NrgEdge Editor

Sharing content and articles for users
Last Updated: November 15, 2017
1 view
Business Trends
image

A practicing Professional Engineer and DOSH qualified 1st Grade Steam Engineer, Ir Mahmood Azmy holds the position of CEO at MECIP Global Engineers Sdn Bhd, and is an active member of IEM, MOGEC and MOGSC, and serves as a board member of SEAMOG Group Sdn Bhd.


uploads1510709899678-IMG_0016b.jpg

Ir Mahmood Azmy Muhd Shukri, MECIP CEO


  1. What has been your greatest achievement so far in MECIP?
    I have been with MECIP for a while now. The greatest achievement for MECIP is that we are able to establish ourselves strongly as equivalent to other international players in oil and gas business. Being local and positioned in Kerteh, Terengganu, it is quite difficult to be visible. But we manage to step out of our boundaries in becoming more prominent in the oil and gas community. It is an achievement for us in terms of the company’s branding, which helps us in marketing, gaining trust and becoming business partners of PETRONAS, Shell, other reputable oil and gas companies, as well as working closely with MATRADE to market our services overseas. This is in line with our company name – MECIP Global, where we want to position ourselves globally as an oil and gas engineering services provider.

  2. I understand that you previously worked in PETRONAS. And now as CEO of MECIP, do you think that the business connections you made back then has helped you in your business?
    I worked with PETRONAS for more than 12 years in oil refinery and petrochemical plant, and another 10 years in a US-based company, HUNTSMAN which gave me very good technical background in oil, gas, and petrochemical business. Being in PETRONAS for many years, coupled with international exposure with HUNTSMAN, I made quite a number of connections which enriched my technical and management experience. I started my career as a project engineer in Kerteh Refinery Reformer Project, then subsequently lead maintenance team in Kerteh Refinery and the Inspection team in Kerteh Ethylene Polyethylene plant. I made my career move outside of PETRONAS to lead Engineering team in HUNTSMAN to gain further knowledge, experience and exposure working with an international company. In managing projects, maintenance, inspection and engineering work, many technical matters were covered, and I had the opportunity to work with specialists and experts in various subject matters. It was expected of me to ensure all activities managed must be well planned, conducted in high safety standards, with great attention to detail, with target of zero defect and according to schedule. I was able understand the technical part of the business and management of engineering work much better through these experiences and business connections locally and overseas. All these experiences, knowledge, contact and business relationships, are very important for me and MECIP to deliver quality engineering service to our clients.

  3.  Are there challenges you faced over the years that you have overcome? How did you do so?
    Working in oil and gas means you may face multiple challenges over the years. One of the challenges we faced is related to people. We must hire good, competent, talented and well-committed people. Because they will become our assets. Getting the right people is a real challenge. For example, when you’re building a house, the foundation must be strong. Even if the house looks beautiful on the outside, if it doesn’t have a good foundation, it will crumble when a storm comes. That’s why it’s important to get the right people, with the right attitude and mindset. We’re looking for people who want to grow with the company. I would like to groom or nurture them to be like me! I want to develop them into becoming future leaders of our business. But sometimes it’s difficult to retain good talent, as they might resign as soon as there’s a better position somewhere else, and then we have to start the hiring process all over again. That’s why we introduced a loyalty programme for our staff. Those who stay for more than 5 years in our company, we reward them with vacation trips, and the longer they stay, the better the rewards. On top of this, we also have annual dinners to encourage a community-feel in our company. We do these little things because we want our people to be happy, enjoy working and stay loyal with MECIP.

  4. Has there been a new development in MECIP, perhaps a new way of doing things or a new technology, that has recently helped a project?
    Technology has been developing so rapidly worldwide, and we have to adjust ourselves. In terms of engineering software, it has changed the way we do things. In design work, we have evolved from using manual tools to computer software and programmes. It is an expensive investment, but we must do it in order to adapt and grow our business. We are always looking for ways to improve our work processes and efficiency. With technology, it will really help us to improve our work performance to serve our client better and this is in line with our passion to serve - “Do it right the first time, every time.”

  5.  As I understand it, it is MECIP’s vision to provide local solutions with global expertise. Do you believe that the local talents are at par with overseas counterparts? 
    Overseas talents are more exposed to the global market and they might have more expertise and experience compared to Malaysian talents. Our local talents, normally having minimal overseas experience, will have limited opportunities to work overseas as they might not be familiar with the countries’ code and standards. I do believe that we have to expose ourselves more to overseas market, learn new standards and explore better ways of doing things. In terms of the local market opportunities, especially for various big local projects here in Malaysia, I do believe the local workforce are capable and competent enough to take bigger roles and responsibilities. In fact, I think we can even speed up to build our local strength if there is a policy that requires foreign players to work under local companies for mega projects in Malaysia. I strongly urge government policy to address this matter accordingly to ensure better development and growth of Malaysian local companies. “Malaysia Boleh” slogan should continue to roar.

  6. What can students or fresh graduates do to prepare themselves for a career in the oil and gas industry? 
    In general, this message is not just for students but also to young fresh graduates who are embarking their careers in oil and gas - you must prepare yourselves mentally in terms of technical know-how and communication. You must apply good analytical thinking and ask questions to enhance understanding. If you don’t ask, how will you learn? You may think it’s alright to just let things go and leave it up to your bosses to correct your work. This is not the right thinking process. You need to put in extra efforts to learn, even after office hours or during your free time on weekends. The learning curve for young graduates must be exponential and they must strive to be good in their respective technical knowledge, especially if they are engineers. If you come across something that you want to delve deeper at work, keep that as ‘homework’. Keep an inventory of things you want to learn in your pocket. I call this the ‘pocket list’. So, you will always occupy yourself with learning. Be proactive in whatever tasks and initiatives given to you. For engineers, I would encourage you to get additional certifications because a degree on its own may not be enough. Work hard towards becoming a Professional Engineer as the career objective. Join professional societies and become a member of Institute of Engineer Malaysia (IEM), Institute of Materials, Malaysia (IMM), etc. These will help you gain good connections and learn about new technologies in the industry.

  7. Having worked with various business partners all over the world, was there something from overseas that impressed you, that you have successfully adapted at MECIP?
    Working with a Japanese company like Chiyoda Corporation, was a very good experience. Being in Japan, you get to observe how Japanese people manage their time. They are very focused and the quality of work produced is extremely good. They are also very detail-oriented, even their handwriting is very neat. I enjoyed very much working with the Japanese and try to adopt similar mindset at MECIP – being result-oriented, attention to detail, work hard, and take things seriously. Sometimes you might have to stay back and work, but that’s what you have to do in order to achieve results. We will not allow substandard work to be produced. We also established a good quality culture in our office - we developed an engineering design process called interdisciplinary checks (IDC) where there are multiple checks to ensure our engineers produce quality work. And this is part of the ISO 9000 quality management system, which is basically derived from the Japanese culture. Our company is an ISO 9001-certified company, and we believe in delivering a good quality job, in a safe and timely manner. We also believe in continuous improvement or “Kaizen” – engineers must develop themselves in order to become senior engineers and so on. You can’t stay in one position forever. Punctuality is also one of the things I try to emphasize. The Japanese are very punctual with their timing. Most importantly, I value honesty at work. Japanese people are very transparent with their work – if they made a mistake, they will own up to it. For locals, saying sorry might be more difficult. But it’s important to keep that integrity.

  8. What is the company culture of MECIP?
    As I mentioned, we like to encourage continuous improvement in our company. We also encourage our engineers to practice their communications skills. For example, we have “English Day” in the office where staff will practice their presentation skills in English. Some might have broken English, but the important thing is they try and keep on improving themselves. We give awards to the “Best Speakers” in our annual dinners. We also like to reward those who give internal training and share their knowledge with others. Usually the juniors will nominate their seniors who they think are the best “coach” or “teacher”. We actually have a few excellent engineers who like to share their technical knowledge. In general, we want to improve through excellence in knowledge and we encourage everyone to learn from each other. We want our engineers to be passionate about their own expertise and share this passion with others.

  9. What is next in the pipeline for MECIP?
    We are planning to secure some overseas projects. We have been to Brunei, Jakarta, Aberdeen, Houston. We’ll be going to Abu Dhabi in Middle East in mid-November. We have our partners in Abu Dhabi and the next step is to secure overseas jobs that can be done locally in Malaysia. In recent years, we have established a good partnership with a Norwegian company, Sharecat, and have formed a Malaysian joint-venture (JV) company with them to provides oil and gas services to the European market. In our plan, Norway will be like a big “storage tank”, and they will pipe down the work to us in Malaysia to execute. Due to the economic downturn, the market is a little slow. But we hope business will pick up soon once the market recovers. We are looking for more channels like these so we can hire more local engineers and nurture them to become future leaders. Our goal is to encourage more participation and involvement of our local engineers to serve the global market through MECIP. MECIP also seriously plans to expand and venture into new horizons through SEAMOG, a new company that was formed to do EPCC packages and major plant Turnaround. We believe in consolidation and having equal shares with other three strong companies in SEAMOG will make us grow bigger and faster. We want to transform MECIP for a better future.

  10. Finally, name things that are important to you – in life or in your career.
    Always have in mind, to do the right thing. Be thankful and grateful. Be honest, trust and grow people. Don’t get easily frustrated when things don’t go your way. When you do something, there should be no turning back. You must have a goal and know which direction you are heading. Have good and sincere intentions because it will most definitely be rewarded in the end.


    Sign up on NrgEdge to read more articles like these and get connected with oil, gas and energy industry influencers!
    Visit https://goo.gl/a36LfT

Nrgtalk influencer interview oil and gas energy business
3
11 2

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

Latest NrgBuzz

Your Weekly Update: 23 - 27 March 2020

Market Watch   

Headline crude prices for the week beginning 23 March 2020 – Brent: US$27/b; WTI: US$23/b

  • After falling to an 18-year low last week, crude oil prices have managed to recover from their lowest level since 2003… but just barely
  • A huge swathe of economic stimulus packages announced by governments worldwide, including a US$2 trillion bipartisan injection in the US economy, soothed financial markets, which in turn supported commodity prices
  • More stimulus, however, may be needed as confirmed Covid-19 cases in Italy and the USA overtake China’s total, with the pandemic increasingly containing in the latter but accelerating at a dangerous pace in Europe and North America
  • While the Covid-19 saga plays out, former allies Saudi Arabia and Russia remain at odds over crude oil prices; Russian President Vladimir Putin has accused Saudi Arabia of ‘oil price blackmail’, vowing not to cave in
  • However, various reports from Russia suggest the low crude prices are beginning to bite economically, with Russia still ‘open to cooperation’ but committed to a war of attrition
  • With Saudi Arabia unlikely to want to cave either, the USA is exercising its muscle in an attempt to intervene in the price war; the Department of Energy will be purchasing some 77 million barrels of (US) crude to bring its Strategic Petroleum Reserve to maximum capacity
  • Meanwhile, the US is reportedly also open to a joint US-Saudi Arabia alliance in a bid to stabilise prices, a scenario that was previously unthinkable but may be necessary if the US shale patch is to be saved; such an alliance, however, is likely to invite reprisals from Russia
  • The record low crude oil prices has led some traders to build up positions, hiring tankers and supertankers to store crude and fuel products at sea while betting that prices will eventually rise; the world’s largest oil trader Glencore has chartered one of the world’s two Ultra Large Crude Carriers for six months to serve as floating storage, while other traders are beginning to store jet fuel
  • As expected, the low prices have begun to bite on the US active rig count, which fell by a net 20 to 772 sites; the situation is worse in Canada, where the industry lost 77 sites over the week to fall to 98 active sites
  • While prices have managed to recover from their lows, the outlook for crude remains weak as long as the oil price war persists and the Covid-19 pandemic shows no sign of containment; expect prices to remain rangebound at US$28-30/b range for Brent and US$23-25 for WTI

Headlines of the week

Upstream

  • CNOOC has announced a new ‘large-sized’ oil discovery in the Bohai Bay, with the Kenli 6-1 structure being the first major discovery in the Laibei Lower Uplift
  • Husky has halted work on the West White Rose project offshore Newfoundland and Labrador in Canada until the Covid-19 pandemic blows over
  • MOL and its partners in the PL820S in the Norwegian North Sea have struck oil, with the Evra and Iving exploratory wells fielding oil (and gas) in multiple formations in the Balder and Ringhorne fields; the discoveries are expected to be developed as a tie-back to nearby existing installations
  • Malaysia is preparing for its 2020 licensing round – with bids due in late May – offering stakes in eight fields, which include discovered assets with more than 12 million boe of proven undeveloped resources

Midstream/Downstream

  • Brazil’s Petrobras has extended the deadline to submit binding offers for eight of its refineries in Brazil, hampered by the volatility in global oil prices
  • Shell has paused construction of its massive ethane cracker in Beaver Country, Pennsylvania to help contain the rapid spread of Covid-19 in the USA
  • A second fire in less than a year has broken out at the Petronas-Saudi Aramco 300 kb/d PRefChem refinery in Malaysia, with output likely to be further curbed by a strict lockdown on private operations instituted by the government
  • Work on upgrading the Abadan oil refinery in Iran has been halted until at least mid-April, until the Covid-19 situation in the country is under control
  • Gazprom has started up a new CDU at its Moscow refinery, adding some 140 kb/d of processing capacity to the key processing site

Natural Gas/LNG

  • After almost two decades of attempted development, the Abadi LNG project in Indonesia may be in jeopardy as Japan’s Inpex is ‘reviewing investment plans’ in light of the Covid-19 virus; a delay is very likely, although Inpex has recently secured key land permits for the project’s planned onshore LNG plant
  • Australia is planning legislation to lift the country’s current moratorium on onshore gas exploration and production in 2021, following a cautious green-light by the Victorian Gas Program task force
  • US regulators have given Cameron LNG an additional four years to complete a two-train expansion at its LNG export project in Louisiana
  • Sempra expects to delay FID on its Port Arthur LNG export project, but remains on course to sanction its Energia Costa Azul project by Q2 2020
  • The Woodfibre LNG project in Canada’s British Columbia has delayed construction until 2021, as a key contractor filed for bankruptcy
  • Total has announced a new gas/condensate discovery in the UK North Sea – with the Isabella 30/12d-11 well in license P1820 yielding ‘encouraging flows’
  • INOX India and an Indian subsidiary of Shell have signed an MoU to partner and develop LNG demand and distribution, to be sourced from Shell Energy India’s 5 million tpa LNG receiving terminal in Hazira, Gujarat
March, 27 2020
This Week in Petroleum: Oil market volatility is at an all-time high

Crude oil prices have fallen significantly since the beginning of 2020, largely driven by the economic contraction caused by the 2019 novel coronavirus disease (COVID19) and a sudden increase in crude oil supply following the suspension of agreed production cuts among the Organization of the Petroleum Exporting Countries (OPEC) and partner countries. With falling demand and increasing supply, the front-month price of the U.S. benchmark crude oil West Texas Intermediate (WTI) fell from a year-to-date high closing price of $63.27 per barrel (b) on January 6 to a year-to-date low of $20.37/b on March 18 (Figure 1), the lowest nominal crude oil price since February 2002.

Figure 1. West Texas Intermediate crude oil futures prices

WTI crude oil prices have also fallen significantly along the futures curve, which charts monthly price settlements for WTI crude oil delivery over the next several years. For example, the WTI price for December 2020 delivery declined from $56.90/b on January 2, 2020, to $32.21/b as of March 24. In addition to the sharp price decline, the shape of the futures curve has shifted from backwardation—when near-term futures prices are higher than longer-dated ones—to contango, when near-term futures prices are lower than longer-dated ones. The WTI 1st-13th spread (the difference between the WTI price in the nearest month and the price for WTI 13 months away) settled at -$10.34/b on March 18, the lowest since February 2016, exhibiting high contango. The shift from backwardation to contango reflects the significant increase in petroleum inventories. In its March 2020 Short-Term Energy Outlook (STEO), released on March 11, 2020, the U.S. Energy Information Administration (EIA) forecast that Organization for Economic Cooperation and Development (OECD) commercial petroleum inventories will rise to 2.9 billion barrels in March, an increase of 20 million barrels over the previous month and 68 million barrels over March 2019 (Figure 2). Since the release of the March STEO, changes in various oil market and macroeconomic indicators suggest that inventory builds are likely to be even greater than EIA’s March forecast.

Figure 2. Crude oil futures price spreads and inventories

Significant price volatility has accompanied both price declines and price increases. Since 1999, 69% of the time, daily WTI crude oil prices increased or decreased by less than 2% relative to the previous trading day. Daily oil price changes during March 2020 have exceeded 2% 13 times (76% of the month’s traded days) as of March 24. For example, the 10.1% decline on March 6 after the OPEC meeting was larger than 99.8% of the daily percentage price decreases since 1999. The 24.6% decline on March 9 and the 24.4% decline on March 18 were the largest and second largest percent declines, respectively, since at least 1999 (Figure 3).

Figure 3. Frequency of West Texas Intermediate (WTI) futures daily price percentage changes (January 1999 - March 2020)

On March 10, a series of government announcements indicated that emergency fiscal and monetary policy were likely to be forthcoming in various countries, which contributed to a 10.4% increase in the WTI price, the 12th-largest daily increase since 1999. During other highly volatile time periods, such as the 2008 financial crisis, both large price increases and decreases occurred in quick succession. During the 2008 financial crisis, the largest single-day increase—a 17.8% rise on September 22, 2008—was followed the next day by the largest single-day decrease, a 12.0% fall on September 23, 2008.

Market price volatility during the first quarter of 2020 has not been limited to oil markets (Figure 4). The recent volatility in oil markets has also coincided with increased volatility in equity markets because the products refined from crude oil are used in many parts of the economy and because the COVID-19-related economic slowdown affects a broad array of economic activities. This can be measured through implied volatility—an estimate of a security’s expected range of near-term price changes—which can be calculated using price movements of financial options and measured by the VIX index for the Standard and Poor’s (S&P) 500 index and the OVX index for WTI prices. Implied volatility for both the S&P 500 index and WTI are higher than the levels seen during the 2008 financial crisis, which peaked on November 20, 2008, at 80.9 and on December 11, 2008, at 100.4, respectively, compared with 61.7 for the VIX and 170.9 for the OVX as of March 24.

Figure 4. Changes in implied and historical volatility measures

Comparing implied volatility for the S&P 500 index with WTI’s suggests that although recent volatility is not limited to oil markets, oil markets are likely more volatile than equity markets at this point. The oil market’s relative volatility is not, however, in and of itself unusual. Oil markets are almost always more volatile than equity markets because crude oil demand is price inelastic—whereby price changes have relatively little effect on the quantity of crude oil demanded—and because of the relative diversity of the companies constituting the S&P 500 index. But recent oil market volatility is still historically high, even in comparison to the volatility of the larger equity market. As denoted by the red line in the bottom of Figure 4, the difference between the OVX and VIX reached an all-time high of 124.1 on March 23, compared with an average difference of 16.8 between May 2007 (the date the OVX was launched) and March 24, 2020.

Markets currently appear to expect continued and increasing market volatility, and, by extension, increasing uncertainty in the pricing of crude oil. Oil’s current level of implied volatility—a forward-looking measure for the next 30 days—is also high relative to its historical, or realized, volatility. Historical volatility can influence the market’s expectations for future price uncertainty, which contributes to higher implied volatility. Some of this difference is a structural part of the market, and implied volatility typically exceeds historical volatility as sellers of options demand a volatility risk premium to compensate them for the risk of holding a volatile security. But as the yellow line in Figure 4 shows, the current implied volatility of WTI prices is still higher than normal. The difference between implied and historical volatility reached an all-time high of 44.7 on March 20, compared with an average difference of 2.3 between 2007 and March 2020. This trend could suggest that options (prices for which increase with volatility) are relatively expensive and, by extension, that demand for financial instruments to limit oil price exposure are relatively elevated.

Increased price correlation among several asset classes also suggests that similar economic factors are driving prices in a variety of markets. For example, both the correlation between changes in the price of WTI and changes in the S&P 500 and the correlation between WTI and other non-energy commodities (as measured by the S&P Commodity Index (GSCI)) increased significantly in March. Typically, when correlations between WTI and other asset classes increase, it suggests that expectations of future economic growth—rather than issues specific to crude oil markets— tend to be the primary drivers of price formation. In this case, price declines for oil, equities, and non-energy commodities all indicate that concerns over global economic growth are likely the primary force driving price formation (Figure 5).

Figure 5. Rolling 60-day correlation between daily price changes in West Texas Intermediate (WTI) crude oil prices and other indicators

U.S. average regular gasoline and diesel prices fall

The U.S. average regular gasoline retail price fell nearly 13 cents from the previous week to $2.12 per gallon on March 23, 50 cents lower than a year ago. The Midwest price fell more than 16 cents to $1.87 per gallon, the West Coast price fell nearly 15 cents to $2.88 per gallon, the East Coast and Gulf Coast prices each fell nearly 11 cents to $2.08 per gallon and $1.86 per gallon, respectively, and the Rocky Mountain price declined more than 8 cents to $2.24 per gallon.

The U.S. average diesel fuel price fell more than 7 cents from the previous week to $2.66 per gallon on March 23, 42 cents lower than a year ago. The Midwest price fell more than 9 cents to $2.50 per gallon, the West Coast price fell more than 7 cents to $3.25 per gallon, the East Coast and Gulf Coast prices each fell nearly 7 cents to $2.72 per gallon and $2.44 per gallon, respectively, and the Rocky Mountain price fell more than 6 cents to $2.68 per gallon.

Propane/propylene inventories decline

U.S. propane/propylene stocks decreased by 1.8 million barrels last week to 64.9 million barrels as of March 20, 2020, 15.5 million barrels (31.3%) greater than the five-year (2015-19) average inventory levels for this same time of year. Gulf Coast inventories decreased by 1.3 million barrels, East Coast inventories decreased by 0.3 million barrels, and Rocky Mountain/West Coast inventories decrease by 0.2 million barrels. Midwest inventories increased by 0.1 million barrels. Propylene non-fuel-use inventories represented 8.5% of total propane/propylene inventories.

Residential heating fuel prices decrease

As of March 23, 2020, residential heating oil prices averaged $2.45 per gallon, almost 15 cents per gallon below last week’s price and nearly 77 cents per gallon lower than last year’s price at this time. Wholesale heating oil prices averaged more than $1.11 per gallon, almost 14 cents per gallon below last week’s price and 98 cents per gallon lower than a year ago.

Residential propane prices averaged more than $1.91 per gallon, nearly 2 cents per gallon below last week’s price and almost 49 cents per gallon below last year’s price. Wholesale propane prices averaged more than $0.42 per gallon, more than 7 cents per gallon lower than last week’s price and almost 36 cents per gallon below last year’s price.

March, 27 2020
Your Weekly Update: 16 - 20 March 2020

Market Watch   

Headline crude prices for the week beginning 16 March 2020 – Brent: US$30/b; WTI: US$28/b

  • The dark days continue, with global crude oil prices at their weakest point since 2015 as the Covid-19 pandemic deepens worldwide and the Saudi Arabia-Russia oil war heats up
  • With infections and deaths piling up in Europe and the US – and a second wave of infections threatening Asia – the number of global cases has topped 240,000 and 10,000 respectively
  • Travel lockdown are taking place worldwide; Europe has largely shut its borders, as well as the US and other major countries, resulting in airlines slashing international travel and cratering jet fuel demand
  • But of more concern for oil prices, is the standoff between Saudi Arabia and Russia, as both countries dig in their heels to engage in a protracted price war
  • Saudi Arabia is on the hunt for more supertankers, with the intention of flooding the market with oil; Saudi Aramco will supply a record 12.3 million barrels in April and is looking to raise capacity by another 1 mmb/d after
  • Russian producers are also ready to raise production, with Rosneft announcing it would lift production as soon as the current supply deal ends on March 31
  • Abu Dhabi, a close ally of Saudi Arabia, is fanning the flames as well; ADNOC is discounting its flagship Murban crude and pledging a rise of output to 4 mmb/d in April, and possibly 5 mmb/d in May, to join the race for market share
  • There is a glimmer of hope that a joint resolution could halt the price war, with OPEC+ still holding meetings – albeit virtually – to assess the situation
  • In light of the meltdown in oil prices, the US has suspended its planned sale of inventories from its Strategic Petroleum Reserve, but instead will add to it by purchasing large volumes in an attempt to prop up US shale oil producers
  • With weak oil prices, the active US rig count according to Baker Hughes is holding steady so far, down by a net one site with the loss of two gas rigs offset by a single gain in the oil rig count; however, do expect sharp drops in the near future if there is no resolution to the oil price imbroglio
  • With sentiment over the global macroeconomic situation and oil prices at near worst-case scenario levels, crude oil prices will remain depressed – Brent in the US$29-33/b range and WTI in the US$25-28/b range

 

Headlines of the week

Upstream

  • Beset by a blockade of its oilfields and ports by strongman Khalifa Haftar, Libya’s oil production fell to a new low of 97,508 b/d in early March
  • Petronas and ExxonMobil are looking to sell their stakes in the Chad-Cameroon Petroleum Development and Pipeline Project – connecting three fields in Chad to a floating facility offshore Cameroon; Petronas holds a 35% stake in the project, with ExxonMobil holding a 40% stake
  • Petronas has halted production at the Garraf area in Iraq’s Thi Qar province, evacuating all its employees as Iraq grapples with a major Covid-19 outbreak
  • Murphy Oil has announced some delays to its projects in the Gulf of Mexico as the global oil industry is hit by the Covid-19 pandemic and the price war, reducing its 2020 budget by US$500 million to US$950 million
  • As the Covid-19 pandemic rolls across the globe, licensing rounds are either being suspended or postponed: South Sudan deferring its debut round, Liberia taking its offshore round online and Bangladesh postponing indefinitely
  • Equinor has halted all work on the Martin Linge field offshore Norway, adding to the project’s delay woes as uncertainty over Covid-19 boils over
  • WPX Energy has acquired Felix Energy, expanding its footprint in the eastern part of the Permian Delaware Basin, adding 60 mboe/d of production and bringing WPX Energy’s total output to some 150,000 b/d of shale oil

Midstream/Downstream

  • Asian refiners are looking to cash in on cheap crude being offered as a result of the price war – with Chinese teapots planning to ramp out output – but are planning to curb jet fuel output by redirecting processing to gasoil, as a result of travel bans worldwide that will severely distress international travel
  • Marathon Petroleum – the largest American independent refinery – is looking to sell off its pipeline subsidiary MPLX LP for some US$15 billion
  • ExxonMobil has restarted the fourth and final CDU at its 502,500 b/d Baton Rouge refinery, after the entire plant was taken out by a fire in February 2020
  • Calumet is planning to sell its 30 kb/d refinery in Great Falls, Montana, retaining a bank to begin sales proceedings; Great Falls is the second refinery in Montana to go under the block, after ExxonMobil’s 61.5 kb/d Billings site
  • Production of very low sulfur fuel oil (VLSFO) in China is ramping up, with Jinxi Petrochemical being the latest refiner to begin exports of the marine fuel
  • Austria’s OMV will be purchasing an additional 39% in petrochemicals processor Borealis from Abu Dhabi’s Mubadala for some US$4.7 billion
  • The GTI Statia crude and refined storage terminal in the Caribbean island of St. Eustatius will undergo a US$100 million upgrade to meet growing demand

Natural Gas/LNG

  • The Alaska LNG project – which is designed to produced 3.5 bcf/d of gas in Nikiski on the Kenai Peninsula, sourced from a 1,300km pipeline from the North Slope – has been granted EIS (Environment Impact Statement) by the US FERC, the first step towards authorisation of project to go ahead
  • BP and Azerbaijan’s SOCAR are in discussion over a new Caspian Sea project that goes beyond the current deep gas scheme, called Future Gas
  • Norway’s Golar Power has announced plans to develop an LNG import terminal with the Brazilian northeastern state of Pernambuco
  • Lithuania’s Kaipedos Nafta is moving to fully acquire the Hoegh floating storage and regasification unit that is it currently leasing
March, 20 2020