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Market Watch

Headline crude prices for the week beginning 1 January 2017 – Brent: US$67/b; WTI: US$60/b

  • A combination of political unrest and strong demand pushed WTI past the US$60/b level for the first time since mid-2015.
  • Ongoing unrest in Iran, triggered by domestic grievances and anti-government sentiment that was responded to by an authoritarian crackdown, added to a bullish trend that began mid-December.
  • Repairs on the Forties Pipeline System has been fully completed, restoring supply in Europe and reducing some tightness in the market.
  • However, an outage at Libya’s pipeline to the Es Sider terminal - reportedly caused by insurgent activity – raised concerns of supply disruptions, with some reports suggesting Libya output had dropped by almost 1 mmb/d.
  • As 2018 begins, there are divergent opinions on how crude prices will develop. Moody’s Investors Services expects a range of US$40-60 on resurgent shale production, both others including JP Morgan and some bullish hedge funds believe prices could hit US$80/b.
  • Data from the US EIA showed American oil production declining to 9.75 mmb/d from 9.79 mmb/d, as output slowed over the Christmas break; production is expected to increase in the coming weeks, with many predicting output to top 10 mmb/d within Q118.
  • US commercial crude storage level dipped last week by 4.6 million barrels, down some 20% from historic highs hit in March 2017.
  • Active US rig sites fell by a net two to 777 last week; oil rig numbers were unchanged, with two gas rigs closing. Nonetheless, the US rig count was up by 222 sites y-o-y, from 525 over the last week of 2016.
  • Saudi Aramco is reportedly on the lookout to acquire natural gas assets and supplies internationally, while also developing local output, in a bid to reduce the amount of crude burnt for power over summer. This could unlock more supplies for export progressively over the next few years.
  • Crude price outlook: Optimism seems to be the flavour for the week. Supply disruption have abated, but there is geopolitical risk in Iran while oil demand seems healthy. Prices should stay in the US$66-67/b range for Brent, while WTI may dip back below US$60/b as US supply recovers after the Christmas/New Year break.


Headlines of the week

Upstream

  • The US has opened up the remote Arctic National Wildlife Refuge area in Alaska to oil and gas drilling as part of the recent Congress tax reform bill.
  • In the wake of this, Eni began drilling a new well near Alaska’s Oliktok Point in the Beaufort Sea – potentially yielding output of 20,000 b/d – which is the first well to be drilled in offshore north Alaska since 2015.
  • Indonesia has received bids - including from Repsol, Mubadala and KrisEnergy - for five oil and gas blocks it offered up in 2017, after two consecutive years of no interest. The 22 blocks previously offered over 2015 and 2016 will be put up for bids again this month.
  • Wintershall has started production at the Maria field in Norway a year ahead of schedule, with recoverable reserves of some 180 million boe.
  • Statoil has announced a NK19 billion (US$2.26 billion) plan to extend output at the Snorre field by some 200 million barrels, beginning 2021.
  • A new oil field came online in the UK in the last week of 2018, as Premier Oil’s Catcher field capped off a resurgent year for the North Sea. Catcher has an initial rate of 10 kb/d, rising to 60 kb/d by mid-2018.

Downstream

  • China has issued its first batch of crude import quotas for 2018. A total 121.32 million tons (2.43 mmb/d) has granted to 44 companies, with ChemChina having the largest share at 333 kb/d. Many independent teapot refiners saw substantial increases in their allocation.

Natural Gas/LNG

  • Algeria’s Sonatrach has inked a deal with BP and Statoil to produce an additional 11 bcm of natural gas from its Tiguentourine gas field, which has a current output of some 9 bcm/y since it started in 2006.
  • Rosneft has asked Russia’s competition watchdog to allow it to bid on natural gas fields in the Yamalo-Nenets region placed on sale by diamond mining firm Alrosa, pitting Rosneft against Novatek for the assets.
  • Qatargas and Austria’s OMV has agreed on a long-term LNG contract, delivering some 1.1 mtpa annually for five years, beginning January 2018.
  • China will launch a natural gas exchange in Chongqing in Q118, hoping to create an international price benchmark by combining pipeline imports from Central Asia/Russia and LNG imports. Chongqing will join Shanghai, Tokyo and Singapore in the race to create an Asian gas benchmark.
  • Gazprom has signed an MoU with Iran that will see it participate in the Iran LNG project, which has an initial plan for two trains of 5.25 mtpa each and a second stage that will double capacity.

Corporate

  • The public listing of ADNOC’s fuel distribution unit has been a major success. From an IPO price of DR2.50, trading opened at DR2.90 and remains above the launch price. The listing raised some US$851 million.

Rosneft has unveiled a five-year plan aimed at increase its crude oil output to 5 mmb/d and natural gas to 200 bcm by 2022.

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Forecasting Bangladesh Tyre Market | Zulker Naeen

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

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

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

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

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

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

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

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

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

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

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

Market Watch

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

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


Headlines of the week

Upstream

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

Downstream

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

Natural Gas/LNG

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

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

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

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

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


January, 17 2019