Strategically-worded statements from OPEC, in particular signals from Saudi Arabia that it was moving to stabilise markets, lifted oil prices last week, moving up to the mid-US$40s as traders bet that the OPEC talks will lead to a balancing of supply with demand.
Russia’s Rosneft announced that it had made a new condensate find at its Wild Orchid gas field in Vietnam, located in the prodigious Nam Con Son offshore basin. Pre-drill preliminary assessments indicate 12.6 billion cubic metres of gas and 5.4 million barrels of condensate, which ties in synergistically as it can be linked to Rosneft Vietnam’s existing Lan Tay production platform.
Australia launched the 2016 Offshore Petroleum Exploration Acreage Release last week, covering 28 areas across five basins. The offshore blocks on offer are in the Bonaparte Basin, Browse Basin, Offshore Canning Basin, Roebuck Basin and Northern Carnarvon Basin in Western Australia, with 25 areas up for work program bidding and three areas for cash bidding.
CNPC has begun work on the fourth Shaanxi-Beijing gas pipeline, moving 25 billion cubic metres of gas per annum to China’s energy-hungry capital in a bid to reduce smog from oil- and coal-burning power plants. There are already three existing pipelines with total capacity of 35 billion cubic metres, and the new 1,114 km pipeline will bring that total up to 60 billion cubic metres when it starts up in October 2017.
Indian oil demand is growing fast, outpacing even China’s growth currently, and refiners are planning ahead to feed that demand. CPCL (Chennai Petroleum) has announced a US$3 billion plan to expand its Nagapattinam plant in Tamil Nadu from 20 kb/d to as much as 180 kb/d. A feasibility study is underway and the plans, if finalised, will go to approval by the Ministry of Petroleum and Natural Gas next year.
In more Indian refinery news, the Numaligarh Refinery in Assam, a joint venture owned by BPCL and Oil India, is planning a US$3 billion expansion of its 80 kb/d refinery, which would treble the site’s capacity to 180 kb/d. Surging demand in India’s northeast is the impetus behind the plans. Ministry approval is required for the plan to go ahead.
Santos is setting aside A$1.05 billion to pay for a tax impairment charge on its Gladstone LNG project in its 1H16 financials. The impairment comes dues to a slower ramp up of Gladstone equity gas production and an increase in third-party gas prices, with sustained low oil prices constraining capital expenditure and Gladstone ramp-up.
Indonesia has approved plans to create holding companies for state firms, including those in the energy sector. Under the new framework, which is designed to encourage state-owned companies to spearhead industrial development, PT Pertamina will be the holding company of the oil and gas sector, with PGN (Perusahaan Gas Negara) as one of its units. This will hopefully bestow some measure of decisive power in Pertamina, which it can use to push ahead with some of its ambitious upstream and refinery projects to increase Indonesia’s crude production and reduce its current dependence on imported oil products.
Continued attacks on pipeline infrastructure in Nigeria persist, despite the government issuing cash payments in efforts to negotiate peace talks. Last week, Shell declared force majeure for Bonny Light crude liftings when a leak appearing on the Niger Delta pipeline. Bonny Light is Nigeria’s fourth crude stream to be under force majeure for deliveries, after Qua Iboe, Forcados and Brass River. ExxonMobil, which exports Qua Iboe, is attempted to re-route its streams via an alternate pipeline while it focusing on repairing the main line damaged in July.
With its energy policy now set in stone, Israel is preparing to exploit the country’s new discoveries of gas (and oil). With regulatory uncertainties now eliminated, some 24 offshore exploration blocks will be up for tender in November, all of which are close to the Leviathan gas field. Preliminary indications by the Israeli Energy Ministry indicates 2,200 billion cubic metres of natural gas and 6.6 billion barrels of oil set to be discovered in Israeli waters, according to a geological survey.
Israel’s neighbor to the south, Egypt, has approved five oil and gas E&P agreements with foreign companies. BP, ENI, Total and Edison will partner with Egypt’s state gas board EGAS on four fields in the Mediterranean, while Trident Petroleum joins EGPC in the Red Sea.
Some 15 new oil rigs started up in the US last week, bringing the total number of operating oil rigs to 396, as onshore producers took heed of OPEC’s signals to strengthen prices. Gas rigs rose by 2, bringing the total number of rigs up to 481, the highest number since March 2016.
A fire broke out at the Motiva refinery in Convent, Louisiana last week. The fire was put out within the day, but not before heavily damaging the structure of the site’s heavy oil hydrocracker. The 235 kb/d is expected to be partially shut down for at least a month to repair the damage to the 45 kb/d heavy oil unit. The wider refinery will remain operational.
Expansions at the Sohar refinery in Oman are now expected to come onstream by early 2017, a slight delay from the original end-2016 start date, which would increase refining capacity to some 90 kb/d. Crude processed will be domestic, reducing the country’s crude exports by at least 50 kb/d when Sohar’s new units start up.
South Korea’s Kogas has signed an MoU with the government of Yucatan state in Mexico to build an LNG import terminal and associated pipeline infrastructure. The proposed site for the project is Progreso, well-placed to receive shipments of LNG coming from the US on the other side of the Gulf of Mexico.
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Anthony Rizzo Players Can't Sit On Bench According to a report from the Chicago Sun-Times, the world-famous Anthony Rizzo Phrase "Zombie Rizzo" has been told to never be used again. Of course, this is not the first time that the Zombified Chicago Cubs' first baseman has made headlines this year. A year ago, "Rosebud" was the catchphrase that he coined for himself. Also, there is Anthony Rizzo Shirts that come in his name. Now that the Cubs are World Series Champions, Anthony Rizzo is on his way to superstardom. He is leading the World Series in several categories, including hits, runs, home runs, RBI's, OBP, and SLG. Also, he's on track for a staggering year in hits, RBI's, and total bases, all while being second in home runs.
The Cubs Phenom
This season the Chicago Cubs are over 3.5 million in earnings from the local broadcasts alone. The Cubs could lose a good deal of local revenue if they fail to get back to the World Series. But the local revenue is not the biggest factor in the Cub's success. A large part of their success comes from two of their most popular players, third baseman Kris Bryant and first baseman Anthony Rizzo. These two players are now the favorites to win the MVP awards this year, especially if the Cubs are able to stay on top of the wild card standings. A Look at Rizzo Anthony Rizzo is often compared to his college teammate Andrew McCutchen. Both players have performed well at the plate.
The wood pellet mill, that goes by the name of a wood pellet machine, or wood pellet press, is popular in lots of countries around the world. With all the expansion of "biomass energy", there are now various production technologies utilized to convert biomass into useable electricity and heat. The wood pellet machines are one of the typical machines that complete this task.
Wood pellet mills turn raw materials such as sawdust, straw, or wood into highly efficient biomass fuel. Concurrently, the entire process of converting these materials in a more dense energy form facilitates storage, transport, and make use of on the remainder of any value chain. Later on, you will find plans for biomass fuel to replace traditional fuels. Moreover, wood pellet machines supply the chances to start many different types of businesses.
What Is A Wood Pellet Mill?
Wood pellet machines are kinds of pellet machines to process raw materials including peanut shells, sawdust, leaves, straw, wood, plus more. Today the pellet mills can be purchased in different types. Both the main types include the ring die pellet mills as well as the flat die pellet mills. Wood pellet mills are designed for processing many different types of raw materials irrespective of size. The pellet size is very simple to customize with the use of a hammer mill.
The Benefits Of A Wood Pellet Mill
- The gearboxes are made of high-quality cast iron materials which provide excellent shock absorption and low noise. The wood pellet mills adopt a gear drive that makes a better efficiency in comparison with worm drive or belt drive. The gear drive setup really helps to prevent belt slippage while extending the lifespan in the belt drive.
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How To Maintain A Wood Pellet Mill
- The belt tightness ought to be checked regularly. If it is now slack, it needs to be tightened immediately.
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It was shaping up to yet another dull OPEC+ meeting. Cut and dry. Copy and paste. Rubber-stamping yet another monthly increase in production quotas by 432,000 b/d. Month after month of resisting pressure from the largest economies in the world to accelerate supply easing had inured markets to expectations of swift action by OPEC and its wider brethren in OPEC+.
And then, just two days before the meeting, chatter began that suggested something big was brewing. Whispers that Russia could be suspended made the rounds, an about-face for a group that has steadfastly avoided reference to the war in Ukraine, calling it a matter of politics not markets. If Russia was indeed removed from the production quotas, that would allow other OPEC+ producers to fill in the gap in volumes constrained internationally due to sanctions.
That didn’t happen. In fact, OPEC+ Joint Technical Committee commented that suspension of Russia’s quota was not discussed at all and not on the table. Instead, the JTC reduced its global oil demand forecast for 2022 by 200,000 b/d, expecting global oil demand to grow by 3.4 mmb/d this year instead with the downside being volatility linked to ‘geopolitical situations and Covid developments.’ Ordinarily, that would be a sign for OPEC+ to hold to its usual supply easing schedule. After all, the group has been claiming that oil markets have ‘been in balance’ for much of the first five months of 2022. Instead, the group surprised traders by announcing an increase in its monthly oil supply hike for July and August, adding 648,000 b/d each month for a 50% rise from the previous baseline.
The increase will be divided proportionally across OPEC+, as has been since the landmark supply deal in spring 2020. Crucially this includes Russia, where the new quota will be a paper one, since Western sanctions means that any additional Russian crude is unlikely to make it to the market. And that too goes for other members that haven’t even met their previous lower quotas, including Iraq, Angola and Nigeria. The oil ministers know this and the market knows this. Which is why the surprise announcement didn’t budge crude prices by very much at all.
In fact, there are only two countries within OPEC+ that have enough spare capacity to be ramped up quickly. The United Arab Emirates, which was responsible for recent turmoil within the group by arguing for higher quotas should be happy. But it will be a measure of backtracking for the only other country in that position, Saudi Arabia. After publicly stating that it had ‘done all it can for the oil market’ and blaming a lack of refining capacity for high fuel prices, the Kingdom’s change of heart seems to be linked to some external pressure. But it could seemingly resist no more. But that spotlight on the UAE and Saudi Arabia will allow both to wrench some market share, as both countries have been long preparing to increase their production. Abu Dhabi recently made three sizable onshore oil discoveries at Bu Hasa, Onshore Block 3 and the Al Dhafra Petroleum Concession, that adds some 650 million barrels to its reserves, which would help lift the ceiling for oil production from 4 to 5 mmb/d by 2030. Meanwhile, Saudi Aramco is expected to contract over 30 offshore rigs in 2022 alone, targeting the Marjan and Zuluf fields to increase production from 12 to 13 mmb/d by 2027.
The UAE wants to ramp up, certainly. But does Saudi Arabia too? As the dominant power of OPEC, what Saudi Arabia wants it usually gets. The signals all along were that the Kingdom wanted to remain prudent. It is not that it cannot, there is about a million barrels per day of extra production capacity that Saudi Arabia can open up immediately but that it does not want to. Bringing those extra volume on means that spare capacity drops down to critical levels, eliminating options if extra crises emerge. One is already starting up again in Libya, where internal political discord for years has led to an on-off, stop-start rhythm in Libyan crude. If Saudi Arabia uses up all its spare capacity, oil prices could jump even higher if new emergencies emerge with no avenue to tackle them. That the Saudis have given in (slightly) must mean that political pressure is heating up. That the announcement was made at the OPEC+ meeting and not a summit between US and Saudi leaders must mean that a façade of independence must be maintained around the crucial decisions to raise supply quotas.
But that increase is not going to be enough, especially with Russia’s absence. Markets largely shrugged off the announcement, keeping Brent crude at US$120/b levels. Consumption is booming, as the world rushes to enjoy its first summer with a high degree of freedom since Covid-19 hit. Which is why global leaders are looking at other ways to tackle high energy prices and mitigate soaring inflation. In Germany, low-priced monthly public transport are intended to wean drivers off cars. In the UK, a windfall tax on energy companies should yield US$6 billion to be used for insulating consumers. And in the US, Joe Biden has been busy.
With the Permian Basin focusing on fiscal prudence instead of wanton drilling, US shale output has not responded to lucrative oil prices that way it used to. American rig counts are only inching up, with some shale basins even losing rigs. So the White House is trying more creative ways. Though the suggestion of an ‘oil consumer cartel’ as an analogue to OPEC by Italian Prime Minister Mario Draghi is likely dead on arrival, the US is looking to unlock supply and tame fuel prices through other ways. Regular releases from the US Strategic Petroleum Reserve has so far done little to bring prices down, but easing sanctions on Venezuelan crude that could be exported to the US and Europe, as well as working with the refining industry to restart recently idled refineries could. Inflation levels above 8% and gasoline prices at all-time highs could lead to a bloody outcome in this year’s midterm elections, and Joe Biden knows that.
But oil (and natural gas) supply/demand dynamics cannot truly start returning to normal as long as the war in Ukraine rages on. And the far-ranging sanctions impacting Russian energy exports will take even longer to be lifted depending on how the war goes. Yes, some Russian crude is making it to the market. China, for example, has been quietly refilling its petroleum reserves with Russian crude (at a discount, of course). India continues to buy from Moscow, as are smaller nations like Sri Lanka where an economic crisis limits options. Selling the crude is one thing, transporting it is another. With most international insurers blacklisting Russian shippers, Russian oil producers can still turn to local insurance and tankers from the once-derided state tanker firm Sovcomflot PJSC to deliver crude to the few customers they still have.
A 50% hike in OPEC’s monthly supply easing targets might seem like a lot. But it isn’t enough. Especially since actual production will fall short of that quota. The entire OPEC system, and the illusion of control it provides has broken down. Russian oil is still trickling out to global buyers but even if it returned in full, there is still not enough refining capacity to absorb those volumes. Doctors speak of long Covid symptoms in patients, and the world energy complex is experiencing long Covid, now with a touch with geopolitical germs as well. It’ll take a long time to recover, so brace yourselves.
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