Chinese petchem firms betting big on energy transition products

Chinese petchem firms betting big on energy transition products

Chinese oil refiners and petrochemical companies are investing tens of billions of dollars to produce high-end chemicals for solar panels and lithium-ion batteries to profit from growing demand for energy transition technologies, said Reuters.

The investments illustrate China's drive to reduce its import dependence and further cement its dominance of renewable energy and electric vehicle supply chains. The move pits the Chinese companies against Dow Chemical, Exxon Mobil and BASF in making key materials.

Companies including Wanhua Chemical, Zhejiang Petrochemical Corp (ZPC) and Hengli Petrochemical (600346.SS) and state oil giant Sinopec Corp are leading the shift, industry executives and analysts said. They are moving from making more basic petrochemicals for polyester fabrics and plastic packaging to manufacturing higher value products such as polyolefin elastomers (POE) used to protect the cells on solar panels, ultra-high-molecular-weight polyethylene for lithium-ion battery separators and carbon fibre for wind turbine blades.

China's glutted market in polyethylene and polyesters after years of rapid petrochemical capacity expansion is prompting some of the shift. The drive also aligns with Beijing's push for companies to break through technological bottlenecks for producing key new materials and strengthen domestic supply chains and builds off China's status as the world's biggest manufacturer of electric vehicles, EV batteries and solar panels.

ZPC, Hengli, and smaller refiner Shandong Chambroad Petrochemical are each building multi-billion-dollar complexes to make the new materials, with production due to come online around 2025, officials at the three companies told Reuters.

Sinopec Corp, the country's top refiner and basic chemicals producer, is shifting investment to high-end chemicals such as ethylene vinyl acetate (EVA) for solar panels and large-tow carbon fibre used in aircraft and lighter, stronger wind turbine shafts.

Engineering plastics, raw materials for bio-degradable plastics and electrolytes for lithium batteries, as well as plastics for the battery separators, are among the new plant's main planned products, said the Hengli representative, who declined to be identified.

Having set up a specialised battery technology unit in late 2022, Wanhua Chemical said in May it will spend 3.4 billion yuan this year on raw materials for anodes, cathodes, and electrolytes used in lithium batteries, China Chemical News reported in June.

Chinese production capacity for POE, a material used for solar panel encapsulation that resists ultraviolet light and is more durable than EVA, will surge to 1 million metric tons per year by 2025 from zero at a cost of about 20 billion yuan, to meet demand that is set to expand at double-digit rates, industry officials estimated.

About a dozen companies, including units of Sinopec and PetroChina , are building or planning POE capacity. The domestic supply would partly replace China's POE imports, which have grown by an average of 23% a year over the past five years to a record 690,000 tonnes worth 13.7 billion yuan in 2022, according to Chinese customs.

Wanhua and Sinopec are expected to be China's first commercial POE producers, according to Zhao and Woodmac's Cui.

In April, Sinopec announced trial output at its Maoming refinery. ZPC expects to bring online a POE facility that can produce 400,000 metric tonnes per year by 2025/2026, said an official from Zhejiang's parent Rongsheng Petrochemical.

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Versalis publishes decarbonisation targets in the latest Sustainability Report

Versalis publishes decarbonisation targets in the latest Sustainability Report

Versalis, Eni's chemical company, has published the 2022 Sustainability Report, illustrating its contribution to the development of more sustainable and circular models in line with Eni's strategy and values, said the company.

The document also outlines the targets set by the company to achieve carbon neutrality by 2050. Being energy-intensive, the chemical industry bears a heavy responsibility in the decarbonisation challenge since deemed ‘hard to abate’, i.e. difficult to decarbonize.

Versalis aims to play a key role in the transition through the development of complementary and synergistic technologies, products and solutions that support a lower-emissions business model and contribute to a more sustainable future.

Adriano Alfani, CEO of Versalis said: “We are committed to making a contribution to contrasting climate change through our daily actions: by identifying more sustainable alternatives for the supply of feedstocks and energy; by developing chemistry from renewables; by adopting solutions aimed at reducing energy impact; and by conducting research activities dedicated to the development of new technologies, processes and products for decarbonisation. We work to ensure that the path towards decarbonisation offers growth opportunities for the social fabric and prosperity of the communities we operate in, developing new activities and supply chains".

The Sustainability Report highlights cross-cutting emission reduction targets: compared to reference year 2018, 15% for Scopes 1 and 2 by 2025 and 30% by 2035. These short- and medium-term targets are fundamental milestones for achieving the Net Zero* goal by 2050. Specific actions have also been identified to achieve these targets: as to Scope 1, activities on industrial processes and in particular on steam-cracking; as to Scope 2, increases in plant efficiency and use of renewable energy; as to Scope 3, the development of circular economy initiatives and chemistry from renewables, for which the direct involvement of the entire network of suppliers and customers is needed, encouraging them to reduce emissions.

We remind, in Italy, Versalis, Eni’s chemical company, has acquired the technology to produce enzymes for second-generation ethanol from DSM. The agreement has a strategic value for Versalis as it integrates with proprietary Proesa® technology, applied at the Crescentino plant for the production of sustainable bioethanol and chemical products from lignocellulosic biomass, improving the competitiveness of technology and production.

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North American chemical railcar traffic fell for a ninth straight week

North American chemical railcar traffic fell for a ninth straight week

North American chemical railcar traffic fell for a ninth straight week, with loadings for the week ended 15 July down 2.0% year on year to 44,025, said according to the freight rail data of Association of American Railroads.

The decline was led by a 10.8% drop in Canada where railways embargoed certain cargoes because of a port strike at Vancouver and other west coast ports.

For the first 28 weeks of 2023 ended 15 July, North American chemical rail traffic was down 2.9% year on year to 1,262,326, with the US down 4.2%, to 870,044 loadings.

In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest. In Canada, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail.

We remind, North American chemical railcar traffic fell for a fourth straight week, with loadings for the week ended 10 June down 3.8% year on year to 44,469, led by a 14.6% decline in Canada. For the first 23 weeks of 2023 ended 10 June, North American chemical rail traffic was down 2.8% year on year to 1,043,139, with the US down 4.6%, to 717,412 loadings.

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Iraq and Lebanon sign MoU on Iraq providing Lebanon with fuel oil and crude oil

Iraq and Lebanon sign MoU on Iraq providing Lebanon with fuel oil and crude oil

Iraq renewed its agreement to provide Lebanon with up to 2 million tons of crude oil for a year, as per Reuters.

The two countries signed a memorandum of understanding on Iraq providing Lebanon with fuel oil and crude oil, the Iraqi state news agency INA also reported on Friday, without elaborating.

In May Lebanon signed deals to secure more fuel supplies from Iraq as Beirut battles to produce more power to help it emerge from years of economic crisis.

Baghdad also agreed to increase the volume of heavy fuel oil supplied under an existing deal by 50% to 1.5 million metric tonnes this year.

We remind, a barter of Iranian natural gas for Iraqi oil as described by the Iraqi prime minister this week would likely violate U.S. sanctions on Tehran unless the U.S. issued a waiver permitting it. Iraqi Prime Minister Mohammed Shia al-Sudani on Tuesday said Iraq would begin trading crude oil for Iranian gas to end recurring payment delays to Tehran due to required U.S. approval for such transactions. Sudani said Iran had cut gas exports to Iraq by more than half as of July 1 after Baghdad failed to secure U.S. approval to disburse owed funds, but Tehran had now agreed to resume gas exports in exchange for crude oil.

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India, Sri Lanka agree to boost ties through energy, power and port projects

India, Sri Lanka agree to boost ties through energy, power and port projects

India and Sri Lanka said on Friday that they had agreed to improve economic ties by increasing cooperation in renewable energy and studying the feasibility of building an oil pipeline and a land bridge between the two countries, said Hydrocarbonprocessing.

New Delhi will also help develop a port and an economic hub at Trincomalee, a city on Sri Lanka's northeastern coast. The announcements were made by the leaders of the two countries as Sri Lankan President Ranil Wickremesinghe held talks with Indian Prime Minister Narendra Modi in New Delhi on Friday morning.

India's support of nearly $4 B between January and July last year was critical for Sri Lanka after it almost ran out of dollars and sank into a financial crisis that left it struggling to fund essential imports including fuel and medicine.
Modi said on Friday that the two leaders "adopted a vision document for our Economic Partnership" to strengthen maritime, air, energy and people-to-people connectivity, to accelerate mutual cooperation in tourism, power, trade, higher education, and skill development.

Modi also said the two sides would work quickly to connect their electricity grids and study the feasibility of building a petroleum pipeline and a land bridge between the countries, which are about 50 km (31 miles) apart at one point. The projects to connect the power grids through undersea cables and the oil pipeline are expected to cost around USD4 B in total, according to officials on both sides. Few details were released on the agreements on renewables.

Wickremesinghe said that "constructing a multi-product petroleum pipeline from the southern part of India to Sri Lanka will ensure an affordable and reliable supply of energy to Sri Lanka." The two countries also will soon restart negotiations on a more expansive trade deal known as the Economic and Technological Cooperation Agreement.

Wickremesinghe also said that he had updated Modi about the reform measures being taken by his government to resolve the island's financial crisis and expressed appreciation for the support provided by India for the "most challenging period in modern history".

Sri Lanka defaulted on its foreign debt last May and India is part of a common platform established with Japan and other Paris Club members to help the island restructure its debt. India remains a key creditor to the island with USD1.9 B in outstanding debt.

While New Delhi has traditionally had strong ties with its southern neighbor, the small island nation has become a jousting ground between India and China due to its strategic location in the Indian Ocean. The two-day visit to New Delhi is Wickremesinghe's first since he took over as the president a year ago after his predecessor was forced out of office following widespread protests against the economic crisis.

We remind, Indian Oil Corporation Limited (IndianOil) and Praj Industries Limited (Praj) signed a term sheet to advance plans to strengthen biofuels production capacities in India. Various biofuels covered under this MoU include Sustainable Aviation Fuel (SAF), Ethanol, Compressed Bio-Gas (CBG), Biodiesel and Bio-bitumen among others. Earlier in October 2021, both the Companies had entered into an agreement to form a 50:50 Joint Venture to this end.

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