Red Sea, Russian refinery attacks tighten Asia naphtha supplies

Red Sea, Russian refinery attacks tighten Asia naphtha supplies

Prices of naphtha, a key petrochemical feedstock, have jumped in Asia as drone attacks on Russian refineries and the Red Sea shipping crisis have disrupted European shipments, said Hydrocarbonprocessing.

The Asian spot naphtha price rose to $701 per metric ton on Friday after hitting a 10-month high of $747 in late January, well above last June's low around $500, as traders grapple with fallout from the dual conflicts.

Damage in recent weeks to Russian refineries and a key export terminal at Ust-Luga, as well as attacks on Red Sea shipping that have led a growing number of vessels to divert around Africa, follows last year's rejig of global energy shipping in the wake of Western sanctions on Russia.

That is driving up costs for Asian importers such as South Korean petrochemical producers, which were already running plants at lower rates to cope with weak margins caused by oversupply and slower plastics demand growth, trade sources said, a squeeze expected to last through March.

"There will be a lot of prompt tightness if outage at the Russian plants is prolonged, it adds fuel to the (Red Sea) freight diversions, with already longer voyages," said Armaan Ashraf, global head of natural gas liquids at consultancy FGE.

Russia exports about 400,000 barrels per day (bpd) of naphtha, said Kpler analyst Viktor Katona, with significant volumes from Ust-Luga destined for China, Singapore and Taiwan.

"Should Ust-Luga repairs take longer than expected, a third of those flows might not be available in the immediate future," Katona said. Russia's Tuapse refinery, meanwhile, could be offline for all of February, depriving the market of 40,000-50,000 bpd of naphtha, FGE analysts wrote on Feb. 5.

Asia, a net importer of naphtha, relies on western suppliers including Russia for about 2 million tons monthly, equivalent to 600,000 barrels per day.

We remind, Russian energy company Novatek resumed gas condensate processing at its Ust-Luga complex on Feb. 11, two industry sources said on Wednesday, after the site was damaged last month by a suspected Ukrainian drone attack. The complex processed about 18,000 metric tons of gas condensate over Feb. 11-12, the sources said.

EQUATE announces Feb MEG India contract price

EQUATE announces Feb MEG India contract price

Global monoethylene glycol (MEG) producer EQUATE has nominated its February 2024 MEG India Contract Price (ICP) at USD552/tonne CFR (cost & freight) India Main Ports, said the company.

The February nomination was USD32/tonne higher than January number.

We remind, EQUATE has nominated its January 2024 MEG India Contract Price (ICP) at $520/tonne CFR (cost & freight) India Main Ports, the company said. The January nomination was $43/tonne higher than December number.

Shell quits Iraqi petrochemicals plant talks

Oil major Shell has withdrawn from talks on building a petrochemicals plant in the southern oil hub of Basra, said Hydrocarbonprocessing.

Shell in a separate statement confirmed it was leaving the project.

A statement from Iraq's oil ministry said Shell would not continue discussions with the Ministry of Industry and Minerals and the Ministry of Oil regarding its role as "a major investor" in the Nebras Petrochemical Project, although it affirmed its continued support for the project through its partnership with Basra Gas Company.

In 2015, Shell signed an outline deal worth $11 billion with Iraq to build the petrochemical complex that would in theory come online within six years and would make Iraq the largest petrochemical producer in the Middle East.

An Iraqi energy official with knowledge of the project talks said financial and contractual issues delayed reaching a final deal with Shell and "caused the initial deal to collapse".

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.

Dow announces completion of inaugural green bond offering

Dow announces completion of inaugural green bond offering

The Dow Chemical Company, a wholly owned subsidiary of Dow, announced today the closing of its green bond offering of USD600 million aggregate principal amount of 5.150% notes due 2034 and USD650 million aggregate principal amount of 5.600% notes due 2054, said Hydrocarbonprocessing.

The notes represent the Company's inaugural green financing instrument, in alignment with Dow's Green Finance Framework ("Framework") published on our website on January 25, 2024. The Framework was established to support the execution of Dow's sustainability strategy and achieve its targets focused on climate protection and a circular economy. Dow intends to allocate proceeds from this offering toward projects that meet eligibility criteria contained within the Framework, including expenditures and investments related to our Fort Saskatchewan, Alberta Path2Zero project. Additional details on eligibility criteria and use of proceeds are available in the Framework.

"This green bond offering marks a foundational opportunity for investors to participate in Dow's strategy to decarbonize and drive circularity while growing earnings over the cycle," said Jeff Tate, Dow's chief financial officer. "We expect the proceeds of this instrument to primarily support our project to build the world's first net-zero Scope 1 and 2 emissions ethylene and derivates complex in Alberta, which achieved the critical milestone of final investment decision from our Board in November 2023."

In 2020, Dow announced its intention to be carbon neutral for Scopes 1+2+3 plus product benefits by 2050. The commitment included a mid-term target to reduce by 2030 the Company's Scope 1 and 2 net annual carbon emissions by 5 million metric tons versus its 2020 baseline. Achieving this 2030 target represents a total 30% emissions reduction versus Dow's 2005 level.

Additionally in 2022, Dow announced its Transform the Waste strategy – which will enable the development of circular ecosystems by transforming plastic waste and alternative feedstock to commercialize 3 million metric tons per year of circular and renewable solutions by 2030.

Indonesia's Pertamina to slash capacity at second-biggest refinery due to upgrade

Indonesia's Pertamina to slash capacity at second-biggest refinery due to upgrade

Indonesia's state energy company Pertamina will reduce production capacity at its Balikpapan refinery starting in the third week of February as an upgrade of the facility advances, the company said.

The "plant stop revamp" at the country's second-largest refinery will last for two months, the company said, during which capacity will be reduced to 60,000 barrels per day (bpd) from 260,000 bpd normally.

Pertamina is revamping Balikpapan to increase its capacity to 360,000 bpd and to be able to produce fuel with Euro V emission standards.

As of last month, 87% of the upgrade had already been completed.

The Balikpapan project is part of Pertamina's long-term refinery upgrade plans. It is aiming to complete the first phase of Balikpapan upgrade this year.

We remind, Pertamina expects to complete the capacity upgrade at its Balikpapan refinery in April next year, Nicke Widyawati, chief executive of Pertamina, the parent company of PHE. Pertamina is expanding Balikpapan's capacity to 360,000 barrels of oil per day (bpd) from 260,000 bpd currently. The refinery would also be able to produce fuel to Euro V emission standards.