Page 18 - EurOil Week 29

EurOil POLICY EurOil

point in coordinating production increases “challenging geology and reliance on enhanced
going forward.” oil recovery (EOR) hinder output increases.
Saudi Arabia, for instance, needs $70 per bar- The sultanate cut production by nearly a quar-
rel oil to fund its budget, whereas Russia needs a ter earlier this year, with most of this coming
price of only $42 per barrel to balance the books. from Petroleum Development Oman’s (PDO)
And while Saudi Arabia made a voluntary cut of large Block 6 concession. Compliance should
1mn bpd in June to help prices recover, Russia not be an issue for Oman, but overcoming the
wants to avoid keeping back any more supply economic ramifications of lower oil prices and
than it has to. It has plans to drill but not com- returning to full output will be much more
plete thousands of wells, allowing Russian pro- challenging.”
ducers to quickly ramp up supply as OPEC+ Global oil demand is expected to be 7.9mn
restrictions are eased and claw back market share bpd lower this year than last, according to the
from competitors. International Energy Agency (IEA)’s latest
In a note on July 20, consultancy IGM Energy monthly report. It will rise by 5.3mn bpd in 2021
said: “Bouncing back from the output cuts is and exceed the 2019 level in 2022. This forecast
likely to be swift for Middle Eastern producers. follows a 16.4mn bpd year-on-year decline in oil
Saudi Arabia made changes to rig schedules, consumption in the second quarter, because of
with the Berri and Marjan crude increment pro- COVID-19 lockdown measures.
jects slowed and units mobilised elsewhere. In The world’s oil production came to 86.86mn
the UAE, Abu Dhabi National Oil Co. (ADNOC) bpd in June, a nine-year low and down 2.39mn
shut down Bab for maintenance for nearly the bpd versus the level in May. This decline was
entire month of July. Meanwhile, Iraq will have mainly on the back of OPEC+ cutbacks. Full-
less flexibility to increase output until October, year output is forecast by the IEA to be 7.1mn
having agreed to compensatory production cuts bpd lower in 2020 than in 2019.
for July, August and September, following its his- “While the oil market has undoubtedly
toric non-compliance.” made progress since ‘Black April’, the large,
Meanwhile, the Omani Ministry of Oil said and in some countries, accelerating number of
that Muscat would show its “100% commitment COVID-19 cases is a disturbing reminder that
to the OPEC+ alliance by cutting 161,000 bpd, as the pandemic is not under control and the risk
of September 2020, from Oman’s quota.” to our market outlook is almost certainly to the
Of Oman, the IGM Energy note added that downside,” the IEA said. ™

PERFORMANCE

PLN Orlen breaks ground on

Plock visbreaker

POLAND POLAND’S PKN Orlen broke ground ear- International. PKN Orlen earlier awarded a
lier this month on a new visbreaking unit at its PLN750mn contract for design, procurement, con-
The unit will enable 327,300 barrel per day (bpd) refinery in Plock. struction, installation and commissioning work on
the refinery to increase The new unit, which will cost PLN1bn the visbreaker to KTI Poland and IDS-BUD.
its fuel yield for every ($255mn) to build, will improve oil feedstock PKN Orlen has other projects in the works
barrel processed by flexibility and efficiency by converting vacuum at the Plock refinery. These include the upgrade
2%. residue from the refinery’s oil distillation unit of a hydrocracking unit in order to boost diesel
into light, high-margin products such as gaso- production by 100,000 tonnes per year (tpy), and
line and diesel. This residue is currently used to the modernisation of a diesel hydrotreater, rais-
produce lower-margin products such as heavy ing output of the fuel by a further 150,000 tpy.
fuel oil and asphalt. Once all planned investments at the Plock
The unit will enable the refinery to increase refinery are finished after 2022, PKN Orlen
its fuel yield from every barrel of oil processed expects the plant’s annual EBITDA to soar by
by 2%, and raise the plant’s EBITDA by up to over PLN600mn. The Polish refiner has also
PLN415mn annually. It is due on stream in established a research and development centre at
December 2022. Plock, aimed at developing, improving and pat-
“We are implementing the visbreaker project enting new and existing technologies, licences
because we want to effectively respond to the and products. The goal is to reduce PKN Orlen’s
growing demand for high-margin products,” reliance on external technologies.
Daniel Obajtek, president of PKN Orlen’s man- The centre was set up as part of PKN Orlen’s
agement board, said in a statement. “The unit petrochemicals development programme,
will allow us to optimise refining output and launched in 2018 and comprising PLN8.3bn in
quickly grow our profits. investment until the end of 2023. Its completion
Visbreaking technology has been jointly will raise EBITDA by a further PLN1.5bn annu-
licensed from Royal Dutch Shell and McDermott ally, the company said. ™

P18 www. NEWSBASE .com Week 29 23•July•2020