The Least Compliant Country In The OPEC Deal

20 Jan 2018   Kazakhstan

Yesterday’s monthly oil market report from OPEC showed that oil production from Kazakhstan likely increased by 180,000 bpd in 2017 to 1.74 million barrels per day. Such a rise gives Kazakhstan the unenviable accolade of being the most out-of-compliance producer in the OPEC / NOPEC production cut deal – surpassing Iraq (some feat). Digging into our export flows, we see a similar story of surging.  Kazakhstan committed to cutting production by 20,000 bpd as part of the OPEC / NOPEC deal. According to our model, we should have seen a fairly commensurate drop in exports for the country to be in compliance, but instead we saw exports last year of Kazakh CPC blend and Batumi crude increase by … (drum roll) … just over 200,000 bpd.  Export loadings outpaced year-ago levels every month last year except January. The current year has started on the front foot; export loadings so far in January reflect ongoing strength.

Sub-zero freeze in China spurs thermal coal imports

20 Jan 2018   China

Freezing temperatures in Beijing to continue until the end of Jan. Sub-zero temperatures in parts of northern China are driving power plant thermal coal consumption higher and stimulating additional demand for import cargoes, market sources said Thursday. A China-based source said: “It has been snowing in the north,” adding that an influx of imported coal had helped Chinese power plants meet the stronger electricity demand. Daytime temperatures in Beijing are forecast to stay below zero degrees Celsius until the end of January, according to weather data. Article continues below… Business executives, traders, risk managers and other mining and energy professionals can be more profitable and stay ahead of the competition by getting the full story and the latest prices from Platts Coal Trader International. Request a FREE trial to see how Platts Coal Trader International can meet your needs. The colder weather in China […]

Six Chinese Ships Covertly Aided North Korea. The U.S. Was Watching

19 Jan 2018   China, North Korea

Satellite photographs and other intelligence gathered by U.S. officials provide what they say is detailed evidence of at least six Chinese-owned or -operated cargo ships violating United Nations sanctions against North Korea. The U.S. compiled the information from Asian waters as part of the Trump administration’s strategy to pressure North Korea into giving up its nuclear weapons and long-range missiles. The effort identified the ships by name and tracked their movements. The ships either entered ports in North Korea and transported what U.S. officials concluded was illicit cargo to Russia and Vietnam or made ship-to-ship transfers at sea. According to the U.S., which presented the information to a U.N. sanctions committee, the ships also made extensive maneuvers designed to disguise their violations of the U.N. sanctions. In August, the Security Council banned North Korean exports of coal, iron ore, lead and seafood, which have generated an estimated $1 billion […]

China’s Gas Production Hits Three-Year High

19 Jan 2018   China

China pumped natural gas at the highest rate since 2014 in December 2017 in an attempt to make up for shortages of the fuel in the northern parts of the country amid harsh winter weather, China’s national statistics authority said today. The daily average reached 13.6 billion cubic meters, versus 12.6 billion cubic meters in November. The full-2017 total hence jumped by 8.5 percent on an annual basis to 147.4 billion cubic meters. Sinopec alone reported a 19-percent annual increase in its natural gas production last year. As part of its fight against pollution, Beijing ordered a switch from central heating, supplied by coal-fired plants, to gas heating. The switch affected millions of households and businesses in northern China, but the government’s ambitious pollution-tackling plans failed to factor in challenges such as demand and lack of adequate transport infrastructure for gas. As a result, state companies had to urgently […]

China’s major coal province to cut 23 million tonnes of capacity in 20

19 Jan 2018   China

China’s Shanxi province, responsible for about a quarter of the country’s total coal output, will cut its production capacity by 23 million tonnes this year as part of its efforts to streamline the sector, it said on Friday. Shanxi, which produced 832 million tonnes of coal in 2016, has been part of a national campaign to reduce coal capacity by around 500 million tonnes over the 2016-2020 period in order to bolster prices and improve efficiency in the sector.  In a report published on its official website, the northern Chinese province said it would intensify a restructuring program this year and try to shut down or consolidate mines with an annual production capacity of less than 600,000 tonnes.  Citing an official with the province’s land and resources office, the report said Shanxi had canceled 56 coal mining licenses in the past five years, resulting in production capacity cuts of 51 million tonnes per year.

BHP Billiton continues U.S. shale exit plans

19 Jan 2018   Australia, Shale Oil

Australian energy and mining giant BHP Billiton said Thursday it was on pace start selling off its U.S. shale assets during the first quarter of the year. In August, CEO Andrew Mackenzie said the company determined that its U.S. shale assets were not core parts of the portfolio. In a performance review for the six months ending in December, it said its exploration and production activity was stable, but it was looking for the exit door. “We continue to progress a number of alternatives to exit our onshore U.S. assets for value,” the review read. “We are preparing all appropriate documentation ahead of data rooms being opened to potential trade sale buyers by the end of the March 2018 […]

Crude imports to increase 7.7%

18 Jan 2018   China

A CNPC employee switches on an oil transportation valve at a facility in Tangshan, Hebei province. (Photo/China Daily) Imports are expected to make up more than 70 percent of China’s crude oil supply in 2018 amid sound economic growth, said a research arm of State-owned energy giant China National Petroleum Corp on Tuesday. The country’s net crude oil imports will rise 7.7 percent to 451 million metric tons in 2018, accounting for 70.1 percent of China’s total supply, according to a report released by CNPC Economics & Technology Research Institute. Oil imports in the world’s largest energy consumer rose 10.8 percent to 396 million tons last year, meaning China overtook the United States to become the world’s largest oil importer. The country relied on imports for 67.4 percent of its oil supply last year. China’s oil demand is expected to increase 4.6 percent year-on-year to 615 million tons in […]

China plug-in electric vehicle sales in 2017: almost four times those in the U.S.

18 Jan 2018   China, Electric Cars

Compared to previous years, overall car-sales growth in the U.S. has all but plateaued at around 17.5 million. China is doing little better, with growth reaching just 3 percent for 2017. But the Chinese new-vehicle market is undergoing a seismic shift in which types of cars are sold. Want proof? China sold 777,000 new-energy vehicles—electrics and plug-in hybrids—in 2017, a whopping 53-percent increase over 2016. READ MORE: Plug-in electric car sales in Dec: 2017 set a new record, Bolt EV ends strong The massive growth in plug-in vehicle sales can be attributed to government subsidies that support domestically produced models, reports Automotive News China. Of the total new-energy vehicles sold, 579,000 are passenger vehicles. The remaining sales are commercial vehicles, such as electric buses and delivery trucks. The vast majority of the NEVs sold in China were battery-electric vehicles, some 652,000 in all. Nio ES8 high-performance […]

U.S. losing renewable race to China, but winning in oil

18 Jan 2018   China, USA

The United States is losing the renewable energy race to China but will be the undisputed leader for oil and gas in the coming years, the head of the IEA said. The U.S. Energy Information Administration expects total U.S. oil production to set an all-time record this year at 10 million barrels per day. About half of the new utility-scale power on the U.S. grid last year came from renewables and most of that was in the fourth quarter. Fatih Birol , the head of the International Energy Agency, told the U.S. Senate the annual rate of growth for U.S. renewables could slow from 3.5 percent […]

Shady triangle: Southeast Asia’s illegal fuel market

18 Jan 2018   Singapore

An alleged oil heist in Singapore that has already led to 20 arrests, the seizure of at least one tanker and allegations that thieves siphoned thousands of tonnes of fuel from Shell’s biggest refinery is shining a spotlight on an illegal trade worth tens of billions of dollars worldwide. Working routes in a triangle of sea anchored by Thailand, Vietnam and Singapore and encompassing the oil facilities of Malaysia, the smugglers take advantage of a difficult-to-patrol sea and enticing black market prices, experts say. The suspects in the latest case are accused of stealing oil from Royal Dutch Shell’s ( RDSa.L ) Pulau Bukom refinery, often during business hours, and distributing it around the region. Several of the men charged worked for Shell. Employees of a major Singaporean fuel trading company and a London-listed business that inspects and certifies cargos have also been charged. “Siphoning off […]

China’s economy grows 6.9% in 2017 on strong exports and property

18 Jan 2018   China

China’s economy grew at 6.9 percent in 2017, the fastest pace in two years, despite policymakers making headway towards curbing financial risk from excessive debt. The country’s 6.8 percent growth for the fourth quarter locked in China’s first yearly gross domestic product acceleration since 2010. The annual figure overshot the government’s original full-year target of “around 6.5 percent” and outpaced growth of 6.7 percent in 2016.

In purchasing-power-parity terms, growth in 2017 alone equaled the size of Canada’s entire economy, according to ANZ Bank. Net exports contributed 0.6 percentage points to overall growth, the highest contribution since 2008, as a buoyant global economy boosted trade.  Entering 2017, most analysts had expected policymakers to ensure solid growth in the run-up to October’s five-yearly Communist party congress, at which President Xi Jinping strengthened his hold on power. Share this graphic Policymakers achieved this goal while also engineering a significant slowdown in credit growth, after years in which economists have warned about risks building from aggressive credit stimulus.

China’s ratio of debt to GDP fell the first time since 2011 in the first half by some estimates. “[Mr Xi] understands that China can no longer play its high growth card. Issues like debt pile-up and air pollution could cause social unrest if not a financial meltdown,” wrote Raymond Yeung, chief greater China economist at ANZ in Hong Kong.

As Petro-Yuan Looms, Bundesbank Adds Renminbi To Currency Reserves

18 Jan 2018   China

Just days after China’s (denied) threat to slow/stop buying US Treasuries , and just days before the launch of China’s petro-yuan futures contract , Germany’s central bank confirmed it would include China’s Renminbi in its reserves . The FT reports that Andreas Dombret, a member of Deutsche Bundesbank’s executive board, said at the Asian Financial Forum in Hong Kong on Monday that the central bank had “decided to include the RMB in our currency reserves”. He said: “ The RMB is used increasingly as part of central banks’ foreign exchange reserves; for example, the European Central Bank included the RMB [as a reserve currency]. ” The Bundesbank’s six-member board took the decision to invest in renminbi assets in mid-2017, but it was not publicly announced at the time. No investments have been made yet; preparations for purchases are still ongoing . The inclusion in the German central bank’s reserves […]

Sheen spreading from Chinese site of Iranian oil tanker sinking

17 Jan 2018   China, Iran

The oil slick spreading from the site of the sunken Iranian oil tanker Sanchi is getting bigger and moving north, Chinese maritime authorities said. The Chinese State Oceanic Administration said that, as of Monday, the slick was about 9 miles long extending southwest from the site off the coast of China and another 11 miles east of the site. Sheen in aerial photos published in Chinese media was patchy. The official Xinhua News Agency reported the main sheen was growing and prevailing winds and currents were pushing it north. The Sanchi was carrying about 1 million barrels of a light form of crude oil called condensate when it crashed into a Chinese freighter on Jan. […]

More resources found in gas-rich Papua New Guinea

17 Jan 2018   New Guinea

Working in a partnership with Australian and Japanese partners, Exxon Mobil said new hydrocarbons were found while drilling in gas-rich Papua New Guinea. A regional affiliate of Exxon is working in a partnership with Oil Search and JX Nippon at the P’nyang South asset. Oil Search started drilling in the petroleum license in October and Exxon said it could finally declare a discovery of hydrocarbons that extends the boundaries of an existing field. Exxon already works with the government of Papua New Guinea on plans to develop the gas discovered in the P’nyang field, situated in the country’s Western Province. The new discovery adds to the potential for natural gas and liquefied natural gas. “We are currently […]

China’s Growing Appetite For Renewables

17 Jan 2018   China, Renewables

Renewables and clean energy innovators won $333.5 billion in investments in 2017 – an increase of three percent from 2016 figures, Bloomberg New Energy Finance figures show. Half of it went to solar projects and 40 percent came from China. Solar panels and wind turbines get cheaper by the day, thanks to Chinese mass manufacturing. “The 2017 total is all the more remarkable when you consider that capital costs for the leading technology – solar – continue to fall sharply,” said Jon Moore, CEO at BNEF told Bloomberg. “Typical utility-scale PV systems were about 25 percent cheaper per megawatt last year than they were two years earlier.” The cheap parts make it easier for developing countries to become investors in solar and wind projects on their home turf. China itself saw investment in clean energy rise by 24 percent in 2016, making it the world’s biggest renewables […]

China Unlikely To Maintain Record Oil Product Exports

16 Jan 2018   China

China exported a record volume of refined oil products in December, but the oil price rally has been driving refining margins down in recent weeks. These falling margins mean January’s oil product exports may be lower as its production falls, Reuters columnist Clyde Russell writes. China’s commodity trade data for December showed that the country exported 6.17 million tons of refined oil products, equal to about 1.6 million bpd using the BP conversion factor of 8 barrels of product/ton. Chinese fuel exports in December increased by 6.6 percent compared to November. The record December fuel exports—including gasoline, diesel, and jet fuel—were the result of near-record imports of crude oil in November and strong refining margins, according to Russell. In November, China had imported crude oil at a rate of 9.01 million bpd—the second-highest on record . But since then, the oil price rally has weakened refining margins, and with […]

Burning Iranian oil tanker sinks after January 6 accident: Chinese state TV

15 Jan 2018   China, Iran, Water

An Iranian oil tanker has sunk after burning for more than a week following a collision on Jan. 6 in the East China Sea, Chinese state media said on Sunday, adding that large amounts of oil are burning in the surrounding waters. The stricken tanker, called the Sanchi (IMO:9356608), which had been adrift and on fire following the accident with the freighter CF Crystal, had “suddenly ignited” around noon (0400 GMT), China Central Television (CCTV) said. “Currently it has already sunk,” CCTV said, citing the Shanghai maritime search and rescue center. It showed video of a tower of billowing black smoke that it said reached as high as 1,000 meters, and flames on the surface of the water. The ship sank before 5 p.m. (0900 GMT), the broadcaster said. China’s State Oceanic Administration said that because the hull of the ship had detonated, a large amount […]

Beijing wins battle for blue skies — but the poor are paying a price

One year ago, China’s capital city was in the grip of suffocating and potentially fatal smog that made life a misery and breathing downright dangerous. This month, the air in Beijing has been clear and the skies blue. Favorable wind and weather have played a part, but this is no fluke. Last year as a whole, Beijing recorded its largest improvement in air quality on record. The average concentration of tiny “PM2.5” particulates fell by more than 20 percent, according to Greenpeace East Asia. In a mad dash to meet year-end air pollution targets and combat the traditional winter smog, 5,600 environmental inspectors were hired from around the country and dispatched into the industrial heartland surrounding the capital. Tens of thousands of polluting factories were forced to clean up their operations or were simply closed, […]

Oil Spill on Fire Off China Seen Damaging Less Than Exxon Valdez

15 Jan 2018   China, Iran, Water

Sanchi oil spill covers 4 square miles and is still burning Authorities collecting data from spill area to assess impact The oil tanker on fire after a collision on Jan. 7. Authorities were trying to assess the environmental impact of oil that’s on fire in the East China Sea after an Iranian tanker sank and caused a spill that covered about 4 square miles. The Sanchi was carrying 1 million barrels of condensate, a highly flammable type of light oil, with most of that supply seen burning off rather than slicking the water. While the cargo is four times larger than the heavier crude the Exxon Valdez spilled off Alaska in 1989 — affecting about 1,300 miles of shoreline and destroying thousands of marine fauna — the blaze off China’s coast may help minimize environmental damage. The Iranian ship sank on Sunday following a blaze after the tanker collided […]

Self-driving cars raise fears over ‘weaponisation’

15 Jan 2018   China, Electric Cars

Autonomous vehicles are in danger of being turned into “weapons”, leading governments around the world to block cars operated by foreign companies, the head of Baidu’s self-driving car programme has warned. Qi Lu, chief operating officer at the Chinese internet group, said security concerns could become a problem for global carmakers and technology companies, including the US and China. “It has nothing to do with any particular government — it has to do with the very nature of autonomy,” he said on the sidelines of the Consumer Electronics Show last week.

“You have an object that is capable of moving by itself. By definition, it is a weapon.” Increasingly, self-driving technology is seen as advancing faster than regulators can keep up with. Regional and national governments are grappling with the issue of when to allow autonomous cars on to their roads and under what conditions. Multinational companies will have a “high bar” to meet local policy requirements for autonomous driving, Mr Lu said. “The days of building a vehicle in one place and it runs everywhere are over. Because a vehicle that can move by itself by definition it is a weapon.” Baidu is investing heavily in Apollo, its open-source autonomous car software, as it looks to diversify away from its core business of internet advertising into artificial intelligence.

At CES, it unveiled Apollo 2.0, which offers improved security, alongside a new $200m fund to invest in south-east Asian efforts to improve autonomous driving. It has already agreed partnerships with US chip companies, including Intel and Nvidia, as well as American and European carmakers Ford and Daimler. In China it is working with local auto manufacturers JAC and BAIC, who plan to start producing autonomous vehicles based on Apollo as soon as next year.

China Looks To Create Supersized Coal Companies

15 Jan 2018   China, Coal

China said on Friday it plans to create several “super-large” coal mining companies by the end of 2020 as the world’s biggest producer of the fuel ramps up years of efforts to streamline the fragmented sector and slash outdated capacity. The country’s National Development & Reform Commission (NDRC) said in a statement that by the end of 2020, China plans to form a number of mega-miners, each with the capacity to produce 100 million tonnes per year of coal, which will compete on the global market and help to modernise the sector. Last year, China had more than 4,000 coal mines with a total capacity of 3.41 billion tonnes a year, the National Energy Administration (NEA) said in November. Only six of China’s coal mining companies are currently capable of producing more than 100 million tonnes per year, according to the China National Coal Association. Those include top coal […]

China inches closer to launching its first crude futures contract

15 Jan 2018   China

China is inching closer to launching its first crude oil futures contract but it will happen only after the Lunar New Year holiday which ends on February 23, a government source with knowledge of the matter said. “Basically, there is no problem [for the crude contract] to get approval from the State Council,” the source said, but added that it was unlikely to be kicked off before the Lunar New Year. Approval from the State Council is the final hurdle in the launch of the medium sour crude futures contract. Once it is approved, the exchange will release the deliverable crude grades, differentials of the deliverable grades against the standard contract and the delivery venue, a source with host platform Shanghai International Energy Exchange said recently. “The exchange should officially release these details two weeks ahead of the launch in order to give enough time to inform the potential […]

Falling Chinese Oil Imports Weigh On Prices

13 Jan 2018   China

China imported 12 percent less crude oil in December than in November, when crude imports had hit a record high, sparking immediate concern about demand from one of the world’s top consumers. While some say the slump is due to Beijing’s aggressive stance on fighting pollution, others say it is merely a seasonal decline. The record-high November oil shipments to China were stockpiled, and used by refiners during the last month of the year, suggesting that the latter explanation is likely, and that China’s stockpiles are quite hefty. Despite the December lull, for full-2017, crude oil import figures reveal a 10.1-percent increase from 2016, at 8.43 million barrels daily. What’s more, the first batch of oil import quotas issued by the government last month also gave market players cause for optimism: at 121.32 million tons , these are high enough to suggest a rebound in oil imports this year […]

China Gas Imports Hit All-Time High

13 Jan 2018   China

Natural gas imports into China reached an all-time high in December as the country fought a cold spell amid efforts to reduce its dependence on coal and replace it with gas. At 7.89 million tons —including pipeline flows and LNG shipments—the December figure beat the previous record, booked in November, by 20 percent. This record-high import rate makes for a fitting end to a year that saw natural gas imports into the country soar by 27 percent annually to 68.57 million tons. It seems Beijing’s drive to reduce coal consumption and increase gas consumption was a bit hurried: winter hit northern China hard and led to gas shortages in certain regions, sending domestic LNG prices to a three-year high despite the global glut. That’s because there are infrastructure challenges to LNG and natural gas supply to China, CNBC noted in a story from early December. The problem is the […]

China may invest in Russian oil pipeline company Transneft

13 Jan 2018   China, Russia

China could become one of the major shareholders in Transneft, the state-backed oil pipeline company in Russia, one of its directors said Friday. Transneft First Vice President Maxim Grishanin said the Russian Direct Investment Fund was in talks to attract investors to the pipeline company. “There are investors from Japan, we are waiting for Singapore and China,” he was quoted as saying by Russian news agency Tass. “RDIF is holding talks with the Chinese.” Russia has focused investment efforts toward the Asia-Pacific, which offers a buffer against a European Union frustrated with the former Soviet Union’s influence in the regional energy sector. The 2010 launch of the East Siberia-Pacific Ocean oil pipeline in 2010 was described by Russian President Vladimir Putin as a […]

China Sets New Records for Gobbling Up the World’s Commodities

12 Jan 2018   China

China’s 2017 imports of oil to iron ore and soybeans increase Demand likely to keep up steam as economic growth persists China continues to gobble up the world’s commodities, setting new records for consumption of everything from crude oil to soybeans. In a year of flux marked by industrial capacity cuts, environmental curbs and financial deleveraging, demand for raw materials has continued to grow in the world’s biggest consumer, helping drive a second annual gain in global commodity returns. The Bloomberg Commodity Index was up 0.2 percent at 9:55 a.m. London time, climbing for a fourth day. The gauge of returns from raw materials rose 0.8 percent last year after advancing 11.4 percent in 2016. As President Xi Jinping consolidates power behind an economy that may have posted its first full-year acceleration since 2010, there are few signs of the Chinese commodity juggernaut slowing as it rolls into 2018. […]

Shell Sells Stake In Iraqi Oil Field To Japan’s Itochu

11 Jan 2018   Iraq, Japan

Royal Dutch Shell has sold its 20-percent stake in Iraq’s West Qurna-1 oil field to Japan’s Itochu Corporation, and Iraq has approved the transaction, a senior Iraqi oil official told Reuters in an interview on Wednesday. “Shell sold its stake in West Qurna 1 to Itochu and the oil ministry approved it. We met with Itochu and discussed the required financial investments and operations at the field,” Ihsan Abdul Jabbar, the head of Iraq’s state-run Basra Oil Company (BOC), told Reuters. The operator and lead contractor at the West Qurna-1 oil field is ExxonMobil, which had agreed in 2010 to rehabilitate the field together with its co-venturers the Oil Exploration Company of Iraq and Shell’s affiliate, Shell West Qurna BV. In September last year, Shell said that it was in the process of selling its stake in West Qurna-1. Shell has also said that it wants out of the […]

Thieves steal chunk of China’s new solar highway

11 Jan 2018   China, Solar

Thieves in China have vandalised a newly opened solar highway, less than a week after the road was christened with much fanfare. The one-kilometre stretch of road in the eastern city of Jinan consists of solar panels under a layer of transparent concrete, allowing cars to drive over the photovoltaic cells. But just five days after it opened on 28 December, workers found a 1.8-metre section had been removed by thieves. Reports of the heist did not emerge until this week. Workers on the project suspected the burglars stole the panel in an attempt to duplicate the technology, since the materials themselves were inexpensive, according to local media. The concept of roads incorporating solar panels into the road has existed for years, but only recently have cities begun to build test projects. A solar bicycle path opened in Amsterdam in 2014 and a village in France opened a one-kilometre […]

PetroChina’s Biggest Refinery Doubles Russian Pipeline Oil Intake

11 Jan 2018   China, Oil Supply, Russia

Since the new Russia-China oil supply agreement took effect at the start of the year, PetroChina’s largest refinery has almost doubled the amount of Russian pipeline crude oil that it is processing, a senior industry source with direct knowledge of the volumes told Reuters on Wednesday. According to the source, the 410,000-bpd PetroChina refinery in the northeast port city Dalian will process 260,000 bpd of Russian pipeline crude oil in 2018, up by 85-90 percent compared to 2017. The higher volumes of Russian pipeline crude will replace seaborne Russian shipments of the ESPO blend from the Kozmino port in the Russian Far East and crude oil shipments from the Middle East, the industry source told Reuters. “The plant will be processing pipeline crude only this year,” the source noted, and added that the PetroChina-run Daqing oil field also ships pipeline crude to the Dalian refinery. An extension of the […]

China’s slow strategic petroleum reserves build signals reduced dependency for energy security

11 Jan 2018   China

China’s pace of strategic petroleum reserves growth slowed over mid-2016 to mid-2017, compared to the previous two years, in a sign that Beijing was comfortable in lowering its dependency on those reserves for energy security. The country did not bring any new SPR storage site on stream in that period. But the country’s implied crude stocks growth over the same period hit a record high, suggesting more crude barrels went into commercial storage. Some analysts expected China to need more crude to build its SPR in H2 2017, and also in 2018, because of more SPR storage sites coming online. PIRA Energy Group, a unit of S&P Global Platts, expects China to build 100,000 b/d of crude stocks for its SPR in 2018. The National Bureau of Statistics at the end of December said the country’s SPR had reached 37.73 million mt of crude as of mid-2017, or 276.56 […]

Japan steps into offshore Brazil bonanza

10 Jan 2018   Brazil, Japan

A consortium of Japanese energy companies said Tuesday they agreed to invest in a long-term agreement involving floating production options for offshore Brazil. Japanese energy company Marubeni said it teamed up with floating production contractor MODEC Inc., and Japanese transport company Mitsui O.S.K. Lines to invest in a long-term charter business “for the purpose of providing a floating production, storage and offloading system for use in the Sepia area offshore Brazil.” Much of the oil from the offshore basins are buried underneath a thick layer of salt on the ocean floor and producers have been able to crack into that in recent years. Output from pre-salt basins has accelerated since 2009 as exploration and production technology acclimates to the region’s tough conditions. By the end of August , Brazil […]

Businessman Seeks Sale Of $5.2B Stake In Kazakhstan Oil Field

10 Jan 2018   Kazakhstan

Moldovan businessman Anatolie Stati will ask courts to sell US$5.2 billion worth of a stake in Kazakhstan’s biggest oil field, Kashagan, held by a Kazakh sovereign wealth fund if Kazakhstan continues to refuse to pay an arbitration award of US$500 million, a spokeswoman for Stati told Reuters on Tuesday. Stati and his son Gabriel Stati, along with two companies owned by them, have been embroiled in lawsuits with Kazakhstan after the Statis initiated a legal dispute , claiming that they have been subjected to harassment by the state of Kazakhstan over their investment in two oil and gas fields in the country. The claimants said the ultimate goal of the harassment was to force them to sell their assets cheaply. The investors have refused to sell their oil assets to Kazakhstan, and instead found an external buyer, but the deal never took place because the state took over the […]

Soaring Indian Oil Demand Grabs OPEC’s Attention

10 Jan 2018   India, OPEC

Last week, we discussed changing trends in Iraqi crude flows into Asia . Total deliveries of OPEC crude to China rose last year by 300,000 bpd, as cartel members looked to keep one of its key growth markets well supplied. Even though Iraqi deliveries into China reached the highest on our records in November at a million barrels per day, arrivals in 2017 were actually down versus the prior year, as Iraq shifted its focus towards India and the U.S. instead . While Iraqi deliveries to China edged lower versus 2016 volumes, other cartel members such as Angola, Venezuela, Kuwait and Libya all saw flows increase. Angola and Venezuela led the charge in terms of higher deliveries, as both nations continue to service their debts with China (via oil, as opposed to cash). A rebound in Libyan production meant more found its way to Chinese shores, while Saudi Arabia […]

Iran Sanctions Will Help China’s Petro-Yuan

9 Jan 2018   China, Iran

In a few days, U.S. President Trump may try to re-impose sanctions on Iran , a dramatic step that could heighten tensions between the two countries. Some analysts believe the move could contribute to a much broader global economic power shift from the U.S. to China. The connection between the issues may not be obvious at first glance, but by seeking to isolate Iran from the international market, Iran could look elsewhere. Because the global oil trade is conducted in greenbacks, the U.S Treasury was able to restrict Iran’s ability to access the global financial system in the past. That made it extremely difficult for Iran to sell its oil prior to the thaw in relations in 2015, which kept millions of barrels of daily oil production on the sidelines. This time around, however, the U.S. will likely go it alone. The Trump administration won’t have the backing of […]

Russia, China And Iran Lose Interest In Venezuela

9 Jan 2018   China, Russia, Venezuela

Since the election of Hugo Chávez Frias to the Venezuelan presidency in 1998, followed by Nicolás Maduro in 2013, Venezuela has endured steady decline with the approval of the new constitution in 1999, concentration of presidential power, the capture of state and private institutions, gradual control over the press, mismanagement of its national oil company and establishment of a failed political project known as the “socialism of the 21 st century.” With 81.8 percent of Venezuelan households in poverty, 1.5 million of its citizens leaving the country, 78 percent of medical centers suffering from a supply of medications, an inflation rate that may pass 2,300 percent in 2018, oil revenues cut by half and shortages of gasoline , Chávez and Maduro literally ruined the country. These economic challenges have influenced foreign relations. Alliances sought to counter the United States are starting to backfire. The official line is that the […]

Vietnam Oil Executives Could Face Death Penalty In Corruption Case

9 Jan 2018   Vietnam

The trial is part of a crackdown on corruption and mismanagement in the energy and banking industries, which began after the security authorities of the country were given more influence in the communist state’s ruling party last year. The Vietnam police say they are investigating state rule violations at the company that led to a loss of about US$35 million for local lender Ocean Bank, as well as financial losses at PetroVietnam itself. The most senior of the executives that stand accused of corruption and other crimes is PetroVietnam’s chairman and former member of Vietnam’s politburo, Dinh La Thang, who was ousted from the supreme decision-making body and from his position as head of the Communist party in Ho Chi Minh City along with his removal from the PetroVietnam board. Another high-profile executive who will stand trial alongside Thang is Trinh Xuan Thanh. Thanh, according to German […]

Chinese steel production to slow sharply in 2018

9 Jan 2018   China

China’s steel production growth is expected to slow sharply in 2018 as state-mandated factory closures and policies to protect the environment begin to bite. The world’s largest producer of the metal will experience just a small rise in output of 0.6 percent this year, a poll of 15 analysts found in a Financial Times survey. Steel is often viewed as a barometer of economic activity because it is used in carmaking, construction and manufacturing, which means a significant price move could have repercussions for the broader economy.

For the steelmakers, the Chinese slowdown could have positive effects. A modest increase in production from China, which accounts for about half the 1.7bn tonnes churned out worldwide, could restore balance to a global market that was ravaged by a collapse in prices two years ago due to oversupply. The anticipated slowdown comes despite a robust outlook for the Chinese economy and contrasts with a 5.7 percent jump in its crude steel output during the first 11 months of 2017, according to World Steel Association figures.

US to discuss Iran sanctions waiver; Iranian oil tanker ablaze after collision with Chinese vessel

8 Jan 2018   China, Iran

All eyes will be on developments in Iran this week, with the US set to decide January 12 whether to issue a waiver suspending sanctions. Street protests have yet to impact oil flows, and the key producer has doubled oil exports since the Iran nuclear deal was implemented two years ago. Its near-term outlook is now uncertain. Meanwhile, more details are expected to emerge after a collision between an Iranian oil tanker and a Chinese vessel over the weekend. The oil tanker caught fire and is reportedly leaking oil off the coast of China. It remains unclear how much oil was spilled and if there will be a disruption in shipping movements in that area. The market will also be paying close attention to a condensate tender from Qatar this week as tightening Middle East ultra-light crude supply could keep price differentials supported this year. […]

China Is About To Shake Up Oil Futures

8 Jan 2018   China

he “huge story”, as Graticule’s Adam Levinson called it, will, it appears, be a “wake up call” for the West that seems to happily be ignoring this potential bombshell that is China’s looming launch of domestic oil futures trading. Additionally, Levison warns Washington that besides serving as a hedging tool for Chinese companies, the contract will aid a broader Chinese government agenda of increasing the use of the yuan in trade settlement… and thus the acceleration of de-dollarization and the rise of the Petro-Yuan. “I don’t think there’s any doubt we’re going to see use of the renminbi in reserves go up substantially” China has been planning this for a number of years and given rising tensions, now seems like a good time for China to flex a little. The Shanghai International Energy Exchange, a unit of Shanghai Futures Exchange, will be known by the acronym INE and will […]

U.S. and Australia Battered by Opposing Weather Extremes

8 Jan 2018   Australia, Climate, USA

Temperature extremes across the globe spanned more than 85 degrees Celsius at the weekend as Sydney melted and parts of the U.S. froze. Western Sydney touched 47.3 degrees Celsius (117 degrees Fahrenheit) on Sunday afternoon local time, the city’s hottest day since 1939. Weekend temperatures at Mount Washington Observatory in New Hampshire plummeted to minus 36 degrees Fahrenheit (minus 38 degrees Celsius). Roads melted, firefighters battled wildfires across New South Wales state and Sydney residents retreated to air-conditioned shopping malls as temperatures surged. English cricket captain Joe Root was hospitalized with severe dehydration after battling Australia in the cauldron of the Sydney Cricket Ground. At the same time, freezing fog and snow buffeted Mount Washington , tying the observatory for the second-coldest place on Earth. You’re Hot and You’re Cold Sydney sizzles as the U.S. freezes Difference Sydney, Australia Mount Washington, U.S. -40-200204060801002014201520162017201820132018100 degrees Celsius Source: Bloomberg, Australian Bureau […]

China aims to supersize coal sector through mergers

5 Jan 2018   China, Coal

China said on Friday it plans to create several “super-large” coal mining companies by the end of 2020 as the world’s biggest producer of the fuel ramps up years of efforts to streamline the fragmented sector and slash outdated capacity. The country’s National Development & Reform Commission (NDRC) said in a statement that by the end of 2020, China plans to form a number of mega-miners, each with the capacity to produce 100 million tonnes per year of coal, which will compete on the global market and help to modernize the sector. Last year, China had more than 4,000 coal mines with a total capacity of 3.41 billion tonnes a year, the National Energy Administration (NEA) said in November. Only six of China’s coal mining companies are currently capable of producing more than 100 million tonnes per year, according to the China National Coal Association. Those […]

Indonesia’s Upstream Sector in ‘Dire’ Need of Additional Investment

4 Jan 2018   Indonesia

Indonesia’s ’embattled’ exploration and production sector is in ‘dire’ need of additional investment, according to BMI Research. Indonesia’s ‘embattled’ exploration and production sector is in ‘dire’ need of additional investment, according to BMI Research. The country is suffering from slowing exploration, rising costs from mature assets and a ‘seemingly perpetual decline’ in oil and gas output, energy analysts at BMI said in a brief report sent to Rigzone, which forecasted a steady drop in Indonesia’s oil and gas production to 2026. “Once the world’s largest exporter of LNG, the country is anticipated to start importing LNG for the first time from 2021, as declining production fails to keep pace with demand,” the report states. Although acknowledging that Jakarta has pursued various measures to generate greater interest in its upstream sector, analysts at BMI highlighted the need for more significant above ground improvements, particularly in its ‘notoriously complex and opaque […]

China raises snowstorm alert level

4 Jan 2018   China

China’s national observatory Wednesday updated its alert for snow to the second-highest level, as heavy snow is expected to continue in central, northern and eastern regions Wednesday and Thursday. The National Meteorological Center (NMC) raised alert to orange at 6 p.m., following a yellow alert issued earlier the day. China has a four-tier warning system for severe weather, with red being the most serious, followed by orange, yellow and blue. Parts of Anhui, Henan, Hubei, Jiangsu, Shaanxi, Shandong and Shanxi can expect up to 30 cm of snow, the NMC said. The center has activated a level III emergency response for severe weather, urging local authorities to take precautions regarding roads, railways, electricity supplies and telecommunications.

China’s LNG prices drop as industrial users curbed, supply crunch eases

4 Jan 2018   China

Liquefied natural gas (LNG) prices in northern China have dropped more than 40 percent from record highs reached less than two weeks ago as a supply crunch has eased and curbs have been enacted on industrial users of the fuel. Ex-plant LNG prices were quoted at 5,700 yuan ($877) per ton in the Inner Mongolia region, compared to 9,750 yuan on Dec. 24, industry publication reported on Thursday. Prices in Shaanxi province fell 46 percent during the same period to 5,520 yuan. “Some industrial users were cut off gas supply or couldn’t afford it,” said Li Ruipeng, a manager at trucked-LNG dealer Tangshan Huapu Gas Co based in the city of Tangshan in the northern Chinese province of Hebei. “Supplies have increased as more gas has been diverted from the south to north,” said Li. Chinese demand for natural gas has surged this winter after […]

Pakistan restricts fuel oil imports as consumption falls – Oil

3 Jan 2018   Pakistan

Pakistan has imposed restrictions on fuel oil imports with immediate effect, as domestic consumption declines amid rising LNG imports and the shutdown of several fuel oil power plants.  A new energy committee, headed by the minister for power, has also been constituted to approve future fuel oil imports and monitor output from domestic refineries, demand from the power sector, and stocks at oil marketing companies, an official with the ministry of energy said.  The decision was taken December 28 at a meeting in Islamabad attended by Prime Minister Shahid Khaqan Abbasi, minister for power Sardar Awais Ahmed Khan Leghari and officials from oil refineries, oil marketing companies and the ministry of energy.  “During the meeting, a decision was made to restrict imports of fuel oil with immediate effect. Only four cargoes, which were booked by Pakistan State Oil, would be received,” the official said.  Pakistan State Oil deferred four cargoes in November, one of which is due to arrive in the first days of 2018, and another three by the end of January, the same official added.

Coal India misses December output target by 4.26 million mt

3 Jan 2018   India

State-owned Coal India Limited produced 54.63 million mt of coal in December 2017, falling short of its 58.89 million mt target, the company said in a filing to the Bombay Stock Exchange Monday. The output inched up 0.7% year on year. Over April-December 2017, India’s largest coal miner produced 383.93 million mt versus a target of 406.58 million mt, but the output had risen 1.6% year on year. CIL supplied 53.44 million mt of coal to its customers in December versus a target of 53.84 million mt, but it was 3.8% higher year on year. Coal supplies for the first nine months of the current fiscal year 2017-2018, which will end in March 2018, stood at 421.41 million mt compared to its target of 432.11 million mt, but was up 7.6% on the year, the company said. CIL aims to produce around 600 million mt of coal in the […]

China set to top Japan as world’s biggest natural gas importer

3 Jan 2018   China, LNG

Beijing’s crackdown on pollution has put China on track to overtake Japan this year as the world’s biggest importer of natural gas, used to replace dirtier coal. China – already the biggest importer of oil and coal – is the world’s third biggest user of third-biggest behind the United States and Russia, but has to import around 40 percent of its total needs as domestic production can’t keep up with demand. Data compiled from the Thomson Reuters Eikon terminal indicates China’s 2017 imports of pipeline gas and liquefied natural gas (LNG) will top 67 million tonnes, up by more than a quarter from a year earlier. LNG imports alone surged more than 50 percent. The data, which includes LNG tanker arrivals to China and pipeline monthly import flow estimates, is preliminary as December figures are not yet available. China still lags Japan, with gas annual […]

Russia Tightens Oil Grip With China’s Second Pipeline

New project to China’s Daqing city runs smoothly, Xinhua says Two parallel lines can transmit 30 million tons of oil a year A second Sino-Russian oil pipeline began operations on New Year’s Day, doubling China’s capacity to import crude from the East Siberia-Pacific Ocean system. China can now import 30 million tons annually (about 600,000 barrels a day) of Russian ESPO crude via pipeline, up from 15 million tons before the second branch opened, the official Xinhua News Agency reported Monday. The two lines run parallel to each other between Mohe at the border and Daqing in northeast Heilongjiang Province, the state media organization said. Russia pipped Saudi Arabia most of last year as the top crude supplier to China, the world’s biggest buyer. The ESPO system, a key piece of Russia’s efforts to export more energy to Asia, pumps crude directly to China via the two links and […]

The Biggest Threats to China’s Economy in 2018

2 Jan 2018   China

U.S rate hikes, tax cuts and trade tensions may darken outlook A slowdown in construction is seen as ‘the biggest fault line’ China’s economy begins 2018 facing what its own leaders call three years of “ critical battles .” Those fights to tackle domestic debt, poverty and pollution pose a hat-trick of risks to the world’s No. 2 economy even before higher interest rates and trade war threats from the U.S. are taken into account. While the nation is starting from a position of strength, with full-year growth in 2017 poised for its first acceleration since 2010, the expansion is seen slowing in 2018. As a result, the government of Xi Jinping is signaling that it’s sanguine about more modest economic performance , if progress on the top risk — financial fragility — can be made. Click here for Bloomberg Economics on potential for upside growth surprise “Significant economic […]

Higher Oil Prices Slow China’s Crude Stockpiling

1 Jan 2018   China

Taking advantage of the low oil prices, China increased its Strategic Petroleum Reserve (SPR) by almost 14 percent between June 2016 and June 2017, according to data by its National Energy Administration (NEA). As oil prices increased in the third and fourth quarter this year, the pace of the Chinese state oil reserve stockpiling has eased, according to analysts cited by Reuters. China rarely releases figures about its strategic reserves, and the data announced today is the first in eight months. According to the NEA, China had 37.73 million tons of oil, equal to 275 million barrels, in nine bases by the middle of 2017, up from 33.25 million tons at end-June 2016. In the previous Chinese update on its SPR, in April 2017, China said it had added 9.34 million barrels of crude oil to its state reserves during the first half of 2016, equal to an average […]