Nigel Davies, Insights Editor at ICIS, wrote and interesting insight article about the global situation of petrochemicals in May. The matter is quite clear, the impact of the coronavirus pandemic on the sector forecasts and outlook. We had already published some posts coming from the ICIS contributions last month. You can find these posts here: part 1, part 2 and part 3.

petrochemicals in May

The impact of the coronavirus lockdowns on the oil, gas and chemicals industries’ integrated value chains is radically shifting relationships and profitability. It is also making planning virtually impossible, as BASF suggested last week.

The environment around refining and chemical margins remains challenging, Shell CEO Ben van Beurden also said this week.

«The key to the profitability of our chemicals plants and refineries is their integrated value chain from their feedstocks to the multiple products they produce», he said. «The demand volatility of a particular product can have a broader impact on the operational capability of the integrated value chain. For example, a reduction in the demand for jet fuel at a refinery can impact the viability of the entire refinery. Looking ahead, we expect significant price and margin volatility in the short to medium term».

Petrochemicals in May affected by recessionary trends

Companies are also confronted by recessionary trends in the markets and in the countries in which they operate.

«This volatility presents a unique challenge for oil and gas producers, with the need to balance the requirement for cash today, with appropriate investment across the portfolio to generate cash tomorrow», van Beurden said.

Shell’s steep cut in its dividend made headline news on Thursday. Oil, gas and chemicals companies are seeking to preserve cash in extraordinarily difficult times while maintaining a level of business that serves them and their customers best. Upholding operations in these multiple value chains is key. Butwe are seeing refinery run downs and closures alongside the squeeze on chemical plant operating rates. Operators of Europe’s crackers and the plants downstream from them are working on shifting sands.


(To be continued…)


Related articles

ConExpo and IFPE bring success to firms globally

ConExpo-CON/AGG, and the co-located International Fluid Power Exposition (IFPE), slated to return to Las Vegas March 14-18, 2023, have gained a reputation for bringing results to global attendees and exhibitors, and is working to expand that reputation for the 2023 show.

Cummins: from Darlington to South Korea

You will remember that in January Cummins revealed that it had manufactured its 1.5 millionth Mid-Range engine, a B5.9, at its Darlington factory. Since then, the team at Darlington has been tracking the progress of its now “famous” engine and have estimated that it travelled over 5,400 miles from D...

Venture Global announces agreements with ExxonMobil

A few days ago, Venture Global LNG announced the execution of two new long-term Sales and Purchase Agreements (SPAs) with ExxonMobil LNG Asia Pacific (EMLAP) for the sale of 2 million tonnes per annum of liquefied natural gas.