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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, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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Showing 26 to 30 news of total 6871 |
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- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- The University of Queensland
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Australian Coal Association
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- Deloitte Consulting - India
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