NrgEdge Editor

Sharing content and articles for users
Last Updated: January 26, 2017
1 view
Business Trends

Last week in the world oil:


-News of a strong recovery in US oil drilling offset optimism that OPEC and its non-OPEC allies were on track to meet their output reduction goals, leading oil prices to start the week slightly lower after gains last week. Saudi Arabia notched up its highest exports in 13 years in November, but numbers are expected to fall by nearly 400 kb/d in January as the supply cuts kick in. The push-pull relationship between OPEC and free market producers in the US highlights the difficulties in the race to raise prices.

Upstream & Midstream

-In a move that could potentially revolutionise oil trading, Mercurialis testing out an oil cargo contract sale based on the digital blockchain technology. Working together with banks ING and Societe Generale, the cargo of African crude sold to ChemChina is based on the technology that powers bitcoins a permanent digital ledger of all transaction history known as a blockchain that could replace the current complex system of clearing and settlement that require massive amounts of paperwork.

-The US oil rig count leapt by 35 last week, the largest rise since 2011, as US drillers responded to price signals, potentially hampering OPECs attempt to strengthen prices. Some 29 new oil rigs and 6 new gas rigs were restarted, and more additions are expected.


-A fire has halted output at Adnocs Ruwais refinery in Abu Dhabi, shutting down half of the sites 800 kb/d capacity. The outage at the newer section, is expected to be short, with production resuming next week.

Natural Gas & LNG

-In an attempt to reduce heavy reliance on Russian natural gas, Serbia and Bulgaria are cooperating on a natural gas pipeline project. The 150km pipeline is scheduled to begin construction in May 2019 and operational by the end of 2020, linking Sofia with the Serbian city of Nis. This could draw supplies from pipelines in Greece and Turkey, and possibly volumes from Israels Leviathan field. Poland, too, is plotting reducing dependence on Russia, aiming to have a gas pipeline to Norway in place by 2022.

-Brazil's Odebrecht group, embroiled in the country's largest ever graft scandal, has missed a financing deadline that will see it exit a US$5 billion natural gas pipeline in Peru, potentially derailing the entire project. The bribery scandal has brought the once powerhouse to its knees, which will now see it focus on divesting assets in all but two sectors to survive, retaining only its construction arm and petrochemical producer Braskem.


-Frances Technip and FMC Technologies have completed their merger, now operating as unified service provider TechnipFMC. The merger comes partially due to the slump in upstream investment, but also to consolidate developing technology to access hard-to-reach assets.

-Shell will have a new Head of Exploration next month, with current upstream strategy vice president Marc Gerrits taking over the role from Ceri Powell, who moves on to become the managing director of Brunei Shell Petroleum. The move is part of a broader reshuffle of executives following the acquisition of the BG Group, with upstream moving away from risky frontier areas like Alaska to existing production sites like Brunei and Malaysia.

Last week in Asian oil:

Upstream & Midstream

-Indonesia's Pertamina has unveiled an ambitious plan to invest US$54 billion in upstream production through 2025, aiming to raise its oil, gas and geothermal output by 185% to 1.91 million barrels. Pertamina's upstream output has slumped over the last decade, hitting its lowest point of 670 kb/d in November 2016, with the company struggling to acquire even domestic fields. The goals are at odds with OPECs wider objectives, leading Indonesia to withdraw temporarily from the organisation in November to focus on an upstream spending spree.

-A week after extending a storage deal with Saudi Aramco, Japan has done the same with the UAEs Adnoc. The two-year extension will allow Adnoc to continue storing up to 6.29 million barrels of crude oil in theKiireterminal in Kagoshima until 2019 at no cost in return for first dibs on the supplies in the case of emergencies. Adnoc uses the storage facilities as a convenient way to distribute crude across East Asia.

Downstream & Shipping

-Iran and China have agreed to a US$3 billion deal that will see China support Iran financially as its moves to upgrade its ailing oil refining infrastructure. The agreement will focus on the 430 kb/d Abadan refinery, Irans largest, that is in dire need of upgrades after years of sanctions prevented access to parts and new technology. It is an indication that the rest of the world is still prepared to deal with Iran, even as the new American administration is prepared to be more hostile.

-Bangladesh has reversed its decision to slash fuel prices as global crude prices rise. The phased prices cuts which would reduce the controlled prices of gasoline, diesel and LPG began in April 2015, after a two-year freeze to help state-owned player Bangladesh Petroleum Corp recover losses and were meant to be extended over 2017. However, the government has now decided that raising oil prices pose too much of a risk to move ahead with another 10% cut, freezing gasoline prices at around 86 taka (US$1.10) per litre.

-Singapore's struggling Jurong Aromatic Corp (JAC) might have found a buyer in South Koreas Lotte Chemical Corp. After going into receivership in September 2015 due to debt issues as global commodity prices were routed, JAC also had to deal with an 18-month outage as its petrochemical complex to fix issues and has been searching for a possible suitor. Lotte, which currently operates two naphtha crackers in Daesan and Yeosu along with a condensate splitter shared with Hyundai Oilbank, has been looking at potential overseas assets and JAC would be a suitable target to establish itself as one of Asia's largest condensate buyers.

Natural Gas & LNG

-Pakistan is in need of natural gas, a reason why Asian LNG prices have spiked over the last two weeks. While there is no short-term solution, it has secured some long-term security with a Gunvor deal to receive 60 LNG cargoes over the next five years and an Eni deal for 180 cargoes over the next 15 years. More tenders are expected, as Pakistan works towards bringing two more LNG terminals online over the next two years.

1 0

Something interesting to share?
Join NrgEdge and create your own NrgBuzz today

Latest NrgBuzz

High Oil Prices and Indonesia’s Ban on Oil Palm Exports

Supply chains are currently in crisis. They have been for a long time now, ever since the start of the Covid-19 pandemic reshaped the way the world works. Stressed shipping networks and operational blockages – coupled with China’s insistence on a Covid-zero policy – means that cargo tanker rates are at an all-time high and that there just aren’t enough of them. McDonalds and KFCs in Asia are running out of French fries to sell, not because there aren’t enough potatoes in Idaho, but because there aren’t enough ships to deliver them to Japan or to Singapore from Los Angeles. The war in Ukraine has placed a particular emphasis on food supply chains by disrupting global wheat and sunflower oil supply chains and kicking off distressingly high levels of food price inflation across North Africa, the Middle East and Asia. It was against this backdrop that Indonesia announced a complete ban on palm oil exports. That nuclear option shocked the markets, set off a potential new supply chain crisis and has particular implications on future of crude oil pricing and biofuels in Asia.  

A brief recap. Like most of Asia, Indonesia has been grappling with food price inflation as consequence of Covid-19. Like most of Asia, Indonesia has been attempting to control this through a combination of shielding its most vulnerable citizens through continued subsidies while attempting to optimise supply chains. Like most of Asia, Indonesia hasn’t been to control the market at all, because uncoordinated attempts across a wide spectrum of countries to achieve a similar level of individual protectionism is self-defeating.

Cooking oil is a major product of sensitive importance in Indonesia, and one that it is self-sufficient in as a result of its status as the world’s largest palm oil producer. So large is Indonesia in that regard that its excess palm oil production has been directed to increasingly higher biodiesel mandates, with a B40 mandate – diesel containing 40% of palm material – originally schedule for full implementation this year. But as palm oil prices started rising to all-time highs at the beginning of January, cooking oil started becoming scarcer in Indonesia. The government blamed hoarding and – wary of the Ramadan period and domestic unrest – implemented a Domestic Market Obligation on palm oil refineries, directing them to devote 20% of projected exports for domestic use. Increasingly stricter terms for the DMO continued over February and March, only for an abrupt U-turn in mid-March that removed the DMO completely. But as the war in Ukraine drove prices even further, Indonesia shocked the market by announcing an total ban on palm oil exports in late April. Chaotically, the ban was first clarified to be palm olein only (straight refining cooking oil), but then flip-flopped into a total ban of crude palm oil as well. Markets went haywire, prices jumped to historical highs and Indonesia’s trading partners reacted with alarm.

Joko Widodo has said that the ban will be indefinite until domestic cooking oil prices ‘moderate’. With the global situation as it is, ‘moderate’ is unlikely to be achieved until the end of 2022 at least, if ‘moderate’ is taken to be the previous level of palm oil prices – roughly half of current pricing. Logistically, Indonesia cannot hold out on the ban for more than two months. Only a third of Indonesia’s monthly palm oil production is consumed domestically; the rest is exported. An indefinite ban means that not only fill storage tanks up beyond capacity and estates forced to let fruit rot, but Indonesia will be missing out on crucial revenue from its crude palm oil export tax. Which is used to fund its biodiesel subsidies.

And that’s where the implications on oil come in. Indonesia’s ham-fisted attempt at protectionism has dire implications on biofuels policies in Asia. Palm oil prices within Indonesia might sink as long as surplus volumes can’t make it beyond the borders, but international palm oil prices will remain high as consuming countries pivot to producers like Malaysia, Thailand, Papua New Guinea, West Africa and Latin America. That in turn, threatens the biodiesel mandates in Thailand and Malaysia. The Thai government has already expressed concern over palm-led food price inflation and associated pressure on its (subsidised) biodiesel programme, launching efforts to mitigate the worst effects. Malaysia – which has a more direct approach to subsidised fuels – is also feeling the pinch. Thailand’s move to B10 and Malaysia’s move to B20 is now in jeopardy; in fact, Thailand has regressed its national mandate from B7 to B5. And the reason is that the differential between the bio- and the diesel portion of the biodiesel is now so disparate that subsidy regimes break down. It would be far cheaper – for the government, the tax-payers and consumers – to use straight diesel instead of biodiesel, as evidenced by Thailand’s reversal in mandates.

That, in turn, has implications on crude pricing. While OPEC+ is stubbornly sticking to its gentle approach to managing global crude supply, the stunning rebound in Asian demand has already kept the consumption side tight to match that supply. Crude prices above US$100/b are a recipe for demand destruction, and Asian economies have been preparing for this by looking at alternatives; biofuels for example. In the past four years, Indonesia has converted some of its oil refineries into biodiesel plants; in China, stricter crude import quotas are paving the way for China to clamp down on its status of a fuels exporter in favour of self-sustainability. But what happens when crude prices are high, but the prices of alternatives are higher? That is the case for palm oil now, where the gasoil-palm spread is now triple the previous average.

Part of this situation is due to market dynamics. Part of it is due to geopolitical effects. But part of it is also due to Indonesia’s knee-jerk reaction. Supply disruption at the level of a blanket ban is always seismic and kicks off a chain of unintended consequences; see the OPEC oil shocks of the 70s. Indonesia’s palm oil export ban is almost at that level. ‘Indefinite’ is a vague term and offers no consolation to markets looking for direction. Damage will be done, even if the ban lasts a month. But the longer it lasts – Indonesian general elections are due in February 2024 – the more serious the consequences could be. And the more the oil and refining industry in Asia will have to think about their preconceived notions of the future of oil in the region.

End of Article

Get timely updates about latest developments in oil & gas delivered to your inbox. Join our email list and get your targeted content regularly for free or follow-us on LinkedIn.

Market Outlook:

  • Crude price trading range: Brent – US$110-1113/b, WTI – US$105-110/b
  • As the war in Ukraine becomes increasingly entrenched, the pressure on global crude prices as Russian energy exports remain curtailed; OPEC+ is offering little hope to consumers of displaced Russian crude, with no indication that it is ready to drastically increase supply beyond its current gentle approach
  • In the US, the so-called NOPEC bill is moving ahead, paving the way for the US to sue the OPEC+ group under antitrust rules for market manipulation, setting up a tense next few months as international geopolitics and trade relations are re-evaluated

No alt text provided for this image

Learn more about this course

May, 09 2022
Importance of Construction Supply Online Shop

An online shop is a type of e-commerce website where the products are typically marketed over the internet. The online sale of goods and services is a type of electronic commerce, or "e-commerce". The construction supply online shop makes it all the more convenient for customers to get what they need when they want it. The construction supply industry is on the rise, but finding the right supplier can be difficult. This is where an online store comes in handy.

Nowadays, everyone is shopping online - from groceries to clothes. And it's no different for construction supplies. With an online store, you can find all your supplies in one place and have them delivered to your doorstep. Construction supply online shops are a great way to find all the construction supplies you need. They also offer a wide variety of products from different suppliers, making it easier for customers to find what they're looking for. A construction supply online shop is essential for any construction company. They are the primary point of contact for the customers and they provide them with all the goods they need.

Most construction supply companies have an online shop where customers can purchase everything they need for their project, but some still prefer to use brick-and-mortar stores instead, so it’s important to sell both in your store.

Construction supply is an essential part of any construction site too. Construction supply shops are usually limited to the geographic area where they are located. This is because, in order for construction supplies to be delivered on time, they must be close to the construction site that ordered them. But with modern technology and internet connectivity, it has become possible for people to purchase their construction supplies online and have them shipped right to their doorstep. Online stores such as Supply House offer a wide variety of products that can help you find what you need without having to drive around town looking for it.

May, 07 2022
Reasons to Quit Smoking and Start Vaping

Only the most enthusiastic dry herb advocates will, in any case, contend that smoking has never been proven to cause lung cancer. In case we are being reasonable, we would all agree that smoking anything isn't great for your health wellbeing. When you consume herbs, it combusts at more than 1000 °C and produces more than 100 cancer-causing agents. Over the long run, this causes the development of tar in the lungs and will conceivably prompt chronic bronchitis. Vaporizers take care of this problem which can be found in a good       online vaporizer store.

Rather than consuming dry herbs, vaporizers work by warming them to a point where it is sufficiently hot to evaporate the active ingredients. In particular, the temperatures from vaping are sufficiently cool to stay away from the actual burning of the plant matter which contains the cancer-causing agents. Accordingly, people who vape either dry herbs or e-fluids are less likely to be exposed to the toxins that are found in smoke. 

Vaping produces less smell and is more discreet. 

Every individual who has smoked joints realizes that the smell can now and then draw in the undesirable attention of meddling neighbors! When you smoke, the mixtures and the plant matter are emanated as a part of the thick smoke; this is the thing that creates the smell. 

Vaping herbs actually creates a scent, obviously. Nonetheless, the plant matter stays in the oven. Thus, the little from vaping tends to not stick to the wall and clothes due to there being no real smoke. A decent dry herb vaporizer makes it simpler to enjoy your herbs when you're out and about, however, you don't want everyone to know what you're doing! 

Further to creating almost no smell, vaporizers, for example, the Relax or Pax look so smooth that you can pull a vape out in the open and those 'not in the know' won't perceive what they are.

May, 05 2022