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Wednesday, 12 February 20
REFINING SET FOR A CHALLENGING 2020 - WOOD MACKENZIE
 Downstream isn’t the glamorous end of the oil business. And in Big Oil, it’s typically dwarfed by upstream. Yet having been forced to restructure and focus on costs early this century, downstream’s cash flow has underpinned a third of the Majors’ shareholder returns over the last five years.
But a laser-like focus on costs and efficiency can only take you so far. If the external environment turns against you, downstream is as vulnerable as any part of the business. The Majors’ downstream results for Q4 2019 were among the poorest since 2015. Petrochemicals is part of that story, with earnings suffering from over-investment.
Now we’re also seeing refining margins come under increasing pressure, slipping to five-year lows in the last few weeks of 2019 and the first of 2020. Alan Gelder, VP Refining, identifies two main factors.
Firstly, new regulation on marine fuels was expected to boost refining margins this year – but that hasn’t played out as expected yet. The International Maritime Organization (IMO) regulations require all vessels to reduce the level of sulphur in their engine emissions from 3.5% to 0.5% or less from 1 January.
Essentially, IMO should trigger a shift out of low-value product (High Sulphur Fuel Oil, or HSFO) into higher value Very Low Sulphur Fuel Oil (VLSFO). Refinery capacity to make VLSFO is limited, so marine gasoil, which is closely linked to the price of diesel, would top up any shortfall. This shift to high-value products was expected to drive up refining margins in 2020.
It’s only half happened. The price of VLSFO surged in Q4 and HSFO duly collapsed. The surprise was that there’s been much more VLSFO available than expected. Traders had taken advantage of low-price feedstock in late summer 2019 and built up volumes of VLSFO in storage. When the demand came in, they were ready and cashed in, big time. A single tanker loaded with 2 million barrels of VLSFO could make over US$10/bbl on the spread and pull in US$20 million-plus in cash profit.
Producers with the right crude have also fared well. Santos revealed that it had sold a single cargo of heavy sweet crude, ideal feedstock for VLSFO, at an unheard-of US$30/bbl premium to Brent. Nice work if you can get it.
What didn’t really materialise was higher demand for marine gasoil – it’s just not been needed in the volumes anticipated. Weaker marine demand for gasoil has been compounded by soft demand from heating – a much bigger market – because of warm winter weather in the northern hemisphere and lacklustre economic growth. That’s led to a glut of gasoil in inventory which is depressing refining margins.
Second, global oil demand growth forecasts are falling back sharply – potentially a more fundamental problem. The biggest factor is the coronavirus, so we have reduced our demand forecasts in China by almost 0.6 million b/d for Q1 2020. We now expect China demand to fall year-on-year by 125,000 b/d for the quarter, the worst rate since 2009. Global demand will fall by 250,000 b/d, also the worst in over a decade.
So what’s next for refining?
The VLSFO surplus should be a short-term phenomenon. There’s not enough refining capacity to supply all bunker demand with VLSFO. That gap will have to be met by additional gasoil once the surplus VLSFO in inventory is soaked up, by H2 2020 at the latest.
The prospects for oil demand are more worrying and harder to call. At this stage, we have restricted our adjustments to Q1 and left the rest of the year largely unchanged. If the virus can be contained successfully in the coming weeks, demand could bounce back strongly – much as was the case with SARS in 2003.
Refining margins so far in Q1 suggest it will take a while before refining profitability recovers. Meantime, refiners will do what they must to keep costs down and maximise cash flows, including cutting refinery runs to limit the build-up in inventory. It’s about toughing it out, waiting and hoping for demand – China in particular – to perk up again.
Source: Wood Mackenzie
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Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Australian Coal Association
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Siam City Cement - Thailand
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
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