Exxon starts world’s 1st crude-cracking petrochemical unit

ExxonMobil has made history in Singapore by being first to launch chemical unit that processes crude oil.  This will make a more direct process in taking crude  into petrochemicals; and this efficiency could see ExxonMobil streak ahead in the market.

ExxonMobil officially launched the world’s first chemical unit that processes crude oil in Singapore, aiming to lower costs to better compete with rivals in a market saddled with excess capacity.

Chemical companies typically process refined oil products such as naphtha – created by separating crude oil into lighter groups – at facilites called crackers to create petrochemicals like ethylene and propylene. These are further processed into products such as plastics, soaps or synthetic fibres.

But Exxon’s new cracker in Singapore allows the company to bypass the refining process by processing crude directly into petrochemicals.

“This is the right place to do crude cracking because it gives us an advantage over the predominant feedstock in the region,” ExxonMobil Chemical’s president Stephen Pryor told Reuters.

“The cracker we’ve built is by far the most feed flexible cracker we’ve ever built. It can crack anything from light gases to heavy liquids, including crude oil.”

The new technology helps reduce raw material costs, energy consumption and carbon emissions, Pryor said, while the cracker also produces fuel components.

He declined to detail the extent of Exxon’s savings or specify which crude grades are processed at the cracker. The cost of Brent crude is more than $160 a tonne lower than Asia’s naphtha NAF-1H-TYO, Reuters data showed.

Crackers in Asia typically use naphtha as a feedstock, while those in the Middle East enjoy a cost advantage as they process cheaper ethane and propane gases into petrochemicals.

The multi-billion dollar complex on Singapore’s Jurong Island includes the 1 million tonne per year (tpy) steam cracker as well as production of at least 1.4 million tpy of polymers and elastomers. The cracker was brought online in the middle of last year, but Exxon has not previously confirmed the use of crude as a feedstock.

The project had been delayed for two years due to its complexity and a weak economic outlook which has pared the use of petrochemicals in automobile parts, electrical appliances and consumables, despite excess capacity.

CHEMICAL DEMAND RISING

An improved economic outlook in the United States and better demand in China is expected to raise global chemical demand growth in coming years, according to the American Chemistry Council.

The Council sees headline global petrochemicals growth of 4.1 percent in 2014 and 4.5 percent in 2015, up from 2.1 percent last year, said Thomas Kevin Swift, its chief economist and managing director.

“After a couple of very slow years, we saw good demand growth in China last year,” said Pryor. “With China’s export sector picking up, we would expect that to continue.”

Global chemical demand for primary petrochemicals was expected to grow by about 50 percent over the next decade, with China accounting for half of the growth, he added.

To meet this demand, Exxon also planned to raise ethylene capacity at its joint venture with Saudi Aramco and Sinopec in southern China Fujian by 200,000 tonnes per year in 2015. At the Singapore plant, Exxon could also produce specialty petrochemicals such as butyl rubber for tyres and premium resins for adhesives, Pryor said.

Yet, supply from the United States could jump as petrochemical producers, including Exxon, launch projects to take advantage of cheap ethane gas from the shale resources boom. Exxon plans to build a 1.5 million tpy ethylene complex at Baytown, Texas by 2016.

“Demand will grow but it will be a competitive marketplace from a standpoint of capacity and that means that marginal liquid crackers are going to be under a lot of pressure,” Pryor said.

“You already see that in Europe, you see that in Japan and you’re going to see it throughout the region.”

French oil major Total and Ineos have said they will shut loss-making petrochemical plants in France and Scotland as Europe readies for a competitive assault from U.S. rivals armed with cheap feedstock.

By Florence Tan and Seng Li Peng of Reuters

The full article is visible via the link below – Pankaj Oswal

http://uk.reuters.com/article/2014/01/08/exxon-singapore-petrochemical-idUKL3N0KH2VU20140108

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Petrochemicals in NWE continue to shun propane as feedstock

Platts has reported that Northwest European petrochemical companies have abandoned propane for naphtha as a feedstock.  Prices weigh heavily in this consideration, as naphtha producers are now in a purple patch in the region.

Petrochemical companies in Northwest Europe are continuing to shun propane as a feedstock, according to industry sources.

Propane can be used as an alternative feedstock to naphtha by a number of petchem companies, but the delivered price of propane usually has to be below the delivered price of naphtha.

In the first half of November CIF propane prices were below CIF naphtha and propane was being widely used as a petchems feedstock.

But in the second half of November and first decade of December CIF propane prices moved above naphtha, driven by tight supply and demand to cover trader short positions.

This resulted in propane becoming too expensive to crack and according to sources most petchems either stopped or considerably reduced their usage of propane.

With weak demand from the traditional heating market in Northwest Europe, CIF propane prices have weakened recently, reaching a last published value Tuesday of $12.25/mt below CIF naphtha, based on Platts data.

But industry sources said the propane/naphtha price spread would probably have to widen even further before petchems started to crack significant quantities of propane again.

Austria-based petrochemicals company Borealis was actually a seller of propane Tuesday, concluding a deal for a 20,600 mt CIF cargo with Totsa at $950/mt and flat to balance December quotes, which based on Platts data equated to a price level just below parity with naphtha.

By Derek Hardy and Jonathan Fox of Platts

The full article is visible via the link below – Pankaj Oswal

http://www.platts.com/latest-news/petrochemicals/london/petrochemicals-in-nwe-continue-to-shun-propane-26559332

Crisis-hit Haldia Petrochemicals plans temporary shutdown

The problems for Haldia Petrochemicals continue to mount, this time due to a working capital shortfall.  According to industry sources, Haldia could complete a temporary shutdown for a week later in the month to save on other business costs.  The crisis has negatively impacted naphtha production and has resulted in a low plant load in the recent months.

KOLKATA: Haldia Petrochemicals is likely to opt for a temporary shutdown from the fourth week of this month following severe working capital crisis that is resulting in a shortage of naphtha and low plant load for the last few months.

It has been learnt that most of the technical officers of HPL, as well as shortlisted bidder Indian Oil, are not averse to the idea of a shutdown for a few weeks to cut down continuous losses and maintenance of the plant. HPL board will meet on December 17 for discussing the future course of action following the Supreme Court verdict that has allowed the Chatterjee Group to move to International Court in Paris for arbitration regarding the disputed 15.5 crore shares. This block constitutes 9.22% equity stake of the company and holds the key for management control.

HPL chairman Partha Chatterjee could not be contacted for comment, but managing director U K Basu said that there is no plan for a shutdown as of now.

According to sources, the HPL plant is now operating in less than 50% capacity which could be dangerous for the plant in the long run. The capacity of the plant is 260 tonnes per hour, but it is operating at 110-120 tonnes on average. “IOC is giving 1,000 tonnes naphtha per week. Not much naphtha has been lined up for the next few weeks. Besides, there has been no maintenance of the plant for the last 18 months,” said sources.

Sources pointed out that HPL is losing Rs 2-2.5 crore every day due to low-capacity operation. They said detonating financial condition is also forcing HPL to sell its products at discounts to realize funds quickly as the company could not hold inventory for long. “It is selling product without almost any margin forcing other petrochem players also to undercut price. This is not good for HPL as well as for the industry as a whole. IOC, the new owner in waiting, is also not happy with this as it is also facing the heat of price undercutting. If it continues for long, then HPL’s financial health will be beyond redemption,” alerted sources.

The firm had an accumulated loss of Rs 2,500 crore till March 2013. From April to October, 2013, HPL has posted a loss of Rs 521 crore taking the accumulated losses to over Rs 3,000 crore. The net worth of HPL has already eroded by Rs 50 crore. If the losses continue, then the company will have to go to BIFR.

The full article is visible via the link below – Pankaj Oswal

http://articles.timesofindia.indiatimes.com/2013-12-15/kolkata/45215153_1_chatterjee-group-hpl-plant-naphtha

Brazilian petrochemical industry calls for government support

A genuine push has been made by Brazil’s petrochemicals industry for federal government intervention as it has been described as uncompetitive by key representatives.  US influences, especially shale gas, are said to be the greatest causes of difficulty for the sector. 

The Brazilian petrochemical industry has called for the federal government to cut the price of natural gas and provide incentives for new investment, to support a sector that has become increasingly uncompetitive in recent years.

At a seminar in the Brazilian congress, Pedro Freitas, director of strategic planning at Braskem, Brazil’s largest petrochemical company, said that because of the emergence of shale gas in the US, the price of petrochemical feedstock in the US has decreased by US$300/t since 2007, while it has increased by US$300/t in Brazil.

Freitas said that 80% of Braskem’s feedstock is naphtha, which has become much more expensive than feedstock derived from natural gas, which supplies only 16% of Braskem’s feedstock. Around 75% of the cost of Braskem’s cost of production is derived from feedstock purchases, Freitas said.

“Raw material is critical for the petrochemical industry to grow in Brazil,” he said. “There is no country with a strong industry without a strong chemical industry.”

Henri Slezynger, president of Brazilian chemical industry association Abiquim, said that “it is essential to take measures immediately to reactivate the industry…the American threat is obvious.”

“A large part of the increase in internal demand for chemical products in Brazil is now systematically met by imports,” he said. Abiquim forecasts that Brazil will post a trade deficit of around US$32bn in chemicals this year.

Representatives of the Brazilian petrochemical industry at the seminar called for the Brazilian government to cut the price of natural gas in Brazil from its current level of around US$12/MBTU to US$5/MBTU, closer to US levels of US$3.50/MBTU.

Slezynger said Brazil needs a more internationally competitive gas price, to prevent further shutdowns in capacity.

“Brazil has a major opportunity to be competitive with its onshore and offshore gas, but it needs government policy to price gas closer to the US level.”

The commercialization of Brazil’s recent offshore gas discoveries is only likely to begin around 2020, speakers said, providing Brazil with more raw materials for its petrochemical industry.

Pedro Wongtschowski, the former chief executive officer of Brazilian fuels and chemicals conglomerate Ultrapar, said that investments in new petrochemical capacity take four to six years, so the government needs to act now to incentivize the sector. Wongtschowski is currently chairman of Embrappi, the government’s industrial innovation company.

By Mark Beresford of BN Americas

The full article is visible via the link below – Pankaj Oswal

http://www.bnamericas.com/news/petrochemicals/brazilian-petrochemical-industry-calls-for-government-support

Article: NWE butane still not attracting petrochemical demand despite falling prices

In a sign sure to alarm butane producers, petchem buyers in Northwest Europe have gone cold on butane in favor of naphtha and propane.  If these supplementary chemicals continue to be favoured by traders, at current price bands, it could force business leaders to re-examine business models.  Butane suppliers will be hoping to contain this trend to this part of the world.

Northwest European butane prices remain too high to attract petrochemical buying despite their recent slide, sources said Thursday.

“At this stage we can’t afford these butane levels,” said a trader.

Delivered prices of butane coasters, which are usually 1,000-3,000 mt in size, came off from levels around parity with naphtha to around 96% of naphtha prices Thursday.

“The price was 100% last week,” said another source, adding that prices were coming under pressure because gasoline blenders were away from the market.

Recent demand for blending butane into gasoline gave boost to prices over the previous two weeks and turned petrochemical users away from the market.

“As a petchem user we haven’t bought for more than two weeks,” said a trader.

As sentiment turned at the start of the week and prices started coming off, petrochemical buyers were said to be reassessing their buying but for now were continuing to crack propane and naphtha.

“Propane is very weak and it is much better to carry on cracking propane than butane,” said a source.

Propane coaster prices were assessed around 81% of naphtha by Platts on Wednesday, feeling the pressure of steady flow of exports from the ConocoPhillips terminal at Tees, northeast England. “The situation in Tees is changing quite fast with huge increase in loading rate,” said a source.

The terminal was restarting after maintenance faster than expected, said a trader, adding that as a result there were abundant offers at low prices.

At those levels, petchem users remain more interested in propane than butane, a trader said, adding that demand may subsequently start pushing propane prices higher against naphtha.

By Elza Turner

Edited by Jonathan Dart

The full article is visible via the link below – Pankaj Oswal

http://www.platts.com/latest-news/petrochemicals/london/nwe-butane-still-not-attracting-petrochemical-26269210

Article: Petrochemicals buying enlivens North Sea butane market

Respected commodity benchmarking and information provider Platts has reported that North Sea butane stocks have been increasingly sought in the last few weeks from Northwestern European buyers.  In only the last week the market has picked up noticeably and could indicate increasing demand for butane, which serves as an alternative to naphtha.

Buying interest from the petrochemicals sector in Northwest Europe has enlivened the North Sea butane market over the last week, according to industry sources.

Over the summer period, North Sea mixed butane is used by the gasoline-related sector in Northwest Europe in the production of alkylate and MTBE. However, mixed and normal butane can also be used by the petchems sector as an alternative feedstock to naphtha, providing the CIF butane price is at a discount to the CIF naphtha price.

Over the second half of June, activity on the North Sea butane market was extremely thin, with hardly any buying or selling interest seen for spot product.

More recently, however, the market has been a bit busier. At the beginning of this week, Statoil was a seller of 8,000-12,000 mt of either mixed or normal butane at sellers option CIF NWE July 8-12 and offered down to $765/mt when a deal was concluded with Borealis for delivery to their steam cracker at Stenungsund in Sweden.

Although trade sources said demand from the gasoline-related sector is still thin over the balance of July, there has been more demand seen from petchems. Sources added that another North Sea butane cargo was recently concluded into the petchems sector at a delivered price of about 92% of CIF naphtha.

Written by Derek Hardy

Edited by James Leech – Platts

The full article is visible via the link below – By Pankaj Oswal

http://www.platts.com/latest-news/petrochemicals/london/petrochemicals-buying-enlivens-north-sea-butane-26072691