ADIPEC Experiencing Record Bookings from Russia and Central Asia
CEO-Level Delegations from Russia’s Top Oil and Gas Companies, National Pavilion More Than Five Times the Size of 2016
Growing Industry Seeks Greater Access to International Markets
Abu Dhabi, UAE – 17 October 2017 – Leading companies from the largest oil producing region outside OPEC, the Commonwealth of Independent States (CIS), will be increasing their presence at this year’s Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), targeting the event as a hub for global deal-makers.
Two of Russia’s biggest oil and gas companies – Lukoil and Gazprom – have each confirmed substantial exhibition areas, with CEOs and other top-level decision makers leading their company delegations and taking part in strategic conference panels. They will be the biggest names among more than 30 Russian companies attending, many of them hosted at a Russian pavilion covering almost 600 square metres of exhibition floorspace – almost six times the size of last year’s 105 square metre pavilion.
They will be joined by resource owners from other CIS members, including Kazakhstan, Uzbekistan and Azerbaijan, as well as by oilfield services companies from the region. Based in countries that were once part of the Soviet Union, they will be using ADIPEC as a gateway to international expansion.
“Russia is among the top 10 countries of the world in terms of oil reserves, and this has supported the growth of a highly sophisticated petroleum industry, from exploration and production, through to oilfield technology and services, transit, refining, distribution, and sales,” said Lukoil President Vagit Alekperov. “Russian companies are now actively expanding their international operations, and ADIPEC offers them access to global partnerships, including for new resources, new markets, and new investment.”
Alongside the big oil and gas producers, other well-known industry names attending ADIPEC include SCADTech, Revalve (PKTBA in Russia), Intra, Transneft Diascan, OZNA, GazNefteMash, and PTPA. The Skolkovo innovation, science and technology cluster, based just outside Moscow will also be an exhibitor.
Stretching from the edge of Europe, into Central Asia, and across Siberia into the Russian Far East, oil and gas projects in the CIS area have already attracted substantial investment from multinationals. Alongside the Western oil majors and supermajors, the region features a strong presence from other parts of Asia. Companies working in the region include Petronas from Malaysia, China National Petroleum Corporation (CNPC), Korea National Oil Corporation, and ITOCHU and INPEX from Japan.
As the industry moves beyond resource extraction, local NOCs and private oil companies are using their assets to move deeper into midstream and downstream sectors, as well as expanding beyond their borders.
Russia’s three largest operators lead this transformation. Rosneft, Lukoil and Gazprom now hold exploration, production and processing operations across the CIS and beyond, from Latin America to the North Sea, and from Africa to India and Southeast Asia. They have made significant investments in the MENA region, including in Iraq, Egypt and Libya, and are negotiating for projects in other countries. Lukoil has expressed interest in Abu Dhabi’s offshore leases when these are extended from 2018.
“ADIPEC is an essential destination for global oil and gas companies, so it makes sense that the big companies from the CIS come here,” said Ali Khalifa Al Shamsi, Al Yasat CEO and ADIPEC 2017 Chairman.
“We are located at the heart of the world’s most important oil and gas suppliers, so the biggest international customers, service companies, and investors, all come to ADIPEC, and they all bring their most senior people. We have a very strong presence from Asian markets, from India to China. ADIPEC is an opportunity to reach all of these of these markets and find new partners around the globe. Most importantly, the people who network at ADIPEC are the decision makers and they are here to do business.”
For companies from the CIS, partnerships to be found in Abu Dhabi can help drive the next evolution of their global business. While mainly driven by economic factors, diplomatic and political concerns are also motivating Russian businesses to look away from the United States or European Union. Cooperation with Asian partners, and with China in particular, is the most immediate priority.
China’s ambitious ‘New Silk Road’ project will improve trade links through Central Asia, with massive investment in new East-West land transport corridors passing through China, Mongolia, Russia, Kazakhstan, Uzbekistan, Turkmenistan, and Azerbaijan, as well as Iran, Pakistan, and Turkey. The plan aims to revive the importance of historic overland links between East Asia and Europe, while also improving cross-border trade and investment between countries along the route.
For petroleum industries, new pipelines currently under construction between Russia and China are projected to add an extra 15 million tonnes of oil and 38 billion cubic metres of natural gas into the Chinese market per year. They are being built by ADIPEC-sponsor, the China National Petroleum Corporation (CNPC). CNPC has oil and gas operations in all the main CIS producer nations, across the Middle East, and both North and Sub-Saharan Africa among its global operations, involved in production, oilfield services, and construction.
“Business and trade links across the region are extremely dynamic, and oil and gas businesses are highly interconnected,” said Christopher Hudson, President – Global Energy at dmg events. “When you look at recent deals, CNPC has signed a group of agreements with both Rosneft and Gazprom this year, covering upstream, midstream, and downstream operations. That’s why ADIPEC is so important. It provides a time and place each year where the giants of oil and gas come together, whether they are the established supermajors of the West or the emerging powers of the East.”
To be held under the theme ‘Forging Ties, Driving Growth’, ADIPEC 2017 is expected to host more than 10,000 delegates, 2,200 exhibiting companies, 900 speakers, and in excess 100,000 visitors from 135 countries.
ADIPEC will be held at Abu Dhabi National Exhibition Centre from 13 to 16 November 2017.
- ENDS –
Held under the patronage of the President of the United Arab Emirates, His Highness Sheikh Khalifa Bin Zayed Al Nahyan, and organised by the Global Energy division of dmg events, ADIPEC is the global meeting point for oil and gas professionals. Standing as one of the world’s top energy events, and the largest in the Middle East and North Africa, ADIPEC is a knowledge-sharing platform that enables industry experts to exchange ideas and information that shape the future of the energy sector. The 20th edition of ADIPEC takes place from 13-16 November at the Abu Dhabi National Exhibition Centre (ADNEC). ADIPEC 2017 is supported by the UAE Ministry of Energy, Masdar, the Abu Dhabi National Oil Company (ADNOC), the Abu Dhabi Chamber, and the Abu Dhabi Tourism & Culture Authority (TCA Abu Dhabi). dmg Global Energy is committed to helping the growing international energy community bridge gaps by bringing oil and gas professionals face to face with new technologies and business opportunities.
For media enquiries, please contact:
Senior Marketing Manager, DMG Events Global Energy
Twofour54, Park Rotana Offices, 6th Floor
PO Box 769256, Abu Dhabi, UAE
T: +971 (0)2 6970 515
T: +971 4 275 4100
Mark Robinson (English): +971 (0)55 127 9764
Feras Hamzah (Arabic): +971 (0)50 798 4784
For more info: http://www.adipec.com/
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Source: U.S. Energy Information Administration, Monthly Refinery Report
The API gravity of crude oil input to U.S. refineries has generally increased, or gotten lighter, since 2011 because of changes in domestic production and imports. Regionally, refinery crude slates—or the mix of crude oil grades that a refinery is processing—have become lighter in the East Coast, Gulf Coast, and West Coast regions, and they have become slightly heavier in the Midwest and Rocky Mountain regions.
API gravity is measured as the inverse of the density of a petroleum liquid relative to water. The higher the API gravity, the lower the density of the petroleum liquid, so light oils have high API gravities. Crude oil with an API gravity greater than 38 degrees is generally considered light crude oil; crude oil with an API gravity of 22 degrees or below is considered heavy crude oil.
The crude slate processed in refineries situated along the Gulf Coast—the region with the most refining capacity in the United States—has had the largest increase in API gravity, increasing from an average of 30.0 degrees in 2011 to an average of 32.6 degrees in 2018. The West Coast had the heaviest crude slate in 2018 at 28.2 degrees, and the East Coast had the lightest of the three regions at 34.8 degrees.
Production of increasingly lighter crude oil in the United States has contributed to the overall lightening of the crude oil slate for U.S. refiners. The fastest-growing category of domestic production has been crude oil with an API gravity greater than 40 degrees, according to data in the U.S. Energy Information Administration’s (EIA) Monthly Crude Oil and Natural Gas Production Report.
Since 2015, when EIA began collecting crude oil production data by API gravity, light crude oil production in the Lower 48 states has grown from an annual average of 4.6 million barrels per day (b/d) to 6.4 million b/d in the first seven months of 2019.
Source: U.S. Energy Information Administration, Monthly Crude Oil and Natural Gas Production Report
When setting crude oil slates, refiners consider logistical constraints and the cost of transportation, as well as their unique refinery configuration. For example, nearly all (more than 99% in 2018) crude oil imports to the Midwest and the Rocky Mountain regions come from Canada because of geographic proximity and existing pipeline and rail infrastructure between these regions.
Crude oil imports from Canada, which consist of mostly heavy crude oil, have increased by 67% since 2011 because of increased Canadian production. Crude oil imports from Canada have accounted for a greater share of refinery inputs in the Midwest and Rocky Mountain regions, leading to heavier refinery crude slates in these regions.
By comparison, crude oil production in Texas tends to be lighter: Texas accounted for half of crude oil production above 40 degrees API in the United States in 2018. The share of domestic crude oil in the Gulf Coast refinery crude oil slate increased from 36% in 2011 to 70% in 2018. As a result, the change in the average API gravity of crude oil processed in refineries in the Gulf Coast region was the largest increase among all regions in the United States during that period.
East Coast refineries have three ways to receive crude oil shipments, depending on which are more economical: by rail from the Midwest, by coastwise-compliant (Jones Act) tankers from the Gulf Coast, or by importing. From 2011 to 2018, the share of imported crude oil in the East Coast region decreased from 95% to 81% as the share of domestic crude oil inputs increased. Conversely, the share of imported crude oil at West Coast refineries increased from 46% in 2011 to 51% in 2018.
Headline crude prices for the week beginning 7 October 2019 – Brent: US$58/b; WTI: US$52/b
Headlines of the week
In the October 2019 Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts lower crude oil prices in the fourth quarter of 2019 and in 2020 despite tighter global balances. The tighter balances are largely the result of unprecedented short-lived loss of global supply following the September 14 attacks on crude oil production and processing infrastructure in Saudi Arabia. The production declines contribute to overall stock draws in the second half of 2019 with a relatively large stock draw in the third quarter. In the fourth quarter, however, EIA forecasts global supply growth will outpace global demand growth, resulting in an inventory build, offsetting some of the third quarter draws (Figure 1). EIA lowered its crude oil price forecast for the fourth quarter of 2019 by $1 per barrel (b) to $59/b, reflecting current price trends, and lowered its crude oil price forecast for 2020 by $2/b to average $60/b because of expected supply growth.
In the October STEO, EIA forecasts total global petroleum stocks in the second half of 2019 will decrease by an average of 290,000 barrels per day (b/d), compared with the September STEO forecast stock build of 250,000 b/d for the same period. EIA forecasts total world crude oil and other liquids production for the second half of 2019 to average 101.3 million b/d, down by 550,000 b/d from the September STEO. Most of the production decline is the result of lower output from Saudi Arabia, reducing the collective output of the Organization of the Petroleum Exporting Countries (OPEC) to 34.8 million b/d for the second half of 2019.
In the October STEO, EIA assumed the Abqaiq facility and Khurais oil field would produce at their pre-attack levels by the end of October. Compared with the September STEO, EIA revised OPEC spare capacity, most of which is located in Saudi Arabia, lower by an average of 200,000 b/d in the second half of 2019. Saudi Arabia's total capacity (including spare capacity) declined following the Abqaiq attack, and EIA expects Saudi Arabia will use some of its remaining spare capacity to backfill inventories and lost production through the end of 2019. Beginning in January 2020, EIA forecasts that OPEC spare capacity will return above 2.0 million b/d.
Crude oil prices increased sharply following the attacks; Brent front-month futures prices rose by nearly 15% on Monday, September 16, the first day of post-attack trading. This increase was the largest one-day percentage increase on record for Brent front-month futures prices. The increase was larger in the front months of the futures strip than in the later months, indicating the market expected the outage to be relatively short lived, and prices fell quickly after the attack (Figure 2). Saudi Arabia continued to export crude oil by drawing from inventories, increasing production in other fields, and reducing domestic refinery inputs. Abqaiq's relatively quick return to operations likely lessened the extent and duration of the price increases. Brent front-month futures prices fell to lower than pre-attack levels on October 1, settling at $59/b for the December contract and have fallen slightly since then.
The relatively quick return to pre-attack price levels likely reflects demand-side concerns and increased down-side price risk. Despite tighter forecast global petroleum markets in the second half of 2019, EIA expects that the Brent crude oil price will average $60.63/b in the second half of 2019, nearly unchanged from the $60.68/b forecast in the September STEO. EIA forecasts that global petroleum inventories will increase by nearly 550,000 b/d in the first half of 2020, which is expected to put downward pressure on crude oil prices. EIA forecasts the price of Brent crude oil to average $57.34/b during the first half of 2020. However, EIA expects the price of Brent crude oil to increase to $62.48/b in the second half of 2020 as global petroleum stock builds slow and petroleum balances are relatively tighter than during the first half of the year.
The price forecast is highly uncertain and supply or demand factors may emerge that could move prices higher or lower than EIA's current STEO forecast. Driven by revisions to global economic outlook, EIA has revised its 2019 liquid fuels demand growth outlook lower in the STEO for the last nine consecutive months and 2020 consumption has been revised down eight of the last nine months. EIA's price forecast also accounts for a higher level of petroleum supply risk in the aftermath of the attacks in Saudi Arabia.
U.S. average regular gasoline prices increase slightly, diesel prices fall
The U.S. average regular gasoline retail price rose less than 1 cent from the previous week to $2.65 per gallon on October 7, 26 cents lower than the same time last year. The West Coast price rose by nearly 10 cents to $3.64 per gallon, and gasoline prices in California continued to rise, increasing by 14 cents to $4.09 per gallon, 55% higher than the national average and 39 cents higher than the same time last year. The Midwest price increased by more than 1 cent to $2.50 per gallon, and the Rocky Mountain price increased by less than 1 cent, remaining at $2.71 per gallon. The Gulf Coast price fell by more than 4 cents to $2.28 per gallon, and the East Coast price fell by 2 cents to $2.49 per gallon.
The U.S. average diesel fuel price fell nearly 2 cents to $3.05 per gallon on October 7, 34 cents lower than a year ago. The East Coast and Gulf Coast prices each fell by more than 2 cents to $3.04 per gallon and $2.80 per gallon, respectively, the Midwest price fell by 2 cents $2.97 per gallon, the Rocky Mountain price decreased 1 cent to $3.02 per gallon, and the West Coast price decreased by less than 1 cent to $3.64 per gallon.
Propane/propylene inventories increase
U.S. propane/propylene stocks increased by 0.1 million barrels last week to 100.8 million barrels as of October 4, 2019, 11.9 million barrels (13.4%) greater than the five-year (2014-18) average inventory levels for this same time of year. Gulf Coast inventories increased by 1.0 million barrels, and Midwest inventories rose slightly, remaining virtually unchanged. East Coast inventories decreased by 0.9 million barrels, and Rocky Mountain/West Coast fell slightly, remaining virtually unchanged. Propylene non-fuel-use inventories represented 4.4% of total propane/propylene inventories.
Residential Heating Fuel Price Survey Begins This Week
Beginning this week and continuing through the end of March 2020, prices for wholesale and residential heating oil and propane will be included in This Week in Petroleum and on EIA's Heating Oil and Propane Update webpage.
As of October 7, 2019, residential heating oil prices averaged nearly $2.95 per gallon, 41 cents per gallon lower than at the same time last year. The average wholesale heating oil price for the start of the 2019–20 heating season is $1.99 per gallon, over 48 cents per gallon below the October 8, 2018, price.
Residential propane prices entered the 2019–20 heating season averaging nearly $1.86 per gallon, 53 cents per gallon less than the October 8, 2018, price. Wholesale propane prices averaged more than $0.58 per gallon, 43 cents per gallon lower than the same time last year.