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Last Updated: August 30, 2018
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Market Watch

Headline crude prices for the week beginning 27 August 2018 – Brent: US$76/b; WTI: US$68/b

  • Having risen progressively over last week over a larger-than-expected fall in US crude stockpiles and signs that the sanctions on Iranian crude are beginning to bite, crude prices started the week off on even trends.
  • While the Trump administration has been starting fires over trade with allies and foes alike, news that the US and Mexico may have come to agreement over a new bilateral trade agreement to replace NAFTA has calmed markets, with Canada also reportedly mulling over concessions to secure a new trade deal.
  • Strong demand in Asia, particularly from China, and modest gains in OPEC output have also been helpful for prices, with OPEC reporting that its member nations had cut output in July by 9% more than was called for.
  • News that OPEC’s compliance level over the (previous) supply reduction agreement was 120% in June and 147% in May stoked some fears that the market balance could tighten increasingly over the rest of the year.
  • The Iranian question is still hanging like the Sword of Damocles over the market, and OPEC looks like it will be kicking the ball further down the road, announcing that it will only discuss if its members can compensate for a sudden drop in Iranian oil supply at its next bi-annual meeting in December.
  • The awkward introduction of the new sovereign bolivar in Venezuela – linked to its new petro-cryptocurrency and crude prices – raises worries that the implosion in Venezuelan could derail OPEC’s careful plans.
  • There is conflicting news over Saudi Aramco’s planned IPO – news has filtered out that the IPO is being shelved temporarily to concentrate on an acquisition in SABIC, but the government has just granted Aramco an official 40 year concession for exploration rights to bolster the company’s value.
  • With crude prices in flux, the active rig count in the US has also been very fluid, moving from a huge gain two weeks ago, to being flat last week, to dropping by 13 this week – the biggest drop in two years – as 9 oil rigs and 4 gas rigs stopped work.
  • Crude price outlook: Signs that the market is tightening will see crude prices on a rising tide this week. We expect Brent to trade in the US$76-78/b range, while WTI will inch up towards the US$70/b mark.


Headlines of the week

Upstream

  • ConocoPhillips and PDVSA have settled their long-running dispute over the nationalisation of the Venezuelan oil industry, with PDVSA agreeing to pay some US$2 billion in recovery fees to COP.
  • Angola has created a new regulator for its upstream industry, seeking to break Sonangol’s grip on the energy industry by transferring its role as the national concessionaire to the new National Agency of Petroleum and Gasin (NOGA) by 2020, with the goal on reviving flailing upstream output.

Downstream

  • Abu Dhabi’s Adnoc is looking to sell minority stakes in its US$20 billion refining business, with Eni and Austria’s OMV – already its existing partners with Adnoc on the upstream side – reportedly being the front-runners.
  • CNPC has completed the planned upgrade of its Shymkent refinery in Kazakhstan, installing a new catalytic cracker unit to boost fuel quality from Euro II to Euro IV/V.
  • Petronas is on the hunt for specialty chemicals acquisitions, for both ‘technology and market penetration’, as it prepares to capitalise on its upcoming jump in petrochemicals production through the RAPID project.
  • Indonesia has allowed nine new companies to sell biodiesel, including the local outfits of ExxonMobil and Shell, as it moves to implement a hard B20 biodiesel mandate across the country to reduce costly gasoil imports.
  • China has sold diesel to South Africa for the first time through Sinopec, a sign that Chinese refiners are struggling to deal with a domestic supply glut.
  • Glencore has been given the go-ahead by South Africa’s competition watchdog to purchase Chevron’s downstream assets in SA and Botswana for US$900 million, potentially scuppering an earlier sale to Sinopec.
  • Despite chaos at home over the introduction of a new cryptocurrency, PDVSA has reached an agreement with NuStar Energy to resume usage of the St. Eustatius storage facility in the Caribbean after settling outstanding fees.

Natural Gas/LNG

  • Total has sold off its 26% stake in India’s Hazira LNG project to Shell, boosting Shell’s share of the import project in Gujarat to 74%; as part of the same deal, Shell has also agreed to buy some 500,000 tpa of LNG over five years beginning in 2019 from Total, to be delivered into India and South Asia.
  • Carnavron Petroleum and Quadrant Energy have completed their initial assessment of the North West Shelf Dorado discovery, estimating that it has some 1.1 tcf of natural gas resources in place.
  • Sinopec and Zhejiang Energy Group are building a new 3 million tpa LNG plant in Wenzhou, Zhejiang, with the first phase of the project planned to be operational by 2021 as Sinopec’s fourth LNG receiving terminal.
  • Thailand’s state-run Electricity Generating Authority (EGAT) is looking to import LNG directly for the first time, as the country plans to boost competition in the power sector, breaking a monopoly held by PTT.

Corporate

  • Saudi Aramco is reportedly putting plans for a giant IPO on hold so that it can focus on a more immediate goal of purchasing a strategic stake in SABIC, a transaction that could cost as much as US$70 billion.
  • Santos has agreed to entirely purchase West Australian specialist Quadrant Energy – partner in the giant Dorado discovery – for US$2.15 billion.

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New PNG Government Reviews Past Oil Agreements

A lot of complications arise when a government changes. Particularly if the new government comes in on a mandate to reverse alleged deficiencies and corruption of previous governments. This is amplified when significant natural resources are involved. It has happened in the past – when Iran nationalised its oil industry by kicking out BP – and it could happen again in the future – in Guyana where the promise of oil riches in the hands of foreign firms has already caused grumbles. And it is also happening right now in Papua New Guinea, as the new government led by Prime Minister James Marape took aim at the Papua LNG deal.

Negotiated by the previous government of Peter O’Neill, the state’s new position that is the current gas deal is ‘disadvantageous’ to country. A complex set of manoeuvres – accusing O’Neill of multiple levels of corruption – led to a proposed vote of no confidence and an eventual resignation. With the departure of O’Neill, public opinion on the Papua LNG project (as well as the PNG LNG project) switched from being viewed as a boon to the economy to one of unequal terms that would not compensate the nation fairly for its resources.

So, despite a previous assurance in early August that the new government of Papua New Guinea would stand by the previous gas deal agreed with the Papua LNG stakeholders in April, Marape sent a team led by the Minister of Petroleum Kerenga Kua to Singapore to renegotiate with the project’s lead operator Total.

As the meeting was announced, suggestions pointed to a hardline position by Papua New Guinea… that they could ‘walk away from a new deal’ if the new terms were not acceptable. In a statement, Kua stated that the negotiations could ‘work out well or even disastrously’. From Total’s part, CEO Patrick Pouyanne said in July that he expected the government to respect the gas deal while Oil Search stated that it was seeking ‘further clarity on the state’s position’. The gas deal covers framework of the Papua LNG project, which was scheduled to enter FEED phase this year with FID expected in 2020, drawing gas from the giant onshore Elk-Antelope fields ahead of planned first LNG by 2024. So, the stakes are high.

With both sides locked into their positions, reports from Singapore suggested that the negotiations broke down into a ‘Mexican standoff’. No grand new deal was announced, and it can therefore be inferred that no progress was made. There is a possibility that PNG could abandon the deal altogether and seek new partners under more favourable terms, but to do so would be a colossal waste of time, given that Papua LNG is nearing a decade in development. Total and ExxonMobil have already raised the possibility of legal moves if the deal is aborted, with compensation running into billions – billions that the PNG government will not have unless the Papua LNG project goes ahead.

But the implications of the deal or no-deal are even wider. The PNG state has already stated that it will look at the planned expansion of the PNG LNG project (led by ExxonMobil and Santos) next, which draws from the P’nyang field. Renegotiation of the current gas deals in PNG may have populist appeal but have serious implications – alienating two of the largest oil and gas supermajors and two of PNG’s largest foreign investors could lead to a monetary gap and a mood of distrust that PNG may be unable to ever fill. Hardline positions are a good starting position, but eventual moderation is required to ever strike a deal.

Papua LNG Factsheet:

  • Ownership: Total (31.1%), ExxonMobil (28.3%), Oil Search (17.7%), state (22.5%)
  • Feed: Elk-Antelope onshore fields,
  • Capacity: 5.4 million tons per annum
  • Structure: 2 trains of 2.7 mtpa capacity each
August, 22 2019
This Week in Petroleum: 2018 OPEC net oil export revenues highest since 2013, but likely to decline

The U.S. Energy Information Administration (EIA) estimates that members of the Organization of the Petroleum Exporting Countries (OPEC) earned almost $711 billion in net oil export revenues in 2018 (Figure 1). The estimate is up 29% from 2017, but about 40% lower than the record high of almost $1,200 billion in 2012. The 2018 earnings increase is mainly a result of higher crude oil prices. The Brent spot price rose from an annual average of $54 per barrel (b) in 2017 to $71/b in 2018. However, EIA forecasts annual OPEC net oil export revenues will decline to $593 billion in 2019 and to $556 billion in 2020. Decreasing OPEC revenues are primarily a result of decreasing production among a number of OPEC producers.

Figure 1. OPEC net oil export revenues

EIA estimates net oil export revenues based on oil production—including crude oil, condensate, and natural gas plant liquids—and total petroleum consumption estimates, as well as crude oil prices forecast in the August 2019 Short-Term Energy Outlook (STEO). EIA’s net oil export revenues estimate assumes that exports are sold at prevailing spot prices and adjusts the prices for benchmark crude oils forecast in STEO (Brent, West Texas Intermediate, and the average imported refiner crude oil acquisition cost) with historical price differentials among spot prices for the different OPEC crude oil types. For countries that export several different varieties of oil, EIA assumes that the proportion of total net oil exports represented by each variety is the same as the proportion of the total domestic production represented by that variety. For example, if Arab Medium represents 20% of total oil production in Saudi Arabia, the estimate assumes that Arab Medium also represents 20% of total net oil exports from Saudi Arabia.

Although OPEC net export earnings include estimated Iranian revenues, they are not adjusted for possible price discounts that trade press reports indicatedIran may have offered its customers after the United States announced its withdrawal from the Joint Comprehensive Plan of Action in May 2018. The United States reinstated sanctions targeting Iranian oil exports in November 2018. Similarly, EIA does not adjust for Venezuelan crude oil exports to China or India for volumes that are sent for debt repayments to China and Russian energy company Rosneft, respectively, and thus do not generate cash revenue for Venezuela.

If the $711 billion in net oil export revenues by all of OPEC is divided by total population of its member countries and adjusted for inflation, then per capita net oil export revenues across OPEC totaled $1,416 in 2018, up 26% from 2017 (Figure 2). The increase in per capita revenues likely benefited member countries that rely heavily on oil sales to import goods, fund social programs, and otherwise support public services.

Figure 2. OPEC real net and per capita oil export revenues

In addition to benefiting from higher prices, some OPEC member countries have increased export revenues by reducing domestic consumption and consequently exporting more. For example, Saudi Arabia has significantly reduced the amount of crude oil burned for power generation. Limiting crude oil burn allowed Saudi Arabia to export more crude oil and to maximize revenues.

Others have been able to charge higher premiums based on the quality of their crude oil streams. As the global slate of crude oil has changed with more light crude oil production (with higher API gravity), OPEC members have benefited from a narrowing price discount for their heavy crude oils, which are typically priced lower than lighter crude oils because of quality differences. Smaller discounts for OPEC members’ heavier crude streams contributed to higher spot prices for the OPEC crude oil basket price, which incorporates spot prices for the major crude oil streams from all OPEC members (Figure 3).

Figure 3. Gasoline crack spreads (250-day moving average)

Despite the increase in annual average crude oil prices in 2018, OPEC revenues fell during the second half of 2018, mainly because of lower production and export volumes from Iran and Venezuela (Figure 4). EIA estimates that OPEC total petroleum liquids production decreased slightly in 2018 when increased production in Saudi Arabia, Iraq, and Libya could not offset significant declines in Iranian and Venezuelan production. Combined crude oil production in Iran and Venezuela fell by almost 800,000 barrels per day (b/d), or 14%, in 2018 and again by over 1.0 million b/d in the first seven months of 2019. Although Iranian net oil export revenues increased by 18% from 2017 to 2018, a year-to-date comparison indicates a significant decrease in revenues in 2019 (Figure 4). EIA estimates that from January to July 2018, Iran received about $40 billion in export revenues, compared with an estimated $17 billion from January to July 2019. Further decreases in OPEC members’ production beyond current EIA assumptions would further reduce EIA’s OPEC revenue estimates for 2019 and 2020.

Figure 4. Number of days Singapore had the highest and lowest gasoline crack spread among global refining centers

U.S. average regular gasoline and diesel prices fall

The U.S. average regular gasoline retail price fell nearly 3 cents from the previous week to $2.60 per gallon on August 19, 22 cents lower than the same time last year. The Gulf Coast price fell nearly 6 cents to $2.27 per gallon, the East Coast price fell nearly 4 cents to $2.52 per gallon, the West Coast and Rocky Mountain prices each fell nearly 2 cents to $3.24 per gallon and $2.67 per gallon, respectively, and the Midwest price fell nearly 1 cent, remaining at $2.52 per gallon.

The U.S. average diesel fuel price fell nearly 2 cents to $2.99 per gallon on August 19, 21 cents lower than a year ago. The Midwest price fell over 2 cents to $2.90 per gallon, the West Coast and East Coast prices each fell nearly 2 cents to $3.56 per gallon and $3.02 per gallon, respectively, the Gulf Coast price fell more than 1 cent to $2.75 per gallon, and the Rocky Mountain price fell less than 1 cent, remaining at $2.94 per gallon.

Propane/propylene inventories rise

U.S. propane/propylene stocks increased by 4.0 million barrels last week to 90.5 million barrels as of August 16, 2019, 10.2 million barrels (12.7%) greater than the five-year (2014-18) average inventory levels for this same time of year. Gulf Coast, East Coast, Midwest, and Rocky Mountain/West Coast inventories increased by 2.0 million barrels, 1.0 million barrels, 0.7 million barrels, and 0.4 million barrels, respectively. Propylene non-fuel-use inventories represented 4.4% of total propane/propylene inventories.

August, 22 2019
The Australian 590 Student Guardian Visa Process In A Nutshell

Student guardian visa subclass 590 allows you to stay in Australia as a guardian or custodian or relative of an overseas student who is pursuing an education course in Australia. With 590 student guardian visa, You can stay with your child to take care of him/her in Australia until the course complete. Your child age must below then 18th years old before applying for a student guardian visa 590. If you're a relative then you can stay with the child by submitting written permission of a child’s caretakers like a guardian or grandparents. If your child is older then eighteen years then to apply for visa subclass 590 you need to show that you have special emergency circumstances. You can apply for a 590 student guardian visa outside from Australia and acquire enrollment in alternative courses up to three months with a 590 visa. You will be authorized to take care more then one child if you have. You can do the other study or coach just for 3 months with this Student Guardian Visa Subclass 590

Step By Step Process About 590 Visa

1.Before Applying for Visa

Meet Eligibility Criteria

    • You must be a parent or grandparents or relative of a non-Australian child who is below 18th of age.

    • If you want to apply from inside of Australia then you need to hold a substantive visa except for domestic worker, temporary work visa, transit visa, visitor visa, etc.

    • If your another child who is below 18th and not coming to Australia with you then you need to give evidence that you have made welfare arrangement for the child.

    • You have to account for your all healthcare expenses so make sure that medical insurance can only reduce your expenses.

    • Your past immigration history must be credible like you must not have any visa cancellation history.

    • Your intention should be genuine at the time of applying for student guardian visa 590 and it should be not against Australian culture and policies.

    • If your family members are also applying with you then they also need to meet health policies of the Australian government

    • Only a parent or grandparents or custodian or step parents of an overseas student visa 500 holder can apply for this student guardian visa subclass 590.

    • If parents are not present due to any reason for looking after the visa subclass 500 holder student then any relative can apply for this 590 student guardian visa. 

    • You must be a guardian of an international student who must be below 18th of age except for exceptional circumstances.

    • You have to give assurance to immigration authorities that you will be able to provide welfare.

    • Your age must be above 21 years old before going to apply for a student guardian visa 590.

    • You have to pay back any type of debt to the Australian government if you have.

    • If you have another child aged 6 years old then you can bring him/her to Australia but if your child if older then 6           years then you need to show emergency condition to bring him/her to Australia.

  Collect Documents

    •Provide character certificate and other national identities.

    •Submit bank documents and salary slips to prove that you will be enough capable to give welfare to the student.

    •Provide guardianship documents to prove your credibility to that child.

    •Translate your non-English documents into English.

    •Submit legal student guardianship form.

    •Provide dependent under 6 documents if you bring your child who is under 6 years of age.

2. Processing Time And Cost Of This Visa

Visa subclass 590 cost starts from AUD 560. This visa 590 may proceed in 2 to 4 months. But in case you forget to submit any documents then you processing time of visa can be increased. Your visa application processing time can be increased if you provide incomplete information.

3. Apply For The Visa

You need to apply online for the 590 student guardian visa 6 weeks before the student’s course starts. At the time applying for the visa, you have to prove that you are genuine and legal applicant by submitting legal documents. If you submit illegal information to immigration authorities then they have the authority to cancel your visa application immediately. You and your relative which is listed in visa application will not able to get a visa for the next 10 years in case of any fraud by you. You should contact an experienced Immigration Agent Adelaide.

4. Conditions After You Have Applied For The Visa

    • You are not allowed to do any type of work in Australia.

    • You can study only for 3 months.

    • With visa subclass 590 you can’t apply for another visa

    • At the time of leaving Australia, you must have brought the student to your country.

    • If you have another child who is below 6th years of age then you can bring him/her to Australia.

Get The Direction To Migration Agent Adelaide - ISA Migrations and Education Consultants.



August, 21 2019