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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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Tuesday, 07 January 20
BHP EYES INDIA FOR COAL GROWTH AS CHINA DEMAND FLATLINES - SYDNEY MORNING HERALD
Australia’s largest miner, BHP, believes the long-term trajectory of the emerging economy of India and the acceleration of its steelmaking ou ...
Sunday, 05 January 20
BUNKER QUALITY CLAIMS IN 2020 - ISSUES TO CONSIDER - CLYDE&CO
KNOWLEDGE TO ELEVATE
In recent years the shipping industry has faced a significant number of bunker quality claims, most notably ari ...
Saturday, 04 January 20
SUPRAMAX: A 53,000DWT VESSEL FIXING DELIVERY INDONESIA TRIP TO CHINA AT $4,000 AND A 58,000DWT SHIP FIXING DELIVERY EAST KALIMANTAN TRIP TO THAILAND AT $5,500 - BALTIC BRIEFING
Capesize
The New Year started with an erosion on pre-Christmas rates as the higher low sulphur fuel costs due to IMO 2020 affected levels. From ...
Thursday, 02 January 20
DMO 2020 PRICE SET FOR ELECTRICITY SECTOR - IAN WOLLFF
On the 26th December 2019, the Minister of Energy and Mineral Resources (ESDM) issued the decree No. 261.K/30.MEM/2019 about the States needs for c ...
Thursday, 02 January 20
SULPHUR 2020 COMPENDIUM - HOW ARE INDIVIDUAL PORT STATES EXPECTED TO REACT? - STANDARD CLUB
KNOWLEDGE TO ELEVATE
With the new sulphur limits soon to be in force, Standard Club has been investigating the ways in which certain jurisdict ...
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Showing 1211 to 1215 news of total 6871 |
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- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Planning Commission, India
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
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