Eni, Pequiven restart Venezuelan methanol plant

Spanish Market: Natural gas, Petrochemicals
09/09/20

Italy's Eni and Venezuelan state-owned Pequiven have restarted methanol production at the Supermetanol plant, according to industry sources.

The 800,000 t/yr plant, in the Jose industrial complex of eastern Venezuela, had been down since the second quarter of 2019 and was gradually brought back on line in early September after repairs to a leaky natural gas line and a steam valve. A boiler installed at an idle adjacent octane plant is operating to support Supermetanol.

The current level of production at the plant is unclear. Eni and Pequiven each holds 50pc of Supermetanol, which was built in the early 1990s and started commercial operations in 1995.

Neither Pequiven nor Eni responded to requests for comment. An official reached by telephone at the plant declined to comment.

Supermetanol is one of two methanol production complexes at Jose that use natural gas feedstock supplied by PdV Gas, a subsidiary of Venezuela's state-owned oil company PdV.

Most other Jose plants, including three of four heavy crude upgraders led by PdV, are not in service, leaving methanol as a stand-out exception in Venezuela's otherwise collapsed industrial base.

The other methanol producer at Jose is Mitsubishi-operated Metor, which recently resumed operations at its two plants after a pandemic-related shutdown of around one month. The Metor complex has capacity to produce 1.6mn t/yr of methanol, mainly for export.

The main shareholders in Metor are Mitsubishi and Mitsubishi Gas Chemical with 23.75pc stakes each. Pequiven holds 37.5pc.

Eni on the spot

Supermetanol is among Eni's lesser known Venezuelan assets. The Rome-based company has drawn recent attention as PdV's minority partner in PetroSucre, an offshore oil development where the faltering Nabarima floating storage vessel is tethered. Eni has said it is awaiting clearance from US sanctions authorities to transfer crude out of the Nabarima to allow for repairs.

Eni is also a steady producer of Venezuelan crude as payment for its supply of natural gas from the Perla offshore field to PdV, with diesel provided in return as a way to settle the transactions. Eni's Perla partner is Spain's Repsol, which engages in similar diesel transactions to recover debts from PdV. The transactions are permitted under an exemption to the sanctions, but the US is seeking to close the exception by the end of October.

Among Eni's other Venezuelan assets is a 40pc stake in the Junin 5 block in the Orinoco heavy oil belt.

By Patricia Garip

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07/11/24

Braskem eyes PE, PP gains from tariff hike

Sao Paulo, 7 November (Argus) — Brazilian petrochemical giant Braskem expects to increase its domestic share of polyethylene (PE) and polypropylene (PP) markets because of higher import tariffs that took effect last month. The Brazilian government's decision to increase import tariffs to 20pc, up from 12.6pc, effective from 15 October and valid for one year, is also expected to boost first-quarter sales by $30mn, the company said Thursday. Additionally, Braskem's operating rates for plastic resins, including polyvinyl chloride (PVC), are expected to rise in the first quarter from 64pc currently, following the seasonally weak fourth quarter. Braskem acknowledged that the higher import tariffs are a temporary government measure. The company is working to boost competitiveness in the petrochemical industry through conversion to renewables, improved technology and greater tax incentives for the industry, among other structural measures, Braskem chief financial officer Pedro Freitas said during the company's earnings call. To bolster the competitiveness of plastic resins made in Brazil, Braskem and fellow PVC producer Unipar Carbocloro have jointly requested the Brazilian government to increase the anti-dumping tariffs already imposed on PVC produced in the US, currently at 8.2pc. Both companies are also monitoring other polymers produced abroad for potential anti-dumping tariff requests. On the investment side, Freitas said Braskem may as much as double capacity at its petrochemical complex in Rio de Janeiro, where the company's cracker operates 100pc on ethane feedstock, and also increase capacity at its petrochemical complex in Bahia, which partially uses ethane. The company is monitoring the regulation of natural gas in Brazil to ensure greater availability of ethane present in the natural gas extracted from Petrobras' offshore operations in the country. The use of this ethane is in the company's plans, according to Freitas. Braskem also stated that it will invest around $60mn in a 30-40 day scheduled maintenance shutdown at its Mexican joint venture Braskem Idesa. The company's cracker in Duque de Caxias, Rio de Janeiro, also is expected to be shut for scheduled maintenance down next year. In the US, Braskem said it is studying potential investments to produce green PP. Looking ahead to next year, Braskem said Donald Trump's victory this week in the US presidential election could lead to greater protectionism in the US, which would be beneficial for Braskem's US operations, or it could lead to weakened domestic demand in Brazil if overseas products that would typically have gone to the US instead shift to Brazil. Freitas said that even with the better outlook for next year coming from the tariff hike on polymers in Brazil, the Trump factor and other global issues such as the currently low petrochemical cycle are causing Braskem to consider possible capacity rationalization, with a possibly decision next year. 3Q production and sales Braskem's domestic resin sales fell by 2pc in the third quarter from a year prior, with volumes also falling in the US, Europe and Mexico. Domestic sales declined mostly because of higher levels of PE and PVC inventories in the transformation chain, Braskem said. Domestic resin sales reached 869,000 metric tonnes (t) in the third quarter, down from 884,000t a year earlier. Compared to the second quarter, the company's Brazil resin sales were up by 6pc on higher volumes of PP after operations at the Rio Grande do Sul petrochemical complex resumed after severe flooding, and greater demand from the hygiene and cleaning sectors. PVC volumes were supported by greater commercial opportunities in the civil construction and sanitation sectors. In Mexico, PE sales through the Braskem Idesa joint venture fell by 3pc on the year to 208,000t because of lower demand. Sales declined by 17pc from the second quarter mainly on inventory management and the expectation of a reduction in PE prices in the international market in the following periods. Third-quarter PP sales were 501,000t, according to consolidated numbers for the US and Europe, down by 8pc from a year earlier and little changed from the previous quarter. The declines were mainly because of lower availability of products for sale in both regions. Braskem narrowed its third-quarter loss to $106mn from a $497mn loss in the same period last year. The loss was largely attributed to a negative exchange rate variation of R$1.2bn ($211mn). By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

German energy-intensive industry reduces output

07/11/24

German energy-intensive industry reduces output

London, 7 November (Argus) — Production from Germany's energy-intensive industrial sectors was lower in September than a year earlier for the first time in seven months, driven by lower generation from the chemicals sector. Energy-intensive industrial production fell by about 3.3pc in September from August, according to data from German statistical office Destatis ( see data and download ). This was driven largely by a 4.3pc fall in output from the chemicals industry. And overall industrial output was about 1.8pc lower than in September 2023, falling year on year for the first time since February this year. The chemicals industry has warned of lower business confidence in the sector since the summer . Energy-intensive industrial branches previously showed signs of a slow recovery, but general manufacturing output across Germany has been on a consistent downward trajectory in recent months ( see manufacturing index graph ). Manufacturing output across all industrial sectors fell on the month by about 2.5pc, having risen on the month by 2.6pc in August. Third-quarter output as a whole was about 2pc lower than in the second quarter. Industrial economic activity has remained "very weak" recently, German economy and climate ministry BMWK said. But it expects a bottom to form in about the new year. BMWK has predicted that Germany will be in a technical recession in 2024 , before a return to 1.1pc GDP growth in 2025. The German economy started on a downward trajectory in 2022 , triggered by higher energy prices on the back of a halt to Russian gas deliveries to the country. And it has since been hampered by other structural factors such as labour shortages and a high bureaucratic burden. Higher gas prices could drive output lower A steady rise in gas prices in recent months could lead industrial firms to curtail domestic industrial production or use LPG instead of gas for some industrial processes. Argus assessed the German THE everyday price at an average of €40.68/MWh in October, about 56pc higher than the €25.98/MWh in February, the index's lowest point this year. Much higher gas prices since 2022 have driven a drop in Germany's industrial gas demand. Gas use in German industry of 256.5TWh in 2023 was about 22pc lower than the pre-crisis 2018-21 average of 327.6TWh, according to Destatis data released earlier this week ( see sector demand graph ). Firms either curtailed production in reaction to higher prices or switched to LPG in some processes in which gas is used as an energy carrier. But some processes, such as the production of ammonia through the Haber-Bosch-synthesis, use methane as a feedstock, which means they cannot shift to LPG as easily. Gas used as a feedstock reacted more strongly to the energy crisis than the gas used for energy. Gas use as a feedstock in the chemicals industry fell by 36pc in 2023 from 2021, while gas use for energy fell by only a quarter. Many fertiliser producers curtailed capacity in 2023, and Europe's largest fertiliser producer, Yara, expects its European gas costs to rise on the year this winter . The producer has already indicated it will shift its focus towards cheaper ammonia production in the US and away from Europe. Industrial gas use on track to rise in 2024 German industrial gas demand is on course to be higher this year than in 2023, based on daily data ending at the end of October. Industrial gas use for production processes other than space heating was 746 GWh/d in January-October, about 8pc higher than a year earlier, according to Argus estimates. But if September's industrial output drops extend to a multi-month trend, this would pull down the average for this year as a whole. Industrial demand typically falls in December when the holiday period limits economic activity, which could push down the average further. And the collapsed German governing coalition is unlikely to send strong recovery signals to the German economy. German market area manager THE publishes a combined dataset for gas demand by industry and the power sector. Argus splits out power-sector gas demand data by assuming operational efficiencies of 39-42pc, in line with fuel use data from Destatis, and factors out seasonal demand swings linked to space heating by looking at analogue trends in the residential and commercial sector ( see demand split graph ). Argus' estimates diverge from Destatis' annual demand data by only about 1-3pc, except for a 6pc gap in 2021 ( see Destatis vs Argus estimates graph ). By Till Stehr German manufacturing index index, 2021=100 German industrial gas demand by sector TWh German industry and power demand split GWh/d Destatis data vs Argus estimates GWh/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

German government collapse could delay energy policies

07/11/24

German government collapse could delay energy policies

London, 7 November (Argus) — The collapse of the German coalition government may delay critical energy security policies currently under discussion, with industry and power associations expressing concerns about potential political standstill on such issues in the coming months. Asked in Berlin on Thursday, energy minister Robert Habeck said he does not expect a general agreement between the remaining red-green government and the conservative Union, which would ensure all further projects in this parliamentary period. And "it remains to be seen" if some decisions could be made together with the opposition on a case-by-case basis where the interests of government and CDU align, Habeck said, although energy security could be one topic where bills could be passed during the minority government phase before the end of this year. CDU politicians including on the state level had "constantly" written him letters to ask when some laws would "finally" be passed, he said, highlighting that while he does not expect "a great deal of helpfulness" he hopes the opposition will work with the government on the basis of how beneficial planning security would be for Germany as a whole. Among the energy security laws waiting to be passed is the draft law that abolishes the German gas storage levy on cross-border interconnection points , while the government has not yet passed its power plant strategy nor submitted the second of its two planned "solar packages". Chancellor Olaf Scholz on Wednesday said that among the legislative projects he was trying to pass before the end of the year were "immediate measures for our industry" on which he was currently deliberating with "companies, unions and associations". He said he would quickly try to begin speaking to opposition leader Friedrich Merz around the questions of defence and economic stability, since the economic stabilisation "cannot wait until elections have taken place". The coalition government collapsed after Scholz sacked finance minister Christian Linder , leading the latter to withdraw his party from the ruling coalition. An election looks likely in early 2025. Industry and renewables associations in particular voiced concerns about the timing of the collapse and potential political stagnation, with general leader of chemicals association VCI calling for elections at "the earliest possible time" to avoid "stalemate and political standstill", while the federation of German industries BDI said the country needs a "new, effective government" with a parliamentary majority "as quickly as possible". VCI stressed that Germany needs low energy prices, faster permitting and less bureaucracy, while BDI highlighted that existing market uncertainty is likely to rise with the arrival of the new US administration at the beginning of 2025, when Scholz plans to hold a vote of confidence. And wind association BWE stated that the country "cannot afford to stand still", while solar power association BSW appealed to members of the Bundestag to "make decisions and compromise" on important energy policy issues across party lines. Renewables association BEE called for laws and budget funds already in process for the continuity of energy measures to be adopted by December, stating that "even in a political crisis" the country "cannot afford" stagnation and stalemates. Conservative opposition sister parties CDU and CSU have been polling well ahead across 2024 at around 30-33pc of the vote. While the parties agree with the ruling coalition on several aspects of energy policy — including supporting hydrogen-fired and climate-neutral gas-fired generation — they notably diverge on the topic of nuclear generation. Germany completed its long-awaited nuclear phase-out in April 2023, but the CDU/CSU this week announced it would conduct an investigation into whether the last plants to be decommissioned could feasibly be reactivated. The CDU/CSU also reiterated its support for the development of fourth and fifth-generation nuclear reactors. Nuclear plants are notorious for lengthy construction times, meaning a single parliamentary term may not be enough to see projects through without cross-party support, and the ruling Greens and SPD remain anti-nuclear. The country has also not yet decided on a final storage location for its existing nuclear waste, which will need to be stored there for "one million years", according to the final report from the commission for the storage of highly radioactive waste. But the CDU and SPD have both voiced support for the introduction of a national green gas sales quota , with the CDU/CSU this week highlighting green gas quotas in the gas grid as a way to leverage the market to reach climate goals. By Till Stehr and Helen Senior Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Europe gas market shows muted reaction to US Trump win

06/11/24

Europe gas market shows muted reaction to US Trump win

London, 6 November (Argus) — The European gas market showed only a limited downward reaction this morning to the US election result, and while some market participants expect a second Donald Trump presidency to ease geopolitical tensions, others see the potential for destabilising effects in the medium term. While vote counting was still ongoing at the time of publication and vice-president Kamala Harris has yet to concede defeat, the Associated Press and major US television networks have concluded that Trump secured enough votes in the Electoral College to win the presidency. European gas prices fell during morning trading, despite the US dollar strengthening by about two basis points against the euro. European gas prices typically move higher in euro terms when the US dollar strengthens to offset the higher cost of dollar-denominated LNG supply. Some market participants attributed the small price fall during morning trading to the expectation that a second Trump administration would seek de-escalation on several geopolitical fronts — such as in Ukraine and the Middle East — which, they say, had supported gas prices in recent weeks. But European gas prices reversed their limited gains by the 16:30 GMT market close. And the European gas price reaction was notably muted relative to the considerable volatility of less than a week ago when a media report had raised the prospect of an imminent deal between European buyers and Azerbaijan for gas transit through Ukraine. These European buyers later denied that a contract would soon be signed . Few market participants foresee a material effect on the gas market stemming from the US election result. "The impact is too vague to really price in," a trading firm said. "Given the tight global supply-demand balance, any setback will be short-lived," another market participant said. The result may fuel speculation that the war between Russia and Ukraine could come to an end sooner, but with the new president set to take office in late January, the change in presidency will have no effect on the possibility of reaching a deal that would allow Russian gas flows through Ukraine to continue beyond the expiry of the transit contract and interconnection agreements between the two countries at the end of this year. If a normalisation of relations with Russia leads a Trump administration to unblock sanctions preventing the use of the Novatek-led 19.8mn t/yr Arctic LNG 2 export terminal, this might bring more LNG supply to the market in 2025 than previously envisaged. Looking further ahead, Trump's pledge to reverse incumbent president Joe Biden administration's LNG licensing pause and speed up the approval of new liquefaction projects may have boosted expectations of global LNG supply towards the end of this decade. But other market participants expressed concern about a potential threat to US LNG exports to Europe in the medium term if the new administration opts not to co-operate with the EU on establishing a framework for monitoring, reporting and verifying methane emissions, which may hamper US-EU LNG trade flows once the EU methane emissions regulation is fully implemented. This, coupled with a "drill, baby, drill" policy in the US domestic market, may lead to a deeper gulf between the two markets, some said. Trump's pledge to impose tariffs on imports into the US, particularly against China, may trigger the risk of retaliation that could affect LNG flows from existing facilities — as was the case in 2019, when deliveries of US LNG to China fell to zero as a result of the trade war between the two countries, before rebounding sharply in 2021 after the two countries agreed on a preliminary trade deal. Only one Chinese buyer had US offtake at the time, but many more subsequently signed on for US LNG, totalling about 22mn t/yr from existing and planned liquefaction projects. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: French state auction for biomethane RGGOs

06/11/24

Q&A: French state auction for biomethane RGGOs

London, 6 November (Argus) — France's first auction for state-owned biomethane renewable gas guarantees of origin (RGGOs) is due to take place on 4 December. It will be run by European Energy Exchange (EEX), which also manages the French biogas registry. Argus spoke to Aude Filippi, director of business development gas and sustainability markets at EEX, about biomethane RGGOs in France and the new auctions. Edited highlights follow: How are RGGOs currently traded in France? All RGGOs for biomethane injected into the French gas grid are currently exchanged via the over-the-counter (OTC) market, and the transfer of ownership is done via the French biogas registry. The RGGOs are tradeable for 12 months and usable for 18 months, and are issued in monthly intervals. The market has been growing quite significantly. Between January and September 2024, 8.5TWh of RGGOs were issued and 7.2TWh cancelled, while in 2023 there were 9.6TWh issued. Almost all of the issued RGGOs are cancelled, with very few expiring after 18 months. Why are the biomethane RGGO auctions being launched now? The French state owns all the RGGOs from biomethane produced from subsidised plants where the contract was signed after 9 November 2020, and now the French state wants to sell them. Even though the contracts were signed in 2020, it takes time to put biomethane into production, so very few of the RGGOs have expired so far. But the volume being produced is growing so it is important that we now have the auctions. What size volumes are you expecting to be in the new biomethane GOO auctions? We expect over 80,000MWh in the first upcoming auction, with volumes likely to increase in the following sessions. What buyers are you expecting to participate in the auctions? Essentially it will be the members of the French biogas registry that we have connected today. And some members connected to the French power GOO auctions at EEX might participate, so we expect that it will be a similar target group, but for gas. Will buyers be able to export the biomethane GOOs for use in other countries? Today we are not yet connected to a hub for the international trade of RGGOs. At the moment, we are working with the hubs to get connected. Why do the auctions have a mechanism for certain buyers to reserve volumes in the auction? The idea is that the operator of a production device will have the ability to buy the RGGOs produced from this particular device from the French state. They are then committing for one year at least to buy these RGGOs at the auction price plus a 30pc premium. By Emma Tribe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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