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Last Updated: May 3, 2017
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Last week in world oil:


  • Rebounding Libyan production has caused crude oil prices to tumble over the past week. The new support level seems to be US$50/b with Brent and WTI trading at about US$2 either side of that level.

Upstream & Midstream

  • Mexican crude is finding new homes, as crude shipments to the US fall to the lowest level since 2010. Shipments have been falling consistently as the shale revolution and Canadian volumes reduce the US Gulf’s dependence on Mexico. Production in Mexico itself is declining and more of its crude is demanded by Pemex’s refineries; excess crude that used to be shipped to the US are now finding its way to Europe and Asia.
  • While international players are exiting Canadian oil sand due to high costs, domestic player Suncor is evaluating opportunities in the region. Hoping to pick up some assets that will provide good returns over the longer term when it sees crude prices recovering, Suncor is also in a unique position, being the main producer of Syncrude, the light crude oil that must be mixed with oil sands to allow flow through pipelines.
  • The active US rig count continues to march upwards, gaining another 13 sites last week to move up to 870, the pace of additions not slowing down.


  • South Africa’s anti-trust body has ordered that LPG producers cap supply agreements with distributors at 10 years, ruling that existing deals were deterring competition, leading to four suppliers – Afrox, Easigas, Totalgas and Oryx Energies – cornering 90% of the market.

Natural Gas and LNG

  • Gazprom’s Nord Stream 2 pipeline took a big step last week, with the European partners of the €9.5 billion project agreeing to provide half of the financing. Uniper, Wintershall, Shell, OMV and Engie have each agreed to provide 10% of the venture, with Gazprom shouldering the remaining 50%. However, equity will not be exchanged; Gazprom will remain the sole shareholder of the 55 bcm pipeline, adding fodder to the political fire.
  • The dependence on Russia gas has unsettled many European countries, particularly in the Baltics and Scandinavia. While countries like Germany hunger for gas, Poland is looking further afield. With an LNG import terminal already in place and another planned, Poland is scheduled to receive a spot LNG cargo from Cheniere’s Sabine Pass. It won’t be the last either, as the glut of LNG swirling around globally opens up new markets.
  • Total will begin construction of its Cote d’Ivoire LNG terminal by mid-2017. The project aims to make the former French colony a natural gas regional hub for Western Africa, with initial capacity planned for 36 mmBtu, scaling up to 100 mmBtu. Completion is expected by end 2018.


  • Earnings across the board have risen in the first quarter of 2017, with ExxonMobil, Total and Chevron beating analyst expectations and BP tripling its profit y-o-y to US$1.51 billion. ExxonMobil reported quarterly profit of US$4.1 billion, while Chevron bounced back from a loss to being US$2.68 billion in the black. Rising crude prices have underpinned the financial recovery, with sizable asset sales also contributing.

Last week in Asian oil:

Upstream & Midstream

  • China has set a deadline of May 5 for private oil refiners to submit permits to use (or continue using) imported crude oil. China’s decision to allow 22 independent refiners to import crude oil on their own since 2015 has been behind the country’s record imports last year, but concerns about overcapacity leading to high exports has caused the state to clamp down on such permits. After curbing quotas earlier this year to an outcry, the state planner has instead issued a short deadline to cap private imports at about 2 mmb/d, still almost 25% higher than last year’s figure.
  • Petronas is seeking help to develop the high carbon dioxide oil and gas fields identified offshore Sarawak. The Malaysian state player lacks sufficient expertise in the arena and has invited close partners to assist it in developing the resources. Petronas is already developing high CO2 fields offshore Peninsula Malaysia, launching the Terengganu Gas Terminal in Kertih last week, utilising the company’s carbon dioxide removal technology that it expects will boost it domestic production.


  • BP’s profits for the first quarter of 2017 have been boosted by its decision to sell its 50% stake in the Shanghai SECCO Petrochemical Company to Sinopec for US$1.68 billion. The first major divestment of the year for BP will lead a charge to sell assets worth between US$4.5-5.5 billion this year, as it seeks to pare down debt accumulating from the Deepwater Horizon accident.
  • India has set an ambitious target to reduce its oil product imports to zero, hoping to replace them with alternative fuels. A specific timeline for the goal was not set out by Transport Minister Nitin Gadkari, leaving this a mere hope that the country would ‘no need to import any fuel from any country and that we will be self-sufficient’. Crude imports, of course, will still be a reality but India is directing state refiners to boost capacity to meet the goal, as well as move to alternative fuels like methanol and LNG to curb imports of LPG currently used by auto-rickshaws and cooking, as well as boost bio-ethanol refining from biomass, bamboo and cotton straw. A push by the government to introduce gas cylinders in rural areas has made India the second-largest LPG importer in the world, overtaking Japan, which has decreased coal usage but hiked up the import bill.  

Natural Gas & LNG

  • The Ichthys LNG export plant has been delayed. Again. Japan’s Inpex confirmed that it would delay the start of the project by several months from the previously projected start date of Q317, as delays in the offshore production facilities being manufactured in Korea hampered the timeline. The new timeline for production of LNG and LPG is end-March, 2018.
  • Australia’s Jemena, a joint venture between the State Grid Corp of China and Singapore Power, could boost the capacity of its planned eastern Australia pipeline to ease the growing natural gas shortage in the region. Jemena has stated that it is open to extend the pipeline, currently running from Tennat Creek in northern Australia to Mount Isa in Queensland, further east if the ban of fracking in the north is lifted. The pipeline is already under construction, but allowing fracking will unlock more supplies in central and northern Australia through which the pipeline flows, which will help ease the current gas crisis on the east coast.

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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.

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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.

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- 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

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June, 12 2022
OPEC And The Current State of Oil Fundamentals

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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June, 12 2022