Page 14 - AsianOil Week 20

AsianOil
N R G
AsianOil
Downstream petchem progress
In this week’s Downstream Middle East & Africa (DMEA), we look at how the next supply war could play out in the LNG arena.
Market leader Qatar is on a major push to increase its liquefaction capacity from 77mn tonnes per year currently to 126mn tpy by 2027. But in the shorter term, with producers vying for market share, it may have to choose between curbing LNG output or getting entangled in a supply war that hurts gas prices.
Qatar Petroleum has the edge over its rivals given the low cost of its LNG production. But it too has reportedly had to make cuts to spending to steer through the crisis.
In Saudi Arabia, Advanced Global Invest- ment (AGIC) is pushing ahead with a $1.8bn propane dehydrogenation and polypropylene project in Jubail. It has selected US firm Fluor as a project management consultant – the latest in a number of foreign companies to secure contracts relating to the project.
Saudi Arabia is eager to build up its petro- chemicals business to monetise domestic gas and establish a greater economic hedge against low oil prices. But conditions are far from ideal, as evidenced by the financial difficulties Saudi petrochemical giant SABIC is going through.
If you’d like to read more about the key events shaping the downstream sector of Africa and the Middle East, then please click here for NewsBase’s DMEA Monitor.
European refining pressure
In Europe, refiners continue to reel from the slump in fuel demand caused by COVID-19 travel restrictions.
European refining has had many ups and downs over the past decade, but current con- ditions could spark a wave of closures without ample state support.
Fuel demand in Italy, one of the hardest hit by the pandemic, plunged 45% year on year in April, according to new data, with a 35% decline expected in May. The country was the first in Europe to impose a nationwide lockdown in early March, but restrictions are now being grad- ually eased.
Italian refiners have responded by cutting runs, with Eni maintaining its plants at only 60% of capacity.
Elsewhere, Scotland-based refiner Ineos is reportedly seeking an emergency loan from the UK government for its joint venture with PetroChina. It may turn out to be a contentious issue in the public’s eye, as Ineos’ owner Sir Jim Ratcliffe is one of several UK billionaires to seek state support, despite having moved overseas for tax purposes.
Greece’s Hellenic Petroleum has bucked the trend, reporting a slight increase in core earnings for the first quarter. Rather than cutting runs, it boosted production in the quarter and sold more products overseas.
In Norway, state-owned Equinor has taken a
In Italy, the first country to impose a nationwide lockdown in early March, Eni is running its refineries at 60% capacity after a collapse in fuel demand.
P14
w w w . N E W S B A S E . c o m
Week 20 21•May•2020