Shell to take USD600 mln hit from scrapped Rotterdam biofuels project

Shell expects to report a $600-MM hit in the third quarter after abandoning its biofuels project in Rotterdam, bringing total impairments and provisions related to the venture to $1.4 B, said Hydrocarbonprocessing.

Shell had approved development of the 820,000-metric tpy biofuels plant in 2021, but paused construction last year and cancelled the project entirely in early September because it would not have been competitive (learn more).

The decision to exit the project is the latest in a series of steps by fossil fuel producers retreating from earlier pledges to expand cleaner energy.

In February, bp announced it would sharply reduce its investment in renewables, while Equinor said it was scaling back its renewable energy ambitions.

Shell raises LNG production outlook. Shell also signaled a stronger performance in its liquefied natural gas (LNG) business, raising its third-quarter production outlook to between 7 MMt and 7.4 MMt, it said in a quarterly trading update.

The company had previously forecast LNG production of about 6.7 MMt–7.3 MMt, the oil major said in July, compared with 6.7 MMt in the second quarter.

It expects trading results to be significantly higher in its integrated gas division. Energy majors typically never divulge detailed results of their trading divisions saying that publishing such details would lessen their competitive advantage.

Shell also said it expects its indicative refining margin in the third quarter rising to $11.6 per barrel from $8.9 in the previous three months. Lower gas trading results and lower oil prices had weighed on Shell's second quarter net profit, which dropped by about a third.

Global benchmark Brent crude prices averaged around $68 a barrel during the July-to-September quarter, compared with $67 in the second quarter and $79 in the same period of last year.

Shell, which is seeking new partners or buyers for some of its chemicals assets, said its chemicals division is expected to record a loss in the quarter.

It also flagged a $200 MM to $400 MM hit from a decrease of its share of production from Brazil's Tupi fields to reflect updated reservoir data, which a Shell spokesperson said was normal course of business.

"We see this as a strong update from the company, with improvement in operational indicators across its two key upstream divisions, as well as better trading q-o-q despite weaker market conditions more broadly," according to analysts at RBC Capital Markets.

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Idemitsu Kosan, Japan's second-largest oil refiner, shut the 165,000 barrel-per-day crude distillation unit (CDU) at its Aichi refinery in central Japan on September 16 for planned maintenance, a company spokesperson said on Tuesday, as per Hydrocarbonprocessing.

The refiner declined to provide a timeline for the unit's restart.

Its smaller rival Cosmo Oil, a unit of Cosmo Energy Holdings, also shut the 100,000-bpd CDU at its Sakai refinery in western Japan on August 27 for scheduled maintenance, with operations expected to resume in October, a company spokesperson said.

Japan's largest refiner, Eneos Corp., a unit of Eneos Holdings, shut the 172,100-bpd No. 2 CDU at its Kawasaki refinery, near Tokyo, on August 16 for scheduled turnaround, according to a company spokesperson.

The company plans to restart the unit in late November.

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Belarusian rail-transported gasoline exports to Russia jumped fourfold month-on-month in September, as Moscow sought to tackle fuel shortages caused by Ukrainian attacks on its energy infrastructure, as per Hydrocarbonprocessing.

Several Russian regions have introduced rationing and have temporarily frozen fuel prices in recent weeks amid a scarcity of popular types of gasoline brought on by the drone strikes, which targeted refineries among other energy installations. Moscow has also restricted gasoline and diesel exports.

Russia increased fuel imports from Belarus last year as well to cover shortages.

According to the sources, gasoline supplies via rail from refineries in Belarus to the Russian domestic market rose to 49,000 metric t, or 14,500 bpd, last month. They also said diesel deliveries amounted to 33,000 t in September.

At the same time, gasoline transit from Belarus for further export via Russian ports edged up by around 1% last month to 140,000 t.

Belarus has used Russian ports for transshipment of its refined petroleum products since March 2021 under a cooperation agreement signed between Moscow and Minsk.

However, such transshipments dropped by nearly 40% year-on-year to 1.17 MMt between January and September, according to the sources and calculations, due to a decline in refining throughput.

Belarus' two refining facilities - the Naftan and Mozyr oil refineries - each has annual capacity of 12 MMt, or some 240,000 bpd. But they typically produce around 9 MMtpy, or roughly 180,000 bpd.

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Resonac Corp.(Tokyo) has announced a partnership with Axiom Space, Inc. (Houston, Texas), a prominent firm in commercial space infrastructure, as per Chemweek.

The two companies have signed a memorandum of understanding (MOU) to collaborate on the research, development and manufacturing of high-performance semiconductor materials in the environment of space.

This collaboration aims to leverage microgravity to enhance next-generation chip technologies and accelerate the growth of the in-space manufacturing market.

“The unique environment of space offers immense potential for advancing semiconductor materials, especially in crystal growth,” said Masato Fukushima, CTO at Resonac.

Resonac said the partnership will allow both the companies to explore the capabilities of microgravity and low-Earth orbit (LEO) vacuum conditions to produce semiconductor materials tailored for critical applications and chip packaging.

According to Resonac, the microgravity environment presents a unique opportunity, as it eliminates convection and sedimentation, enabling the growth of defect-free semiconductor bulk crystals, resins, and two-dimensional materials.

To facilitate this groundbreaking research, the companies plan to utilize the International Space Station, Axiom Space’s orbital platforms, and the upcoming Axiom Station to transition from proof-of-concept projects to commercially viable scale manufacturing.

In addition, under this MOU, Resonac intends to build upon its ongoing work with Axiom Space, focusing on the development of specialized molding compounds designed to mitigate soft errors in semiconductor devices exposed to space radiation.

Soft errors occur when cosmic rays penetrate a transistor, displacing electrons and causing bits to invert. To tackle this challenge, Resonac is currently testing simple devices fabricated with various compositions of molding material in both the external environment of space and within the International Space Station, it added.

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Petrochemical producers in India — mainly in the polymer and polyurethane segments — hoped that strong on-year sales growth in the local automobile industry in September would translate to better demand for plastics and foam used in automotive production, as per Chemweek.

The Indian automobile industry's sales grew 5.22% yea over year in September, led by a 34% surge in retail demand over Sept. 22-30, following the implementation of lower Goods and Services Tax (GST) on automobiles on Sept. 22, according to the data from the Federation of Automobile Dealers Association, published on Oct. 7. Before the tax cut was implemented, demand in the sector was muted, the Association said.

Retail sales of passenger vehicles rose almost 35% year over year over Sept. 22-30 and 6% across the whole month, the data showed.

The near-term outlook was upbeat for auto sales on the back of an above-normal monsoon season, a strong kharif harvest, and steady central bank rates that could boost purchasing power, the Association said.

The country’s GST council approved a revised two-tier tax structure of 5% and 18% on Sept. 3 to go into effect on Sept. 22. Prior to the change, all products fell under the previous “four-slab” system of 5%, 12%, 18% and 28% tax rates.

Under the change, the tax rate on passenger vehicles in the 1,200-1,500 cc segment was cut to 18% from 28%.

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