NrgEdge Editor

Sharing content and articles for users
Last Updated: June 14, 2017
1 view
Business Trends
image

Last week in the world oil:

Prices

  • Oil prices remain weak, but edged up at the start of the week on news that US inventories had declined and that Saudi Arabia would limit crude sales to Asia in July and slash shipments to the US. However, simmering geopolitical tensions in the Arabian Gulf and increased US drilling activity is likely to keep a lid on prices below US$50/b for a while.

Upstream & Midstream

  • Shell has lifted its declared force majeure on Forcados crude exports, bringing all of Nigeria’s oil export facilities online for the first time in 16 months, after local militants disrupted operations through a sustained series of sabotage. With Nigeria exempt from the OPEC supply cuts, it can now raise its production back to expected levels of 1.8 mmbpd.
  • After previous talks with the South Sudan government collapsed, France’s Total says that the country has reapproached the French major to resume talks on developing the B1 and B2 oil blocks. Tullow Oil is also involved in the negotiations as South Sudan seeks foreign investment to unlock its hydrocarbon potential. B1 and B2 are part of the three blocks that make up the former Block B, the largest untapped oil deposit in South Sudan and central to the government’s plans to raise production from 130 kb/d to 200 kb/d by end-2017 and 300 kb/d by end-2018.
  • Commercial production from Eni’s offshore Sankofa field in Ghana will start in July, three months ahead of schedule with production of 45 kb/d. This is Phase 1 of the US$7.9 billion Offshore Cape Three Points project, which includes expected 180 mcf/d output at the Gye Nyame gas reserve.
  • Libya’s major Sharara field has reopened and should resume normal production levels of 270 kb/d within the week after a short workers’ strike over medical treatment coverage for employees.
  • Total operational oil rigs in the USA reached 741 last week, adding 8 new units. Along with 3 new gas rigs, that brings the American total to 927.

Downstream

  • Utilisation rates at Venezuela’s 187 kb/d Puerto la Cruz refinery has dropped down to 16%, as the Mesa 30 crude it depends on is redirected to Cuba and Curacao. Mesa 30 is a superlight crude used to dilute heavy Orinoco oil, but also prized by PDVSA’s foreign clients. Cuba, in particular, has taken up to 1.4 mmbpd of Mesa 30 since March, providing valuable foreign currency but exacerbating Venezuela’s refining crisis.

Natural Gas and LNG

  • While the gas world focuses on selling LNG to Asia, France’s Total is also looking at alternatives to grow its gas business by investing directly in gas-consuming industries. It has identified Morocco and South Africa as key countries to invest in gas and power projects, which will support an LNG portfolio that is expected to double to 15 million tons by 2020. Total will be looking to get involved in a US$4.6 billion Moroccan LNG import project and a US$3.9 billion gas-to-power development in South Africa.
  • Greece will be launching a tender this month for the privatisation of the country’s natural gas grid operator DESFA, part of a condition of Greece’s bailout agreement with the EU and IMF. Azerbaijan’s SOCAR originally agreed to buy 66% of DESFAfor €400 million, but the deal later collapsed.

Last week in Asian oil

Upstream

  • Pakistan’s OGDC has struck oil in the Chabaro-1 well in Pakistan’s Khewari block. Test drilling has shown flows of 15 mcf/d and a tiny 20 bpd of condensate. This adds on to the Chhutto-1 well, also in the province of Sindh, with flows of 8.66 mcf/d of gas and 285 bpd of condensate. While small, the finds are also a signal that OGDC’s aggressive exploration is paying off, adding to its production level of 50 kb/d – representing half of Pakistan’s current oil output.

Downstream

  • In an unusual and coordinated move, an alliance of more than 20 of China’s largest independent oil refiners have urged the ‘teapots’ to work closely as a group to adhere to government rules on oil quotas and fuel taxes. Previously pursuing individual agendas, the importance of the teapots in domestic fuels and exports expanded in 2015 when they were first allowed to import crude directly. But with that came extra scrutiny. Accused by Sinopec and Petrochina of evading or under-paying taxes, the move is an attempt to band together and act as a single block to preserve and defend their interests as a whole, since the actions of a single errant member could cause negative consequences for all.
  • Iraq is planning to triple its refining capacity by 2021 to reduce its reliance on refined product imports. Capitalising on its vast crude reserves, Iraq is planning a second refinery in Basra (300kb/d), a 70 kb/d plant in Kirkuk, and a 150 kb/d facility with two Chinese companies, as well as upgrades to existing refineries in Basra and Daura. Assuming all projects are completed as scheduled by 2021, processing capacity in Iraq will rise from 500 kb/d to 1.5 mmb/d.
  • Financing issues have caused Indonesia’s Pertamina to rethink its schedule of upcoming refinery upgrades and its ventures with Rosneft and Saudi Aramco. Unable to juggle so many projects within a short period, the timeline will now be expanded to ensure that cost is not a burden concentrated within 1 or 2 years. The Balikpapan project, which would boost capacity to 360 kb/d from 260 kb/d has been pushed back to 2020 from 2019, with a second stage – aimed at improving fuel quality – delayed to 2021. The Cilacap upgrade project will be pushed to 2023 from 2021, pending Saudi Aramco sign-off, while the grassroots 300 kb/d Tuban refinery with Rosneft is likely to be moved to 2024 from 2021. All this will mean that Indonesia will remain highly dependent on fuel imports for the time being.

Natural Gas & LNG

  • As Australia aims to ease the gas shortage in its populous east coast, the Northern Territory has ok-ed the building of the Jemena A$800 million gas pipeline (owned by the State Grid Corp of China and Singapore Power), which will link the gasfields in northern Australia with consuming markets in Queensland. Meanwhile, further south, the state of Victoria is backing a floating LNG import project with AGL Energy to beef up its local gas supply. This is required since onshore gas drilling has been barred in Victoria, forcing the state to compete with LNG export projects pulling natural gas out of the country’s manufacturing hub.

3
0 0

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

Latest NrgBuzz

China’s Strategic Petroleum Reserves

After the OPEC+ club met on September 1st,  and confirmed that it would be sticking to its plan of increasing its crude supply by 400,000 b/d a month through December, China made a rather unusual announcement. It announced that it was going to release some crude oil from its strategic petroleum reserves, selling it to domestic refiners that were grappling with crude’s heady price rise over 2021. The release of strategic oil reserves isn’t news in itself. What is news is that the usually secretive China did it and did it publicly.

And it did it to send a message to OPEC+: attempts to create artificial scarcity to maintain crude prices will not be tolerated. China has a right to feel that way. Even though great strides have been made to ease the effects of the Covid-19 pandemic worldwide, the virus is still exerting major effects on the global economy. Not least a massive ripple through the health of global supply chains that has seen the price of almost everything – plastics, semiconductors, agricultural commodity, lumber, steel – spike due to supply issues. In some cases, the prices of raw materials are at historic highs. Crude oil is still nowhere near its peak of above US$100/b, but it is high enough to be concerning, especially since it is happening within a major inflationary environment. And for a manufacturing-heavy economy like China, that matters. That matters a lot. So China’s National Food and Strategic Reserves announced that it would be releasing some of the country’s crude stocks to ‘better stabilise domestic market supply and demand, and effectively guarantee the country’s energy security’, a month after the country’s producer price inflation – ie. the cost of manufacturing – hit a 13-year high.

China made good on that promise, releasing 7.38 million barrels from its stockpile to domestic bidders on September 24 with more tranches expected. This was the first ever recorded release from China’s Strategic Petroleum Reserves (SPR), which began back in 2009 in serendipitous response to crude oil prices exceeding the US$100/b mark for the first time in 2008. But curiously, it may not have been the first ever release. So secretive is the SPR that China does not reveal the size of the reserve, although analysts have estimated it at some 300-400 million barrels with total capacity of 500 million barrels using satellite imaging. It has been speculated that batches of crude from the SPR have been released before on the quiet. But this is the first time China has gone public. Compared to the country’s overall oil consumption, 7.38 million barrels is small, almost tiny. And even if additional supplies are released, it will not make a major impact on China’s oil balances. But the message is what is important.

It is a message that China is not alone in sending. US President Joe Biden has already called on OPEC+ to accelerate its supply easing plans, given indications that the crude glut built up over 2020 has been all but erased. It is a notion that would be supported by some OPEC+ members – Russia, Mexico, the UAE – but so far, the discipline advocated by Saudi Arabia has held. The US too has attempted to release of its own crude reserve stocks – the largest in the world with a capacity of 727 million barrels – but this was also in response to the devastating impact of Hurricane Ida. India, China’s closest analogue to size and stage, has been complaining too. As a major oil importer and with a shakier economic situation, India is particularly sensitive to oil price swings. US$70/b is way above what New Delhi is comfortable with. But since India’s appeals to OPEC+ have fallen on deaf ears, it is attempting domestic directives instead. India’s state refiners have been ordered to reduce crude purchases from the Middle East, but with supply tight, there aren’t many other people to buy from. India has also been selling oil from its strategic reserve – officially stated to be for clearing space to lease storage capacity to refiners – although since India is more transparent about these announcements, the announcement isn’t as surprising.

Will it work? At least immediately, no. Crude prices did come under pressure in the wake of China’s announcement, but then recovered with Brent hitting US$75/b. But the fact that China timed the announcement of the September 24 auction to coincide with peak global trading time and with a lot of details (again an unusual move) shows that Beijing is serious about wielding its strategic reserves as weapons. If not to moderate crude prices, then to at least stabilise it. But this is a war of attrition. China may very well have a planned schedule to release more crude reserves over 2021 and 2022 if prices remain high, but its supplies are finite. And they will have to eventually be replenished, possibly at an even higher cost if the attempt to quell crude price inflation fails. Thus far, the details of the SPR release hint that this is a tentative dip in the pool: the volume of 7.38 million barrels was far lower than the 35-70 million barrels predicted by some market participants. And because successful bidders can lift the oil up to December 10, it seems unlikely that a second auction for 2021 is in concrete plans at this point.

But, at the very least, the message has been sent. Beijing has a tool that it can wield if crude prices get out of hand, and it is not afraid to use it. The first step might have been small, and it is a giant leap in what mechanics are available to influence crude prices. And as history has proven, China can be very quick to scale up and very single-minded in its approach. Over to you, OPEC+.

End of Article

Follow us for weekly updates!  

Market Outlook:

  • Crude price trading range: Brent – US$73-76/b, WTI – US$71-74/b
  • Global crude benchmarks retain their strength, with Brent zipping past US$75/b, as supply-side issues and healthy demand continue to reverberate
  • After Hurricane Ida, US upstream players have gradually brought back some 70% of Gulf of Mexico production, easing some supply concerns, but a standoff between Libya’s Ministry of Oil and National Oil Corp could disrupt Libyan output

No alt text provided for this image

Learn more about this training course

September, 23 2021
Chicago Cubs Shirts: Wear Style with Ultimate Comfort!

For most people, embracing style can be really overwhelming. The bodycon dress might look fabulous but what about comfort? This type of dress clasp all the body and sometimes it becomes really hard to take a fine breath! In fact, the satin cloths that look super lustrous and voguish, but only the person who is wearing that knows how uneasiness feels like. Moreover, these types of clothing can not be worn on all occasions. You literally have to pick the right piece of outfit according to a specific occasion keeping the ambiance of the situation in mind. This is simply the reason, why ladies always complain that they have nothing to wear. To save people from this fashion crisis, sport wears emerges to be the ultimate lifesaver and in this connection, the mention must be made of Chicago Cubs Shirts.


This exclusive range of sportswear apparel is now currently flooding the market with exceptionally designed shirts that can be worn by people of all ages, gender and fashion taste. They are affordable and comfortable at the same time. Chicago Cubs Shirts adopt the classic sport design with exceptionally hemmed collar shapes that are sober and fashionable at the same time. The trend of sportswear can never be old and apart from sports lovers, people who worship fashion are now greatly turning their heads towards the contemplation of sporty shirts. Although they have a very simple design, they look highly versatile on everyone. 


Whether you are partying, enjoying social gathering, attending boring lectures, going on a date, traveling or just chilling at your couch with a cozy blanket, Chicago Cubs Shirts can be worn at any time and any situation. The material of the cloth is extremely comfortable and they are breathable. The shirts keep you from over sweating and at the same time, it allows you to look super cool in a sober manner. To know more please visit the websitehttps://www.sportsworldchicago.com/Chicago_Cubs_Shirts/


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.

End of Article

Follow us for weekly updates! 

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

No alt text provided for this image

Learn more about this course

September, 16 2021