NrgEdge Editor

Sharing content and articles for users
Last Updated: September 27, 2018
18 views
Business Trends
image

Market Watch

Headline crude prices for the week beginning 24 September 2018 – Brent: US$80/b; WTI: US$72/b

  • International crude oil prices are now at their highest levels in four years, as the market fret over tight supply following a declaration by OPEC that it was approaching the issue of raising output cautiously ahead of a meeting of OPEC oil ministers in Algeria this weekend
  • Despite President Trump’s demand that the group steps in to control oil prices, OPEC is taking a wait-and-see approach; Saudi Arabia signalled that it was comfortable with US$80/b oil and was in no rush to bring prices down from current levels
  • OPEC also is not guaranteeing that its members (and its NOPEC partners) will automatically replace lost Iranian barrels due to upcoming American sanctions; coupled with still-strong energy demand, this is leading traders to predict a very tight oil market over the next few months
  • Most financial institutions are maintaining that oil prices will stay at US$80/b, but some bullish traders, including Mercuria and Trafigura, are predicting a return to US$100/b oil by early 2019
  • Saudi Arabia’s new best (oil) friend Russia reported a surge in its crude production to a new post-Soviet record of 11.3 mmb/d, but the US has leapfrogged that to become the largest crude oil producer in the world
  • Caught in an American web of sanctions, Iran warned that it would veto any decision by OPEC that ‘harms the Islamic Republic’, setting the tone for a testy meeting in Algiers this Sunday and in Vienna this December
  • Iran also issued veiled threats about jeopardising international peace as the US and Iran butted heads at the annual International Atomic Energy Agency meeting in Vienna
  • As the noose closes on Iran, even neighbouring India is cutting down on purchases; Chennai Petroleum (partly owned by the National Iranian Oil Co’s trading arm) announced it would stop processing Iranian crude from October onwards to maintain its insurance coverage
  • Meanwhile, the imbroglio between China and the US has reached LNG, with China slapping a 10% tariff on US LNG imports in response to a new tranche of duties imposed on US$200 billion of Chinese imports by the US, threatening to upend the accelerating LNG terminal development in the US Gulf Coast
  • Despite prices tending upwards, the US active oil rig count fell by one last week as ongoing infrastructure bottlenecks in onshore shale basins, particularly the Permian, hamper the marketability of liquids
  • Crude price outlook: Prices sustaining at high levels seem inevitable for the moment, as sanctions against Iran kick in in six weeks and the full scale of its impact remains uncertain. With OPEC content to let prices rise, we see Brent trading towards US$82/b and WTI towards US$73/b this week.


Headlines of the week

Upstream

  • Shell is reportedly looking to sell its 22.5% stake in the Gulf of Mexico Caesar Tonga field to Focus Oil for some US$1.3 billion, as it continues an asset rationalisation process kickstarted by its purchase of the BG Group
  • Canada has decided to restart the approval process for the Trans Mountain oil pipeline, hoping to circumvent or rectify shortcomings that led to a court ruling quashing the project’s permits on insufficient environmental impact studies
  • North Africa-focused SDX Energy is reportedly in discussion with BP to purchase a ‘significant package of assets’, which would add to SDX’s current interests in the South Disouq, Meseda, NW Gemsa and South Ramadan areas
  • Mexico’s Pemex has signed a landmark pre-unitisation deal with the three-way Block 7 Consortium, which will focus on developing the JV’s Zama-1 ‘world class oil discovery’ containing 1.2-1.8 billion barrels of oil
  • CNOOC’s Penglai 19-3 oilfield project in the Bohai Sea has commenced production, with a peak of 58,700 b/d expected to be hit by 2020, which should soften the persistentn decline in Bohai Bay upstream production
  • First oil has been produced at the Tortue field, in the offshore Gabon Dussafu PSC, a major milestone for its operator Panoro Energy

Downstream

  • Eni and Pertamina have signed an MoU meant to deepen cooperation between the two firms, particularly in Indonesian downstream, leveraging Eni’s experience in developing bio-refineries
  • Uganda has delayed its planned 60 kb/d oil refinery startup to a still ambitious 2022 over delays in the design and engineering phase; the refinery is meant to take Ugandan crude from fields co-developed by Total, CNOOC and Tullow, with delays in the upstream output also contributing to the pushback
  • After years of delays, Vietnam’s Nghi Son refinery is finally entering full production mode, offering its first cargo of gasoline for export, although Nghi Son will eventually focus on supplying fuels to the domestic market
  • China is reportedly considering issuing a new tranche of fuel export permits of some 3-4 million tons to prevent state-owned refiners from having to cut runs
  • Russian petrochemical producer Sibur has been sending out feelers on a possible stock market flotation, having spoken to several banks about listing some 15% of its shares in Moscow or international bourses

Natural Gas/LNG

  • With Egypt’s giant Zohr gas field ramping out faster than expected, the country plans to revive its long-dormant Damietta LNG plant to resume LNG exports
  • Vitol has signed a long-term 15-year LNG agreement with Cheniere, with the trader taking in 700,000 tpa of LNG per year beginning end-2018
  • Trader Woodside has signed a mid-term deal with Germany’s Uniper to supply up to 600,000 tpa of LNG over a four-year period beginning 2019
  • Qatar Petroleum will be adding a fourth train to its North Field expansion project, which will expand its total capacity to 110 mtpa by 2024
  • French major Total has clarified that its LNG investment position will be to focus on what it calls the ‘Golden Triangle’ of the LNG market – cost-competitive projects in Qatar, Russia and the USA
  • Nigeria LNG expects to make a final investment decision on its planned US$7 billion, 8 million tpa Train 7 LNG expansion project by end-2018

oil oil and gas news oil and gas industry LNG oil and gas companies news weekly update market watch market trends latest oil and gas trends
3
2 0

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

Latest NrgBuzz

Permian’s Pipeline Lifeline

The Permian is in desperate need of pipelines. That much is true. There is so much shale liquids sloshing underneath the Permian formation in Texas and New Mexico, that even though it has already upended global crude market and turned the USA into the world’s largest crude producer, there is still so much of it trapped inland, unable to make the 800km journey to the Gulf Coast that would take them to the big wider world.

The stakes are high. Even though the US is poised to reach some 12 mmb/d of crude oil production next year – more than half of that coming from shale oil formations – it could be producing a lot more. This has already caused the Brent-WTI spread to widen to a constant US$10/b since mid-2018 – when the Permian’s pipeline bottlenecks first became critical – from an average of US$4/b prior to that. It is even more dramatic in the Permian itself, where crude is selling at a US$10-16/b discount to Houston WTI, with trends pointing to the spread going as wide as US$20/b soon. Estimates suggest that a record 3,722 wells were drilled in the Permian this year but never opened because the oil could not be brought to market. This is part of the reason why the US active rig count hasn’t increased as much as would have been expected when crude prices were trending towards US$80/b – there’s no point in drilling if you can’t sell.

Assistance is on the way. Between now and 2020, estimates suggest that some 2.6 mmb/d of pipeline capacity across several projects will come onstream, with an additional 1 mmb/d in the planning stages. Add this to the existing 3.1 mmb/d of takeaway capacity (and 300,000 b/d of local refining) and Permian shale oil output currently dammed away by a wall of fixed capacity could double in size when freed to make it to market.

And more pipelines keep getting announced. In the last two weeks, Jupiter Energy Group announced a 90-day open season seeking binding commitments for a planned 1 mmb/d, 1050km long Jupiter Pipeline – which could connect the Permian to all three of Texas’ deepwater ports, Houston, Corpus Christi and Brownsville. Plains All American is launching its 500,000 b/d Sunrise Pipeline, connecting the Permian to Cushing, Oklahoma. Wolf Midstream has also launched an open season, seeking interest for its 120,000 b/d Red Wolf Crude Connector branch, connecting to its existing terminal and infrastructure in Colorado City.

Current estimates suggest that Permian output numbered around 3.5 mmb/d in October. At maximum capacity, that’s still about 100,000 b/d of shale oil trapped inland. As planned pipelines come online over the next two years, that trickle could turn into a flood. Consider this. Even at the current maxing out of Permian infrastructure, the US is already on the cusp on 12 mmb/d crude production. By 2021, it could go as high as 15 mmb/d – crude prices, permitting, of course.

As recently reported in the WSJ; “For years, the companies behind the U.S. oil-and-gas boom, including Noble Energy Inc. and Whiting Petroleum Corp. have promised shareholders they have thousands of prospective wells they can drill profitably even at $40 a barrel. Some have even said they can generate returns on investment of 30%. But most shale drillers haven’t made much, if any, money at those prices. From 2012 to 2017, the 30 biggest shale producers lost more than $50 billion. Last year, when oil prices averaged about $50 a barrel, the group as a whole was barely in the black, with profits of about $1.7 billion, or roughly 1.3% of revenue, according to FactSet.”

The immense growth experienced in the Permian has consequences for the entire oil supply chain, from refining balances – shale oil is more suitable for lighter ends like gasoline, but the world is heading for a gasoline glut and is more interested in cracking gasoil for the IMO’s strict marine fuels sulphur levels coming up in 2020 – to geopolitics, by diminishing OPEC’s power and particularly Saudi Arabia’s role as a swing producer. For now, the walls keeping a Permian flood in are still standing. In two years, they won’t, with new pipeline infrastructure in place. And so the oil world has two years to prepare for the coming tsunami, but only if crude prices stay on course.

Recent Announced Permian Pipeline Projects

  • September 2018 – EPIC Midstream Holdings – 675,000 b/d, 1125km, 24-30’ diameter, 4Q19 target opening
  • November 2018, Wolf Midstream Partners – 500,000 b/d, 65km, 16’ diameter, 2H2019 target opening
  • November 2018, Jupiter Energy – 1 mmb/d, 1050km, 36’ diameter, 2020 target opening
  • December 2018, Plains All American Pipeline – 575,000 b/d, 830km, 26’ diameter, 3Q19 target opening
December, 04 2018
Your Weekly Update: 3 - 7 December 2018

Market Watch

Headline crude prices for the week beginning 3 December 2018 – Brent: US$61/b; WTI: US$52/b

  • After falling down to fresh lows last week – with WTI prices dipping below US$50/b at one point – crude oil prices improved after the G20 meeting in Buenos Aires, where the US and China agreed to a temporary truce over their trade war
  • While no concrete agreements over energy were announced at the G20 summit, the slightly thawing in trade tensions allowed crude benchmarks to rise slightly, assisted by an announcement by Canadian producers in Alberta that output would be cut by 325,000 b/d beginning January
  • Russia and Saudi Arabia agreed at the G20 summit to extend the OPEC+ deal into 2019, suggesting that a coordinated oil output cut was in the works, also supported prices ahead of OPEC’s meeting in Vienna this week
  • Not present at the OPEC meeting, however, will be Qatar, which quit the oil cartel in a surprise move; the tiny sultanate said it was quitting due to its small oil production, choosing instead to focus on its LNG industry, but the move can be seen as a response to the Saudi-led boycott of Qatar, calling into question Saudi Arabia’s ability to hold the fragile OPEC coalition together
  • Consensus among analysts point to OPEC+ agreeing to remove some 800,000 b/d of crude oil from the market beginning January, aimed at establishing a floor for oil prices at some US$65/b
  • The downward spiral of crude prices has put the brakes on US drilling activity, with 2 new oil rigs offset by the loss of 5 gas rigs last week; analysts are expecting shale explorers to cut spending budgets in 2019 in response to weak prices, raising spectres of the 2015 price slump
  • Crude price outlook: Ahead of the OPEC meeting on December 6, crude should be kept up by expectations of a renewed supply cut, with Brent likely to trade rangebound around US$61-63/b and WTI at US$52-53/b

Headlines of the week

Upstream

  • Buoyed by the prolific nature of the Permian Basin, Shell has announced plans to nearly double its production in the shale patch with AI-powered technology
  • China and the Philippines have set aside sovereignty issues, signing an agreement for joint exploration and development in the South China Sea
  • Facing severe pipeline bottlenecks, Canada’s Alberta province is looking to purchase rail cars to ship more crude oil by train out of the province towards the US, as a temporary measure while new pipeline are proposed and built
  • Shell has completed the sale of Shell E&P Ireland to Nephin Energy Holdings, which includes a 45% in the Corrib gas venture, for US$1.3 billion
  • In Norway, Shell also sold its interests in the Draugen and Gjøa fields for US$526 million to OKEA AS, but retains its interests in the Ormen Lange and Knarr fields, as well as the Troll, Valemon and Kvitebjørn projects
  • Petrobras has sold its stake in 34 onshore production fields to Brazilian firm 3R Petroleum for US$453.1 million, as well as stakes in three shallow-water offshore fields off Rio de Janeiro to Perenco for US$370 million
  • Pemex tripled its estimated reserves in the Ixachi field to 1.3 billion barrels of oil, calling it the ‘most important onshore field in 25 years’ and expecting peak production of 80,000 b/d of condensate and 720 mscf/d of gas by 2022

Downstream

  • Uganda has pushed back the opening of its first oil refinery to 2023, in line with estimates by Total, CNOOC and Tullow Oil, as crude oil production is now only expected to begin in 2021
  • Malaysia will be introducing a B10 biodiesel mandate in December over a phased rollout, with complete implementation expected by February 2018
  • Pertamina expects to begin works on upgrading its Balikpapan refinery in early 2019, aimed to increasing fuel standards to Euro V and upgrading capacity to process sour crude together with its current medium heavies
  • ExxonMobil plans to upgrade its Rotterdam refinery to expand Group II base stock production, following the installation of a new hydrocracker
  • The US EPA has increased its annual blending mandate for advanced biofuels by 15% and kept conventional biofuels blending requirement steady for 2019, while maintaining waivers for selected refineries

Natural Gas/LNG

  • Petronas and Vitol Asia have signed a long-term LNG supply agreement, with Petronas providing LNG from the LNG Canada project in Kitimat, providing up to 800,000 tons per annum for 15 years beginning 2024
  • Eni and Anadarko have been giving a 2023 deadline to submit key development plans for the Area 1 and 4 LNG complex in Mozambique
  • Tullow Oil is backing the attempt by three former Cove Energy executives in the Comoros Islands by taking stakes in Discover Exploration’s blocks, hoping to repeat the trio’s success in discovering the Rovuma block
  • South Korea’s Posco Daewoo has signed a deal with Brunei National Petroleum Company to jointly explore LNG opportunities in Brunei, with specific focus on the development of the Dehwa area operated by Posco Daewoo
  • Rosnedt and the Beijing Gas Group have set up a joint venture focusing on building and operating a network of up to 170 CNG fuel stations in Russia, using LNG as motor fuel
December, 06 2018
Overall Lubricants Market Is Growing In Bangladesh

The engine oil market has grown up around 10 to 12% in the last three years because of various reasons, mostly because of the rise of automobiles. 

According to the Bangladesh Road Transport Authority (BRTA), the number of registered petrol and diesel-powered vehicles is 3,663,189 units.

The number of automotive vehicles has increased by 2.5 times in the last eight years.

The demand for engine oils will rise keeping pace with the increasing automotive vehicles, with an expected 3% yearly growths.

Mostly, for this reason, the annual lubricant consumption raised over 14% growth for the last four years. Now its current demand is around 160 million tonnes.

The overall lubricants demand has increased also for the growth of the power sector, which has created a special market for industrial lubricants oil.

The lubricants oil market size for industries has doubled in the last five years due to the establishment of a number of power plants across the country.

The demand for industrial oil will continue to rise at least for the next 15 years, as the quick rental power plants need a huge quantity of lube oil to run.

The industries account for 30% of the total lubricant consumption; however, it is expected to take over 35% of the overall demand in the next 10 years.

Mobil is the market leader with 27% market share; however, market insiders say that around 70% market shares belong to various brands altogether, which is still undefined.

 It is already flooded with many global and local brands.

December, 01 2018