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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, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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Showing 11 to 15 news of total 6871 |
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- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Minerals Council of Australia
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Australian Coal Association
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Planning Commission, India
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Economic Council, Georgia
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
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