NrgEdge Editor

Sharing content and articles for users
Last Updated: November 22, 2017
1 view
Business Trends
image

Market Watch

Headline crude prices for the week beginning 20 November 2018 – Brent: US$62/b; WTI: US$56/b

  • Mixed signals out of OPEC. Saudi Arabia says ‘too early to make assessment’ on extending oil output cuts, while Iran says majority of OPEC members support extending supply freeze
  • Decision on extending cuts beyond March 30, 2018 expected at OPEC Vienna meeting next week on November 30. Pact with NOPEC group (Russia and 9 other Non-OPEC countries) likely to continue
  • OPEC admits market ‘will not be balanced’ by March 2018 and expects supply deficit to increase next year on stronger-than-expected demand
  • Active US rig count up by 8, all gas-producing sites in Texas and Louisiana
  • Part of TransCanada’s Keystone pipeline shut after leak in South Dakota, but no impact on Nebraska’s approval of Keystone XL pipeline route
  • US EIA data points to growth in domestic crude and gasoline inventories, while US oil output hit a record 9.65 mmb/d last week
  • International Energy Agency expects the US to account for more than 80% of world crude supply growth through 2027
  • Norway’s US$1 trillion sovereign well fund proposes US$35 billion sell-off in oil and gas stocks, including ExxonMobil and Shell, rattling long-term confidence in the oil sector
  • Dollar gains against the Euro, as Angela Merkel’s talks to form the next German government fail, hitting commodities
  • Singapore onshore oil product stocks continue to swell, with light distillates up by 8.6% to 11.6 million barrels, placing pressure on Asian gasoline and naphtha prices
  • China raised retail gasoline prices on 18 November, the 10th increase in 2017 and second in November. Retail prices of gasoline up by CNY265 (US$40) per ton, diesel up by CNY250 (US$38) per ton
  • Crude price outlook: Crude prices likely to trend downwards over the week to US$60/b (Brent) and US$54/b (WTI) on rising American output and fretting over OPEC deal. Prices to stay rangebound until November 30 when clarity is expected on OPEC’s position. 


Headlines of the week

Upstream

  • After regaining the Bai Hasan and Avana oilfields from Kurdish regional government, Iraq plans to increase output in Kirkuk to 1 mmb/d, as negotiations with Turkey on the Kirkuk-Ceyhan pipeline continue
  • Murphy Oil strikes oil at the CM-1X well in its Block 15-1/05 in the Nam Con Son basin, the firm’s second oil discovery after CT-1X this year
  • Following lifting of US sanctions last month, Sudan has begun dialogue with Lukoil and several US/Canadian companies to develop its onshore oil industry, as well as natural gas projects in the Red Sea
  • Eni has signed a new PSC for offshore Block 52 in Oman, holding a 85% stake, in partnership with Oman Oil Company Exploration and Production

Downstream

  • Oman Oil Company has begun preliminary financial negotiations to back its planned 230 kb/d Duqm refinery, a joint venture with KPI
  • Saudi Arabia announced initial plans to build a refinery in Egypt, after serving as Egypt’s main oil product supplier since 2016
  • Petrobras is opening early discussions with China’s CNPC over the latter’s participation in reviving the stalled 165kb/d COMPERJ refinery and petrochemical project in Rio de Janeiro

Natural Gas/LNG

  • Anadarko’s Mozambique LNG project is approved by the government, as it signs a 20-year contract with Thailand’s PTT to supply 2.6 mtpa of LNG
  • Ahead planned March 2018 start of Ichthys, Japan’s Inpex awarded 100% exploration permit for Block WA-532-P in Western Australia, near Ichthys
  • Russia and Saudi Arabia have opened up talks on Saudi Aramco potentially collaborating in Novatek’s Arctic LNG 2 project, after PetroChina parent CNPC and China Development Bank bought in
  • Sinopec and China’s sovereign wealth fund sign up for 20 mtpa Alaska LNG export terminal project, par of a second wave of US LNG projects
  • China’s POLY-GCL Petroleum Group signs US$4 billion MoU with Djibouti for a natural gas project, comprising pipeline, liquefaction plant and export terminal in Damerjog. Gas to be transported from Ethiopia (12 bcm capacity), with LNG target capacity at an initial 3 mtpa in 2020
  • Egypt optimistic that it can halt all LNG imports by end-2018 and begin gas exports in 2019 as Zohr field begins producing at initial 350 mcf/d; Rosneft acquired almost 30% of the Eni-led Zohr in October, and announced plans to invest over US$2 billion through 2021 and possibly increase its stake to 35%
  • Premier UK is seeking to sell of a 25% stake in Indonesia’s Tuna gas field from its 65% stake to fund development. Output is expected to start in 2022, with Premier Oil having reached a deal to sell Tuna gas to Vietnam via a cross-border pipeline connection to Nam Con Son system

Corporate

  • Australia’s Santos Energy is now part of a bidding war, after a A$9.5 billion takeover from Harbour Energy was rejected, triggering further bids and an improved all-cash A$11 billion offer from Harbour
  • A law firm survey reveals that offshore service companies dominated North American energy industry bankruptcies in 2017, with 44 firms filing for bankruptcy owing US$24.8 billion

BP became the first major European energy firm to start a share buyback programme since 2014, a sign that years of austerity have paid off

nrgedge oil and gas news
3
1 0

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

Latest NrgBuzz

RAPID Rises

When it was first announced in 2012, there was scepticism about whether or not Petronas’ RAPID refinery in Johor was destined for reality or cancellation. It came at a time when the refining industry saw multiple ambitious, sometimes unpractical, projects announced. At that point, Petronas – though one of the most respected state oil firms – was still seen as more of an upstream player internationally. Its downstream forays were largely confined to its home base Malaysia and specialty chemicals, as well as a surprising venture into South African through Engen. Its refineries, too, were relatively small. So the announcement that Petronas was planning essentially, its own Jamnagar, promoted some pessimism. Could it succeed?

It has. The RAPID refinery – part of a larger plan to turn the Pengerang district in southern Johor into an oil refining and storage hub capitalising on linkages with Singapore – received its first cargo of crude oil for testing in September 2018. Mechanical completion was achieved on November 29 and all critical units have begun commissioning ahead of the expected firing up of RAPID’s 300 kb/d CDU later this month. A second cargo of 2 million barrels of Saudi crude arrived at RAPID last week. It seems like it’s all systems go for RAPID. But it wasn’t always so clear cut. Financing difficulties – and the 2015 crude oil price crash – put the US$27 billion project on shaky ground for a while, and it was only when Saudi Aramco swooped in to purchase a US$7 billion stake in the project that it started coalescing. Petronas had been courting Aramco since the start of the project, mainly as a crude provider, but having the Saudi giant on board was the final step towards FID. It guaranteed a stable supply of crude for Petronas; and for Aramco, RAPID gave it a foothold in a major global refining hub area as part of its strategy to expand downstream.

But RAPID will be entering into a market quite different than when it was first announced. In 2012, demand for fuel products was concentrated on light distillates; in 2019, that focus has changed. Impending new International Maritime Organisation (IMO) regulations are requiring shippers to switch from burning cheap (and dirty) fuel oil to using cleaner middle distillate gasoils. This plays well into complex refineries like RAPID, specialising in cracking heavy and medium Arabian crude into valuable products. But the issue is that Asia and the rest of the world is currently swamped with gasoline. A whole host of new Asian refineries – the latest being the 200 kb/d Nghi Son in Vietnam – have contributed to growing volumes of gasoline with no home in Asia. Gasoline refining margins in Singapore have taken a hit, falling into negative territory for the first time in seven years. Adding RAPID to the equation places more pressure on gasoline margins, even though margins for middle distillates are still very healthy. And with three other large Asian refinery projects scheduled to come online in 2019 – one in Brunei and two in China – that glut will only grow.

The safety valve for RAPID (and indeed the other refineries due this year) is that they have been planned with deep petrochemicals integration, using naphtha produced from the refinery portion. RAPID itself is planned to have capacity of 3 million tpa of ethylene, propylene and other olefins – still a lucrative market that justifies the mega-investment. But it will be at least two years before RAPID’s petrochemicals portion will be ready to start up, and when it does, it’ll face the same set of challenging circumstances as refineries like Hengli’s 400 kb/d Dalian Changxing plant also bring online their petchem operations. But that is a problem for the future and for now, RAPID is first out of the gate into reality. It won’t be entering in a bonanza fuels market as predicted in 2012, but there is still space in the market for RAPID – and a few other like in – at least for now.

 

RAPID Refinery Factsheet:

  • Ownership: Petronas (50%), Saudi Aramco (50%)
  • Capacity: 300 kb/d CDU/3 mtpa olefins plant
  • Other facilities: 1.22 Gigawatt congeneration plant, 3.5 mtpa regasification terminal
  • Expected commissioning: March 2019
January, 21 2019
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