World Bank predicts $55/bbl oil in 2017; Braskem commissions Texas PE plant
Petrochemicals news you need to know
World Bank forecasts $55/bbl crude oil in 2017
Crude oil prices will rise to $55 per barrel in 2017 from an average of $43/bbl this year as the market continues to rebalance and OPEC is likely to limit output, the World Bank has predicted.
Prices fell slightly in the third quarter, averaging $44.70/bbl, as supply returned to the market, the World Bank said. Noting that prices jumped in late September when OPEC members announced a plan to limit oil output, it said the agreement is likely to be finalized in November but without the signatures of Iran, Libya or Nigeria.
The bank’s decision to revise its 2017 forecast from the previous $53/bbl announced in July is reflective of OPEC’s intention to limit output, it explained. It named further supply disruptions among key producers and stronger-than-expected OPEC production cuts as upside risks. Downside risks include greater-than-expected oil output and further weakening in economic growth in emerging and developing economies.
Braskem commissions Texas polyethylene plant
Braskem has commissioned its new polyethylene plant in La Porte in the Greater Houston area, and is now completing the steps to ensure a safe and successful startup by the end of 2016, the company has announced.
During this phase, the company is concluding functional tests and process-control tests to verify performance of controls and integrated safety systems.
The plant will produce Ultra High Molecular Weight Polyethlene (UHMWPE), which Braskem markets under the trade name UTEC. Output will complement the existing UTEC product line that is produced in Brazil.
According to Braskem, UTEC is an engineered polymer, with mechanical properties including high-abrasion resistance, impact strength and low co-efficient of friction. It is eight times lighter than steel and lasts 10 times longer than high-density polyethylene, and is used in a vast array of applications in transportation, electronics, fibers and textiles, industrial and heavy equipment, material handling, oil and gas, mining, and other industries, the company says.
The La Porte project is being completed slightly behind schedule. When Braskem announced the plant’s construction in June 2014, it said it would aim to for completion in the first half of 2016.
Louisiana tipped to get billions more in production facilities
The United States, and Louisiana in particular, stand to see billions of dollars of additional investment in new production facilities in the coming years, a representative of the American Chemistry Council (ACC) has predicted.
According to the Greater Baton Rouge Business Report, Martha Moore, senior director of economics and policy analysis at the American Chemistry Council, said she is tracking 277 new or ongoing petrochemical projects worth $168 billion. Around 70% of new investment is expected to go to Gulf Coast states, with Louisiana expected to receive around $46 billion worth of such projects, many of which will go to the areas of Geismar and Plaquemine, she was quoted as saying.
Bids for LyondellBasell refinery reach as high as $1.5 billion
Saudi Aramco, Valero, and Suncor have all made bids for LyondellBasell’s 268,000 barrel-per-day Houston Refinery, with Aramco offering $1.5 billion, according to Reuters.
Aramco upped its bid to $1.5 billion after an initial bid of $1.2 billion, Reuters reported, citing three anonymous sources. Aramco later made a statement denying the report. According to the sources, Canada’s Suncor bid around $1.2 billion, and Texas firm Valero bid $900 million. LyondellBasell has not stated publicly what it believes the plant is worth, but Reuters cited a source familiar with negotiations as saying the refinery could be sold for $2 billion.
The figure of $1.5 billion would mean the Houston Refinery is worth $5,597/bpd of capacity – which is significantly more than the typical historical price of a U.S. refinery.
Prices varied wildly for the 10 U.S. refineries sold between 2011 and 2013, with the cheapest valuated at around $1,000/bpd, and the most expensive going at around $12,000/bpd, according to data collected by Watson Millican & Co. Four of the 10 refineries were sold for more than $5,000/bpd. The average price was roughly $4,500-4,600/bpd. The market for refineries has slowed down since then, with PBF Energy’s acquisition of ExxonMobil’s Torrance, California refinery for $537.5 million – or $3,468/bpd – the only notable deal this year.
The Houston Refinery is one of the largest in the United States designed to process high-sulfur crude oil. Covering about 700 acres along the Houston Ship Channel, the refinery produces reformulated gasoline and ultra-low-sulfur diesel, and other products such as jet fuel, aromatics, lubricants, and petroleum coke.