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DIRECTORY OF SINGAPORE PROCESS & CHEMICALS INDUSTRIES 2021/2022
refineries with hydrocracking unit capacities of 165mbd and 142mbd respectively. Among the expansion projects, Zhenhai refinery is the largest upcoming one with 80mbd of capacity, closely followed by Dayushan Island with 76 mbd.”
GlobalData expects India to be the second highest contributor to the Asia’s refinery hydrocracking unit capacity additions by 2025 with a total refining capacity of 465 mbd by 2025, followed by Thailand with 197mbd.
Strong surge in chemical mergers and acquisitions after haitus
With progress on the vaccine front, chemical mergers and acquisitions (M&A) are poised for a major rebound.
“We see strategic buyers not hesitating to buy and sell, and financial sponsors flush with cash and looking for deals. The market is open and debt financing markets are very strong,” Leland Harrs, managing director at investment bank Houlihan Lokey told Independent Commodity Intelligence Services (ICIS) in December 2020.
“Some deals that were put on pause will go to market in the new year. There is a much more optimistic tone than four to five months ago as people are now looking beyond Covid.
All systems are go and we should be in for an active 2021,” he added.
Robert Clarke, vice-president of Wood Mackenzie’s Upstream Research, predicted there will be a blockbuster deal in 2021 that will send shockwaves through the industry. “Absent a very volatile crude market, two big names will get together. Maybe even three, as some of the recent deal filings have indicated. We don’t think it goes as far as the Permian eventually only having five meaningful operators, as some have suggested. But we are confident a storied name (or three) will be retired in 2021.”
Global chemicals M&A activity took a nosedive in 2020. According to Statista, it tumbled 51% from US$139 billion in 2019 to US$68 billion in 2020, the lowest since 2013.
Convinced that oil demand has peaked, BP announced in August 2020 its intent to cut oil and gas production by 40% by 2030, while increasing annual low-carbon investments like wind energy to US$5 billion.
Unlike BP, Shell is not planning to pivot away from its traditional oil and gas business. It expects its output to decline by 1-2% per year from its oil production peak of about 1.7 million barrels per day in 2019. Instead, it is building its consumer business, focusing on sale of low- carbon electricity, biofuels and hydrogen directly to households and electric vehicle owners.
Likewise for Chevron. “In our view, oil and natural gas are going to be critically needed for some time to come. The energy transition under way will take some time, to not only develop the new energy sources, but also to figure out the technical challenges that we all face,” Jay Johnson, the company’s executive vice president of upstream, told weekly oil and gas newspaper, Upstream.
The company is seeking to lower the carbon intensity in its operations. Having exceeded its 2023 target three years of schedule, Chevron has now set its sights on reducing its carbon intensity by 35% by 2028 and eliminating routine flaring by 2030.
As for ExxonMobil, the group aims to reduce greenhouse gas intensity of upstream operations by 15-20% compared to 2016 levels under its new emissions reduction plan for 2025, and cut methane intensity by 40-50% and flaring intensity by 35-45%.
An industry leader in carbon capture and storage (CCS), the company has set up a new business, ExxonMobil Low Carbon Solutions to commercialise its extensive low-carbon technology portfolio building on the work of its Carbon Capture and Storage venture established in 2018.
“The business will initially concentrate on CCS, advancing plans for over 20 opportunities
Transitioning to
a low carbon future
Despite resistance in some quarters, the world is transitioning to a low carbon future to avert the worst effects of climate change. Over 100 countries have pledged to achieve net zero greenhouse gas emissions by 2050.
More companies have also declared their commitment. Amongst big oil, Shell, BP and Total pledged to achieve net-zero by 2050 and are developing new business models to reduce their dependence on hydrocarbon.
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