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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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Wednesday, 26 February 20
SHIPPING MARKET INSIGHT - INTERMODAL
Coming from one of its busiest periods historically, with a list of scrubber and BWMS retrofits on a waiting list, the ship repair sector is witnes ...
Wednesday, 26 February 20
AS ALL OF THE GLOBAL COAL GIANTS EXIT SOUTH AFRICA, ESKOM TO DEPEND ON TWO MINERS FOR 70% OF ITS SUPPLY - BUSINESS INSIDER
While some of its politicians continue to imagine that coal has a future in South Africa, two key developments from the real world show that securi ...
Tuesday, 25 February 20
DELTA DUNIA MAKMUR REGISTERED A NET PROFIT OF US$20 MILLION FOR FY 2019
PT Delta Dunia Makmur, one of the largest coal mining company in Indonesia, has recorded an US$882 million revenue for FY 2019, 1% lower compared t ...
Tuesday, 25 February 20
SHIPPING UPDATE - ALLIED
The positive feeling and optimism for a fresh rally during the first few months of 2020 that prevailed in the tanker markets during the final quart ...
Monday, 24 February 20
COULD SOME VLSFO FUELS BE BANNED? - GIBSON
The run up to the implementation of the new IMO rules on marine fuels from1st January 2020 had owners and charterers analysing the vari ...
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Showing 1106 to 1110 news of total 6871 |
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- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
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