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A dramatic drop in oil prices is translating into a mixed bag for motorists across the globe - from hefty savings at the pump in the United States to a rare fuel price hike in Venezuela.

Oil prices have dropped nearly 70 percent in the past 20 months, driven down by a glut in supply. All countries have access to the same oil prices on international markets, but retail gasoline prices vary wildly, largely because of the taxes and subsidies imposed on them.

That has meant the impact of diving oil prices has been uneven around the world.

In the United States, for example, drivers have enjoyed the fall as average gasoline prices tumbled to $1.64 a gallon ($0.43 a litre) last month from $3.37 a gallon ($0.89 a litre) two years ago. That has spurred a road renaissance of sorts as Americans hit the highways in greater numbers.

    "It's great. It used to pain me to fill up my car, but now it's no big deal," said Patsy Gehring, a 59-year old who lives in Philadelphia. She says she notices the low pump prices every time she fills up her 2014 Honda Civic and is considering driving instead of flying on an upcoming trip to Florida.

    "I'm probably going to end up driving. I'd prefer to fly, but gas prices are so cheap it just makes sense," she said.

    The decline in prices at the pump has been more muted in countries like Indonesia, China and India, which have tried to reduce subsidies and absorb some of the gains from lower oil prices as taxes or levies, Barclays said in a research report.

    Overall, retail fuel prices in Asia - which is home to three of the world's four largest energy importers - have fallen only about 35 percent despite the almost 70 percent decline in oil prices since July 2014, Barclays said.

   

    "NO CHOICE"

    In China, the wholesale gasoline price ceiling - which is set by the country's central planning commission - has fallen 29 percent since February 2014. But in January regulators set a floor on price cuts, saying they would no longer adjust prices down when oil prices are below $40 a barrel. One benchmark oil price, Brent crude, was trading at around $36 a barrel this week.

    Meanwhile, the Chinese government has also raised the consumption tax on fuel three times six since the slide in oil prices began. In Beijing, motorists appeared resigned to the limited benefit.

    "When you look at oil prices, you can see the price at the pump should be a lot lower," said a 35-year-old man driving a black Audi A6, who gave his surname as Gao.

In Hong Kong - which has the world's most expensive gasoline at $6.69 per gallon ($1.76 per litre) according to www.globalpetrolprices.com - the slow downward march in prices has not impressed car owner Simon Lam. "It's been at this price range for so long and we have no choice but to accept that," he said.

    A different story is being played out in two major oil producing countries - Saudi Arabia and Venezuela - where prices at the pump have actually risen due to cuts in subsidies, imposed to compensate for the economic hit from the oil price crash.

    Venezuela in February increased pump rates for the first time in nearly 20 years. Its 95 octane gasoline rose more than 6,000 percent from 0.097 bolivars to 6 bolivars per litre. (From 0.36 bolivars to 22.7 bolivars per gallon.) While that is $0.60 at the strongest official exchange rate it is far less at the weakest official rate and just $0.006 on the black market, making it the cheapest fuel in the world at that rate.

The price is so low – especially in the face of raging inflation – that many Venezuelans support raising fuel rates even more.

    "Gasoline is too cheap here. A litre of water is still more expensive than a litre of fuel. I have family abroad in Ecuador, and there it's very expensive, here it's nothing! They should have increased it a bit more," said taxi driver Raul Ramirez as he filled up his car at a Caracas gas station recently.

    Similarly, Saudi Arabia - with its finances also hit hard by the oil slump - in December raised the price of 95 octane gasoline to 0.90 riyal ($0.24) per litre from 0.60 riyal. (From 2.27 to 3.40 riyal per gallon)

    That still keeps Saudi Arabia among the countries with the cheapest gasoline prices in the world, so motorists are not  complaining too much.

    "It is still cheap, still reasonable - people can afford it," said a 40-year-old as he filled up at a gas station in Khobar near the state oil company's headquarters.

    "You don’t usually tip the guy at the pump but in Saudi Arabia you do because petrol is so cheap."

By Jarrett Renshaw and Reem Shamseddine

PHILADELPHIA/KHOBAR, Saudi Arabia(Reuters)

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BP & The Expansion of the Caspian

The vast Shah Deniz field in Azerbaijan’s portion of the South Caspian Sea marked several milestones in 2018. It has now produced a cumulative total of 100 billion cubic metres of natural gas since the field started up in 2006, with daily output reaching a new peak, growing by 12.5% y-o-y. At a cost of US$28 billion, Shah Deniz – with its estimated 1.2 trillion cubic metres of gas resources – has proven to be an unparalleled success, being a founding link of Europe’s Southern Gas Corridor and coming in relatively on budget and on time. And now BP, along with its partners, is hoping to replicate that success with an ambitious exploration schedule over the next two years.

Four new exploration wells in three blocks, along with a seismic survey of a fourth, are planned for 2019 and an additional three wells in 2020. The aggressive programme is aimed at confirming a long-held belief by BP and SOCAR there are more significant pockets of gas swirling around the area. The first exploratory well is targeting the Shafag-Asiman block, where initial seismic surveys suggest natural gas reserves of some 500 billion cubic metres; if confirmed, that would make it the second-largest gas field ever discovered in the Caspian, behind only Shah Deniz. BP also suspects that Shah Deniz itself could be bigger than expected – the company has long predicted the existence of a second, deeper reservoir below the existing field, and a ‘further assessment’ is planned for 2020 to get to the bottom of the case, so to speak.

Two wells are planned to be drilled in the Shallow Water Absheron Peninsula (SWAP) block, some 30km southeast of Baku, where BP operates in equal partnership with SOCAR, with an additional well planned for 2020. The goal at SWAP is light crude oil, as is a seismic survey in the deepwater Caspian Sea Block D230 where a ‘significant amount’ of oil is expected. Exploration in the onshore Gobustan block, an inland field 50km north of Baku, rounds up BP’s upstream programme and the company expects that at least one seven wells of these will yield a bonanza that will take Azerbaijan’s reserves well into the middle of the century.

Developments in the Caspian are key, as it is the starting node of the Southern Gas Corridor – meant to deliver gas to Europe. Shah Deniz gas currently makes its way to Turkey via the South Caucasus Gas pipeline and exports onwards to Europe should begin when the US$8.5 billion, 32 bcm/y Trans-Anatolian Pipeline (TANAP) starts service in 2020. Planned output from Azerbaijan currently only fills half of the TANAP capacity, meaning there is room for plenty more gas, if BP can find it. From Turkey, Azeri gas will link up to the Trans-Adriatic Pipeline in Greece and connect into Turkey, potentially joined by other pipelines projects that are planned to link up with gas production in Israel. This alternate source of natural gas for Europe is crucial, particularly since political will to push through the Nordstream-2 pipeline connecting Russian gas to Germany is slackening. The demand is there and so is the infrastructure. And now BP will be spending the next two years trying to prove that the supply exists underneath Azerbaijan.

BP’s upcoming planned exploration in the Caspian:

  • Shafag-Asiman, late 2019, targeting natural gas
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  • ‘Onshore gas project’, end 2019, targeting natural gas’
  • Block D230, 2019 (seismic assessment)/2020 (drilling), targeting oil
  • Shah Deniz ‘further assessment’, 2020, targeting natural gas
January, 22 2019
RAPID Rises

When it was first announced in 2012, there was scepticism about whether or not Petronas’ RAPID refinery in Johor was destined for reality or cancellation. It came at a time when the refining industry saw multiple ambitious, sometimes unpractical, projects announced. At that point, Petronas – though one of the most respected state oil firms – was still seen as more of an upstream player internationally. Its downstream forays were largely confined to its home base Malaysia and specialty chemicals, as well as a surprising venture into South African through Engen. Its refineries, too, were relatively small. So the announcement that Petronas was planning essentially, its own Jamnagar, promoted some pessimism. Could it succeed?

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RAPID Refinery Factsheet:

  • Ownership: Petronas (50%), Saudi Aramco (50%)
  • Capacity: 300 kb/d CDU/3 mtpa olefins plant
  • Other facilities: 1.22 Gigawatt congeneration plant, 3.5 mtpa regasification terminal
  • Expected commissioning: March 2019
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Forecasting Bangladesh Tyre Market | Zulker Naeen

Tyre market in Bangladesh is forecasted to grow at over 9% until 2020 on the back of growth in automobile sales, advancements in public infrastructure, and development-seeking government policies.

The government has emphasized on the road infrastructure of the country, which has been instrumental in driving vehicle sales in the country.

The tyre market reached Tk 4,750 crore last year, up from about Tk 4,000 crore in 2017, according to market insiders.

The commercial vehicle tyre segment dominates this industry with around 80% of the market share. At least 1.5 lakh pieces of tyres in the segment were sold in 2018.

In the commercial vehicle tyre segment, the MRF's market share is 30%. Apollo controls 5% of the segment, Birla 10%, CEAT 3%, and Hankook 1%. The rest 51% is controlled by non-branded Chinese tyres.

However, Bangladesh mostly lacks in tyre manufacturing setups, which leads to tyre imports from other countries as the only feasible option to meet the demand. The company largely imports tyre from China, India, Indonesia, Thailand and Japan.

Automobile and tyre sales in Bangladesh are expected to grow with the rising in purchasing power of people as well as growing investments and joint ventures of foreign market players. The country might become the exporting destination for global tyre manufacturers.

Several global tyre giants have also expressed interest in making significant investments by setting up their manufacturing units in the country.

This reflects an opportunity for local companies to set up an indigenous manufacturing base in Bangladesh and also enables foreign players to set up their localized production facilities to capture a significant market.

It can be said that, the rise in automobile sales, improvement in public infrastructure, and growth in purchasing power to drive the tyre market over the next five years.

January, 18 2019