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Last Updated: May 11, 2017
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Last week in world oil:


  • With Saudi Arabia and Russia seemingly in agreement that the OPEC and non-OPEC supply cuts must be extended into 2018 to support crude prices, oil has traded upwards over the past week. Levels, however, are still weak, as Libyan production returns to the market, with Brent trading just below US$50/b and WTI at US$46/b.

Upstream & Midstream

  • Suncor’s Syncrude oil sand project in Canada has restarted crude shipments from its Mildred Lake upgrader. Production had been halted as a result of a fire in mid-March, leaving Syncrude orders empty over April. Output at Mildred Lake – which upgrades mined oil sands bitumen into refinery-ready synthetic crude – will stay at 140 kb/d as maintenance is completed, ramping up to full capacity of 350 kb/d only in June.
  • American oil rigs numbered above 700 for the first time since April 2015, as the country gained another six oil and gas rigs to hit 877 in total.


  • Petrobras’ drive to reduce debt through a vast asset sale has been expanded to include its refineries. Thus far, the Petrobras divestiture program has been confined to oil fields, pipeline and peripheral downstream interests, but CEO Pedro Parente has now expanded the circle to include refineries as part of 40 assets to be offered through 2018 that the company hopes will fetch some US$42 billion.
  • Total has begun shutting down its 117 kb/d Feyzin refinery in France as workers downed tools on a strike over bonuses and compensation. With no clear end to the end, Total has opted to shut the refining and petrochemical platform completely, supplying clients from other sites.
  • The US will continue to probe the alleged dumping and unfair subsidies of biofuels from Argentina and Indonesia, potentially paving the way for punitive import duties, bringing a possible benefit to US producers.

Natural Gas and LNG

  • BP and Kosmos Energy announced a major gas discovery offshore Senegal, adding to a list of exploration successes made by BP, Total and smaller players in recent years. The Yakaar-1 find, while not yet quantified, has players sufficiently excited that it could support another LNG export project using Senegalese and Mauritanian natural gas.
  • Russia has suspended LPG exports to Ukraine for the second time in a month, citing that Russia’s regulator had not given clearance for the shipments. Ukraine is typically the second-largest market for Russian propane and butane, with volumes of 800,000 tons last year, but Russia has turned off the tracks (LPG is exported by train), saying it fears the fuel would be used for military purposes. It highlights the fragile relationship Russia has with its former vassal state since the annexation of the Crimean peninsula in 2014, yet still commercially dependent on Ukraine to absorb Russian exports and allow Russian gas through to Europe.
  • As it announced strong earnings results, Total has sanctioned its first project since 2014. FID was made on the US$500 million Aguada Pichana Este in Argentina’s Vaca Muerta, increasing its stake from 27% to 41% as well. It is the first of 10 major FIDs Total expects to make this year.

Last week in Asian oil

Upstream & Midstream

  • PetroVietnam is attempting to restart its joint venture with Venezuela’s PDVSA for the extra-heavy PetroMacareo project. Muscled out of more conventional projects by other state players, PetroVietnam’s first major upstream asset was meant to be the start of the state firm’s upstream ambitions; instead, plummeting oil prices and severe economic conditions in Venezuela halted the costly project. Although it initially considered selling its 40% stake in the project, it has instead retained its shares. And now, with oil prices moving up and Vietnam’s second refinery impending, PetroVietnam is revisiting the project, which could eventually produce 200 kb/d of crude at peak production.
  • Indonesia is pressing forward with a lawsuit against Thailand’s PTT and PTTEP for US$2 billion over environmental damage from the Timor Sea oil spill in 2009. PTTEP Australasia’s Montara wellhead caught fire then, leaking crude oil across Western Australian and (Indonesia alleges) the East Nusa Tenggara province. Indonesia claims that the spill damaged mangroves, corals and seagrass fields in its regions exposed to the currents of the Timor Sea, with PTTEP refutes the allegations, stating that ‘no oil from Montara reached Indonesia.’


  • Iran declared that it was now self-sufficient in petrol supplies, as President Hassan Rouhani opened the Bandar Abbas refinery. Years of sanctions had left Iran floundering in terms of fuel production, but as the country comes in from the cold, it is now in a position not only achieve fuel self-sufficiency but also resume product exports, particularly with energy-hungry India next door.
  • Iraq has opened bids for a 300 kb/d refinery in Fao, near the country’s southern city of Basra. The refinery will be export-focused, aiming to boost Iraq’s exports, which have been curtailed since the Islamic State militants overran and damaged the country’s larger oil processing plant in Baiji, north of Baghdad, in 2014. Iraq is offering either build-own-operate or build-operate-transfer options for the refinery, with bidding closing by August 1.

Natural Gas & LNG

  • Reliance is India’s first major coal-bed methane gas producer and, curiously, now its own customer. Produced at the coal seams of the Sohagpur block in Madhya Pradesh, Reliance outbidded other contenders by agreeing to pay US$4.23/mmBtu for the gas. Earmarked for its petrochemical plants in Maharashtra and Gujarat, which are currently dependent largely on imported gas, Reliance outbid fertiliser maker Deepak Fertilisers & Petrochemicals Corp and state utility GAIL.


  • PetroVietnam’s former chairman Dinh La Thang has been sacked from the country’s Politburo, the body that oversees all major political and policy decisions, over violations during his 2009-2011 tenure at the state oil player. Over 90% of the Central Committees members voted to remove him, a sign that the country’s top brass was taking allegations of corruption and leadership violations seriously.

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September, 16 2021
The New Wave of Renewable Fuels

In 2021, the makeup of renewables has also changed drastically. Technologies such as solar and wind are no longer novel, as is the idea of blending vegetable oils into road fuels or switching to electric-based vehicles. Such ideas are now entrenched and are not considered enough to shift the world into a carbon neutral future. The new wave of renewables focus on converting by-products from other carbon-intensive industries into usable fuels. Research into such technologies has been pioneered in universities and start-ups over the past two decades, but the impetus of global climate goals is now seeing an incredible amount of money being poured into them as oil & gas giants seek to rebalance their portfolios away from pure hydrocarbons with a goal of balancing their total carbon emissions in aggregate to zero.

Traditionally, the European players have led this drive. Which is unsurprising, since the EU has been the most driven in this acceleration. But even the US giants are following suit. In the past year, Chevron has poured an incredible amount of cash and effort in pioneering renewables. Its motives might be less than altruistic, shareholders across America have been particularly vocal about driving this transformation but the net results will be positive for all.

Chevron’s recent efforts have focused on biomethane, through a partnership with global waste solutions company Brightmark. The joint venture Brightmark RNG Holdings operations focused on convert cow manure to renewable natural gas, which are then converted into fuel for long-haul trucks, the very kind that criss-cross the vast highways of the US delivering goods from coast to coast. Launched in October 2020, the joint venture was extended and expanded in August, now encompassing 38 biomethane plants in seven US states, with first production set to begin later in 2021. The targeting of livestock waste is particularly crucial: methane emissions from farms is the second-largest contributor to climate change emissions globally. The technology to capture methane from manure (as well as landfills and other waste sites) has existed for years, but has only recently been commercialised to convert methane emissions from decomposition to useful products.

This is an arena that another supermajor – BP – has also made a recent significant investment in. BP signed a 15-year agreement with CleanBay Renewables to purchase the latter’s renewable natural gas (RNG) to be mixed and sold into select US state markets. Beginning with California, which has one of the strictest fuel standards in the US and provides incentives under the Low Carbon Fuel Standard to reduce carbon intensity – CleanBay’s RNG is derived not from cows, but from poultry. Chicken manure, feathers and bedding are all converted into RNG using anaerobic digesters, providing a carbon intensity that is said to be 95% less than the lifecycle greenhouse gas emissions of pure fossil fuels and non-conversion of poultry waste matter. BP also has an agreement with Gevo Inc in Iowa to purchase RNG produced from cow manure, also for sale in California.

But road fuels aren’t the only avenue for large-scale embracing of renewables. It could take to the air, literally. After all, the global commercial airline fleet currently stands at over 25,000 aircraft and is expected to grow to over 35,000 by 2030. All those planes will burn a lot of fuel. With the airline industry embracing the idea of AAF (or Alternative Aviation Fuels), developments into renewable jet fuels have been striking, from traditional bio-sources such as palm or soybean oil to advanced organic matter conversion from agricultural waste and manure. Chevron, again, has signed a landmark deal to advance the commercialisation. Together with Delta Airlines and Google, Chevron will be producing a batch of sustainable aviation fuel at its El Segundo refinery in California. Delta will then use the fuel, with Google providing a cloud-based framework to analyse the data. That data will then allow for a transparent analysis into carbon emissions from the use of sustainable aviation fuel, as benchmark for others to follow. The analysis should be able to confirm whether or not the International Air Transport Association (IATA)’s estimates that renewable jet fuel can reduce lifecycle carbon intensity by up to 80%. And to strengthen the measure, Delta has pledged to replace 10% of its jet fuel with sustainable aviation fuel by 2030.

In a parallel, but no less pioneering lane, France’s TotalEnergies has announced that it is developing a 100% renewable fuel for use in motorsports, using bioethanol sourced from residues produced by the French wine industry (among others) at its Feyzin refinery in Lyon. This, it believes, will reduce the racing sports’ carbon emissions by an immediate 65%. The fuel, named Excellium Racing 100, is set to debut at the next season of the FIA World Endurance Championship, which includes the iconic 24 Hours of Le Mans 2022 race.

But Chevron isn’t done yet. It is also falling back on the long-standing use of vegetable oils blended into US transport fuels by signing a wide-ranging agreement with commodity giant Bunge. Called a ‘farmer-to-fuelling station’ solution, Bunge’s soybean processing facilities in Louisiana and Illinois will be the source of meal and oil that will be converted by Chevron into diesel and jet fuel. With an investment of US$600 million, Chevron will assist Bunge in doubling the combined capacity of both plants by 2024, in line with anticipated increases in the US biofuels blending mandates.

Even ExxonMobil, one of the most reticent of the supermajors to embrace renewables wholesale, is getting in on the action. Its Imperial Oil subsidiary in Canada has announced plans to commercialise renewable diesel at a new facility near Edmonton using plant-based feedstock and hydrogen. The venture does only target the Canadian market – where political will to drive renewable adoption is far higher than in the US – but similar moves have already been adopted by other refiners for the US market, including major investments by Phillips 66 and Valero.

Ultimately, these recent moves are driven out of necessity. This is the way the industry is moving and anyone stubborn enough to ignore it will be left behind. Combined with other major investments driven by European supermajors over the past five years, this wider and wider adoption of renewable can only be better for the planet and, eventually, individual bottom lines. The renewables ball is rolling fast and is only gaining momentum.

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Market Outlook:

  • Crude price trading range: Brent – US$71-73/b, WTI – US$68-70/b
  • Global crude benchmarks have stayed steady, even as OPEC+ sticks to its plans to ease supply quotas against the uncertainty of rising Covid-19 cases worldwide
  • However, the success of vaccination drives has kindled hope that the effect of lockdowns – if any – will be mild, with pockets of demand resurgence in Europe; in China, where there has been a zero-tolerance drive to stamp out Covid outbreaks, fuel consumption is strengthening again, possibly tightening fuel balances in Q4
  • Meanwhile, much of the US Gulf of Mexico crude production remains hampered by the effects of Hurricane Ida, providing a counter-balance on the supply side

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