23 February 2010 16:40 [Source: ICIS news]
By Nigel Davis
The shift towards diesel could balance out naphtha demand and availability. The region’s cracker operators, however, have had years to add the sort of flexibility that allows them to crack a broad range of feedstocks to take advantage of shifting supply and demand and particularly cost factors.
It is the recent global drive to reduce refining capacity though that is likely to have the greatest impact on chemicals markets and on feedstock supply to nearby producers.
Europe’s propylene market was on tenterhooks this week given the prospect of an unlimited strike at Total’s six refineries in
The situation appears to be worsening with the energy major said to have declared force majeure on propylene supply from some of its refineries. By Wednesday afternoon more than a quarter of France's propylene supply was estimated to have been affected.
In the face of reduced demand for refined products, Total,
The ongoing uncertainty, however, has forced the strike action in
Chemicals tend to be a sideline for refiners, although a business that provides much needed growth and potentially significant cash generation. But the chemicals business in Europe is hardly robust with end use markets on the move to
The current refining cutbacks will show, however, where the needs of the much larger and more influential business override the sentiment in chemicals.
The oil industry giants are cutting out the dead wood and some chemicals operations will suffer in the process.
Total wants to cut its global refining capacity by around 20% and other oil majors are thinking along similar lines, although it depends where they are along the refining/petrochemicals evaluation process.
BP, for instance, has no current planned cutbacks, having been through earlier phases of restructuring, a spokesman said last week. In chemicals, the company makes acetyls, has a global aromatics business and is a world leader in the production of purified terephthalic acid (PTA).
It sold two refineries alongside its European and North American olefins and polymers business to INEOS in 2005.
Total refocused on petrochemicals and some specialities when it spun off the chlorvinyls and specialities maker Arkema in 2006 and has rationalised its polyolefins production in Europe to better cope with the expected on-rush of commodity polyolefins from the
Shell retrenched in chemicals in the late 1990s and has been running an integrated oil products and chemicals business since 2004. Chemicals at the time was said to be about two years ahead of oil products in terms of cost cutting and restructuring, including portfolio re-shaping.
The current retrenchment in refining at Shell, however, is likely to have an impact on chemicals in Europe.
“Shell and Essar can confirm that negotiations for the possible sale and purchase of Shell’s three refineries at Stanlow in the
As companies rebalance their global refining capabilities the production of some refinery based chemicals is bound to suffer. The refining cutbacks will be broad and deep. Caught in the rush, chemicals supplies will have to shift to compensate for at least some capacities being taken out of the market.
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