Last Week in World Oil:
Prices
- Crude oil seems stuck in its current range – US$48/b for WTI and US$51/b for Brent – as traders remain pessimistic of an extension to the OPEC supply freeze that, even if implemented, may not have much effect given the rise in American drilling that is sure to follow.
Upstream & Midstream
- Permit for the Keystone XL oil pipeline has been issued by President Donald Trump. The battleground now shifts to courtroom, where activists and landowners are plotting regulatory and legal challenges to keep the TransCanada pipeline from moving ahead.
- The 29th offshore licensing round in the UK North Sea has been completed, with 25 licences handed out to mostly majors, including Shell, BP, ExxonMobil and Statoil. Centred on frontier areas off the Hebrides and Shetlands, the success of the round indicates renewed vigour that has been gaining over the last year in what was once a declining area.
- The US active rig count jumped by a massive 20 last week, led mainly by oil rig gains, as American drillers put faith in steady crude oil prices. The bulk of the gains were in the onshore Permian Basin, with gains in Eagle Ford and Marcellus shale plays as well.
Downstream
- A shakeup is happening at PDVSA, where high-level managers across all refining and downstream divisions have been removed recently. Ostensibly to battle corruption, the changes while Venezuela is struggling to provide fuel for its citizens, with reports of long queues to buy gasoline as PDVSA struggles with debt, imports and distribution woes.
- Shell has completed talks with Tesoro to lease its capacity at an oil terminal in Panama. The three-year agreement at Petroterminal de Panama, which has 14 million barrels of capacity, and a pipeline network connecting the Atlantic to the Pacific, bolsters Shell’s storage capacity in the Gulf and Caribbean, which anchors its crude trading operations.
- The US government is considering retaliatory actions against Argentina and Indonesia over biodiesel dumping. Between 2014 and 2016, biodiesel imports from both countries have risen by 464%, prompting complaints by American biodiesel producers of underpricing. Indonesia, facing similar complaints from the EU, plans to protest together with Argentina.
Natural Gas and LNG
- Unable to rely on Saudi Arabia to supply its energy needs, Egypt has been looking elsewhere, issuing a flurry of tenders late last year. The Egyptian Natural Gas Holding Company has signed an agreement with Russia’s Rosneft to buy 10 LNG cargoes this year, starting in May, up from three cargoes bought in 2016. Until Egypt’s natural gas discoveries, including Zohr, begin producing, tenders such as this will be more common.
Corporate
- Petrobras has raised its target for divestitures, aiming to raise US$21 billion over 2017 and 2018 in a bid to pare down debt. Despite legal challenges in Brazilian courts that have blocked several of attempted sales, Petrobras intends to accelerate its asset sales plan, while expanding joint ventures in key areas such as refining and E&P.
Last week in Asian oil:
Upstream & Midstream
- A trend is emerging, as Japan’s Inpex has decided to exit the Natuna Sea in Indonesia. Selling its entire stake in subsidiary Inpex Natuna to Indonesia’s PT Medco Daya Sentosa (a subsidiary of PT Medco Energi Internasional), the sale will see Inpex leave the South Natuna Sea Block B. This follows ConocoPhillips’ decision to exit the Natuna Sea block last year, with PT Medco also gaining in that case. Inpex has been involved in the prodigious Natuna Sea since 1977, but returns have been dwindling recently with little replenishment, leading to declining interest.
- Petronas is beefing up its presence in Myanmar, farming into two ultra-deep water exploration permits operated by Shell in the Rakhine basin of the Bay of Bengal. Petronas already operates the Yetagun field in Myanmar, and plans to boost involvement in Myanmar as it seeks to deepen its external asset base. With the upstream business in the country heating up, UK oilfield services firm James Fisher and Sons last week signed an MoU with Myanmar’s Royal Marine Technology to expand the country’s marine services industry.
Downstream & Shipping
- China’s Sinopec has officially acquired its first major refining operation in Africa, following in the footsteps of its upstream division by paying almost US$1 billion for a 75% stake in Chevron’s South African downstream assets, which includes the 100 kb/d Cape Town refinery, the Durban lubricants plant and operations in Botswana. Sinopec will retain the Caltex brand for six years for all retail operations, before rebranding.
- Indian Oil has inked an agreement with the government of Nepal to supply the landlocked Himalayan nation’s refined product demand for the next five years. This extends a supply agreement dating back to 1974, with the new contract involving 1.3 million tons of refined products, principally gasoline, diesel, jet fuel and LPG for cooking. A natural gas pipeline is also being considered, as well as a refined products pipeline linking Motihari in the Indian state of Bihar to Amlekhgunj in Nepal.
Natural Gas & LNG
- As the gigantic Gorgon and Wheatstone LNG projects, collectively costing US$88 billion, approached completion, Chevron has signalled that it does not intend to sanction any further expansion. Instead, it will focus on boosting returns and perhaps smaller, linked developments, as the LNG industry adjusts to the slump in oil prices.
- South Korea’s KOGAS has signed an agreement with Japan’s JERA and China’s CNOOC, as the world’s largest LNG buyers aim to boost cooperation as bargaining power in the LNG industry increasingly shifts from sellers to buyers. Jointly, the three companies buy a third of global LNG, and the agreement potentially creates an influential buyers’ club that could demand more favourable contracts and clauses.
Corporate
- Indonesian President Joko Widodo has named Elia Massa Manik as the new CEO of Pertamina, tasked with turning around the beleaguered state giant. A relative outsider to the country’s vast oil and gas bureaucracy, Elia lands in the position with a solid reputation for restructuring state-owned firms, including turning around operations at his previous position as head of PTPN III, Indonesia’s state plantation company, and at PT Elnusa, Pertamina’s oil services subsidiary.
- Malaysia’s oilfield services firm Sapura Kencana will now be known as Sapura Energy Berhad. Proposed in early February and adopted at the recent AGM, the name was chosen to reflect the firm’s ‘global corporate identity.’
This article was originally found on NrgEdge.net.
