Oman to merge oil, petrochemical firms under OQ brand
Oman's government has announced further details of its planned integration of state-owned oil company OOC, refiner Orpic and seven other domestic energy firms.
A new entity, OQ, will be set up to integrate the operations of the companies. This is the latest step forward in the Nakhla integration programme that was launched late last year, shortly after OOC and Orpic announced plans to merge their downstream and upstream operations.
OQ will comprise OOC, Orpic, OOC's upstream arm OOCEP, Oman Gas (OGC), Duqm Refinery and Petrochemicals Industries (DRPIC), Salalah Methanol (SMC), Oman Trading International (OTI), oxo intermediates and derivatives producer Oxea, and Salalah Liquified Petroleum Gas.
The government said earlier this year that it aims to implement the organisational structure by the end of 2020 and plans to invest over $28bn in the next 10 years.
The integration will enable Oman to streamline its downstream operations before new refinery and petrochemical projects start up in the coming years.
Orpic is in the process of commissioning new polymer plants that are expected to be operational next year. Orpic will produce 300,000 t/yr of polypropylene (PP) and 880,000 t/yr polyethylene (PE), according to Argus data.
The new 260,000 b/d DRPIC refinery is on track to start commissioning in late 2022. DRPIC's planned 1.6mn t/yr mixed-feed steam cracker is scheduled to be operational by 2026, with petrochemical derivative units expected to come on stream around the same period.
Consolidation has been a major theme for Mideast Gulf petrochemical producers in 2019. Saudi Arabia-based Sipchem, a producer of methanol, polymers, and acetic acid, earlier this year merged its operations with fellow Saudi-based firm Sahara Petrochemicals, a supplier of PP.
State-owned Saudi Aramco in March announced plans to acquire a majority stake in state-controlled petrochemicals producer Sabic.
By Muhamad Fadhil
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Shale to emerge leaner from M&A boom
Shale to emerge leaner from M&A boom
New York, 1 July (Argus) — The recent flurry of deals in the US shale patch is poised to deliver significant productivity gains, potentially offsetting a drilling slowdown and suggesting that it might well be a mistake to bet against the sector any time soon. Ownership of top shale basins, such as the Permian in west Texas and New Mexico, is increasingly falling into the hands of fewer but larger operators, with the necessary resources to chase technology breakthroughs and drive economies of scale that could support further output growth. The flood of deal-making comes as shale growth is likely to slow after defying all expectations last year. Even as acquirers look to fine-tune their combined portfolios and slow activity in favour of shareholder returns, they will still be targeting ever longer lateral wells that reduce the need for more rigs and hydraulic fracturing (fracking) crews. Fracking multiple wells at the same time and shifting to electric fleets will also help them become more efficient. All in all, shale could continue to be a thorn in Opec's side for years to come. Underestimate US shale at your peril was the title of a recent report from analysts at bank HSBC. "We expect the mergers and acquisitions to result in substantial capital efficiencies," they wrote. Concentrated operations have reduced inefficiencies in the supply chain, and the elimination of downtime has also helped producers become leaner, according to consultancy Wood Mackenzie. But costs remain 15-30pc higher than 2020-21 levels, suggesting scope for further improvements. And while efficiency gains will inevitably become exhausted at some point, opportunities to tackle unproductive processes might still crop up. "The will and the technology are there for some operators, who should be able to keep cutting capex while modestly growing and maintaining shareholder distributions for a while to come," Wood Mackenzie research director for the Lower 48 Maria Peacock says. ExxonMobil flagged $2bn in annual savings from its $64.5bn takeover of shale giant Pioneer, with two-thirds to come from improved resource recovery and the rest from efficiencies. Leading US independent ConocoPhillips says improved technology will help it extend its inventory of top-quality drilling locations in both the Eagle Ford and Bakken basins after its $22.5bn tie-up with Marathon Oil. Return to spender Productivity gains are hardly the preserve of firms that have been active participants in the $200bn of shale deals seen over the past year. For example, US independent EOG, which has sat out the mergers and acquisitions (M&A) boom so far, plans to deliver the same level of growth for this year as seen in 2023 with four fewer rigs and two fewer fracking fleets. "Technology has evolved so much that you can go and drill horizontal wells in these and exploit that technology and you can get just absolutely outstanding returns," chief operating officer Jeff Leitzell says. Still, almost half of oil and gas executives recently polled by the Dallas Federal Reserve think that US oil output will be "slightly lower" if consolidation continues over the next five years. But the answer differed by company size. All executives from E&P firms that produce 100,000 b/d or more envisaged "no impact". Service company executives are more concerned: "Consolidation by E&P firms has curtailed investment in exploration," one said. "Our hope is that it's a temporary situation that will work itself out as the integration is completed." And even though the prolific Permian basin is due to peak before the end of the decade, analysts forecast robust growth in the intervening years. Relatively high oil prices that remain above breakeven costs and efficiency gains — which will shift the mix of wells to newer and more productive ones — will be the main drivers, according to bank Goldman Sachs. By Stephen Cunningham US tight oil production Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Borealis to keep pyrolysis options open
Borealis to keep pyrolysis options open
London, 28 June (Argus) — Austrian chemical company Borealis continues to weigh up the technology pathways for expanding pyrolysis chemical recycling capacity. A plan to build a plant in Stenungsund, Sweden, was put on hold earlier this year, and the company might opt for a different location altogether. The Stenungsund project has yet to get past the feasibility stage as it had "not yet met the performance requirements expected". The company said earlier this year that it was evaluating different technology options for the site, including the Blue Alp pyrolysis process in use at its majority-owned Renasci plant in Ostende, Belgium, and parent company OMV's ReOil technology, which is to be deployed at small commercial scale in Schwechat, Austria, this year. Borealis vice-president of circular economy Mirjam Mayer told Argus at PRSE that the chemical recycling investment environment has become more challenging: "A lot of projects across the industry have been delayed... with capital expenditure increases seen recently." But she said Borealis remained committed to adding chemical recycling capacity and was looking at investment options. These could include new technologies or different locations, Mayer said, noting that there was "greater flexibility for chemical recycling scope in the Nordic area". Stenungsund was initially due to start up this year, providing recycled feedstock to count towards Borealis' target of producing 600,000 t/yr of recycled and bio-based polymers by 2025. Mayer said the company is still committed to its goal, but acknowledged it could be challenging in current market conditions. In the last few years Borealis has acquired both chemical and mechanical recyclers and Mayer said Borealis was "still open to mergers and acquisition opportunities, as long as they made sense, but a starting point going forward would be to expand on opportunities from recently bought companies, including Rialti, Renasci and Integra Plastics". "We have made some good progress, especially with acquisitions in the last year or so, and there seems to have been a real step change in the last year... with current capacity of around 200,000 t/yr [for these products]," Mayer added. Rising costs, including new projects' capital expenditure requirements and energy prices, have checked progress in recent years, Mayer said, as has competition from cheap virgin material. Meyer also said EU Packaging and Packaging Waste (PPWR) regulations have bought "clarity and security" to the industry for 2030, but that volatile energy costs might contribute to weak market conditions in the short term. "Regulatory support, like PPWR is something we need to make progress and make these targets a reality," she said. Some companies have announced closures or strategic reviews of European petrochemical assets in recent months, highlighting the challenge facing the industry, but Mayer said Borealis feels it is in a better position in Europe as it covers "a specialty segment which is valued by customers and sells products that actively support the energy transition". This includes its focus on building a portfolio of sustainable products, including its Borcycle-M mechanically recycled polymer range and Borcycle-C chemically-recycled product line, she said. Borealis recently achieved US Food and Drug Administration approval for some Borcycle-M grades, which Mayer called a "very important step" in being able to take recyclates to a wide variety of consumer applications, including cosmetic, personal care and dry food packaging applications. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
PRSE: Brighter notes, familiar chords
PRSE: Brighter notes, familiar chords
London, 28 June (Argus) — In our editorial following last year's PRSE trade fair, we discussed short-term concerns and long-term optimism for the industry. This year's show — held last week in Amsterdam — featured some brighter notes, but conversations also struck many familiar chords of pessimism about the near term. On the plus side, last year's main reason for long-term optimism — increasingly supportive legislation in Europe — remains on track. The EU Packaging and Packaging Waste Regulations (PPWR) mandating recycled content across almost all plastic packaging by the end of the decade appear set for confirmation in the near future — welcome news for polyolefin recyclers in particular. And the PE films market appears less nervous about PPWR's strict reuse quotas for industrial packaging than it was in spring, with much optimism that future delegated acts will address industry concerns. Importantly for chemical recyclers, the European Commission has continued to support fuel use-exempt mass balance accounting, with member states reportedly largely in line. For PET recyclers, mandatory recycled content requirements are even closer, with the 25pc minimum for PET beverage bottles kicking in from next year. The weather has not generally supported a strong season for on-the-go beverage consumption in much of Europe this year, limiting the emergence of a peak season for rPET pellet consumption. And there is a feeling that the supply chain is more adequately stocked ahead of next year than it otherwise would have been, even as a reduction in the competitiveness of imports from Asia — the result of higher freight costs — theoretically supports demand for European recyclates. But PET recyclers were quietly confident about future demand prospects because of the upcoming regulation. Demand for premium blow-moulding grade rHDPE was another bright spot discussed at the fair, with many recyclers operating in that market noting increasing buying interest. This is an encouraging sign, one said, that brand owners are still looking to make as much progress as possible towards their 2025 targets for recycled content in packaging, after a slowdown in new projects last year, despite recent data showing that many are not on track to fully meet them. But for all the upbeat sentiment, many of the same concerns were raised again at this year's gathering. Polyolefin recyclers complained of low or even negative margins on commodity cost-saving products, such as low-end rPP grades and rHDPE pipe, with virgin PE and PP prices having declined in recent months and underlying demand still slow. There was still a feeling that a challenging period lies ahead, and that this could lead to further consolidation in the industry. 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US Supreme Court ends 'deference' to regulators
US Supreme Court ends 'deference' to regulators
Washington, 28 June (Argus) — The US Supreme Court's conservative majority, in one of its most significant rulings in years, has thrown out a landmark, 40-year-old precedent under which courts have offered federal agencies significant leeway in deciding how to regulate the energy sector and other industries. In a 6-3 ruling that marks a major blow to President Joe Biden's administration, the court's conservatives overturned its 1984 ruling Chevron v. NRDC that for decades has served as a cornerstone for how judges should review the legality of federal regulations when a statute is not clear. But chief justice John Roberts, writing for the majority, said experience has shown the precedent is "unworkable" and became an "impediment, rather than an aid" for courts to analyze what a specific law requires. "All that remains of Chevron is a decaying husk with bold pretensions," the opinion said. For decades, under what is now known as Chevron deference, courts were first required to review if a law was clear and if not, to defer to an agency's interpretation so long as the government's reading was reasonable. But the court's majority said the landmark precedent has become a source of unpredictability, allowing any ambiguity in a law to be a "license authorizing an agency to change positions as much as it likes." Roberts wrote that the federal courts can no longer defer to an agency's interpretation "simply because" a law is ambiguous. "Chevron is overruled," Roberts writes. "Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority." The court's ruling, named Loper Bright Enterprises v. Gina Raimando, focuses on lawsuits from herring fishers who opposed a rule that could require them to pay about $710 per day for an at-sea observer to verify compliance with regional catch limits. The US Commerce Department said it believes it interpreted the law correctly, but the fishers said the "best interpretation" of the statute was that it did not apply to herring fishers. The court's three liberal justices dissented from the ruling, which they said will likely result in "large-scale disruptions" by putting federal judges in the position of having to rule on the merits of a variety of scientific and technical judgments, without the benefit of expertise that regulators have developed over the course of decades. Overturning Chevron will put courts "at the apex" of policy decisions on every conceivable topic, including climate change, health care, finance, transportation, artificial intelligence and other issues where courts lack specific expertise, judge Elena Kagan wrote. "In every sphere of current or future federal regulations, expect courts from now on to play a commanding role," Kagan wrote. The Supreme Court for years has been chipping away at the importance of Chevron deference, such as a 2022 ruling where it created the "major questions doctrine" to invalidate a greenhouse gas emission rule limits for power plants. That doctrine attempts to prohibit agencies from resolving issues that have "vast economic and political significance" without clear direction from the US Congress. That has led regulators to be hesitant in relying on Chevron to defend their regulations in court. The Supreme Court last cited the precedent in 2016. The ruling comes a day after the Supreme Court's conservatives, in another 6-3 ruling , dramatically curtailed the ability of the US Securities and Exchange Commission — and likely many other federal agencies — to use in-house tribunals to impose civil penalties. The court ruled those enforcement cases instead need to be filed as jury trials. That change is expected to curtail enforcement of securities fraud, since court cases are more resource-intensive. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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