Shell halts Iraqi chemical project amid global review

Shell, opens new tab said on Tuesday it will not proceed with the Nebras petrochemical project in southern Iraq as part of its review of its operations in the sector that has seen a sharp drop in profits in recent years, said Reuters.

"After in-depth evaluation on the feasibility of the Nebras integrated petrochemicals complex with our government partners, Shell has decided not to proceed with the project," a spokesperson said in a statement.

Shell is seeking buyers for its oil refining and petrochemicals plant in Singapore.

"Shell will continue to play a vital role in Iraq's energy landscape through our partnership in the Basra Gas Company (BGC) joint venture as the main gas processing entity in Iraq," the company said.

We remind, in early February, Royal Dutch Shell, a prominent Anglo-Dutch oil and gas company, declared force majeure concerning the supply of butadiene to its facility in Norco, Louisiana, USA. Market reports have confirmed the shutdown of a line with a substantial capacity of 265,000 tonnes of butadiene annually. This operational halt is anticipated to persist at least until the conclusion of February, with the precise cause of the disruption remaining undisclosed.

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PTT Global Chemical's (PTTGC) net profit surged to Thai Baht (Bt) 5.08bn in the fourth quarter on higher sales and gains from its sale of shares of GC Logistics Co (GCL), said the Thailand-based producer.

PTTGC in the fourth quarter of last year approved the sale of a 50% share in subsidiary GCL to Thailand-based logistics and industrial facilities firm WHA Venture Holding Co in a deal worth around Bt2.64bn. Sales volumes increased in the fourth quarter of the year on strong refining operating rates.

"However, the average crude oil price and petrochemical prices declined across all products [in the fourth quarter], reflecting the slow economic recovery," the company said in a statement. On a quarter-on-quarter basis, adjusted earnings before interest, tax, depreciation and amortization (EBITDA) at the polymers and chemicals unit fell by 53% in the last three months of 2023, weighed by poorer sales volumes and higher plant turnarounds.

For the whole of 2023, sales fell by 9.1% year on year due to price decreases in its petroleum and petrochemical products due to the ongoing global economic recession "that has not yet recovered", it said. Petrochemical product spreads declined during 2023, especially in its intermediates business as well as its polymers and chemicals business which was affected by new capacity start-ups and the global economic slowdown.

The company also reported a share of loss from investments at Bt725m in comparison with the gain of Bt2,908 the previous year as the petrochemical business encountered a downturn in overall performance. Earnings at PTTGC's Polymers & Chemicals business declined from the previous year due to the decrease in spread of plastic resins products, especially polyethylene (PE), which declined by 19% year on year, driven by ongoing economic slowdown, high inflation, economic regression, and oversupply, resulting from the continuous introduction of new production capacities from China.

"We expect around 21% year on year growth in EBITDA in 2024 on the back of a higher share of low-cost ethane feedstock, some recovery of petrochemical spreads, and a gradual improvement in the business environment for PTTGC’s specialty chemicals subsidiary Allnex," Japan's Nomura Global Markets Research said in a note on Wednesday.

We remind, credit watchdog Moody's Investors Service has cut the ratings of Thailand's PTT Global Chemical Public Company (PTTGC) because of the company's relatively high debt and weak global demand for petrochemicals, said the agency. PTTGC’s leverage has been driven by weak earnings over the past 12 months, combined with the primarily debt-funded acquisition of resin producer Allnex Holding GmbH, Moody’s said. PTTGC completed the €4bn acquisition of Germany-based Allnex in December 2021.

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In the week ending February 9, the average capacity utilization at paraxylene plants in China experienced a notable increase, rising by 1% compared to the previous week, said Chemanalyst.

This uptick in capacity utilization reflects the operational efficiency and production levels within the Chinese paraxylene manufacturing sector, reaching an average utilization rate of 82%.

A closer look at the recent developments in China's paraxylene market reveals insights into the country's import dynamics. In December, China recorded a total import volume of 692.83 thousand tons of paraxylene. However, this figure reflects a 14% decline when compared to the corresponding period in December 2022. Additionally, there was a 12% reduction in paraxylene imports from November 2023, where the import volume stood at 787.47 thousand tons. South Korea, Japan, and Brunei emerged as the primary suppliers of paraxylene to China during this period.

Analyzing the broader picture, the cumulative volume of paraxylene imports to China throughout the entirety of January to December 2023 reached approximately 9.1 million tons. This data underscores the significant role that international suppliers, particularly those from South Korea, Japan, and Brunei, play in meeting China's demand for paraxylene.

The rise in average capacity utilization at Chinese paraxylene plants suggests a positive trend in the domestic production landscape. This increase aligns with the country's ongoing efforts to enhance its self-sufficiency and operational efficiency in the production of key chemical components like paraxylene. The 1% rise in capacity utilization is indicative of a productive and well-functioning manufacturing sector in China.

It is essential to recognize the interconnected nature of the global paraxylene market, with China serving as a key player in both production and consumption. The fluctuations in import volumes highlight the dynamics of international trade and the dependencies that nations have on each other to meet their specific industrial requirements. The lower import volumes in December compared to the previous year could be attributed to various factors, including changes in domestic demand, market conditions, or strategic decisions made by suppliers and buyers.

South Korea, Japan, and Brunei emerge as prominent contributors to China's paraxylene supply chain during the examined period. These countries play a pivotal role in meeting China's demand for paraxylene, emphasizing the importance of strong trade relations and supply chains in the global chemical industry.

The intricate balance between domestic production and international trade in paraxylene reflects the complexity of the chemical industry and the strategic considerations that nations must take into account. China's efforts to boost domestic production while engaging in international trade partnerships underscore the multifaceted nature of its approach to meeting the demands of its chemical sector.

We remind, on December 20th, 2023, the Tariff Commission of China's State Council announced a suspension of tariff concessions on specific products covered by the Cross-Strait Economic Cooperation Framework Agreement. Beginning January 1, 2024, tariff rates for 12 imported products, including Paraxylene (PX) from Taiwan, will no longer receive concessions. The current 0% tariff on Paraxylene will be adjusted to 2%. This new 2% tariff will be applicable on Paraxylene imports from Taiwan, same as that from other countries expect for the ASEAN market.

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Repsol has achieved a significant milestone with the certification granted by the Roundtable on Sustainable Biomaterials (RSB), providing the company with the opportunity to market its sustainable aviation fuel (SAF) within the RSB Book & Claim System, said Chemanalyst.

This certification empowers the multi-energy corporation to distribute SAF at designated airports and enroll it in the RSB registry. Consequently, customers at airports worldwide can claim the certified emission reductions associated with the registered SAF when procuring their traditional jet fuel.

The implementation of the book and claim mechanism addresses the existing supply-and-demand challenges encountered within the SAF market, thereby facilitating the aviation sector's efforts to accelerate its decarbonization process.

Presently, SAF is only accessible at a limited number of geographic locations globally, and the transportation of SAF to other airport locations can incur substantial costs and generate unnecessary CO2 emissions during the refueling process. RSB's Book & Claim System serves as a solution to overcome these obstacles and facilitate the growth of SAF usage. By enabling airlines and their clients to claim SAF carbon reductions without the necessity of physical access to sustainable fuel supplies, this mechanism streamlines the procurement process.

Moreover, the chain of custody model developed by RSB ensures complete traceability and credibility, while also demonstrating a tangible climate impact by preventing instances of double counting in the process. The carbon reductions linked with the SAF will be registered as a 'book and claim unit' and can be transferred to any interested buyer globally. However, it's important to note that the physical fuel delivered at the nearest airport will not carry any specific sustainability criteria. The book and claim system is presently focused on voluntary markets, thereby contributing to carbon emission reductions that complement existing mandates and regulations.

The carbon reductions associated with the SAF will be meticulously recorded as 'book and claim units' and are transferable to any interested buyer across the globe. However, it's important to note that the physical fuel dispensed at the nearest airport will not carry any specific sustainability criteria. Presently, the book and claim approach primarily targets voluntary markets, thereby contributing to carbon emission reductions that surpass regulatory mandates and obligations.

RSB's leadership in the book and claim domain stems from the organization's multi-stakeholder governance and non-profit status. RSB's approach has been developed through a uniquely credible and robust consensus-based decision-making process, which balances the input of industry, civil society, and academia. This approach has resulted in a trusted solution to help scale decarbonization efforts. Repsol's certification has been achieved through SGS, accredited by RSB to conduct independent audits, ensuring adherence to the highest standards of sustainability and credibility.

We remind, on December 20th, 2023, the Tariff Commission of China's State Council announced a suspension of tariff concessions on specific products covered by the Cross-Strait Economic Cooperation Framework Agreement. Beginning January 1, 2024, tariff rates for 12 imported products, including Paraxylene (PX) from Taiwan, will no longer receive concessions. The current 0% tariff on Paraxylene will be adjusted to 2%. This new 2% tariff will be applicable on Paraxylene imports from Taiwan, same as that from other countries expect for the ASEAN market.

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The Lake Area region in Louisiana is bracing for potential flaring activities as a polyethylene unit undergoes the startup process, said Chemanalyst.

This precautionary notice is issued to residents in anticipation of temporary disruptions that may occur over the next few days. The focal point of attention is the Louisiana Integrated PolyEthylene Joint Venture, a collaborative effort between industry giants LyondellBasell and Sasol, set to kick off operations on Friday, February 8, 2024. This initial phase of operation is estimated to span approximately three days, during which residents may observe flaring activities associated with the startup process.

Nestled within the 2200 block of Old Spanish Trail, the polyethylene unit stands as a notable addition to the industrial infrastructure of the Lake Area region. As is customary with the startup of such facilities, flaring is a standard safety practice employed to manage excess gas and mitigate the release of potentially harmful pollutants into the atmosphere. While the sight of flaring may pose temporary inconveniences for nearby residents, it's imperative to recognize its indispensable role in ensuring the safe and efficient operation of industrial facilities like the polyethylene unit.

Acknowledging the potential disruptions caused by flaring, the companies involved in the joint venture, LyondellBasell and Sasol, are committed to implementing measures aimed at minimizing the impact on the local community. These efforts encompass strategies to reduce both the duration and intensity of flaring activities, along with stringent adherence to established safety protocols throughout the entirety of the startup process.

The commencement of operations at the polyethylene unit signifies a significant milestone for both LyondellBasell and Sasol, underscoring their respective commitments to innovation and economic growth. This joint venture represents a collaborative endeavor between two industry leaders, highlighting the importance of cooperation in driving progress within the industrial sector.

Amidst the startup process, residents are encouraged to remain informed and vigilant. Updates pertaining to the status of flaring activities and any related developments will be disseminated to ensure transparency and facilitate open communication with the community.

The startup of the polyethylene unit in Louisiana's Lake Area region marks a notable development within the state's industrial landscape. While flaring activities may be observed during this phase, residents can take solace in the knowledge that concerted efforts are underway to minimize potential disruptions. Through collaboration and adherence to stringent safety standards, LyondellBasell, Sasol, and other stakeholders are working collectively to ensure the safe and efficient operation of the polyethylene unit, thereby safeguarding the interests of all parties involved.

We remind, on January 30, Wanhua Chemical, a prominent player in the Chinese chemical industry, initiated a temporary shutdown of its high-density polyethylene (HDPE) plant located in Yantai City, Shandong Province, China. This strategic move is part of a scheduled maintenance effort aimed at optimizing operational efficiency. The HDPE plant, boasting an annual production capacity of 350 thousand tons, will undergo maintenance for an estimated duration of one month.

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