OPEC+ unlikely to deepen oil supply cuts at June 4 meeting

OPEC and its allies are unlikely to deepen supply cuts at their ministerial meeting on Sunday despite a fall in oil prices toward $70 per barrel, four sources from the alliance told Reuters.

OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40% of the world's crude and supplies around 60% of the oil export market, meaning its policy decisions can have a major price impact.

As the economic outlook worsened, several members of OPEC+ in April pledged voluntary cuts starting from May and to continue to the end of the year. This was in addition to a 2 million barrels per day (bpd) cut agreed in early October to output targets versus an August 2022 production baseline. It brought total output cuts to 3.66 million bpd, or about 4% of global consumption.

The group of late has cut by more than its targets mainly because of capacity limitations in West African producers Nigeria and Angola. A Reuters survey found the two countries missed their output targets by a combined 600,000 bpd in May, while outages in the Kurdistan Region of northern Iraq meant the country produced 220,000 bpd below its target last month.

The surprise announcement in April helped to drive benchmark Brent crude prices about USD9 per barrel higher to above USD87 over the days followed, but Brent has since lost those gains to trade below USD73, under pressure from concerns about global economic growth and its impact on fuel demand.

Last week, Saudi Energy Minister Prince Abdulaziz bin Salman told investors he said were shorting the oil price to "watch out," which many market watchers interpreted as a warning of additional supply cuts.

Russian Deputy Prime Minister Alexander Novak subsequently said he did not expect any new steps from OPEC+ in Vienna, Russian media reported. The Kremlin on Thursday did not comment on the meeting's outcome, but Kremlin spokesman Dmitry Peskov said relations with Saudi Arabia were "constructive, based on mutual understanding, mutual respect, mutual trust".

We remind, Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.


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Nigeria's state owned oil company NNPC will soon end its monopoly on petrol supplies, its chief executive told local television on Thursday, a day after it nearly tripled prices at its fuel stations countrywide, said Reuters.

Newly inaugurated President Bola Tinubu pledged to remove fuel subsidies, a popular but costly benefit that has drained billions annually from government coffers. Mele Kyari told Arise TV that prices were expected to come down once new companies started supplying petrol, bringing more competition.

"All we did was to set variable prices depending on our costs by location and knowing full well that NNPC is the single supplier of the market and we are seeing that exit coming very, very quickly," said Kyari. "There will be no monopoly, NNPC will not continue being supplier of this product alone."

Kyari has previously said the corporation was owed USD6 billion in petrol subsidy payments by the federal government. Under the Petroleum Industry Act signed into law two years ago, NNPC cannot supply more than 30% of gasoline in Nigeria.

"As soon as the market stabilizes, oil marketing companies are able to come in. Competition will surely come in ... and you will see changes in prices downwards," said Kyari. Nigeria imports most of its refined petroleum products because it has run down its refineries over the years.

The 650,000 barrel per day Dangote Refinery was commissioned last month, amid hopes of transforming the country into a net exporter of petroleum products.

We remind, Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.

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A flood of potentially "dubious" biodiesel imports into Europe from China needs to be subject to closer EU vetting or it could trigger the collapse of the European Union's biofuels industry, top producer body EWABA said on Wednesday, said Reuters.

The European Waste-based Advanced Biofuels Association (EWABA) said 11 European biodiesel plants have already halted production and another 10 have reduced their capacity. The EU has provided incentives for the production of biodiesel made with waste oils and fat as part of its efforts to increase renewable energy use.

At the same time, EU data and Chinese customs data have both shown a rise in imports to Europe from Chinese producers that see the opportunity provided by a strong market in Europe. European vegetable oil industry group FEDIOL last week cited an abnormal rise in imports of biodiesel classified as waste based as a reason for plummeting rapeseed prices.

Offer prices in Europe for advanced biodiesel have nearly halved since August, traders say, reducing producers' earnings. EWABA said the EU-backed inspection mechanism has not sufficiently checked imports and traders say spot audits in China are insufficient to ensure less sustainable materials, notably palm oil, are not used to make biofuel.

"The promotion to waste-based and advanced biodiesel has to be accompanied by effective policing and worldwide sound auditing and verification practices ... thus avoiding dubious or fraudulent activity," EWABA said, without naming specific Chinese companies.

If authorities do not crack down on the flows, it added: "We will soon be on a path which will irremediably spiral into the complete collapse of the EU industry. This would result in de-industrialization and damaging job losses". It addressed its open letter to the European Commission, the German Federal Ministry for the Environment and the Dutch Emissions Authority.

We remind, Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.

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Indorama Ventures Public Company Limited, a global sustainable chemical producer, and Carbios, a biotech company developing and industrializing biological solutions to reinvent the life cycle of plastic and textiles, announce today the signing of a non-binding Memorandum of Understanding (MOU) to form a Joint Venture for the construction of the world’s first PET biorecycling plant in France, said the company.

Based on and subject to the comprehensive terms set out in the MOU, Indorama Ventures plans to mobilize about €110 MM for the Joint Venture in equity and non-convertible loan financing , pending final engineering documentation and final economic feasibility studies. Both parties have acknowledged their mutual support for the implementation of the project and their intent to finalize contract documentation before end 2023.

Subject to the successful performance of this first plant in France, Indorama Ventures confirms its intention to potentially expand the technology to other PET sites for future developments.

Under the agreement signed today, Carbios, which filed for plant permitting in December 2022, should acquire 13ha land from Indorama Ventures’ existing PET plant at Longlaville and expects to be granted permits by Q3 2023, allowing start of construction by end of 2023 and targeted commissioning in 2025. The land surface offers the possibility to double capacity. Pursuant to this MOU, Indorama Ventures shall ensure 100% of output repolymerization and both partners shall collaborate to secure feedstock supply.

The total capital investment for the new plant is re-estimated to be around EUR230 million, taking into account recent impact from inflation. Project costs shall be financed by the sums mobilized by Indorama Ventures, the French State and Grand-Est Region subsidies available for the project , and by equity capitalization of the Joint Venture by Carbios. Part of Carbios’ equity injection into the Joint Venture shall be financed by a portion of Carbios’ current cash position (i.e. €86 million as of 30 April 2023). Carbios is actively examining the best options to finance its remaining equity injection into the Joint Venture and will choose the most appropriate solution and timeline based on market conditions.

The project is part of Indorama Ventures’ Vision 2030 ambition to build on its leadership as a global sustainable chemical company. The company’s ESG commitments include spending USD1.5 B to increase its recycling capacity to 50 billion PET bottles per year by 2025 and 100 billion bottles per year by 2030. To meet these goals, Indorama Ventures, the world’s largest producer of recycled PET resin used in beverage bottles, is investing in new recycling technologies, including advanced recycling, in addition to expanding its global footprint of mechanical recycling sites, including two in France.

Carbios has developed a disruptive enzymatic depolymerization technology that enables efficient and solvent-free recycling of PET plastic and textile waste into virgin-like products with an aim to achieve true circularity. Carbios has ambitious plans to become a leading technology provider in advanced recycling of PET by 2035. After successful ongoing operations in its demonstration plant in Clermont-Ferrand in France, Carbios has been collaborating with Indorama Ventures for over a year to assess the commercial and technical feasibility of the technology. The world’s first industrial-scale enzymatic PET recycling plant at Longlaville will have a capacity to process about 50,000 tons of post-consumer PET waste per year, including waste that is not recyclable mechanically, equivalent to 2 billion PET colored bottles or 2.5 billion PET trays.

We remind, Indorama Ventures Public Company Limited (IVL) are collaborating to use flake from recycled PET trays to produce PET film suitable for food packaging trays, said the company. The partnership is an important step in diverting PET trays from landfill or incineration to support the EU’s recycling targets and create a circular economy for PET trays.

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Sumitomo Mitsui Banking Corporation has announced a USD10m investment to advance the recovery and recycling of rigid and flexible PE and PP, said Packaging-gateway.

The Closed Loop Circular Plastics Fund has received a USD10m investment from Japanese multinational banking and financial services institution Sumitomo Mitsui Banking Corporation (SMBC).

The investment partnership aims to advance the recovery and recycling of rigid and flexible polyethene (PE) and polypropylene (PP) plastics in the US and Canada.

The Fund is a key part of Closed Loop Partners’ strategy to focus on PE, PP and flexible plastics. It also provides debt and equity financing and mainstream investments into recovery and recycling solutions and infrastructure to help address bottlenecks in the recycling system.

Fund performance is benchmarked according to a combination of financial and impact outcomes. This includes tonnes of PE and PP impacted and tonnes of greenhouse gas emissions avoided or reduced. With its investment, SMBC joins institutions such as LyondellBasell, Nova Chemicals and Chevron Phillips Chemical.

SMBC group chief sustainability officer Masayuki Takanashi commented: “SMBC is committed to sustainability while identifying partnerships that leverage our expertise and strong footprint in the Japan and Asia Pacific region.

“Our team is proud to partner in the Closed Loop Circular Plastics Fund’s catalytic, impact-first effort to accelerate infrastructure, equipment, municipal services, as well as innovation and enabling technologies related to flexible films and specific plastic types.” In April, Closed Loop Partners managed the launch of two reusable bag pilots across three US states through The Consortium to Reinvent the Retail Bag.

SMBC is the commercial banking subsidiary of Sumitomo Mitsui Financial Group, one of Japan’s largest financial institutions.

We remind, Toray Industries, Inc., Mitsui Chemicals, Inc., and Kumagai Co., Ltd., announced that they have jointly developed a revolutionary mono-material film packaging material and manufacturing process that are free of volatile organic compounds (VOC). Carbon dioxide emissions are 80% lower than from conventional counterparts with this new material, which is also recyclable.

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