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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, 14 February 20
KOWEPO INVITED BIDS FOR 1.275 MILLION TONS OF MIN. 5,600 NCV COAL
COALspot.com: Korea Western Power Co. Ltd (KOWEPO). as a representative of five Korean Gencos has issued an international tender for total 1,275,00 ...
Friday, 14 February 20
IS THE US COAL INDUSTRY COMPLETELY BURNED OUT? -FORBES
This is the fourth of a multi-part series on the state of the main sources of energy in the US and how they compare globally. The series will cover ...
Friday, 14 February 20
FITCH RTGS: GLOBAL PORTS VULNERABLE TO CORONAVIRUS - RELATED VOLUME DECLINES
Global ports will see reduced trade volumes as a result of the coronavirus, COVID-19, which would become more severe should Chinese production take ...
Thursday, 13 February 20
INDIA: MAJOR PORTS SHOW MUTED GROWTH IN CARGO AS THERMAL COAL VOLUME SLIDES 15% - BUSINESS STANDARD
A sharp slide of 15 per cent in thermal coal volumes weighed on the performance of major ports during the period of April-January of FY20. The majo ...
Wednesday, 12 February 20
COAL INDIA WILL EXCEED LAST YEAR'S PRODUCTION FIGURES: OFFICIAL - PTI
Despite coal production being hampered at Dipka mines due to prolonged rains, Coal India Ltd will exceed last year’s production figures, a to ...
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- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Parliament of New Zealand
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