Last week in the world oil:
- With news filtering out that major OPEC members were preparing to enforce the new supply quotas, crude oil prices are marching upwards to the mid-US$50/b level, raising hopes that the trajectory was on the mend and US$60/b levels could be seen in the first half of 2017
Upstream & Midstream
- Libya’s National Oil Corporation has confirmed that the Sharara and El Feel oil field pipelines have re-opened after two years, adding 175 kb/d to national production in January and up to 270 kb/d by May 2017. Production in Libya has been hampered by political conflict, with output languishing at 600 kb/d, far off average figures of 1.6 mmb/d in 2011.
- Faced with a stubborn Saudi Arabia refusing to resume shipments of oil products, Egypt is looking for alternatives to solve it energy deficiency. It is now speaking with Iraq to directly import crude amounting to 1-2 million barrels per month, hoping to finalise the details by Q12017.
- Another 16 rigs came online in the US, 13 of which were oil rigs, as American shale producers happily respond to the positive price signals.
- Mexico has set a timetable for fuel price liberalisation, beginning in March to roll out on a staggered basis over the rest of the year. Gasoline and diesel prices have been set by the government for decades and the move is part of a larger energy reform movement that began in 2013. The rollout begin in the northwestern Baja California and Sonora states, then move south to the main consumption areas and finally to the Yucatan.
- Shell continues its divestment at a rapid pace, last week agreeing to sell its 20% stake in Vivo Energy to Vitol Africa for US$250 million. Vivo Energy will retain the rights to marketing and distributing fuels in 16 African nations under the Shell brand.
Natural Gas & LNG
- BP seems to be aggressively expanding on the natural gas front. After purchasing a stake in the Zohr field in Egypt and sanctioning an expansion in Indonesia’s Tangguh LNG last month, BP has now purchased stakes in West African licences held by US player Kosmos Energy. In a deal worth US$916 million, BP has acquired interest in offshore blocks in Mauritania and Senegal, as it tries to play catch-up with rival Shell.
- France’s Total is also pushing ahead, acquiring a stake in Houston-based Tellurian share, that will see it partner with Tellurian to develop the Driftwood LNG terminal in Lousiana due to start up in 2022.
- Phillips 66 has started up its Freeport LPG Export Terminal, loading its first cargo on a VLGC last week. The startup is part of a wider expansion of the US natural gas liquids infrastructure, including ethane and LPG (propane and butane), which much of the volumes destined for Asia.
- BP has agreed to take a 10% stake in the Adco onshore oil concession for 40 years, with Abu Dhabi government gaining a 2% stake in the supermajor. The deal is part of Adnoc’s aim to secure 40% foreign funding in the Adco concession, with stakes already held by France’s Total (10%), Japan’s Inpex (5%) and South Korea’s GS Caltex (3%).
Last week in Asian oil:
Upstream & Midstream
- The shine seems to be coming off Australian upstream. The results of the country’s latest licensing round are out, and only nine of the 29 offshore oil and gas exploration permits have been taken up. With some of sites in the prodigious Bonaparte, Browse, Carnarvon and Roebuck basins, the low take up is symptomatic of the recent more cautious approach in E&P.
Downstream & Shipping
- A major Chinese independent refiner is opening up a trading office in Singapore next year, as the teapots leverage the opportunity granted to them by crude import quotas this year to go global. A Singapore trading desk would make it easier for Sinochem Hongrun Petrochemical to acquire crude on the open market, and could also have allowed it to trade refined products, although the Chinese government has clamped down on that by rescinding export quotas for the teapots next year. Another teapot, Shandong Hengyuan Petrochemical, acquired a 51% stake in Shell’s 156 kb/d Port Dickson refinery in Malaysia for US$66.3 million.
- Mongolia is seeking funds from India to build an oil refinery and associated pipeline infrastructure, hoping to garner US$1 billion from the Import-Export Bank of India in an infrastructure funding pact sealed by Prime Minister Narendra Modi last year. Of the number, US$700 million is earmarked for building the refinery and US$264 million for oil pipelines.
- Vietnam has allowed retail prices of gasoline, diesel and other products to rise for a second time in less than a month, hiking controlled prices by 6.7% last week due to increases in crude prices. Retail fuel prices are controlled by the government in Vietnam, implemented by state distributor Petrolimex, though prices are still relatively lower than the global average, with diesel and gasoline at 12,670 and 17,590 dong (US$0.56 and US$0.77) per litre with the latest hike.
Gas & LNG
- ExxonMobil’s bid to take over InterOil as part of its grand plans for Papua New Guinea LNG has hit more road blocks. Although most InterOil shareholders approved the deal, founder Phil Mulacek is not happy and has launched (successful) legal bids to scupper the deal, with the Court of Appeal in Yukon, Canada halting the deal. ExxonMobil’s offer to raise its bid to as high as US$3.9 billion does not seem to have satisfied Mulacek and the parties now have until March 31, 2017 to rescue the deal.
- Idemitsu has completed it purchase of a stake in rival refiner Showa Shell Sekiyu. However, due to opposition from the founding family of Idemitsu, the purchase was trimmed to just under a third of the shares, and places the longer-term goal of a merger as less possible given the obstruction.
- Chevron is divesting its geothermal assets in Southeast Asia. Once a promising area of investment, low oil prices have removed some of the shine from geothermal energy. The Ayala Corporation of the Philippines has agreed to acquire Chevron’s geothermal assets in Indonesia and the Philippines, valued at US$3 billion. Ayala is in the power generation business in the Philippines, and this would also represent its first investment in Indonesia.
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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
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How To Maintain A Wood Pellet Mill
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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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