Pemex Ethylene, PE Output Unaffected by Pipeline Incident

(Platts, 16.Aug.2018) — State-owned Pemex’s ethylene and polyethylene production facilities ran normally even as a pipeline incident led fellow Mexican polymer producer Braskem Idesa to institute a temporary shutdown of operations, company sources said Thursday.

The incident occurred last week and resulted in the shutdown of two Pemex gas processing complexes following a “clandestine attack” on a natural gas pipeline in Veracruz, Mexico.

Repairing the damaged pipeline led to natural gas and naphtha processing slowing at Pemex’s Cactus and Nuevo Pemex sites, leading to reduced NGL production, a company source said.

Pemex, as a result, was unable to supply Braskem Idesa with contractual volumes of ethane, leading to a 36-hour shutdown of ethylene and PE production for Braskem Idesa that started August 10.

Pemex resumed supply to Braskem Idesa by Sunday, leading to the latter achieving a 90% operating rate by late Tuesday, a company source said.

Pemex’s supply of ethane to its own steam crackers at Cangrejera and Morelos was not impacted, as those feeds are part of a different pipeline system, a company source said Thursday.

Pemex also maintains some ethane reserves that aided it in avoiding a shutdown at Cangrejera and Morelos, the source said.

Pemex on August 3 restarted the Cangrejera cracker following a one-day shutdown tied to electrical outages. The company saw feedstock constraints and weather-related outages lead to reduced PE output in June. The company’s July production data is expected to be released in the coming weeks, it said.

The company produced a combined 30,301 mt of PE in June, down 5,409 mt or 15.1% compared with May, while the year-on-year dropoff was more pronounced at 7,560 mt or 20%.

Pemex has been dealing with an ethane production dropoff of around 20% since mid-2017 on lower wellhead output in southern Mexico as a result of elevated nitrogen levels and compression issues trimming overall NGL production in the region, according to company sources.

Pemex’s supply deal with Braskem Idesa calls for it to provide 66,000 b/d of ethane for 20 years, and Pemex has typically produced around 100,000 b/d-115,000 b/d overall in recent years before seeing production fall since the start of last summer, according to company sources.

Long term, Pemex expects to see PE production rise in line with additional feedstock supply after recently awarding a three-year tender to Vitol for US-origin ethane imports.

Regular contract deliveries began in July and will increase this month with the Emilius arriving at Morgan’s Point, Texas, this week for loading, company sources have said. Vitol has not responded to multiple requests for comment.

S&P Global Platts last assessed PE in the Mexican markets Wednesday as mixed week on week, with LDPE holding stable at $1,275/mt and LLDPE butene falling $5/mt to $1,115/mt, respectively

Platts’ Mexican HDPE assessments closed stable to lower, with film shedding $20/mt to close at $1,245/mt. HDPE blowmolding and injection grades, meanwhile, both held flat week on week at $1,285/mt and $1,215/mt, respectively. All Platts Mexico PE assessments are made on a delivered Mexico City basis, via rail or truck.

–Phillipe Craig, phillipe.craig@spglobal.com

–Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com

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Stock to Watch: ExxonMobil in Guyana

(OilPrice.com, Meredith Taylor, 10.Jul.2018) – American energy dominance is on the rise.

In March 2018, the U.S. beat its all-time record and pumped more than 10.4 million barrels per day (bpd). Energy stocks are way up on strong forecasts of future demand. Mentioned in today’s commentary includes: Exxon-Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), Pioneer Natural Resources (NYSE:PXD), Marathon Oil (NYSE:MRO), PDC Energy, Inc (NASDAQ:PDCE).

A tight market is looming, regardless of OPEC’s plans to pump more: outages are expected in multiple areas, offering up opportunities for American energy producers to swoop in. The last few years have seen the U.S. emerge as an energy powerhouse. And this is just the beginning.

Here is the best stock with (Guyana exposure) to watch in the space:

Exxon-Mobil Corp.

The biggest of the American super-majors is going back to its roots. Exxon-Mobil, an industry giant with a market cap of $351.8 billion, has its hands in upstream, midstream and downstream. It’s truly international, with operations and investments all over the world.

But increasingly, it’s looking to the U.S. to cover its bottom-line. Both NGL and crude production from Exxon’s U.S. properties have increased since 2013. In January, the company announced it would invest $35 billion in the U.S., in response to the generous tax cuts it received.

As other supermajors diversify and turn towards renewables and natural gas, Exxon is determined to remain a crude player-even if that has caused it to lose its market lead over Shell, narrowing the gap between the two firms to a mere $55 billion, according to Bloomberg. And even as it looks to the U.S., particularly the Permian Basin where it holds 6 billion barrels of oil equivalent (BOE), Exxon’s international posture has grown more sturdy-it’s adding to an already-impressive find off the coast of Guyana.

Exxon stock has risen steadily since the doldrums of February 2018, and the news from Guyana (as well as positive news from the OPEC conference in Vienna) should send it even higher. It always pays to bet on the biggest players. And they don’t come any bigger than this.

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