China’s North Korea import ban the latest gyrating coal policy: Russell

20 Feb 2017   China, Coal, North Korea

Coal markets could be forgiven for feeling slightly confused about the recent signals coming out of top importer China, with both bullish and bearish developments in evidence. The most obvious bullish news relates mainly to coking coal used in steel-making, and like many announcements in China it’s political in nature. China said on Feb. 18 that it will suspend all imports of coal from its nuclear-armed neighbor North Korea until Dec. 31, a move that, if implemented, would bring a dramatic halt to cargoes from China’s fourth-biggest supplier of imported coal. The statement from the Ministry of Commerce was brief and didn’t go into reasons for the ban, although it came shortly after Pyongyang tested an intermediate-range ballistic […]

OPEC’s Oil Curbs Grant Russia’s Urals a Rare Ticket for S. Korea

17 Feb 2017   South Korea

The biggest oil producers in the Middle East are helping crude from Western Siberia boldly go where it’s rarely gone before. Top South Korean refiner SK Innovation Co. is set to receive about 1 million barrels of Urals crude in its first purchase of the Russian blend oil in a decade. The shipment was made viable because of rising costs for rival supply from the Middle East, as nations such as Saudi Arabia curb output to comply with a deal between global producers. The cargo is also another example that helps illustrate how the reductions by top OPEC members are rerouting the flow of oil across the globe. In recent weeks, Asia has become a destination for grades that typically don’t show up in the region — from U.S. Mars Blend and Southern Green Canyon to West Canadian Select, Hibernia and White Rose. The premium of Oman crude, often […]

Saudis Lose South Korean Market Share To Iran

South Korea doubled its imports of Iranian crude in January this year from the same time last year, when Iran returned on the international oil market and started exporting growing amounts of oil in a bid to regain market share lost to the Western sanctions. According to preliminary South Korean customs data reported by Reuters , the Asian country, which is also the world’s fifth-largest crude importer, last month imported 1.79 million tons of crude from Iran, which is equal to 424,143 bpd, compared to 859,223 tons in January 2016, when sanctions on Iran were lifted. This development takes market share away from Iran’s key rival, Saudi Arabia. South Korea’s imports of crude oil from Iran’s regional rival Saudi Arabia dropped by 17.3 percent in January compared to December 2016, to 785,084 bpd, as the Saudis are complying with the OPEC supply-deal cut. South Korea’s total crude oil imports […]

China’s oil demand growing, but at a slower pace

14 Feb 2017   China

A metric used to gauge oil demand in China, the world’s second-largest economy, show steady gains but at a slower pace than before, S&P Global Platts said. Platts measured China’s apparent oil demand, which measures the amount moving through domestic refineries against net imports, at 2.3 percent higher in December when compared with last year. When using official government data, apparent oil demand last year declined 0.8 percent as the economy moved from a quantitative growth phase to a qualitative one. The assessment from Platts, however, said it found an increase because of activity at independent Chinese refineries. “That said, the pace of growth fell in 2016 from 6.6 percent in 2015, when oil demand had been boosted by […]

India’s Air Pollution Rivals China’s as World’s Deadliest

14 Feb 2017   India

India’s rapidly worsening air pollution is causing about 1.1 million people to die prematurely each year and is now surpassing China’s as the deadliest in the world, a new study of global air pollution shows. The number of premature deaths in China caused by dangerous air particles, known as PM2.5, has stabilized globally in recent years but has risen sharply in India, according to the report, issued jointly on Tuesday by the Health Effects Institute, a Boston research institute focused on the health impacts of air pollution, and the Institute of Health Metrics and Evaluation, a population health research center in Seattle. India has registered an alarming increase of nearly 50 percent in premature deaths from particulate matter between 1990 and 2015, the report says. “You can almost think of this as the perfect storm for India,” said Michael Brauer, a professor of environment and health […]

China Set To Resume Work On Nuclear Power Plants

14 Feb 2017   China, Nuclear

In order to cater to growing power demand, China is likely to begin construction on inland nuclear reactors in the next four years, resuming plans for nuclear power plants that were halted after the 2011 Fukushima disaster in Japan, a senior energy official told Chinese media on Monday. China has already decided which locations would host its inland nuclear power plants, Wang Yiren, vice director of the State Administration of Science, Technology and Industry for National Defense, and vice-chairman of the China Atomic Energy Authority, has told China National Radio in an interview. As of 2015, China’s 2016-2020 Five-Year Plan had the government investing US$78 billion to build seven new reactors a year from 2016 for the next five years. According to the plan, the country will reach 88 gigawatts of nuclear power by the end of 2020. The resumption of the projects for China’s inland nuclear power stations […]

Beijing issues yellow alert for smog

14 Feb 2017   China

Beijing issued a yellow alert for heavy air pollution Tuesday as a new round of smog hit the city, authorities said. The alert indicates an air quality index of over 200, or over 150 micrograms of PM 2.5 per cubic meter of air for two consecutive days, was issued at 10 a.m., according to a statement by the city’s air pollution emergency response office. Air quality will improve around noon Thursday, according to the statement. Outdoor construction will be limited, while more road cleaning will be conducted. Beijing has a four-tier color alert system for pollution, with red the highest, followed by orange, yellow and blue. Smog is also predicted in large parts of northern China on Tuesday and Wednesday.

China Jan crude oil imports at 34.03 mil mt, down from Dec’s record

14 Feb 2017   -, China

China’s crude oil imports and oil product exports in January retreated from fresh highs in December, but were still higher from the same month last year, according to preliminary data Friday from the General Administration of Customs. The country imported 34.03 million mt of crude in January, down 6.5% from the record high of 36.38 million mt in December despite surging 27.5% on the year. The 6.5% month-on-month decrease was much smaller than the 19.6% drop in January 2016 from December 2015, indicating strong import interest last month which could even extend into February, analysts said. China’s crude oil imports kept hitting record highs in December as oil companies rushed to use up import quotas. As a result inflows in December 2015 and 2016 hit 33.19 million mt and 36.38 million mt, respectively. In contrast to January 2016, oil companies preferred to buy more before crude oil prices would […]

U.S. Dependent on China for Rare Earth Minerals

14 Feb 2017   -, China, USA

An overlooked report has revealed the United States is completely reliant on imports from foreign countries, most heavily China, for rare earth minerals critical to our national security. The report, released by the United States Geological Survey, stated the United States is 100% dependent on foreign imports for at least 20 elements and minerals, including 17 classified as rare earth minerals critical to the development of high-grade magnets used in aircraft and missile systems. In addition to the use in military hardware, many rare earth minerals are critical for the development of GPS systems, satellite imaging, night vision goggles, and consumer products like smartphones and flat-screen televisions. One country has a near monopoly over exporting rare earth minerals to the United States: China. According to the report, the United States is 100% reliant on foreign countries (most notably the African nations of Gabon and South Africa) for the mineral […]

Oil Companies’ Hottest Market Is Low on Fuel

13 Feb 2017   Asia

Oil companies’ big bet on demand in their fastest-growing market is getting less lucrative. Energy companies are investing billions of dollars over the next several years in new and existing refineries across Asia, where consumption of refined fuels like gasoline, jet fuel and petrochemicals has been increasing faster than in any other region. But those plans are butting up against a glut in refined fuels that analysts say…

India’s Oil Demand Plunges Most in 13 Years Amid Cash Ban

13 Feb 2017   India

India’s monthly oil demand fell the most since May 2003 as the government’s crackdown on high-value currency notes continued to reverberate through the country’s $2 trillion economy. Fuel consumption fell 4.5 percent to 15.5 million tons in January from 16.2 million tons a year ago, the Oil Ministry’s Petroleum Planning and Analysis Cell said Friday. Diesel use, which accounts for about 40 percent of total fuel demand in India, dropped 7.8 percent to 5.8 million tons, the biggest decline since September. Gasoline consumption fell the most since June. Expansion in the world’s fastest-growing major economy is under pressure after Prime Minister Narendra Modi in November withdrew high-value currency notes in a country where almost all consumer payments are in cash. Growth in gross domestic product may slow to 6.5 percent in the year through March from 7.9 percent the previous year, according to an Economic Survey presented by the […]

China steel capacity rises in 2016, despite closures: Greenpeace

13 Feb 2017   China

Chinese steel capacity in operation actually rose in 2016 after a high-profile closure program concentrated on shutting idled plants, environment group Greenpeace said on Monday. China – the world’s top producer and consumer of steel – said early last year it would shut as much as 150 million tonnes of annual crude steel capacity over the next five years to tackle a supply glut that had encouraged a surge in cheap exports, exposing the nation to anti-dumping complaints. The campaign to curtail steel capacity overlapped with the country’s war on pollution, with hundreds of poorly regulated mills blamed for much of the hazardous smog drifting across northern China. “We believe that it’s above all in China’s self-interest to tackle the overcapacity problem, because of the tremendous health and environmental costs as well as associated financial risks,” said Greenpeace campaigner Lauri Myllyvirta. In research conducted with Custeel, a consultancy affiliated […]

Exclusive: China mulls radical steps targeting metals, coal in war on smog – document

13 Feb 2017   China, Climate

China is considering forcing steel and aluminum producers to cut more output, banning coal in one of the country’s top ports and shutting some fertilizer and drug plants as Beijing intensifies its war on smog, a draft policy document shows. The Ministry of Environmental Protection (MEP) has proposed the measures in a draft policy document seen by Reuters. If implemented, they would be some of the most radical steps so far to tackle air quality in the country’s most polluted cities. The move comes after China’s northeast has battled some of the worst pollution in years as emissions from heavy industry, coal burning in winter and increased transport have left major cities including Beijing blanketed in […]

New Radiation Level at Fukushima Dwarfs the Highest Peak at Chernobyl

8 Feb 2017   Japan, Nuclear

The Fukushima Disaster We noted a few days after the Japanese earthquake that the amount of radioactive fuel at Fukushima dwarfs that at Chernobyl … and that the cesium fallout from Fukushima already rivaled Chernobyl (we also noted that Fukushima radiation could end up on the West Coast of North America. And see this .). The next month, we pointed out that Tepco admitted that the radiation from Fukushima could exceed that from Chernobyl . And that Fukushima’s reactors had actually suffered something much worse than a total meltdown: nuclear melt- throughs , where the nuclear fuel melted through the containment vessels and into the ground. A few months later, we reported that radiation will pollute the area around Chernobyl for 5 to 10 times longer than models predicted – between 180 and 320 years . The following year, we pointed out that the operator of the Fukushima plant […]

Indonesia needs to invest $70 billion to $80 billion in gas infrastructure through 2030 to avoid a potential gas shortage, as domestic consumption growth outpaces supply, state-owned energy business Pertamina said Tuesday.

8 Feb 2017   Indonesia

Indonesia needs to invest $70 billion to $80 billion in gas infrastructure through 2030 to avoid a potential gas shortage, as domestic consumption growth outpaces supply, state-owned energy business Pertamina said Tuesday. An expanding economy and growing middle class are the key drivers of energy consumption, which continues to grow by around 4-5% a year. Natural gas accounts for approximately 15% of the country’s energy needs, and its growth is primarily supported by expanding demand from the power, refinery, fertilizer and transport sectors. “Indonesia needs new investment to explore and develop new gas resources and to build gas infrastructure,” said Yenni Andayani, chairman of Indonesia Gas Society and acting president director of Pertamina. Article continues below… LNG Daily is essential reading as LNG supply dynamics continue to change in big markets like Japan, China, India and the U.S. This premier independent news publication for the global LNG industry gives […]

China forex reserves fall below $3tn to hit 5-year low

7 Feb 2017   China

China’s foreign exchange reserves dipped below $3tn in January for the first time in five years but the decline was the lowest in seven months as tighter capital controls and a stronger renminbi discouraged outflows.  Official reserves fell by $12.3bn to just under $3tn, well below the average $52bn monthly drop in the third quarter of last year.  China’s reserves peaked at $3.99tn in June 2014 but since then the central bank has sold dollars aggressively to curb renminbi depreciation.

Putin’s Tough Choice: China Or The West

6 Feb 2017   China, Russia

“With Tillerson’s confirmation, Exxon just annexed the United States,” –anonymous blogger. To many observers, the appointment of Tillerson to the helm the State Dept signaled the Administration’s priority of supporting the oil industry, which in recent years has been under severe pressure from OPEC’s campaign of over-production that forced prices down to a post-recession low. Seen from a different angle, the move also signals Exxon, the oil giant, establishing a strong connection with the Administration. As the former CEO of Exxon, and a member of the Board of Directors of the company that was the core of the original Rockefeller Family’s Standard Oil monopoly, Tillerson also brings direct contact with the Rockefeller Family, whose members remain on the Exxon Board. Former Secretary of State, Condaleeza Rice, who also sits on the BoD, along with Former CIA Director and Defense Secretary, Robert Gates, both listed as an Exxon consultant, also […]

Radiation Level At Fukushima At Highest Since 2011 Disaster

4 Feb 2017   Japan, Nuclear

Radiation levels in one part of reactor no.2 at the Fukushima Daiichi nuclear power station are the highest since the disaster in March 2011, media report , quoting the facility’s operator, Tokyo Electric Power (Tepco), as saying. Tepco inspected the site via a camera attached to a guiding pipe, and according to Nikkei Asian Review, the company has estimated that an area of the containment vessel was emitting radiation of 530 sieverts per hour–enough to kill a person in under a minute. Prior to this, emissions of up to 73 Sv/hour had been detected at the reactor after it was melted in the nuclear disaster almost six years ago. Tepco said on Tuesday that the camera “captured intriguing images that may be fuel debris from the March 2011 accident, but further examination is necessary before that can be verified”. Yesterday the company said : “After some examination of digital […]

OPEC, Russia spare Asia oil supply cuts in fight to hold market share

3 Feb 2017   Asia

OPEC and non-OPEC producer Russia are shielding Asia from supply cuts agreed in a landmark deal last year as they fight to protect their share of the world’s biggest and fastest growing oil market. Instead, they have reduced deliveries to Europe and the Americas as they implement a coordinated agreement to cut supply by about 1.8 million barrels per day (bpd), seeking to reduce a global supply glut and lift oil prices. The Organization of the Petroleum Exporting Countries’ (OPEC) oil supplies to Asia rose by 7 percent between November and January, to 17 million bpd, meeting two-thirds of the region’s oil consumption, data from Thomson Reuters Eikon showed. Under a deal agreed last November, OPEC pledged to cut production […]

China’s 2016 oil demand in the red as GDP growth hits 26-year low

2 Feb 2017   China

China’s apparent oil demand slipped into the negative territory in 2016, a sharp reversal from the near 7% growth witnessed a year earlier, as the country’s slowest GDP growth in 26 years slashed appetite for industrial and transportation fuels in Asia’s biggest oil consuming nation. A near 25% growth in LPG demand and close to double-digit growth in naphtha and jet fuel demand failed to offset the impact of sharp falls in gasoil and fuel oil consumption, pulling down overall oil demand in 2016 by 0.8% to 11.11 million b/d, compared with a growth of 6.6% in 2015. The world’s second biggest oil consumer saw a sharp slowdown in demand after GDP growth slowed to 6.7% in 2016 from 6.9% in 2015 and 7.3% in 2014. GDP growth was 3.9% in 1990. Although GDP growth was only 0.2 percentage points lower than in 2015, fixed asset investment growth slowed […]

India plans oil giant to take on global rivals

1 Feb 2017   India

India plans to form a giant national oil company by combining other state-owned firms, finance minister Arun Jaitley said on Wednesday, as New Delhi wants to expand its foreign presence to meet growing domestic fuel demand. India, struggling to lift its local oil production, imports about 80 percent of its oil needs. Prime Minister Narendra Modi in 2015 set the goal of cutting this import dependence to 67 percent by 2020. “We propose to create an integrated public sector oil major which will be able to match the performance of international and domestic private sector oil and gas companies,” Jaitley said in his budget speech. India has about a dozen state-run oil and gas companies – including Indian Oil Corp ( IOC.NS ), Oil and Natural Gas Corp ( ONGC.NS ), Hindustan Petroleum Corp ( HPCL.NS ) and others – but alone they do not have the financial power […]

More drilling anticipated for New Zealand

31 Jan 2017   New Zealand

Australian energy company Melbana said Monday it was anticipating drilling success closer to home in New Zealand while keeping its eye on Cuban reserves. Melbana, which rebranded itself last year through a name change from MEO Australia, said it was planning to drill at the Pukatea-1 prospect onshore New Zealand during the third quarter. According to Melbana, Pukatea is a “low-cost [and] commercially robust” drilling opportunity with an estimated 12.4 million barrels of oil equivalents in prospective reserves. Oil is the fourth-largest export for New Zealand, bringing in around $700 million each year in royalties and taxes. The government said there are around 149 million barrels of oil reserves remaining in fields already in production. Elsewhere, […]

Is The $4 Trillion Saudi Reform Plan Inspired By China?

30 Jan 2017   China, Saudi Arabia

In an ironic decision, Saudi Arabia’s Muslim rulers, leading anti-Communists of the Cold War, may be adopting the economic management model of the atheist Communist Party of China. But rulers gotta rule… Prince Mohammad bin Salman Al Saud of Saudi Arabia recently announced Vision 2030 , the most ambitious Saudization project ever, likely driven by a $150 billion drop in reserves due to a steep decline in oil prices. Among the project’s stated objectives are some hardy perennials: reduce the role of the public sector and make the private sector the engine of the economy, reduce dependence on oil, increase participation of women in the work force, reduce corruption, and an unprecedented public share offering of 5 percent of Saudi Aramco (the Saudi Arabian Oil Company) to recapitalize the country’s reserves. But the key goal isn’t mentioned: ensure the continuing rule of the country by the Al-Saud family. Vision […]

Big Chinese Deals Stall on Capital-Outflows Clampdown

28 Jan 2017   China

The pace of big Chinese takeovers abroad is slowing as buyers contend with rules tightening the flow of money out of the country and increased government scrutiny at home and overseas. Bankers say many of the record-breaking $225 billion in overseas acquisitions Chinese companies announced last year are stalled by financial or regulatory hurdles—including the country’s biggest-ever deal, China National Chemical Corp.’s $43 billion…

China’s Oil Majors Set To Lift CAPEX For First Time In Years

27 Jan 2017   China

China’s oil majors are expected to pump up spending in 2017 for the first time in years, scrambling to squeeze more barrels of crude out of ageing domestic wells in the hope that higher prices are here to stay. State-run explorer CNOOC Ltd set the tone this month. After an international output cut agreed late last year lifted benchmark Brent crude futures to a peak of nearly $58 a barrel, not seen for 18 months, CNOOC said it would spend as much as $10 billion, up to 40 percent more than 2016. Industry executives and analysts say that increase – the first in CNOOC’s annual […]

Toshiba reckoning looms with chip decision, nuclear hole unresolved

27 Jan 2017   Japan, Nuclear

Toshiba Corp faces a day of reckoning on Friday, when it is expected to offer an initial estimate of the multibillion-dollar charge it must take on its U.S. nuclear business, but this will be only a step in a series of tough choices on the Japanese conglomerate’s survival. Toshiba’s board meets to approve plans to spin off its semiconductor business as a separate company, hoping to raise more than 200 billion yen ($1.74 billion) by selling as much as a fifth of the core money-making unit, a person with direct knowledge of the matter said. But as the proceeds would be just a fraction of the hole from cost overruns in its Westinghouse nuclear business – which local media put at 680 billion yen ($6 billion) […]

Angolan Fund Says China Exim Will Lend $600 Million for New Port

25 Jan 2017   Angola, China

The Export-Import Bank of China is lending Angola as much as $600 million for the construction of a deep-sea port in the northern enclave of Cabinda, according to Jose Filomeno dos Santos, the chairman of Angola’s sovereign wealth fund. The first phase of the port, which will include a 630-meter (2,070-foot) container terminal, ship-repair facilities, warehouses, a power plant and a free-trade zone, will be completed in the second half of this year, Dos Santos said in an interview in London on Tuesday. The work is being carried out by a Chinese construction company. Fundo Soberano de Angola, the wealth fund known by its Portuguese acronym FSDEA , is investing $180 million from its infrastructure fund in return for a 50 percent stake in Caio Porto, the company operating the project, Dos Santos said. The other half is owned by Angolan investors whom Dos Santos declined to identify. The […]

PetroChina Warns Profit May Drop to Record Low on Oil Plunge

25 Jan 2017   China

PetroChina Co., the country’s biggest listed oil and gas producer, said full-year net income in 2016 fell by as much as 80 percent, putting it on pace to report a record-low profit. The slump is due to lower international oil prices and domestic natural gas prices dropping “drastically” compared with the previous year, it said in a filing with the Hong Kong stock exchange on Wednesday. The company reported net income of 35.5 billion yuan ($5.16 billion) in 2015, which means profit last year may have fallen to as low as about 7.1 billion yuan, down for a third year to the least in data going back to 1996. “It’s slightly better than what we were expecting, but overall it’s largely in line with guidance,” said Neil Beveridge, a Hong Kong-based analyst Sanford C. Bernstein & Co. “As oil prices recover, we’ll see a strong recovery in earnings in […]

Beijing’s Plan for Cleaner Heat Leaves Villagers Cold

25 Jan 2017   China

China has opened a challenging chapter in its pollution battle, installing electric heaters in village homes near Beijing to cut winter coal-burning, but stoking discontent about rising power bills. The campaign is part of a bid by Communist Party leaders to clean the air in the city as urban dwellers grow frustrated by noxious smog that peaks in winter. China’s pollution crisis reflects decades of unrestrained industrialization. While lifting hundreds of millions of people from poverty, the boom also fouled China’s air, water and soil. The sprawling capital and its surrounding regions, home to more than 100 million people, is ground zero in the government’s three-year-old “war on pollution.” China’s government has on occasion closed factories and pulled cars off the road to limit pollution. Now it is trying to cut coal-burning by households, another contributor to Beijing’s smog. That means installing new equipment in million of village homes […]

Pricier Oil Means China’s Foreign Reserves Will Shrink Even Faster, Goldman Says

25 Jan 2017   China

Much focus is on how China’s capital outflows will impact the world’s biggest pile of foreign-exchange reserves, but another issue in need of attention here is the rally in crude, argues Goldman Sachs Group Inc. In a country where oil prices play “a disproportionate role” in the balance of payments — and China’s crude output is forecast to fall as much as 7 percent this year — the commodity’s bullish outlook poses a serious threat to reserves that have already shrunk more than 20 percent in the past two years. “The outlook for the balance of payments has deteriorated from a year ago, because oil prices are now on an upward trajectory, which could push the current-account surplus to around $200 billion this year, down from $331 billion as recently as 2015,” Goldman analysts Robin Brooks and Michael Cahill wrote […]

Xinhua: U.S. wasting opportunity in clean energy

24 Jan 2017   China, Climate, USA

Decoupling the U.S. economy from the renewable energy sector might not work as designed, a column in China’s official Xinhua News Agency read. U.S. President Donald Trump put the fossil fuels industry at the forefront of his economic agenda, nominating several key oil and gas figures to top Cabinet positions. “President Trump is committed to eliminating harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule,” a White House policy statement read. “Lifting these restrictions will greatly help American workers, increasing wages by more than $30 billion over the next seven years.” Xinhua cited several clean-energy policy advocates and government advisors who were critical of Trump’s emphasis on fossil fuels. Julia King, a climate advisor for […]

Russia beats Saudi Arabia as China’s top crude oil supplier in 2016

24 Jan 2017   China, Russia

Russia overtook Saudi Arabia in 2016 to became China’s biggest crude oil supplier for the first year ever, customs data showed on Monday, boosted by robust demand from independent Chinese “teapot” refineries. Russian shipments surged nearly a quarter over 2015 to about 1.05 million barrels per day (bpd), the data showed, with Saudi Arabia coming in a close second with 1.02 million bpd, up 0.9 percent in 2016 versus the previous year. China is the world’s second-largest oil buyer and the fastest-growing major importer. While Saudi Arabia counts China’s state oil firms as backbone clients over long-term supply contracts, China’s independent refineries – nicknamed “teapots” due to their smaller processing capacity – saw Russia as a more flexible supplier. For the teapot plants, authorized to import crude oil importers for the first time in late 2015, shipments from Russia’s eastern ports are easier to process, coming in smaller cargo […]

Why Russia Beat Saudi Arabia As China’s No.1 Oil Supplier

24 Jan 2017   China, Russia

Russia last year overtook Saudi Arabia as China’s biggest supplier of crude oil thanks in large part to increased demand from independent refineries, popularly called teapots. This is what statistics data released today by Beijing’s customs authority show. The average daily amount that Russian companies exported to China in 2016 stood at 1.05 million barrels, up by 25 percent from 2015. Saudi Arabia’s average daily shipments to the world’s second-largest oil consumer were 1.02 million barrels daily in the period, an amount representing a slight 0.9-percent uptick on 2015. Russia is likely to keep its place as top exporter to China this year as well, as long as demand from teapots remains intense: while China’s state oil companies are bound by long-term contracts with Saudi Arabia, the small refineries have taken advantage of more flexible export conditions offered by Russian exporters as well as from the proximity of Russia’s […]

As Oil Prices Climb, China and India Curb Their Enthusiasm for Reserves

23 Jan 2017   China, Energy Demand

The world’s oil producers are counting on a production cut to boost crude prices, but a slowdown in stockpiling by China’s and India’s governments could offer obstacles to that plan. For years, the governments of emerging oil consumers like China and India have been stockpiling crude, looking to build buffers like those long held by the U.S. and other developed countries. These stockpiling efforts have been important—if…

Russia Wrests Crown of Top China Oil Supplier From Saudi Arabia

23 Jan 2017   China, Russia

Russia overtook Saudi Arabia as China’s top oil supplier last year for the first time ever amid the ongoing battle for market share in the world’s biggest energy market. Russia boosted crude supply to the Asian nation by 24 percent from 2015 to 52.5 million metric tons, or 1.05 million barrels per day, according to data released Monday by the General Administration of Customs. The Middle Eastern kingdom became the second-biggest supplier, shipping 51 million tons, or 1.02 million barrels per day, little changed from a year earlier. Russia has been tussling with Saudi Arabia for dominance in the Asian nation amid efforts by oil producers to defend market share during a worldwide glut. Chinese demand has been seen as a key to a sustainable recovery in prices, while benchmark rates are climbing from the worst crash in a generation amid output cuts by major producing nations. China last […]

China is shaping up to be a world leader on climate change

21 Jan 2017   China, Climate

On Tuesday in Davos, all eyes were on Xi Jinping, the first Chinese president to attend the World Economic Forum’s annual meeting. His appearance came at an important moment for China, as it increasingly takes on a global leadership role, including, critically, on climate change. In his speech, President Xi stood up to defend the Paris climate agreement and called for stronger international co-operation to meet today’s global problems. The entire world needs to build cities in which we can move, breathe and be productive. It must also ensure better access to clean energy, use it more efficiently and protect the natural resources that are the foundation of our economy. China’s role will be key, not only as the world’s largest emitter but also as its largest investor in sustainable infrastructure. China has come so far so fast that many people are unaware of how much progress it has made, from investing in renewable energy to tackling air pollution. It still faces significant adjustment challenges, particularly around reducing coal consumption, but it is displaying the commitment and creativity needed to tackle this urgent and complex challenge. China has recognised not only the grave risks of unmanaged climate change, to which it is very vulnerable, but also the great attractions of an alternative path for growth which is cleaner, more efficient, innovative and dynamic.

China quietly shelves plans to launch Shanghai crude oil futures

21 Jan 2017   China

China’s plans to create a new crude futures contract to compete with global pricing benchmarks have been shelved due to market resistance, five sources with knowledge of the matter said, dealing a blow to Shanghai’s ambitions to be a leading energy trading hub. Potential international participants were worried they would not be able to freely exchange the yuan currency given a Chinese clampdown on capital outflows, and concerned at Beijing’s heavy handed intervention in its volatile commodity markets last year, the sources said. Most of the trillions of dollars of oil traded each year is priced off two crude derivatives, U.S. West Texas Intermediate (WTI) and London’s Brent, and executed mainly on the New York Mercantile Exchange (NYMEX) owned by CME Group and Intercontinental Exchange. With Asia becoming the world’s biggest […]

Explorers in World’s Fastest-Growing Oil Market Seek Tax Breaks

20 Jan 2017   India

Explorers in the world’s fastest-growing oil market are seeking lower taxes on crude produced domestically to encourage fresh drilling as India tries to reduce its dependence on energy imports. State-run Oil & Natural Gas Corp. and the biggest private producer Cairn India Ltd. want Finance Minister Arun Jaitley to at least halve the tax on crude oil production in the federal budget due Feb. 1. India surprised some explorers last year with its 20 percent levy on crude produced locally, moving from a fixed charge. Companies pay more now with crude near $50 a barrel than they did under the old system when it was double the price. “Globally, given the low oil price scenario, governments have provided incentives to stimulate and attract investments,” said Sudhir Mathur, interim chief executive officer at Cairn India. “In India, the cess rate of 20 percent acts as a disincentive to increase production […]

China’s Cnooc to Raise Spending First Time Since Oil’s Plunge

20 Jan 2017   China

Cnooc Ltd. plans to raise capital spending for the first time since crude began its crash in 2014 as China’s biggest offshore oil and gas producer prepares for life after the slump and a second year of falling output. The Beijing-based explorer will increase expenditure, including in the Gulf of Mexico, to 60 billion to 70 billion yuan ($8.7 billion to $10.2 billion) for 2017 after cuts in the last two years, according to a statement to the Hong Kong stock exchange and a press conference on Thursday. It set its production target to between 450 million to 460 million barrels of oil equivalent after last year posting the first output decline since at least 1999. “As a pure upstream player, Cnooc has to invest for the future, especially in exploration as it needs to find new reserves to keep sustainable development,” said Tian Miao, a Beijing-based analyst at […]

China Q4 GDP grows 6.8 percent year-on-year, slightly better than expectations

20 Jan 2017   China

China’s economy grew 6.8 percent in the fourth quarter from a year earlier, slightly more than expected, supported by higher government spending and record bank lending that has stoked concerns about an explosive rise in debt. The world’s second-largest economy expanded 6.7 percent in 2016, the National Bureau of Statistics said on Friday, roughly in the middle of the government’s 6.5-7 percent growth target but still the slowest pace in 26 years. Economists polled by Reuters had expected China would report 6.7 percent growth for both the fourth quarter and the full year. The economy grew 6.7 percent in the third quarter. While China is on more solid economic footing than this time last year, it faces increasing uncertainties in 2017, with a housing frenzy showing signs […]

China-U.S. trade tensions top Big Oil’s worry list

20 Jan 2017   China, USA

Oil executives and Middle East producers are concerned that trade tensions between the United States and China risk clouding the outlook for global energy demand growth and a recovery in the price of oil. “It is not unique to our country to feel a certain level of anxiety (about tensions). But there is a lot of wisdom on both sides… I hope this anxiety will prove unfounded,” Saudi Energy Minister Khalid al-Falih told Reuters. Chinese President Xi Jinping offered a vigorous defense of free trade in Davos on Tuesday, underscoring Beijing’s desire to play a greater global role as the United States turns inward. “The two largest economies need to sort out their differences for the wellbeing of the global community,” Falih, who sets energy policies for the world’s largest […]

China Fires Up Its Furnaces While Diggers and Oil Drills Slow

20 Jan 2017   China

China may be mining less coal and pumping less crude but it’s processing more raw materials than ever in its mills, refineries and smelters. Cost pressures and environmental regulation curbed domestic crude and coal output last year while economic stimulus propelled steel making, aluminum smelting and oil refining to record levels. The outlook for 2017 depends on the pace of supply-side reforms aimed at shifting away from heavy industry to a consumer-led economy, according to Susan Gao, head of consulting at CRU Group in China. Aluminum makers ramped up output as government stimulus boosted demand, lifting prices and profits, and as new or idled smelters came online. After exports slowed for the first time in four years, shipments of aluminum are set to rise again in 2017, according to consultant SMM Information & Technology Co. That may set up trade friction with the incoming U.S. presidential administration of Donald […]

Oil Demand at Risk as China Reins In Buyers That Bought Less

20 Jan 2017   China

Demand from some of the most coveted oil buyers may slow this year because they didn’t purchase all that they could in 2016. While China’s private refiners have received their first batch of quotas to buy foreign crude in 2017 and may get approval to purchase more later, the amount probably won’t exceed 2016 volumes, according to JPMorgan Chase & Co. That’s because the government is cutting allocations for those who bought less last year. What the processors have been allowed to directly import in the latest tranche is 62 percent of 2016’s total levels, the bank said in a report. The refiners, known as teapots, have been wooed by everyone from producers such as Saudi Arabia to oil traders including Trafigura Group as a global supply glut stoked competition among sellers. While benchmark crude prices are gaining from their worst crash in a generation amid supply curbs by […]

Analysis: Asia’s unquenchable thirst for oil to outpace 2017 refining growth

20 Jan 2017   Asia

Asia is gearing up to witness new refining capacity growth in at least four countries in 2017, but capacity reductions in some top consuming nations will pull down the net addition to a level that would be lower than the anticipated demand growth the region is likely to see this year. While China, India, Taiwan and Vietnam are expected to add to their refining capacities this year, Japan will witness closures, while some independent refiners in China might be forced to give up capacity, analysts and market participants told S&P Global Platts. “Oil demand growth in the Asian region is expected to exceed the net refining additions this year,” said Sri Paravaikkarasu, Head of Oil, East of Suez, at Facts Global Energy. “And looking at the next five-year horizon, oil products demand growth should exceed net refining additions every single year, helping to clear product surplus somewhat.” Growth in […]

New year, new cuts stir debate about China’s steel, coal excess

19 Jan 2017   China

The new year has ushered in a new round of capacity cuts as China tries to combat excess in its bloated steel and coal sectors, but the moves are a drop in the ocean in the nation’s long struggle to make its heavy industry more efficient. For years, Beijing has been seeking to cut the share of coal in its energy mix to contain pollution and meet climate change goals while streamlining its unwieldy and over-supplied smoke-stack industries such as steel. It also comes as the government tries to focus the nation’s economy away from heavy industry and cheap manufacturing in favor of the high tech and service sectors. Beijing far exceeded its targets to eliminate 250 million tonnes […]

Oil Production Here Is Declining Faster Than Anywhere On Earth

19 Jan 2017   East Asia

Series of important warnings emerging in the oil sector this week. With several sources noting that production is taking a steep nosedive — in one particular part of the world. Asia-Pacific. Industry specialists Wood Mackenzie released data Monday showing that Asian crude output is falling notably. In fact, the decline is substantially greater than production pullbacks anywhere else in the world. WoodMac’s Asia-Pacific upstream research director Angus Rodger said the region’s overall output is heading lower fast. With forecasts showing that Asia-Pacific crude production will fall by 1 million barrels per day, or over 13%, by 2020 — to 6.5 million b/d, from a current 7.5 million b/d. That’s largely a consequence of declines in Asia-Pacific’s “big four” oil producers — China, Indonesia, Malaysia, and Thailand. Coming as big fields in those countries hit maturity — thus requiring higher levels of investment to keep them pumping. Such capital investment […]

China Leads Unprecedented Drop In Asian Crude Production

18 Jan 2017   China

Crude oil production in the Asia-Pacific is falling at a unique rate, according to a report from Wood Mackenzie, with China accounting for about half of the decline, Wood Mac’s Asia-Pacific upstream research director Angus Roger said. In 2016, the region pumped around 7.5 million barrels daily but this is about to drop to less than 6.5 million bpd by 2020, Roger warned, noting that the region’s output has been falling by about 7 percent annually since the price crash of 2014. The analyst added that the bulk of oil production in the Asia-Pacific will continue coming from large fields in China, Malaysia, and Indonesia, but these fields are already mature, which is affecting production costs and lifting breakeven points. The report’s findings are worrying for China, which recently reported that its dependency on imported crude had deepened, reaching 64.4 percent of domestic demand in 2016. The reason for […]

Declining Chinese Oil Production Could Help Boost Oil Prices

18 Jan 2017   China

While all eyes are on OPEC to see whether or not they will follow through on production cuts, there is another major source of oil supply that will have a substantial impact on prices this year, and very few people are talking about it. China is often a central player in oil market analysis, but usually in terms of oil demand. But even as China is the world’s second largest crude oil consumer, and the largest importer, it is also no slouch in terms of production. Crude oil output climbed steadily over the past three decades, rising from 2 million barrels per day in the 1980s to a peak of about 4.4 mb/d in 2015, enough to rank it as the fourth largest producer in the world after the U.S., Russia and Saudi Arabia, and roughly on par with Canada. However, the collapse of crude oil prices has forced […]

China’s crude oil juggernaut to roll on, but more slowly: Russell

17 Jan 2017   China

There is little doubt China’s crude oil imports enjoyed a robust 2016, hitting a record high. The question is how long the party can continue? Customs data released on Jan. 13 showed Chinese imports of crude reached 36.38 million tonnes in December, or 8.57 million barrels per day (bpd), the most in a month and well above the previous mark of 8.04 million bpd set in September. For the year crude imports were 13.6 percent higher at about 7.6 million bpd. In volume terms this represents a gain of about 912,000 bpd, showing that China is still by a large margin the major driver of global growth in crude oil demand. To put that figure in perspective, Asia’s other major source of oil demand growth is India, where crude imports were about 4.3 […]

China’s crude oil output will fall 7 percent by 2020 – government

17 Jan 2017   China

China’s crude oil output is expected to drop by 7 percent by 2020 compared with the previous five-year plan as output from some of the nation’s largest, but oldest, wells falls, while natural gas supplies will rocket by almost two-thirds. Under a plan covering the period 2016-2020 published by the National Development and Reform Commission (NDRC) on Tuesday, crude output will be around 200 million tonnes by 2020, equivalent to 4 million barrels per day (bpd). That would be down from 215 million tonnes in the 2011-2015 plan. The drop reflects falling output at aging, high-cost fields as producers scale back production in a lower oil price environment. For the first 11 months of 2016, production was down 6.9 percent at 182.91 million tonnes, just […]