth joint venture with Sinopec that will see it take a 50% share in the Tianjin Nangang project, which is currently underway and due to go on stream at the end of 2023, said Chemanager-online.
“This latest joint venture with Sinopec significantly expands Ineos’ petrochemical production and business footprint in China. It is a further example of the close relationship and growing collaboration between Sinopec and Ineos,” said Ineos chairman and CEO Jim Ratcliffe.
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MOSCOW (MRC) -- Slovakia is close to an agreement to export oil products such as diesel to Ukraine after European sanctions take effect in February, Economy Minister Karel Hirman said, as per Hydrocarbonprocessing.

The country's main refiner Slovnaft, part of Hungarian energy firm MOL, will no longer be able to export products refined from Russian oil to most markets when EU sanctions take effect on February 5. The plan would allow Slovnaft to export oil products to Ukraine, which is facing severe electricity and heating shortages this winter as Russia attacks critical infrastructure.

A Slovnaft spokesman said the company was exporting unspecified amounts of products to Ukraine at the moment but the EU sanctions threaten to halt these. Hirman, returning from a visit to Kyiv, said in a news conference shown live on television that talks were under way in Brussels and with Ukraine and MOL to arrange the exports.

"We are close to an agreement that after February 5, the Slovnaft refinery will be able to export to Ukraine its products from Russian oil, which flows to us through the Druzhba pipeline," Hirman said. "In this situation, supplies of diesel for diesel generators are a question of life and death," he said. Hirman added that supplies would be on a commercial basis, as well as potential supply of electricity to Ukraine.

Slovakia receives nearly 100% of its crude oil from Russia via the Druzhba pipeline that passes through Ukraine, but Slovnaft plans to cut the proportion to around 60% next year to keep its export possibilities to other markets open.

The Slovnaft refinery currently exports a substantial part of its 124,000-barrel-per-day production. A separate short-term exception will also allow Slovnaft to export Russian oil-based products to the Czech Republic next year. The company said earlier it was testing various blends to replace part of its Russian supply.

We remind, Slovak oil refiner Slovnaft said on Wednesday it expected Russian oil flows through Ukraine to resume in the coming days after it had made a payment for transit through Ukraine to remove an obstacle that halted flows through the southern leg of the Druzhba pipeline earlier this month.
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MOSCOW (MRC) -- Saudi Aramco and Shandong Energy signed a Memorandum of Understanding to collaborate on downstream projects, including the construction of a refining and petrochemicals integrated complex, said Hydrocarbonprocessing.

The deal, which includes the potential for a crude oil supply agreement and chemicals products offtake agreement, helps support Saudi Aramco's goal of building downstream assets in Shandong, China.

The JV will also explore cooperation across hydrogen, renewables and carbon capture technologies.

We remind, Saudi Aramco has signed 59 corporate procurement agreements (CPAs) worth a potential total of USD11 billion with up to 51 domestic and international manufacturers, as a part of its coveted in-kingdom total value add (IKTVA) localisation programme.

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MOSCOW (MRC) -- Olefins and polyolefins producer Borealis has joined forces with Austrian energy utility company Verbund to supply solar energy to its production site at Schwechat, Austria, said Chemanager-online.

As part of a new photovoltaics (PV) park being created on a brownfield plot at the Schwechat complex, the companies are currently installing erecting a solar array that would supply power to the chemical group’s plastics producer’s facilities, potentially from the end of 2022.

The array covering a surface area of around 75,000 m2 will have 10,220 individual PV modules, each with a nominal power (peak power) of 460 watt-peak (Wp). Ultimately, the park’s total installed solar power is projected to reach around 4.7 megawatt-peak (MWp), with an annual energy yield of around 5.6 gigawatt hours (GWh).

When the installation is complete, Borealis said it hopes to move closer to its goal of drawing 100% of the energy used in its own operations from renewable sources by 2030. CEO Thomas Gangl said the use of renewable energy generated at Schwechat, where the company can produce 1 million t/y of polyolefins, will reduce annual CO2 emissions by nearly 1,200 t.

The PV park will be the second Austrian solar project for Borealis and Verbund, complementing an earlier installation at the plastics producer’s site in Linz. In a broader partnership, the two firms intend to continue their collaboration to promote the use of renewable energy across Austria.

We remind, Borealis is designing a first-of-its-kind commercial-scale advanced mechanical recycling plant to be located in Schwechat, Austria. The plant will be based on Borealis’ own Borcycle™ M technology, which transforms polyolefin-based post-consumer waste into high-performance polymers suitable for demanding applications. This represents another tangible step forward on Borealis’ path to net zero.

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MOSCOW (MRC) -- BP has signed a memorandum of understanding with the Egyptian government with the aim of establishing a large-scale renewable hydrogen production facility in the North African country, it said in a statement Dec. 8, said the company.

BP is to evaluate the technical and commercial feasibility of developing an export hub in Egypt, exploring high-potential locations across the country for renewables.

"Egypt has world-class renewable energy resources, and we look forward to working with the government to explore how we can support its ambitious low-carbon strategy," BP executive vice president of gas and low carbon energy Anja-Isabel Dotzenrath said in the statement.

The MOU was signed by BP, Egypt's New and Renewable Energy Authority, the Egyptian Electricity Transmission Company, the General Authority for Suez Canal Economic Zone and the Sovereign Fund of Egypt for Investment and Development (TSFE).

TSFE CEO Ayman Soliman said the MOU builds on the fund's green hydrogen portfolio and its "mandate to transform Egypt into a regional hub for green energy."

Hydrogen was a prominent theme at the UN Climate Change Conference hosted by Egypt in Sharm el-Sheikh in November, with several deals and projects launched on the sidelines.

BP CEO Bernard Looney attended COP27 as a delegate of Mauritania, with which the company signed a separate MOU on green hydrogen production at the conference.

The EU signed strategic hydrogen partnerships with Kazakhstan, Namibia and Egypt, seeking a diverse range of suppliers to meet its planned 10 million mt/year of imports by 2030. And Fertiglobe led a consortium commissioning a first phase of the 100-MW Egypt Green hydrogen plant for ammonia production, also supported by Egypt's Sovereign Fund.

BP is developing a portfolio of renewable and low-carbon hydrogen projects globally, including in the UK, Netherlands, Germany, Spain, the Middle East, the US and Australia, it said. Europe and Asia-Pacific are seen as becoming major importers of hydrogen and its derivatives, drawing supplies from potential producing regions such as the Middle East, Australia and Latin America.

We remind, BP Plc will market Guyana's share of crude oil produced over the next year from two offshore production platforms, the South American country's Ministry of Natural Resources said. Guyana is home to one of the largest oil discoveries in the last decade, with about 11 B barrels found to date. A consortium that controls the country's crude output expects to pump 1.2 MM barrels per day (bpd) by 2027, up from an expected 380,000 bpd at year-end.

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