We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
 A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to get tough, very tough.
The service sector is already on the ropes but will be first port of call when operators look to save money. IOCs and NOCs need to recognise they’ll want a functioning, reliable service sector when things pick up, as they will. I talked it all through with Andy Tidey, Head of our Performance Improvement team.
Covid-19 has already disrupted the supply chain. The ability of service companies to manufacture and deliver equipment and supply personnel to industry sites is seriously compromised by restrictions on travel and movement of people.
Last downturn, the service sector did its bit in getting costs down. The Majors reduced unit development costs by 55% between 2014 and 2019; our Upstream Cost Survey shows that almost half was rate cuts by suppliers.
It’s taken its toll on service sector finances. Margins for five leading service companies fell by an average of 65% between 2014 and 2019. EBITDA margins (earnings before interest, tax, depreciation and amortisation) for the wider sector have shrunk close to zero.
IOCs will look to cut more to get their own finances on an even keel and reassure shareholders. Cash flow breakevens for the Majors averaged US$55/bbl pre-crisis. BP said this week it aims to reduce underlying breakeven to below US$35/bbl in 2021, and others are heading in the same direction. The primary lever is to cut investment – discretionary spend by IOCs will all but dry up in 2020.
Operators are signalling cuts of up to 50% to expenditure in the US Lower 48. Only a handful of the 53 conventional pre-FID projects we expected to get sanctioned in 2020 will get the green light. These cuts make up a big chunk of the 20% to 25% reduction in spend the Majors have announced.
What drives NOC decisions isn’t quite so straightforward. Their stakeholder is the government, and the NOC may be central to their national economy – big employer, investor and a source of revenue through dividends and taxation. US$20/bbl oil isn’t just a problem for the NOC, it’s a national problem. We estimate that, pre-crisis, Angola needed US$75/bbl to fund its 2020 budget, Saudi Arabia US$85/bbl and Nigeria US$131/bbl – prices of a long-gone era.
Overall cuts in spend by NOCs so far are more muted, averaging 10% to 15%. Chinese NOCs are prioritising domestic investment to maintain production and employment. In the Middle East, ADNOC and Qatar Petroleum will likely proceed with big new gas projects where the scale and economics will win investment from the big IOCs. There have been concerns about market tightness in certain segments in the Middle East.
Many others face an investment drought. Ten higher cost projects at pre-sanction stage in Nigeria, Mexico, Libya and Angola won’t get the support they need from IOC partners. Combined spend will be pushed out indefinitely into the future along with 0.4 million boe/d of new production.
NOCs have to perform a tricky balancing act. To keep investment moving, costs need to come down. The service sector is the easy target; but the service companies are sizeable employers, too. They may be bound into the domestic economy through local obligation requirements and, in certain cases, may even be government-owned.
So, where do NOCs go from here? The adversarial approach between operator and suppliers is counterproductive and could end badly – for both sides. What’s needed is a change in relationship, built on openness, transparency and trust. We are starting to see alliances and partnerships emerging between mid-sized operators and service companies. That could be the template for a win-win – more competitive prices for the operator, and acceptable returns for the supplier. It’s a model NOCs need to consider if they are to foster and preserve a strong supply chain through the coming challenges.
NOCs need to take a strategic view of how they address the cost challenge of US$20/bbl oil. As operator and “national champion”, many NOCs can shape the service sector, in ways not open to the IOCs. There are opportunities to change the commercial model with individual suppliers and bring in practices from other sectors, such as true open-book pricing. Many NOCs could also act as an aggregator of plans, providing the service sector with an aggregated demand profile.
Simon Flowers
Chairman, Chief Analyst and author of The Edge
Source: Wood Mackenzie
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Saturday, 25 April 20
KOREA SOUTH-EAST POWER CO. INVITED BIDS FOR 780K - 900K MT OF 5600 NCV COAL FOR JULY TO OCTOBER 2020 LOADING
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 780,000~900,000 Metric Tons (MT) s ...
Saturday, 25 April 20
SEAFARER MENTAL WELLBEING DURING THE COVID-19 PANDEMIC - STANDARD CLUB
KNOWLEDGE TO ELEVATE
COVID-19 has forced many parts of the world to enforce a lockdown in a bid to flatten the curve in terms of transmissions ...
Friday, 24 April 20
KOMIPO INVITED BIDS FOR 5700 NAR COAL FOR JUNE & JULY LOADING
COALspot.com: South Korea’s Korea Midland Power Co. Ltd. (KOMIPO) Has Issued An International Tender For 260,000 Metric Tons (MT) Steam Coal ...
Friday, 24 April 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Friday, 24 April 20
COAL INDIA TO PRODUCE 710 MT COAL - MINISTER OF COAL AND MINES
Coal India Limited (CIL) will produce 710 million tonnes (MT) of coal and company’s coal off take target will also remain at710 MT for this f ...
|
|
|
Showing 1001 to 1005 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Planning Commission, India
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- PTC India Limited - India
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- The University of Queensland
|
| |
| |
|
