Easwaran Kanason

Co - founder of PetroEdge
Last Updated: August 1, 2016
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Business Trends
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Prices

Crude oil dropped down towards US$41/b, stoking fears that prices will once again fall below US$40/b as the markets deals with a persistent supply glut that does not seem to have an end in sight. China, in particular, is almost finished filling up its strategic petroleum reserves, and has been buying up less crude in July than earlier in the year.

Last week in Asian oil

In a sign that the global oil glut is growing ever bigger, Saudi Aramco has lowered the pricing of its crude sold to Asian customers, slashing Arab Light and Arab Extra Light in particular as it competes with Iran to sell crude to an Asian refining market that is under pressure from low margins. In contrast, prices to Europe were raised, an indication of the region’s lower priority in the race for demand stakes. 

In a sign that Asian demand is running out of steam, Korean crude oil imports for July fell by 5.8% y-o-y to 88 million barrels. There is also concern about the wider Korean economy; overall exports fell by 10.2%, the 19th consecutive monthly contraction, and weak economies have weak oil demand. 

Years of sluggish investment and the depressed crude markets have seen Indonesia’s proven oil reserves sink to their lowest level since 2000, with only 2,922 million stock tank barrels in oil reserves declared for the first half of 2016. This comes despite an increase in fields - 757 in 2015 vs 632 in 2000 – indicating that mature fields are depleting fast and new fields coming online are not substantial enough to offset the loss. 

Pakistan is reviving its plans for two new oil refineries to eliminate surging domestic demand that have caused oil imports to spike. The ambitious plans call for the planned Balochistan and central Punjab refineries, with a whooping combined 480kb/d capacity, to come online by 2023, eliminating the need for imports. As grand as the plan is, it is also unlikely to happen. 

Japanese refiner TonenGeneral has purchased its first crude oil from Iran, a move that was not possible when it was part of ExxonMobil, illustrating a shift towards embracing Iran as a new crude source for Japan. 

Indonesia has reversed its decision to implement a new pricing formula based on dated Brent for its July shipments, to ‘maintain stability’ in the market, but will press ahead with the new formula by the end of 2016. 

The first LNG shipment from the lower 48 US states is on its way to China, as Shell’s Maran Gas Apollonia loaded with Cheniere’s Sabine Pass gas moved past the Panama Canal towards China. Expect this to become a busy route in the near future, as the US Gulf heats up the race to supply LNG to Asia, joining Canada and Australia.

Two major deepwater natural gas fields in Indonesia will start production in the next 12 months, with Chevron’s Bangka project due in August, and Eni’s Jangkrik expected for July 2017. Both are located in the Kutai Basin in East Kalimantan.

China’s upstream giant CNOOC is warning investors that it will likely declare a loss of US$1.2 billion for 1H16, as it takes a hit on the oil sands assets it bought from Nexen. The severe decline in oil prices has been particularly brutal for CNOOC, as it has no downstream assets to hedge and offset revenue that evaporated when oil prices crashed.

International markets last week

The impasse between the Libya government and Libya’s National Oil Co is over. NOC has now said that it ‘unconditionally welcomes’ the deal brokered between the government and the Petroleum Facilities Guard, moving to restart crude exports from three blocked ports. It is good news for Libya’s oil exports, but another contribution to ever-growing supply. 

Norway’s Statoil has agreed to pay US$2.5 billion to Petrobras for a 66% stake in the BM-S-8 offshore licence in Brazil, which includes a substantial part of the Carcará oil field in the Santos basin. Although Petrobras is loath to part with recoverable volumes of up to 1.3 billion barrels of oil equivalent, huge debts means it must offer up valuable assets for cash.

A fifth consecutive rise for the US rig count, with producers adding three new oil rigs but stopped two gas rigs to bring the total to 462. Though lower than the rise of 14 last week, the continued additions show producers gaining confidence, but contributing to the growing glut. 

The Petrobras sell-off continues, with the Brazilian giant offering up its petrochemicals units in Pernambuco to Mexico’s Alpek for US$700 million. The deal is part of Petrobras’ attempt to pare down debt through asset sales, and the petchems units’ recent performance has been weak. 

In other Petrobras news, the Brazilian state oil firm says its plans to re-evaluates its plans for the massive Comperj and Abreu refining and petrochemical projects, suspending ongoing work at both sites for the time being as it grapples with its debt and a refocusing of priorities.

A favourable FEIS (final environmental impact statement) has been released for the Golden Pass LNG export project in Texas by the Federal Energy Regulatory Commission, clearing the way for US$10 billion Golden Pass to switch from an import to an export facility, just as the widened Panama Canal dramatically shortens the journey of US Gulf LNG to Asia. 

Tumbling oil prices have knocked the earnings of the world’s oil giants. ExxonMobil posting a 59% decline in profits for Q2, down to US$1.7 billion, while Chevron’s drop was even more dramatic – into the red with a loss of US$1.47 billion after a US$571 million profit in Q215. The picture was repeated across the earnings reports of oil companies, with players like Shell, BP and Statoil reporting weak results. 

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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
Your Weekly Update: 14 - 18 January 2019

Market Watch

Headline crude prices for the week beginning 14 January 2019 – Brent: US$61/b; WTI: US$51/b

  • After a rally, crude oil prices took a breather at the start of this week, as the market moved from a bullish mood to a cautious one as slowing Chinese trade data spooked the market
  • The US government shutdown – now the longest ever in history – continues with no end in sight, with Republicans and President Donald Trump at a stalemate with energised Democrats
  • That ended a week-long rally that allowed crude oil to bounce back from sub-US$50/b levels in December over OPEC+’s implementation of a new deal to shrink supplies and Saudi Arabia’s promise to ‘do more if needed’
  • Even Russia, which showed some reluctance in implementing a speedy cut, has made strides in reducing output, releasing data that showed that production fell by 30,000 b/d in December and is on track for a decrease of 50,000 b/d in January relative to October levels
  • However, the OPEC+ group is now reportedly struggling to set a date for their next meeting, where the supply deal will be reviewed; the review is set for April, ahead of OPEC’s usual Vienna meeting in June/July, but an April review is necessary to assess the expiration of American waivers on Iranian crude
  • Some downside to price trends is that the waivers on Iranian crude exports have nullified the impact of American sanctions; both Turkey and India have recently resumed imports of Iranian crude after a brief hiatus, with India electing to pay for all its crude in rupees
  • Although WTI prices have improved, American drillers are still reticent to add sites, wary of changing market conditions; Baker Hughes indicates that the active American drill count was flat last week, with the loss of 4 oil rigs offset by a gain of 4 gas ones
  • Crude price outlook: Upward momentum should continue with crude price this week, but at a more gradual pace, as fears of a slowing global economy weigh on the market. Brent should stay in the US$61-63/b range and WTI in the US$52-54/b range


Headlines of the week

Upstream

  • BP is proceeding with a major US$1.3 billion expansion of the Atlantis Phase 3 in the Gulf of Mexico, aimed at adding 38,000 b/d of additional output
  • Venezuela has announced plans to remap its Caribbean oil and gas prospects, a move that potentially puts it on collision course with ExxonMobil over the country’s long-disputed borders with the now oil-rich Guyana
  • New seismic studies at BP have identified a billion more barrels of oil in place at the deepwater Thunder Horse platform in the Gulf of Mexico
  • Saudi Arabia has published an updated figure of its oil reserves – its first in 40 years – pegging total volumes at 268.5 billion barrels
  • Norway has cut its crude production forecast, predicting the output will be 1.42 mmb/d in 2019, the lowest level since 1988
  • BP is reportedly looking to sell its 28% stake in the North Sea Shearwater assets to offset its recent US$10.6 billion acquisition of US shale fields
  • The Unity fields in South Sudan have resumed production, after being halted for five years over a civil war, with initial production targeted at 20,000 b/d
  • Eni and Thailand’s PTTEP have secured exploration rights to an oil and gas concession in Abu Dhabi, with Adnoc participating at 60% if oil is struck
  • TransCanada Corp – ahead of name change to TC Energy – is planning to start construction on the controversial Keystone XL oil pipeline in June, even in the face of continued social and legal setbacks
  • Spirit Energy’s Oda field in the Norwegian North Sea has received permission from the Norwegian Petroleum Directorate to start up
  • Aker Energy has completed successful appraisal of the offshore Pecan field in Ghana, estimating some 450-550 mmboe of resources in place
  • Shell and BP have submitted plans to begin exploratory drilling in Brazil’s Pau Brasil and Saturno pre-salt areas in early 2020

Downstream

  • Saudi Arabia has reiterated plans to build a US$10 billion oil refinery in Pakistan’s deepwater port of Gwadar, part of the larger China-Pakistan Economic Corridor plan that is part of the Belt and Road initiative
  • Shell Chemicals has started up its fourth alpha olefins unit at in Geismar, Louisiana, adding 425,000 tpa of capacity to a new total of 1.3 mtpa
  • After being idled over the paralysis between PDVSA and ConocoPhillips, the 335,000 b/d Isla refinery in Curacao has restarted, with operations likely to shift from PDVSA to Saudi Aramco’s Motiva US refining subsidiary

Natural Gas/LNG

  • After seemingly receiving official go-ahead from all levels of government and even indigenous groups, Shell’s US$31 billion Kitimat LNG project in Canada has now been blockaded by a group of protesting First Nation holdouts
  • Completion of major LNG projects in Australia’s west coast have allowed its LNG exports to increase by 23% in 2018, with greater growth expected in 2019
  • The NordStream 2, long championed by German Chancellor Angela Merkel, now faces new opposition in Germany over Russian global political interference – which could result in the controversial pipeline being delayed or cancelled
  • Shell has completed its acquisition of a 26% stake in the Hazira LNG and port venture in India from Total, bringing its equity interest to full ownership
  • BP has announced plans to drill six new exploration wells in Azerbaijan by 2020, hoping to strike a new natural gas play to rival its giant Shah Deniz field
January, 18 2019
Latest issue of GEO ExPro magazine covers geoscience and oil and gas activity focusing on Frontier Exploration and the Gulf of Mexico

GEO ExPro Vol. 15, No. 6 was published on 10th December 2018 bringing light to the latest science and technology activity in the global geoscience community within the oil, gas and energy sector.

This issue focusses on frontier exploration, downhole acquisition tools and how we can collaboratively increase the efficiency of the exploration and production of oil, gas and energy resources. With a geographical focus on the Gulf of Mexico, this issue provides a lesson on the carbonate geology of the Florida Keys and details coverage of newly improved tectonic restorations of the US and Mexican conjugate margins which have enabled enhanced mega-regional hydrocarbon play and reservoir fairway maps of the region.

You can download the PDF of GEO ExPro magazine for FREE and sign up to GEO ExPro’s weekly updates and online exclusives to receive the latest articles direct to your inbox.

To access the latest issue, please visit: https://www.geoexpro.com/magazine/vol-15-no-6


January, 17 2019