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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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- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Parliament of New Zealand
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- The University of Queensland
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