Iran-PDVSA to start Paraguana refinery revamp soon

Iran-PDVSA to start Paraguana refinery revamp soon

State firms from Iran and Venezuela will start in the coming weeks a 100-day revamp of the South American nation's largest refining complex to restore its crude distillation capacity, said Hydrocarbonprocessing.

The effort by state oil firm Petroleos de Venezuela (PDVSA) and the state-owned National Iranian Oil Refining and Distribution Company (NIORDC) to boost fuel output at the Paraguana Refining Center marks a step toward ending Venezuela's reliance on U.S. refinery technology, the sources said.

Venezuela, which has the world's largest crude reserves, has struggled in recent years to produce enough gasoline and diesel due to refinery outages, a lack of investment and U.S. sanctions that create obstacles for imports. Long lines at gasoline stations have been common since 2020.

Tehran has strengthened ties with Caracas in recent years, providing crude and condensate as well as parts and feedstock for Venezuela's aging 1.3 million barrel per day oil (bpd) refining network. A unit of NIORDC signed a 110-MM euro contract with PDVSA in May to repair Venezuela's smallest refinery, the 146,000-bpd El Palito in the center of the country, a project that is currently underway.

The companies are now expected to sign in the coming weeks a 460-million-euro contract to revamp the 955,000-bpd Paraguana refinery complex on the coast of western Venezuela, according to the sources. Iran's Foreign Minister Hossein Amirabdollahian arrived in Caracas on Friday and met Venezuela's oil minister Tareck El Aissami, according to tweets from the Iranian embassy in Caracas and Venezuela's oil ministry.

The embassy did not answer calls seeking comment on their talks. PDVSA, NIORDC and Venezuela's oil ministry did not reply to requests for comment. The Paraguana revamp project will allow NIORDC to hire contractors and outsource work to repair five of the complex's nine distillation units, which do the primary refining of crude oil, the four people said.

Paraguana - composed of the Amuay and Cardon refineries - operated at 25% of capacity this month even after the restart of Amuay's catalytic cracker, a key unit for gasoline. Iran will be in charge of parts procurement, installation and inspection before handling the refinery's operations back to PDVSA, two of the people said.

The planned distillation unit overhaul will combine Chinese and Iranian parts and equipment in refineries originally built with U.S. technology, the sources said. The integration of the new and old components will not be easy, they added.

If the revamp succeeds, a larger overhaul could follow in 2024 and 2025, according to the sources. "If the distillation plants do not work, the refinery does not work," said Caracas-based energy expert Nelson Hernandez. "The whole facilities need to pass through a revamp or a major maintenance program."

We remind, Venezuela's oil exports last year declined due to infrastructure outages, U.S. sanctions and rising competition in its key Asia market despite assistance from ally Iran, according to shipping data and documents. Exports this year are expected to get a lift after the United States relaxed oil sanctions by authorizing some partners of state-run firm Petroleos de Venezuela (PDVSA) to resume taking Venezuelan crude.

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Strikes affecting French fuels distribution network

Strikes affecting French fuels distribution network

A national strike against planned pension reforms reduced France's power supply and disrupted petrol deliveries from French refineries on Tuesday, said Hydrocarbonprocessing.

Strikes have been taking place since mid-January as unions protest against the government's plans to make people work longer before retirement. Public transport and schools have also been affected.

Total power supply was reduced by about 6.3%, or 4.3 gigawatts (GW) due to decreased supply at two nuclear reactors, and several thermal- and hydro plants, data from power utility EDF showed.

Nuclear capacity was lowered by 1.8 GW and thermal plants were reduced by 2.3 GW, while hydropower disruptions totalled 220 megawatts (MW). No imports were needed at 1215 GMT after peaking earlier at 2.8 GW, grid operator RTE data showed.

Strike participation at EDF totalled some 30.3% of employees by midday, the utility said. This compares to the midday rate of 40.3% recorded on Jan. 31. On the refining side, the shipping of petrol products from French sites was interrupted by the strike, TotalEnergies said.

The company added that there was no shortage of petrol at fueling stations and supply levels were generally satisfactory. About 56% of the operators working in the TotalEnergies' French refineries and depots were on strike this morning, the company said.

At Esso, a subsidiary of ExxonMobil, about 75% of the workforce at the Fos site was on strike and blocking deliveries while the Port Jerome site was operating normally, a CGT spokesperson said.

We remind, TotalEnergies is joining forces with Portuguese packaging player Intraplas to create commercial products with TotalEnergies renewable polymer – a range of the RE:clic portfolio, which uses renewable sources to lower carbon footprint. TotalEnergies’ biorefinery in La Mede, France, allows direct access to renewable feedstock for its drop-in RE: newable polymer range derived from bio-based products. The company claims these polymers retain virgin-like properties.

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China economic recovery to boost oil demand

China economic recovery to boost oil demand

Oil producers may have to reconsider their output policies following a demand recovery in China, the world's second-largest oil consumer, as per Hydrocarbonprocessing.

Demand in China, the world's largest crude importer and No. 2 buyer of liquefied natural gas, has become the biggest uncertain factor in global oil and gas markets in 2023 as investors bet on the speed of its recovery after Beijing lifted COVID restrictions in December.

"We expect about half of the growth in global oil demand this year will come from China," Birol told Reuters on the sidelines of the India Energy Week conference. He added that China's jet fuel demand is exploding, putting upward pressure on demand. "If demand goes up very strongly, if the Chinese economy rebounds, then there will be a need, in my view, for the OPEC+ countries to look at their (output) policies," Birol said.

Producer group OPEC+ angered the United States and other Western nations in October when it decided to cut output by 2 million barrels a day from November through 2023, instead of pumping more to cut fuel prices and help the global economy as the U.S. advised.

Birol said he hoped such a situation does not repeat, and that OPEC+ - which includes members of the Organization of the Petroleum Exporting Countries and allies such as Russia - will return to a constructive role in the market as demand improves. OPEC+ rolled over the group's current output policy at a meeting on Wednesday, leaving production cuts agreed last year in place.

Separately, Birol said price caps on Russian oil have achieved the objectives of both stabilizing oil markets and reducing Moscow's revenues from oil and gas exports. Russia's revenues likely fell by nearly 30% in January, or about USD8 billion, compared with a year before, he added. G7 nations, the European Commission and Australia this week approved a USD100 per barrel price cap on diesel and a USD45 per barrel cap on discounted products such as fuel oil starting from Feb. 5.

This followed a similar measure they implemented on Dec. 5 barring Western-supplied maritime insurance, finance and brokering for seaborne Russian crude unless it was sold below a USD60 price cap. Birol said fuel markets might face difficulties in the short term as global trade routes "reshuffle" to accommodate Europe drawing on more imports from China, India, the Middle East and the United States.

That could force other markets such as Latin America to scout for alternative imports, he said. Europe has decided to end refined fuel imports from Russia from Sunday.

We remind, Shenghong Refining and Chemical has started up its new vinyl acetate monomer (VAM) unit around the second half of January 2023. The VAM unit has a capacity of 300,000 tonnes/year. The start-up of Shenghong's new VAM unit has pushed China’s total VAM capacity up to 3.12m tonnes/year.

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Toray Korea to boost PPS resin production with expansion plan

Toray Korea to boost PPS resin production with expansion plan

Toray Advanced Materials Korea (TAK) has announced plans to increase its annual production capacity of polyphenylene sulfide (PPS) resin by 5,000 tons, said Kedglobal.

The expansion will take place at the Gunsan plant located in Saemangeum Industrial Complex and is set to be completed by 2024, bringing TAK's total annual capacity to 13,600 tons, the largest in South Korea. TAK will also raise its capacity for sodium sulfide, the main raw material for PPS resin, to 4,800 tons per year.

The Gunsan plant is unique in that it is the first to have a batch production system that allows for the production of PPS resin and compounds from raw materials. PPS is a super engineering plastic with high heat resistance, chemical resistance, and excellent mechanical strength, making it a popular choice for use in industrial parts such as electric vehicles, electronic devices, and housing facilities.

North Jeolla Province Governor Kim Kwan-young played a role in securing the expansion by asking Toray Industries President Akihiro Nikkaku for additional investment during his visit to Japan late last year.

Toray has expressed its intention to strengthen its relationship with the local community through this investment. "We will provide administrative support to ensure that the company's infrastructure growth can be completed in a timely manner," Governor Kim said.

We remind, Toray Industries, Inc., announced that it has developed a polyethylene terephthalate (PET) film that combines excellent applicability and adhesion for water-based and solvent-free coatings and can eliminate solvent-derived carbon-dioxide emissions. The company looks to produce the film at a domestic plant by end-March 2024 to help popularize eco-friendly film products for which decarbonization during manufacturing is desirable. These items include release, adhesive, printing, packaging, and automotive films.

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Novelis quarterly earnings affected by lower beverage packaging shipments

Novelis quarterly earnings affected by lower beverage packaging shipments

Mumbai-based Hindalco Industries Ltd. subsidiary Novelis Inc., an aluminum recycling and rolling company headquartered in Atlanta, has reported its financial results for the third quarter of its 2023 fiscal year, revealing some year-over-year losses, said Recyclingtoday.

Compared with the previous year, net income attributable to the company's common shareholder decreased 95 percent to USD12 million primarily because of factors driving lower adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and unfavorable metal price lag from falling aluminum local market premiums, according to the company. Excluding special items in both years, third-quarter fiscal year 2023 net income from continuing operations decreased 60 percent relative to the prior year to USD96 million largely because of lower adjusted EBITDA.

"As expected, our results were pressured by continued unprecedented inflationary headwinds but were also further impacted by lower shipments resulting from significantly larger than anticipated customer inventory reduction actions in the beverage packaging market,” says Novelis President and CEO Steve Fisher. "We will continue to address these short-term challenges while remaining focused on building for our future in a prudent manner. Importantly, we believe the underlying demand fundamentals driven by increasing consumer preferences for lightweight, sustainable aluminum solutions in all our key end markets remains unchanged."

The company's net sales for the quarter decreased 3 percent to USD4.2 billion compared with USD4.3 billion in the prior-year period. Novelis attributes this to lower average aluminum prices and a 2 percent decrease in total flat-rolled product shipments to 908,000 tons. The lower prices were offset somewhat by increased product pricing and favorable product mix. Novelis reports shipping fewer beverage cans as customers reduced inventories and adjusted to more normalized levels of can demand postpandemic and softer demand for specialty products in this weaker macroeconomic environment. Conversely, easing supply chain constraints, including higher semiconductor availability, resulted in higher automotive shipments compared with the prior year.

Adjusted EBITDA decreased 33 percent to USD341 million for the quarter compared with $506 million in the prior-year period as a result of what Novelis says was "an extraordinary inflationary environment and higher energy costs" arising from geopolitical instability. Less favorable metal benefits from recycling, unfavorable foreign exchange and lower volume also negatively affected its third-quarter results. Providing some relief were higher product pricing, including some higher cost pass-through to customers, and favorable product mix, the company says.

Adjusted free cash flow from continuing operations was an outflow of $158 million for the first nine months of fiscal year 2023 compared with generation of USD217 million in the prior-year period. The company attributes the decrease largely to unfavorable metal price lag in the current year compared with a favorable lag in the prior year, lower adjusted EBITDA and higher capital expenditures. The company says it had a net leverage ratio of 2.6x at the end of the third quarter of fiscal year 2023 compared with 2.3x in the prior-year period. Novelis says it had a total liquidity position of USD2.1 billion as of Dec. 31, 2022.

In its earnings presentation slides, the company notes that its capital expenditure growth projects remain on track, including its USD2.5 billion greenfield rolling and recycling facility in Bay Minette, Alabama, and its USD365 million automotive recycling center in Guthrie, Kentucky.

We remind, Novelis Inc, a leading sustainable aluminium solutions provider and the world leader in aluminium rolling and recycling, broke ground and began construction on 7 Oct 2022 on its USD2.5 bn recycling and rolling plant in Bay Minette, AL, US. The highly advanced facility is expected to create up to 1000 new jobs and will have an initial 600,000 tonnes of finished aluminium goods capacity per year focused on the beverage container market, with flexibility for automotive production. It also adds a new recycling centre for beverage cans, increasing the company's recycling capacity by 15 bn/y cans when fully operational.

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