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Last week in the world oil:

Prices

  • As it turns out, an extension of the OPEC and non-OPEC supply cuts wasn’t enough, even if it ‘gave clarity until March 2018’ according to French major Total. Traders and investors were expecting deeper cuts to quotas, and when those failed to materialise, sent oil prices down by almost 5% to US$51/b for Brent and US$49/b for WTI.

Upstream & Midstream

  • Norway’s Statoil will start up its Gina Krog oil and gas field in June, after receiving consent from the Norwegian Petroleum Directorate. Originally expected to start up in April, Gina Krog is estimated to hold some 106 million barrels of oil, 11.8 bcm of natural gas and 3.2 million tons of NGLs. Operator Statoil owns 58.7% of the field, while Total’s 15% stake has been sold to Norwegian startup Okea for US$350 million. With new output expected, Norway has declined to enforce a cut in its output, despite being approached by Saudi Arabia to join in the OPEC-led freeze.
  • The worst disruption in Nigeria’s oil-producing Delta are over, with output expected to climb back to 2.2 mmb/d entering the second half of 2017 and Forcados expected back by end June. This would add pressure on global oil prices, as Nigeria is currently exempt from the OPEC supply freeze. This could be further exarcebated by the passing of the country’s Petroleum Industry Governance Bill, part of the Petroleum Industry Bill that will overhaul Nigeria’s upstream sector to boost investment.
  • With the OPEC cuts extended for another nine months, US drillers are sensing opportunity to sell more volumes, adding another seven new sites to bring the total up to 908. Last week, however, added only two new oilrigs, the slowest expansion rate in three months – perhaps a sign that US onshore shale drilling is reaching a ceiling.

Downstream

  • Saudi Aramco has been making major downstream steps recently, strengthening up its portfolio ahead of its planned IPO. Fresh from ending its partnership with Shell over its US refining subsidiary Motiva, Saudi Aramco has announced plans to spend some US$18 billion through 2022, investing in expanding Port Arthur – the largest refinery in America – adding new petrochemical capacity and expanding marketing operations.
  • Uganda and Tanzania have agreed to move ahead with the proposed US$3.55 billion crude pipeline that will bring landlocked Ugandan crude in the country’s west to Tanzania’s port of Tanga by 2020. Fiscal terms, timelines, routing and mechanical details of the pipeline have been agreed, with the 1,445km, 24inch pipeline being the longest electrically-heated crude pipeline in the world when operational.

Natural Gas and LNG

  • Another first for Cheniere, as the Netherlands received its first ever LNG cargo from the US, expanding Sabine Pass’ LNG footprint in Europe. Cheniere is currently the only company exporting large LNG cargoes from the US Gulf, and its increasing volumes sent to Europe proves the case for international viability of US LNG exports; and a boon to European countries keen to reduce their reliance on cunning Russia.

Last week in Asian oil

Upstream

  • Shell has been given the green light by Petronas to sell its 50% stake in the 2011 North Sabah Enhanced Oil Recovery PSC to Malaysian player Hibiscus Petroleum. The clears the way for the stake to exchange hands for US$25 million, with Petronas Carigali waiving it pre-emption rights. The PSC includes the Labuan Crude Oil Terminal and the offshore fields of St. Joseph, South Furious, SF30 and Barton, lumped together to eke additional production out of the aging fields. Petronas has 50% of the PSC, with Shell holding the remainder through two subsidiaries – split evenly between Sabah Shell Petroleum and Shell Sabah Selatan.

Downstream

  • China has signalled that private companies will eventually be allowed to invest in Chinese oil and gas storage sector, part of a larger plan to streamline the country’s complex and lumbering state players and stimulate competition. Foreign participation in upstream is also on the cards, filtering down to pipeline and other midstream distribution.
  • Vietnam’s sole operational refinery in Dung Quat will sell off 5-6% of its shares in late 2017 via an IPO aimed that reducing government ownership in state-run enterprises. An additional 36% is also earmarked to be sold to ‘strategic partners’ – which reportedly include Gazprom, PTT and Kuwait Petroleum – after flotation, as the refinery struggles to maintain consistent operations.

Natural Gas & LNG

  • The Philippine National Oil Company (PNOC) has established talks with Shell to build a grassroots LNG import plant in Batangas. It is the latest in a series of planned LNG import projects in the area, including one by Shell on its own, with Batangas being the main transmission point to Metro Manila. PNOC has been trying to establish an LNG terminal for almost a decade to cope with increasing power demands, but cannot handle the project alone, hence the need to seek out experienced partners.
  • The state government of Sarawak is negotiating with Petronas to acquire a 10% stake in the LNG Train 9 at the Petronas LNG complex in Bintulu. With a capacity of 3.6 million tons of LNG, Train 9 is the latest liquefaction facility in Bintulu, which began operations in January and raised total capacity at the site to 30 million tons per year. Petronas is the operator and main shareholder in Train 9, with Japan’s JX Nippon Oil & Energy also a significant stakeholder. The state government has been pushing to derive more direct revenues from Sarawak’s vast natural gas industry, and is also asking for a larger equity share in the operational Malaysian Liquefied Natural Gas (MLNG) Dua plant.

Corporate

  • China’s Sinochem and ChemChina are on the verge of merging. The deal would create the world’s largest industrial chemicals firm, dwarfing BASF, in the world’s largest chemicals market. Sinochem chief Ning Gaoning is earmarked to be the head of the new firm, which Beijing sees as a blueprint for streamlining its vast and complex state entreprises holdings, creating international champions in the process.

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Forecasting Bangladesh Tyre Market | Zulker Naeen

Tyre market in Bangladesh is forecasted to grow at over 9% until 2020 on the back of growth in automobile sales, advancements in public infrastructure, and development-seeking government policies.

The government has emphasized on the road infrastructure of the country, which has been instrumental in driving vehicle sales in the country.

The tyre market reached Tk 4,750 crore last year, up from about Tk 4,000 crore in 2017, according to market insiders.

The commercial vehicle tyre segment dominates this industry with around 80% of the market share. At least 1.5 lakh pieces of tyres in the segment were sold in 2018.

In the commercial vehicle tyre segment, the MRF's market share is 30%. Apollo controls 5% of the segment, Birla 10%, CEAT 3%, and Hankook 1%. The rest 51% is controlled by non-branded Chinese tyres.

However, Bangladesh mostly lacks in tyre manufacturing setups, which leads to tyre imports from other countries as the only feasible option to meet the demand. The company largely imports tyre from China, India, Indonesia, Thailand and Japan.

Automobile and tyre sales in Bangladesh are expected to grow with the rising in purchasing power of people as well as growing investments and joint ventures of foreign market players. The country might become the exporting destination for global tyre manufacturers.

Several global tyre giants have also expressed interest in making significant investments by setting up their manufacturing units in the country.

This reflects an opportunity for local companies to set up an indigenous manufacturing base in Bangladesh and also enables foreign players to set up their localized production facilities to capture a significant market.

It can be said that, the rise in automobile sales, improvement in public infrastructure, and growth in purchasing power to drive the tyre market over the next five years.

January, 18 2019
Your Weekly Update: 14 - 18 January 2019

Market Watch

Headline crude prices for the week beginning 14 January 2019 – Brent: US$61/b; WTI: US$51/b

  • After a rally, crude oil prices took a breather at the start of this week, as the market moved from a bullish mood to a cautious one as slowing Chinese trade data spooked the market
  • The US government shutdown – now the longest ever in history – continues with no end in sight, with Republicans and President Donald Trump at a stalemate with energised Democrats
  • That ended a week-long rally that allowed crude oil to bounce back from sub-US$50/b levels in December over OPEC+’s implementation of a new deal to shrink supplies and Saudi Arabia’s promise to ‘do more if needed’
  • Even Russia, which showed some reluctance in implementing a speedy cut, has made strides in reducing output, releasing data that showed that production fell by 30,000 b/d in December and is on track for a decrease of 50,000 b/d in January relative to October levels
  • However, the OPEC+ group is now reportedly struggling to set a date for their next meeting, where the supply deal will be reviewed; the review is set for April, ahead of OPEC’s usual Vienna meeting in June/July, but an April review is necessary to assess the expiration of American waivers on Iranian crude
  • Some downside to price trends is that the waivers on Iranian crude exports have nullified the impact of American sanctions; both Turkey and India have recently resumed imports of Iranian crude after a brief hiatus, with India electing to pay for all its crude in rupees
  • Although WTI prices have improved, American drillers are still reticent to add sites, wary of changing market conditions; Baker Hughes indicates that the active American drill count was flat last week, with the loss of 4 oil rigs offset by a gain of 4 gas ones
  • Crude price outlook: Upward momentum should continue with crude price this week, but at a more gradual pace, as fears of a slowing global economy weigh on the market. Brent should stay in the US$61-63/b range and WTI in the US$52-54/b range


Headlines of the week

Upstream

  • BP is proceeding with a major US$1.3 billion expansion of the Atlantis Phase 3 in the Gulf of Mexico, aimed at adding 38,000 b/d of additional output
  • Venezuela has announced plans to remap its Caribbean oil and gas prospects, a move that potentially puts it on collision course with ExxonMobil over the country’s long-disputed borders with the now oil-rich Guyana
  • New seismic studies at BP have identified a billion more barrels of oil in place at the deepwater Thunder Horse platform in the Gulf of Mexico
  • Saudi Arabia has published an updated figure of its oil reserves – its first in 40 years – pegging total volumes at 268.5 billion barrels
  • Norway has cut its crude production forecast, predicting the output will be 1.42 mmb/d in 2019, the lowest level since 1988
  • BP is reportedly looking to sell its 28% stake in the North Sea Shearwater assets to offset its recent US$10.6 billion acquisition of US shale fields
  • The Unity fields in South Sudan have resumed production, after being halted for five years over a civil war, with initial production targeted at 20,000 b/d
  • Eni and Thailand’s PTTEP have secured exploration rights to an oil and gas concession in Abu Dhabi, with Adnoc participating at 60% if oil is struck
  • TransCanada Corp – ahead of name change to TC Energy – is planning to start construction on the controversial Keystone XL oil pipeline in June, even in the face of continued social and legal setbacks
  • Spirit Energy’s Oda field in the Norwegian North Sea has received permission from the Norwegian Petroleum Directorate to start up
  • Aker Energy has completed successful appraisal of the offshore Pecan field in Ghana, estimating some 450-550 mmboe of resources in place
  • Shell and BP have submitted plans to begin exploratory drilling in Brazil’s Pau Brasil and Saturno pre-salt areas in early 2020

Downstream

  • Saudi Arabia has reiterated plans to build a US$10 billion oil refinery in Pakistan’s deepwater port of Gwadar, part of the larger China-Pakistan Economic Corridor plan that is part of the Belt and Road initiative
  • Shell Chemicals has started up its fourth alpha olefins unit at in Geismar, Louisiana, adding 425,000 tpa of capacity to a new total of 1.3 mtpa
  • After being idled over the paralysis between PDVSA and ConocoPhillips, the 335,000 b/d Isla refinery in Curacao has restarted, with operations likely to shift from PDVSA to Saudi Aramco’s Motiva US refining subsidiary

Natural Gas/LNG

  • After seemingly receiving official go-ahead from all levels of government and even indigenous groups, Shell’s US$31 billion Kitimat LNG project in Canada has now been blockaded by a group of protesting First Nation holdouts
  • Completion of major LNG projects in Australia’s west coast have allowed its LNG exports to increase by 23% in 2018, with greater growth expected in 2019
  • The NordStream 2, long championed by German Chancellor Angela Merkel, now faces new opposition in Germany over Russian global political interference – which could result in the controversial pipeline being delayed or cancelled
  • Shell has completed its acquisition of a 26% stake in the Hazira LNG and port venture in India from Total, bringing its equity interest to full ownership
  • BP has announced plans to drill six new exploration wells in Azerbaijan by 2020, hoping to strike a new natural gas play to rival its giant Shah Deniz field
January, 18 2019
Latest issue of GEO ExPro magazine covers geoscience and oil and gas activity focusing on Frontier Exploration and the Gulf of Mexico

GEO ExPro Vol. 15, No. 6 was published on 10th December 2018 bringing light to the latest science and technology activity in the global geoscience community within the oil, gas and energy sector.

This issue focusses on frontier exploration, downhole acquisition tools and how we can collaboratively increase the efficiency of the exploration and production of oil, gas and energy resources. With a geographical focus on the Gulf of Mexico, this issue provides a lesson on the carbonate geology of the Florida Keys and details coverage of newly improved tectonic restorations of the US and Mexican conjugate margins which have enabled enhanced mega-regional hydrocarbon play and reservoir fairway maps of the region.

You can download the PDF of GEO ExPro magazine for FREE and sign up to GEO ExPro’s weekly updates and online exclusives to receive the latest articles direct to your inbox.

To access the latest issue, please visit: https://www.geoexpro.com/magazine/vol-15-no-6


January, 17 2019