Last week in the world oil:
- Crude oil ended the week aroundUS$45/b, as the market largely shrugged off the attempted coup in Turkey andlooked ahead to healthy economic indicators from the US and China, although astronger US dollar weighed down on prices slightly.
Last week in Asian oil:
- Iran’s new oil industryinvestment framework will be ready by the end of July, with the once-isolatednation looking to entice international oil firms to assist in bringing its oilindustry out from the cold. Several Asian firms, including those from China,India and Iran, have already announced proposed plans, and the new contractshould bring in other Western firms, including BP, Total, Rni and Repsol. Thenew system replaces the old buy-back system where foreign firms were bannedfrom booking reserves or taking equity in Iranian companies.
- Pertamina’s goal of increasingits domestic output to meet federal targets by taking over private oil fieldsin Indonesia is gaining pace, with reports indicating that it is eyeing a partof the gas-rich Masela block in Arafura Sea, while expediting its takeover ofthe mature Mahakam block in East Kalimantan from Japan’s Inpex and Shell.
- China’s refineries processed arecord amount of crude in June, rising 3.2% y-o-y to 11 million b/d,contributing to the highest refining figure for the first six months of anyyear. The increase in mainly coming from the ‘teapot’ refineries – independentrefiners that were last year allowed to directly import crude – tempted byhealthy refining margins.
- Meanwhile, CNOOC (ChinaNational Offshore Oil Company) is aiming to cap its crude runs to 1 million b/dby 2020 to ease oil product oversupply, and instead focus on expanding itsservice station fleet to 2000 over the same period, as the upstream firmcontinues its push downstream.
- Flooding along the Yangtze hasdisrupted oil distribution and also damaged facilities in China’s central andsouthern regions, with Sinopec stating that some 500 of its gas stations weredamaged and some refining operations disruption.
- Indonesia’s state power firmPLN has criticised the government’s upcoming B30 mandate for gasoil used inindustrial/power burning. Indonesia has ambitious plans to move to higherbiodiesel blends to ease pressure on oil product imports, but PLN says that thenew rules are ‘unworkable’ as it has not allowed for sufficient technicaltesting, potentially damaging equipment.
- Echoing Japan, South Korea isaiming to become an LNG hub as well. The Korean efforts will focus on becominga regional LNG bunkering hub along its southern cost, as the shipping industrygradually moves away from burning dirty fuel oil to cleaner LNG. The hope isthat by creating a hub, Korea’s LNG import volumes will rise, giving it morebargaining power as a buyer.
- Thailand’s PTT wants to investmore in Malaysia, including a proposed LNG project with Petronas that PTT hopeswill ease its long-term energy demands. Thailand uses natural gas for almost70% of its power generation, traditionally from Thai gas fields in the Bay ofBangkok and its west offshore coast, but output is dwindling and PTT is lookingoverseas.
Last week in international markets
Upstream & Midstream
- ExxonMobil has declare a force majeure on its Nigerian Qua Iboe crudeexports, traced to a ‘system anomaly’ at its loading facility that may take upto four weeks to repair. The issue is thought not to be connected to therampage of the Niger Delta Avengers, which continue its sabotage with morepipeline attacks on Eni, Shell, Exxon and NNPC facilities in the last twoweeks.
- Aiming to capitalise on the post-Brexit shuffle in the UK government,where the climate change department has been bundled into the department ofbusiness, petrochemical giant Ineos is aiming to accelerate shale gasdevelopment in the UK by lodging up to 30 planning application for drill testwells through to the end of 2016.
- BP’s Argentine subsidiary Pan American Energy plans to spend some US$1.4billion to exploit Argentina’s conventional and unconventional resources,including the Cerro Dragón oil field and shale gas in Neuquén and Tierra delFuego.
- In a sign that US crude producers are seeing brighter times ahead, theUS oil rig count increased for the sixth time in seven weeks, up by 6 to 357,coming from Louisiana and New Mexico. The gas rig count rose by one, bringingtotal operational rigs in the US to 447.
- The 65 kb/d Cienfuegos refineryis Cuba will be partially shut down for 120 days, or four months, for extensivemaintenance. Technical problems have kept the Soviet-era refinery running atminimum capacity, causing shortages. Cuba depends on Venezuela for most of itscrude and oil imports, and problems there have affected the isolated Caribbeannation.
- South African Airways hascompleted a test flight using bio-jetfuel refined from tobacco, part of aglobal aviation push to move to renewable resources. With refining marginsdeclining, jet fuel a dependable bright spot in oil products, but even thismight come under pressure soon.
- Shell and its partners on theLNG Canada project have delayed the final investment decision on the proposedLNG export terminal on Canada’s western coast for the second time this year.‘Global industry challenges, including capital constraints’ were cited as thereason to delay the project, aimed at exporting LNG to Asia, principally due toan emerging LNG glut.
- ExxonMobil has made another bidto acquire Canada’s InterOil, outbidding Oil Search Ltd with a ‘superior offer’as it looks to merge InterOil’s large natural gas reserves in Papua New Guineawith its own. Exxon has faced issues in building pipelines, and InterOil’sfields are logistically less complicated, and closer to the proposed coastalLNG plant, speeding up the ambition of PNG becoming a major LNG exporter.
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Headline crude prices for the week beginning 16 September 2019 – Brent: US$69/b; WTI: US$63/b
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