Russia's oil/gas revenues fall 40% in January

Russia's oil/gas revenues fall 40% in January

MOSCOW (MRC) -- Russia's revenues from oil and gas exports dropped by nearly 40% in January as price caps and Western sanctions squeezed the proceeds from Moscow's most lucrative export, said Hydrocarbonprocessing.

Russia's oil and gas export revenues were USD18.5 billion in January, 38% lower than the USD30 billion Moscow received in January 2022, a month before its invasion of Ukraine, according to IEA numbers shared with Reuters. IEA Executive Director Fatih Birol said Western measures targeting Russian energy exports had achieved their aims of stabilizing oil markets and reducing Moscow's revenues from oil and gas exports.

"Our expectation is that this oil and gas revenue decline will be steeper in the next months to come. And even more steep in the mid-term, as a result of the lack of access to technology and investment," Birol told Reuters. International restrictions imposed on Russia in response to the Ukraine war, including a USD60 a barrel crude price cap imposed by Group of Seven countries, have left Russia's Urals blend being sold at a heavy discount to Brent.

The 27-country European Union also banned Russian seaborne oil imports from December, and has placed sanctions on exports to Russia of technologies needed for oil refining. The United States and Britain have also imposed restrictions on Russian oil imports.

Moscow relies on income from oil and gas - last year around 11.6 trillion roubles (USD154.68 billion) - to fund its budget spending, and has been forced to start selling international reserves to cover a deficit widened by the cost of its invasion of Ukraine.

Europe is meanwhile racing to wean itself off Russian gas, after Moscow cut pipeline deliveries to the EU following its Feb. 2022 invasion of Ukraine. That pushed European gas prices to record highs and left countries struggling to find alternative supplies and launch energy-saving measures. Birol said EU countries made progress in improving energy security last year, including a rapid expansion of renewable energy and heat pumps to reduce the need for fossil fuels.

But he said risks remain, and countries needed to keep up efforts to save energy and safeguard supplies. Europe's ability to secure enough gas could be challenged by rising demand from China, or if Russia cuts off the gas it still sends to Europe.

We remind, Russia's crude oil exports to the European Union in January fell to around 600,000 barrels per day (bpd) from 1 million bpd in December as seaborne volumes dried up except to Bulgaria, International Energy Agency (IEA) data showed. The EU imposed a ban on seaborne Russian crude oil imports from Dec. 5 and G7 countries set a price cap on Russian seaborne exports at USD60 per barrel over Russia's invasion of Ukraine in February 2022. Bulgaria has secured a two-year exemption from the ban.

Egypt increases gasoline prices in line with global levels

Egypt increases gasoline prices in line with global levels

MOSCOW (MRC) -- Egypt raised domestic gasoline prices early on Thursday, bringing them more in line with global levels but risking further public discontent after a year of rising inflation, a weakening currency and a series of austerity measures, said Hydrocarbonprocessing.

The North African nation reaffirmed its commitment to push through fuel price increases to receive a financial support package agreed with the International Monetary Fund (IMF) in December. Egypt had been bringing fuel prices closer to international levels only for a series of currency devaluations to undermine the process over the past year. The Egyptian pound has fallen by nearly 50% against the dollar over the past 12 months.

The country's fuel pricing committee left the diesel price unchanged, the petroleum ministry said in a statement, but raised the price of 80-octane petrol by 0.75 Egyptian pounds, 92-octane petrol by 1 pound and 95-octane petrol by 0.75 pounds to 8.75 Egyptian pounds (USD0.29), 10.25 and 11.50 per litre, respectively. The diesel price was kept at 7.25 pounds per litre.

Diesel is now about 50% lower than international prices and 95-octane petrol about 40% lower, said Allen Sandeep of Naeem Brokerage. EFG Hermes economist Mohamed Abu Basha estimates that the increases could increase headline inflation by 0.2 to 0.3 percentage points. Inflation hit a five-year high of 25.8% in January.

"Gasoline prices were raised, but diesel unchanged. So it should not have a big impact on inflation," Abu Basha said. A rise in the prices of global commodities including wheat and oil after Russia's invasion of Ukraine last year added to financial pressures on Egypt, driving it to seek a rescue package from the IMF.

In July 2022 the government announced a rare increase to the price of diesel but said it was still subsidising the fuel at the rate of about 55 billion Egyptian pounds per year. Pricing of fuel has been set under quarterly reviews since 2019, taking account of global markets and the exchange rate, in line with previous commitments to the IMF.

We remind, 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. 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.

Dow, X-energy SMR deployment project progresses

Dow, X-energy SMR deployment project progresses

MOSCOW (MRC) -- Dow and X-energy have signed a joint development agreement (JDA) to develop a nuclear small modular reactor (SMR) at one of Dow’s US Gulf Coast sites, said the companies.

Dow, the world’s leading materials science company, and X-Energy Reactor Company, LLC (“X-energy”), a leading developer of advanced nuclear reactors and fuel technology for clean energy generation, announced today their entry into a joint development agreement (“JDA”) to demonstrate the first grid-scale advanced nuclear reactor for an industrial site in North America.

As a subawardee under the U.S. Department of Energy’s (DOE) Advanced Reactor Demonstration Program (“ARDP”) Cooperative Agreement with X-energy, Dow intends to work with X-energy to install their Xe-100 high-temperature gas-cooled reactor (“HTGR”) plant at one of Dow’s U.S. Gulf Coast sites, providing the site with safe, reliable, low-carbon power and steam within this decade. The JDA includes up to USD50 million in engineering work, up to half of which is eligible to be funded through ARDP, and the other half by Dow. The JDA work scope also includes the preparation and submission of a Construction Permit application to the U.S. Nuclear Regulatory Commission (NRC).

Nuclear SMRs could play an important part in decarbonising the chemical and other industries, and may eventually power electric cracking.

X-energy, based in Rockville, Maryland, is a developer of advanced small modular nuclear reactors and fuel technology for clean energy generation.

We remind, Dow intends to construct the sector's first net-zero carbon emissions ethylene and derivatives complex with respect to scope 1 and 2 carbon dioxide (CO2) emissions, at its Fort Saskatchewan (Alberta, Canada) site. The project involves a new 'net-zero carbon emissions' ethylene cracker at the site, set for launching by 2027. It would expand Dow's ethylene and polyethylene capacity by over 200% from its Fort Saskatchewan site, while retrofitting the site's existing assets to net-zero carbon emissions.

Brazil halts Petrobras divestments

Brazil halts Petrobras divestments

MOOSCOW (MRC) -- Brazil’s mines and energy ministry (MME) has requested that federal oil firm Petrobras halt the sale of assets for 90 days starting March 1, according to a company press release.

The request was made due to the reassessment of the national energy policy and the establishment of a new composition of the national energy policy council (CNPE), which is part of the ministry.

Last week, a decree signed by President Luiz Inacio Lula da Silva and energy minister Alexandre Silveira mandated representation of six new ministries on the CNPE board: finance; transport; agriculture and livestock; science, technology and innovation; environment and climate change; and integration and regional development.

The suspension of some Petrobras divestments had been expected, as Lula considers it of strategic importance that the company remains an integrated up- and downstream group. Since Lula’s election in October, the company canceled the sales of its Araucaria Nitrogenados (Ansa) fertilizer plant, in Parana, the Gabriel Passos (Regap) refinery, in Minas Gerais, and the Canoas gas and diesel-fired thermal plant, in Rio Grande do Sul.

Among other mid- and downstream assets that are included in Petrobras’ divestment program are the Abreu e Lima (Rnest), Presidente Getulio Vargas (Repar) and Alberto Pasqualini (Refap) refineries, besides the Braskem petrochemical company, Transportadora Bolivia Brasil de Gas (TBG) and the Tres Lagoas nitrogen fertilizer plant (UFN-III).

Regarding the upstream segment, Petrobras is selling a number of mostly shallow water and onshore exploration blocks and fields, as it prioritizes deep and ultra-deepwater assets. In the biofuels area, Petrobras has started the sale process of its Petrobras Biocombustivel (PBio) subsidiary in 2020.

Oversea assets, such as the Tayrona block, in Colombia, and Petrobras Operaciones (Posa), in Argentina, are also for sale. All these processes are likely to be reviewed by Petrobras’ board, controlled by a federal administration that is expected to modify its current business plan.

In charge of Petrobras since February, CEO Jean Paul Prates intends to better insert Petrobras into the energy transition, potentially increasing investments in renewable energy and biofuels. In a statement, Petrobras said its board will analyze the divestments in progress, “from the standpoint of civil law and within the rules of governance, as well as any commitments already made, their punitive clauses and their consequences."

In this way, the company wants its governance bodies to assess potential legal and economic risks, subject to secrecy rules and other regulations.

We remind, Petroleo Brasileiro SA stepped up security at its refineries in a precautionary measure after threats against assets, including Brazil's biggest fuel plant. The threats were detected by Petrobras' intelligence unit monitoring social media communications of supporters of Brazil's far-right former President Jair Bolsonaro, the two people said. The state-controlled company said on Sunday night all its assets and refineries were operating normally.

DAK Americas to shut down Cooper River site

DAK Americas to shut down Cooper River site

MOSCOW (MRC) -- DAK has announced that it will be shutting down its Cooper River, South Carolina, PET site, said the company.

The PET resins operations at the Cooper River site have shut down indefinitely as of 1 March. PET can be compounded with glass fibre for the production of engineering plastics.

We remind, DAK has announced a 10 cent/lb price increase for polyethylene terephthalate (PET) citing an increase in paraxylene (PX) prices effective 1 June 2022. Increases in blendstock values as well as an increase in demand for gasoline in the summer months has put upward pressure on PX prices. This increase in demand for gasoline has resulted in refiners limiting operating rates at their toluene disproportionation process (TDP) units due to higher blendstock and gasoline prices, making it uneconomical to transform toluene into xylenes, including PX.

DAK Americas, Indorama, Nan Ya Plastics Corporation and Far Eastern New Century (FENC) are PET producers in the US.