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Poland's Azoty ramps up PDH/PP operations at Police

  • Spanish Market: LPG, Petrochemicals
  • 08/11/24

Polish chemical conglomerate Grupa Azoty said it is making progress in ramping up production at its new 437,000 t/yr propane dehydrogenation (PDH) and 429,000 t/yr polypropylene (PP) complex in Police, although it needs time to stabilise output and ascertain the unit's economic feasibility.

Azoty said both units are operating even though formal commissioning of the entire project has not yet been yet completed. It is in negotiations with the contractor to undertake final improvements and overcome some defects, it said. Azoty expects to agree with the contractor on final terms of commissioning by the end of this year.

Since the start of its operations, the PP plant has produced more than 200,000t and sales of PP reached 60,000t in the third quarter, Azoty said.

Azoty sees healthy demand for its PP products from European buyers that want to diversify their supply portfolio to reduce risk in delays to imports from Asia-Pacific.

"We see end users want have at least 30pc of their (PP) supplies to come from local European supplies," said plant manager Andrzej Dawidowski.

He said the company sells PP through its own distribution as well as through traders that market in Europe and elsewhere. Azoty expects to make adjustments to this model as soon as it stabilises output, which would enable buyers to determine their demand for Azoty's product.

Azoty said the Police plant is yet to generate positive earnings, and it requires stable supplies of feedstock propane. It said it is working with suppliers to secure financing to ensure steady propane supplies.

Azoty also said the letter of intent with Polish integrated Orlen, about a possible sale of a stake in the PDH/PP project was extended until end of 2024, giving them more time to discuss the possibility of co-operation.


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06/12/24

S Africa EML gets 2-yr contract at Sunrise LPG terminal

S Africa EML gets 2-yr contract at Sunrise LPG terminal

Cape Town, 6 December (Argus) — South African terminal operator Sunrise Energy has awarded local firm EML Energy a 24-month storage contract at its 210,000 t/yr LPG import facility at Saldanha Bay. Eight companies participated in Sunrise's bidding process, of which five opted to proceed to full evaluation. After "a comprehensive vetting process," EML emerged as the preferred bidder, Sunrise's chief executive Rajen Singh told Argus . The contract will begin on 1 January 2025. EML aims to use the opportunity "to enhance its supply chain efficiency, expand its reach and solidify relationships with wholesalers and end-users," it said. Sunrise's facility is the Western Cape's only LPG import terminal, and the province is almost entirely reliant on imports because local refineries are unable to meet demand. EML replaced Vitol's local unit Vita Gas as the Western Cape's sole importer in June 2023, since when it has imported to Saldanha Bay on a temporary basis. Sunrise launched an invitation-only bidding round to find a new long-term supplier after EML's agreement ended in December 2023. Wholesalers in the province served by Sunrise's terminal have said they have to pay significant premiums since EML took over. This has pushed regional prices above the government-regulated maximum refinery gate price (MRGP), prompting the department of mineral and resources energy (DMRE) to review the formula it uses to determine domestic LPG prices. It currently uses Saudi state-controlled Aramco's monthly contract prices (CP) and Argus ' Ras Tanura-Richards Bay freight assessment to generate an import parity price. EML sells at about $280-320/t above the Aramco CP, while the MRGP is only around $160/t above the CP, a local trader said. The firm also varies prices between buyers and has no transparent methodology, revealing prices after the MRGP is published each month, according to a wholesaler that paid a premium of more than R2/kg, or around 14pc above an MRGP of R14/kg, last month. "Nothing justifies such a high premium", the wholesaler said. The price could be "optimised" through long-term contracts and by using a supplier with a sizeable footprint in multiple locations. EML said the MRGP as calculated by the DMRE does not include factors and circumstances such as demurrage and freight costs specific to the LPG terminal in Saldanha Bay. "DMRE is aware of this problem and is better placed to comment on this issue," EML said. DMRE deputy director of minerals and petroleum regulation Tseliso Maqubelo told Argus Saldanha is costlier than Richards Bay — where the Petredec-Bidvest 22,600t LPG terminal is located — because the size of vessel it can accommodate is much smaller. However, some LPG operators in the region have questioned the motivation behind EML's appointment given it has no operational experience and is unable to secure long-term agreements, which forces it to buy more expensive spot supply. At least one wholesaler with an international trading arm, which said it could bring LPG into the Western Cape in full compliance with the MRGP, took part in Sunrise's bidding round but was rejected. Another withdrew its bid because it found the process was not transparent. A second LPG import terminal will add competition once state-owned Strategic Fuel Fund (SFF) completes a pipeline to LPG supplier Avedia Energy's 2,000t storage facility in Saldanha Bay. A tender process to appoint a construction company for the pipeline is underway and work is expected to start in the first quarter of 2025, said the SFF, which acquired a 60pc stake in Avedia last year. The pipeline is expected to be completed by around August 2025, said Avedia chief executive Atose Aguele. This will allow initial imports of about 5,000-6,000 t/month, he said. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: Oman OQ’s fourth IPO draws firm investor interest


06/12/24
06/12/24

Q&A: Oman OQ’s fourth IPO draws firm investor interest

Muscat, 6 December (Argus) — Oman's state-owned OQ raised 188mn Omani riyals ($489mn) from its fourth initial public offering (IPO) this year with a "good mix of both international and local investors" flocking to the company's chemical and LPG subsidiary, OQ Base Industries (OQBI). OQBI's chief executive Khalid Al Asmi spoke to Argus at the Gulf Petrochemicals and Chemicals Association forum in Muscat about the company's expansion plans and its emission reduction targets. Shares in OQBI are expected to begin trading on the Muscat Stock Exchange on 15 December. OQBI has seen strong interest from some of the largest investors in Oman. How would you evaluate the investor interest so far? If we look into the overall average of the offering, the IPO price was 2.1 times oversubscribed by both retail and institutional investors, Looking at the trend of investors, it was a good mix of both international and local investors. The fact that the investors believed in our story by buying off our shares implies the trust that they have on our company and on our future plans. Are there any capacity expansion plans or new any projects in the pipeline for next year? We do not have any projects in line for next year. However, we have non-committed projects that are awaiting FID and other approvals from the shareholders. We are looking at a brownfield expansion project to increase our current methanol plant capacity by 50pc to 550,000 t/yr. In it, we are also exploring technologies for decarbonisation and carbon capture. Our aim is to get this project up and running by 2028. We have done an initial study and it was concluded that the project is valuable. How would you view the long-term outlook for petrochemical markets? The market segments that we are operating — methanol, ammonia and LPG— are all expected to grow in the future. Ammonia has already started penetrating into the marines [sector], same with methanol. LPG will grow to around 39mn t/yr by 2030. So the market is still hungry for our products. That will support the prices, which would either go up or go in line with the GDP. Looking forward, we are not worried about the markets, based on the available information that we have. How does OQBI's strategy fit into Oman's clean energy transition plans? We have both short-term and long-term targets for carbon emission reductions. For the near term, we expect to reduce our carbon footprint by 25pc by 2030 from our base target that was set in 2023. So far, we have reduced our energy intensity by 0.3mn Btu/t produced and now we are targeting 1.1mn Btu in 2025. By 2030, it would be a 25pc reduction. There is growing interest in green ammonia and blue methanol, how is OQBI positioned to capitalise on the interest? We are very well-positioned to capitalise on the shift. We have an ambitious growth target for both blue methanol and green ammonia for 2030 and beyond. That is in line with the net zero target that was set by the government of Oman. We currently have plans to start the transit but that will only happen when the right time comes. When the 365,000 t/yr ammonia plant was built, we took into consideration the need to achieve zero Scope 1 emissions. So the transition from ammonia to green is doable. When it comes to methanol, we will always rely on gas, so green methanol is not an option. But when the time comes, it can also be converted into blue methanol. How is methanol demand looking in the markets you are targeting? When we are referring to the market we are supplying to, we don't deal with the market directly. We are leveraging on the outreach of OQ Trading, which is considered one of the top five methanol traders globally. OQ Trading has a global reach from markets in Asia to Europe and even the Americas. The market is always dynamic and we will always target the market that gives us the highest netback. Currently, Asia is more profitable but tomorrow it could be somewhere else. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU affirms 12-month deforestation delay


03/12/24
03/12/24

EU affirms 12-month deforestation delay

Brussels, 3 December (Argus) — Negotiators for the European Parliament and EU member states have provisionally agreed on delaying the implementation of the EU's 2023 deforestation regulation by one year. Fast-track adoption can now take place with a plenary vote expected on 16-19 December and later approval by EU ministers. The EU's council of ministers noted that the provisional agreement does not affect the substance of the existing deforestation rules. The final text, provisionally agreed, does not retain a "no risk" category, put forward by parliament's largest centre-right EPP party. Parliament had narrowly accepted the EPP proposal for the "no risk" category. Backing down on the amendment now allows the EU to proceed to EUDR adoption and publication in the bloc's official journal before the end of the year. Due diligence obligations set by the EU's 2023 deforestation regulation require operators and traders to ensure listed commodities and derived products, sold in or exported to the EU are "deforestation-free". Products include those made from cattle, wood, cocoa, soy, palm oil, coffee and rubber. The European Commission said it aims to finalise the country benchmarking system "as soon as possible but no later than 30 June 2025". And an information system where firms register due diligence statements will enter into operation on 4 December. Parliament's lead negotiator for the deforestation law, Christine Schneider, also pointed to a commitment by the commission to an "impact assessment and further simplification" for low risk countries or regions. "From 2028, countries practising sustainable forest management and showing no deforestation will have the opportunity to be exempted from unnecessary red tape," said Schneider, a member of the German centre-right EPP. The Centre-left S&D group said the system of "no risk" countries would have created an "unfair double standard", dividing EU member states into different risk categories. Negotiators firmly rejected this approach, the group said. "It was clear all along that their half-baked amendment proposals had no chance of success with the council and the commission," said Delara Burkhardt, German S&D negotiator for the deforestation law. Citing reasons of legal certainty, EU states quickly came out in favour of just a one year delay , agreeing with the commission's original proposal. Speaking to parliament on 3 December, the EU's director general for trade Sabine Weyand said robust commitments to halt deforestation in South America, as of 2030, and to ensure adherence to the Paris climate Agreement, are also "essential" elements of the EU's free trade agreement (FTA) with Mercosur countries — Brazil, Argentina, Paraguay, Uruguay, and now Bolivia. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil LPG association knocks price control plan


03/12/24
03/12/24

Brazil LPG association knocks price control plan

The scheme has received a call for the creation of a benchmark price ceiling for LPG distributors, writes Maria Frazatto Sao Paulo, 3 December (Argus) — Brazil's "Gas for All" scheme that aims to spread LPG use to more low-income homes should reconsider the creation of a price ceiling for LPG distributors, LPG association Sindigas' president, Sergio Bandeira de Mello, says. "The mechanism creates economic flaws that can lead to distributors withdrawing from the programme, especially in remote areas where most beneficiaries are located," he says. The bill, which underwent revisions in November, aims to extend LPG subsidies to nearly 21mn low-income households and prevent beneficiaries from using the financial benefit for other purposes. Instead, it might create a system to provide LPG cylinder vouchers to the families, with the government directly paying distributors. Sindigas supports creating a benchmark price from weekly price surveys made by oil regulator ANP. The LPG sector also agrees that prices should be different among states, as long as there is no price ceiling. ANP — which will be responsible for capping the price — assures that it will follow market price trends and consider each individual state situation such as transportation costs, according to the mines and energy ministry's oil and gas secretary, Pietro Mendes. The Gas for All scheme is meant to supersede the social assistance ministry's gas assistance programme, which gave the money equivalent to one 13kg cylinder directly to the beneficiaries. But the new programme can also facilitate reselling fraud. Brazil's low-income households spend about 70pc of their income on housing and groceries, according to think-tank Getulio Vargas Foundation researcher Carlos Ragazzo, meaning that the free LPG cylinder given to the families could be sold to supplement income. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

RLG production forecasts fraught with uncertainty


03/12/24
03/12/24

RLG production forecasts fraught with uncertainty

Government backing and co-operation between competitors are needed to align with the targets for RLG output, writes Matt Scotland London, 3 December (Argus) — The production of renewable LPG and dimethyl ether (DME) is projected to rise to 60mn-120mn t/yr by 2050 under a supportive policy scenario, consultants told attendees of this year's LPG Week conference in Cape Town, South Africa, over 18-22 November. But such forecasts continue to be laced with uncertainty given the enormous challenges involved in reaching commercial-scale output. Output of both fuels, often pooled together under the umbrella term renewable liquid gas (RLG), could grow to 4mn-9mn t/yr by 2030 and 8mn-27mn t/yr by 2040 under the same scenario, according to the findings from a soon-to-be-released report from consultancies NNFCC and Frazer-Nash. But under a situation where no policy support is forthcoming, volumes are about a quarter of these projections, NNFCC managing director Adrian Higson told the audience. RLG production could then exceed 100mn t/yr by 2050-55 and 200mn t/yr by 2060-65, Frazer-Nash consultant Jeremy Revell said, adding the caveat that greater uncertainty exists over a long timeframe. Biogas to LPG "offers the best potential route to renewable LPG beyond 2050", while gasification to DME does likewise for rDME. "One of the main surprises was just how much liquid gas we could produce by 2050, especially the role rDME could play from the gasification pathway," Revell said. "It has high potential yields and a lot of feedstock to support it." Speakers at the event were keen to emphasise the high level of uncertainty involved in RLG development, and just how much rests on the degree of government backing when it comes to projecting growth. And even assuming a supportive policy scenario does not necessarily equate to clear-cut support for RLG, bearing in mind it will be competing with other technologies, BioLPG LLC chairman Kimball Chen told delegates. "I don't know yet what supportive policies we want and for which solutions," he said. More co-operation between competitors in the LPG industry is needed to ease uncertainty, while allowing for competition between individual firms or partnerships, Chen said. "SHV and DCC [through their recently announced RLG collaboration] and my consortium [bioLPG LLC] with 12 European and American companies share the same technical challenges and will be competing for the same feedstocks, so the way we think about competition and increasing our chances for success as an industry and individually need to be further delineated," he said. Cost calculation Feedstock availability in many of the study's pathways is not a concern, with the possible exception of bioLPG from hydrotreated vegetable oil and hydroprocessed esters and fatty acids, something not unexpected, DCC's director of sustainable gas, Emmanuel Mannooretonil, said. The issue is having feedstock at the right price. "Now we see that technically it's possible and the feedstock exists, the next question is can we make a product good enough from an environmental and affordability standpoint for policy makers to support?" he said. The maturity of the technology is a challenge for the LPG industry, with "decisions of large financial magnitudes" required to get there, Chen added. "We have a race against time." Cost will remain a problem over the medium and long term because of the technological limits, Chen said. But perhaps the biggest challenge is the reluctance to build a first-of-a-kind plant, SHV Energy's head of sustainable fuels policy, Goher Ur Rehman Mir, said. SHV is testing a number of production routes for RLG, including converting ethanol to butane. But pilot plants and then demonstration facilities are required first, necessitating more investment and collaboration, he said. "We need to join forces, which is why we have signed [an initial agreement] with DCC Energy," he said. "But we are open to collaborating with other stakeholders to develop a consortium to progress this process fraught with difficulties." Production pathways Source Product Alcohol Renewable LPG Biogas Renewable LPG CO2 and H2 Renewable LPG and DME Gasififcation with Fischer-Tropsch Renewable LPG Gasification Renewable DME HVO and Hefa Renewable LPG Pyrolosis Renewable LPG — NNFCC, Frazer-Nash Renewable LPG, DME output forecast averages* Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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