Germany relaxes restrictions to expedite sale of Rosneft stake in the Schwedt refinery

Germany plans to adjust its Energy Security Act to allow a quick sale of Russian energy group Rosneft's stake in the Schwedt refinery without the need for prior nationalization, a draft law showed, said Hydrocarbonprocessing.

Under the planned adjustment to the law, the condition of prior nationalization of assets put under government trusteeship could be withdrawn if the sale of the assets is needed to ensure that Germany's energy sector remains functional, the draft law, seen by Reuters on Thursday, showed.

Germany took control of the Schwedt refinery, which was majority owned by Rosneft, and put Rosneft Deutschland under a trusteeship of the German industry regulator but Rosneft still holds 54.17% of the refinery.

We remind, Rosneft will parnter with Indonesia to contribute USD24 B on a greenfield refinery in East Java province.
The refinery will have 14 refining units for vehicle fuels as well as seven units for petrochemicals. The purpose is to construct a facility which can process heavy crude oil and high sulfur crude oil.

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China is expected to import a record amount of crude oil in 2023 due to increased demand for fuel as people travel more following the dismantling of COVID-19 controls and as a result of new refineries coming onstream, said Hydrocarbonprocessing.

The prospect of strong demand from the world's biggest importer will be another bullish factor for an oil market already supported by the OPEC+ producer group's output cuts and western sanctions on Russian exports. China's crude imports may rise between 500,000 and 1 MMbpd this year to as high as 11.8 MMbpd, reversing previous two years' decline to exceed 2020's record of 10.8 MMbpd, according to analysts from four industry consultancies - Wood Mackenzie, FGE, Energy Aspects and S&P Global Commodity Insight.

Their estimates are in line with the latest forecast by the International Energy Agency. Since the removal of COVID controls in December, China's demand for gasoline and jet fuel has risen.

Sun Jianan, an analyst at Energy Aspects, reckoned gasoline and jet fuel would account for around 50% and 30% of total growth in demand for liquid fuels, respectively. Jet fuel consumption, according to Sun, would reach 90% of pre-COVID levels by end-2023.

Demand for diesel - a key industrial and transportation fuel - and petrochemical feedstock naphtha, may grow more slowly as it will take longer for the recovery in China's manufacturing and property sectors to materialize, said FGE analyst Mia Geng and Energy Aspects' Sun.

"Economic stimulus, along with infrastructure expansion in 2023 will set the stage for robust diesel consumption recovery," Wang Zhuwei, an analyst at S&P Global Commodity Insight, said. With domestic consumption rising and lucrative export markets to supply, the four consultancies saw Chinese refineries raising crude throughput by between 850,000 to 1.2 MMbpd over 2022 levels, for an increase of between 6% to 9%.

Last year, China's refineries posted their first annual decline in throughput since 2001. Chinese consultancy Longzhong said state-run refineries were lifting throughput during the first week of February by 5.5% from January to an average of 74.5% of capacity.

We remind, ECI Group has signed license and engineering agreements for process technology and engineering design with a confidential Chinese client for two lines of ethyl-vinyl acetate (EVA) production using ECI Group's proprietary Hybrid Technology offering. This technology is capable of producing 4000,000 tpy EVA total, each line producing 200,000 tpy. The plant will be part of the client's integrated project to be located in Guangxi Province, China. ECI Group will provide the technology, design, and training for the two lines, as well as support through commissioning, start-up, and production.

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Kazakhstan will supply 100,000 tons of oil via Russia's Druzhba pipeline to Germany in March for the PCK Schwedt refinery after it agreed commercial and legal terms with all parties involved, said Hydrocarbonprocessing.

Kazakhstan's Kazmunaigaz (KMG) oil company will supply the volume via the pipeline system of Russia's Transneft to the refinery, the sources said. The volume will mostly be from KMG's share in the Karaсhaganak Petroleum Operating (KPO), the sources said.

The oil will be supplied to Rosneft Deutschland, which Germany had put under a trusteeship of the German industry regulator, the sources said. Rosneft still holds 54.17% of the refinery. Germany plans to change its Energy Security Act to allow a quick sale of Rosneft's stake in the Schwedt refinery without the need for prior nationalization, according to a draft law.

Germany stopped Russian oil imports via Druzhba from January and has been working hard to try to secure supply for Schwedt from alternative routes. "The federal government has continuously supported the procurement of crude oil quantities ... by the shareholders of PCK and will continue to do so," a spokesman for the refinery told Reuters in a written answer.

"This also applies to the ongoing negotiations between the oil companies concerned and the Kazakh side about additional oil volumes from Kazakhstan, for example those of the Rosneft Deutschland," the spokesman said. German refineries in Schwedt and Leuna near Leipzig are supplied with non-Russian oil via Poland's Gdansk and Germany's Rostock. These seaborne supplies are not enough to provide full runs at both German oil plants linked to the Druzhba pipeline.

"According to PCK management, the refinery's capacity utilization averaged around 60 percent in January," the refinery's representative said. Kazakhstan initially planned to start oil exports to Germany in January 2023, but negotiations were delayed as legal and commercial questions needed to be worked out, the sources said.

Rosneft, Kazmunaigaz, Transneft, KPO and Kazakhstan's Energy Ministry didn't answer Reuters requests for comment. Russia's Energy Ministry declined to comment. Eni, which owns 8.33% in PCK Schwedt, didn't immediately answer a Reuters request for comment. Shell, which still holds the stake in the plant, declined to comment.

We remind, KazMunaiGaz began producing paraxylene at a new aromatics production facility at its Atyrau refinery in Kazakhstan. The 496,000-t/y paraxylene plant, costing approximately USD1.7-billion, is part of a project, based on Axens' Paramax technology, that includes a 133,000-t/y benzene facility. A consortium of Marubeni Corp., Sinopec Engineering and KazStroyService served as contractor for the project.

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NextChem has signed an agreement with Netherlands-headquartered energy firm Dimeta to develop plants for renewable and recycled carbon dimethyl ether (DME) from waste, said the company.

DME has similar properties to liquefied petroleum gas (LPG), and the recycled material can be blended with conventional LPG to help reduce its carbon footprint without needing to change appliances or infrastructure.

Dimeta is a Dutch joint venture between SHV Energy and UGI International, which was established to support the production and use of renewable and recycled carbon DME to accelerate the LPG industry’s transition to net zero.

Dimeta aims to produce 300,000 tonnes of DME by the end of 2027 and has established plants in the UK, Europe and US.

The process developed by Maire Tecnimont’s green chemistry venture NextChem and its subsidiary MyRechemical would convert municipal solid waste into methanol and then into DME.

Through the agreement between the companies, the area of cooperation involves generating business cases where Dimeta will offtake DME in ongoing waste-to-methanol projects and new initiatives targeting production of renewable and recycled carbon DME.

We remind, Maire Tecnimont S.p.A. announces that its subsidiary NextChem S.p.A. has signed an agreement with Biorenova S.p.A. to acquire, scale up and industrialize the proprietary CatC technology, a continuous chemical recycling process to recover monomers with ultra-high levels of purity from sorted plastic waste, particularly Polymethylmethacrylate (PMMA).

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Solvay has signed a memorandum of understanding (MoU) with Canadian start-up Cyclic Materials to develop a supply chain for recycled rare earth permanent magnets, said the company.

Under the agreement, the partnership will develop the production and supply of recycled mixed rare earth oxides which will be sent from Cyclic Materials' site in Ontario, Canada to Solvay’s plant in La Rochelle, France.

Cyclic Materials recycles rare earth permanent magnets to produce raw materials for applications in the automotive, wind energy and electronics industries and is working to build domestic supply chains across Europe and North America.

Solvay has been working with Cyclic Materials to validate product compatibility with its rare earth separation process.

“Cyclic Materials will provide us key raw materials for our plant to successfully produce rare earths for magnet manufacture, electronics and catalysts,” said Ilham Kadri, Solvay CEO. “As the European Commission finalises the European Critical Raw Materials Act, supplies of recycled materials are becoming critical to European manufacturers. This MoU prepares us for a future offtake agreement which will further our efforts to provide certifiably recycled materials to these markets.”

The agreement will help Solvay to implement the development of a major hub for rare earth magnets in Europe. Last year, the Belgian-headquartered firm announced plans to expand rate earth operations at its La Rochelle site.

We remind, Solvay in advanced negotiations to divest its stake in Rusvinyl. The company confirms it is in advanced negotiations to divest its stake in Rusvinyl, an independent 50/50 joint venture in Russia, to its joint venture partner, Sibur. In addition to the recently obtained preliminary clearance from Russian governmental authorities, the potential transaction is still subject to several other regulatory approvals. Solvay will keep the market informed if and when appropriate, in accordance with applicable law.

Solvay is a science company whose technologies bring benefits to many aspects of daily life. With more than 21,000 employees in 63 countries, Solvay bonds people, ideas and elements to reinvent progress.

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