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State-run Philippine National Oil Co. (PNOC) wants to push through with the establishment of a strategic petroleum reserve (SPR), along with an interim oil stockpiling program, in a bid to provide oil supply security and price stability in the country.

PNOC has issued an invitation for negotiated procurement for transaction advisory services for its SPR program.

The SPR, or a strategic oil stockpile, is an emergency fuel storage of oil and petroleum products maintained by either the government or private entities, or both, which are released during periods of local or international oil supply disruptions.

According to PNOC, the main purpose of the SPR is to temporarily replace the physical volumes of imported oil or refined petroleum products that may be lost in the short-term during an emergency.

PNOC will engage the services of a transaction adviser to prepare the detailed feasibility study for the development of a national SPR.

The comprehensive feasibility study is expected to cover the technical, legal, social, environmental, financial and economic viability aspects, as well as the risk assessment in developing and implementing the project.

If a national SPR is determined to be viable for the country, PNOC said the study must assess potential sites, considering all the currently existing storage facilities that can be used for SPR development.

Likewise, the best stockpile ownership options, methods and technologies to be adopted, composition and volume as well as estimated total project cost should be determined.

Recognizing that any SPR program would entail gradual build-up of volume and presence in strategic locations, PNOC is also requiring its transaction adviser to come up with a study on the establishment of an interim oil stockpiling program that can be undertaken in the near term as a transition phase leading to the full-blown SPR.

“The objective of this short-term undertaking is to provide a response mechanism that the government may immediately employ in times of oil-related emergencies,” PNOC said.

Being a country that is almost completely reliant on imports to supply its crude oil and petroleum product requirements, PNOC said pump prices in the Philippines are heavily affected by price adjustments caused by complications among different parties on the global stage, on top of problems within its own borders as well as natural and man-made disasters.

philstar GLOBAL by Richmond Mercurio, August 16, 2022

Egypt is working to double the oil storage capacity at Al-Hamra Port within three years, Asharq reported citing an industry source.

With the expansion, the capacity will increase to 5.3 million barrels of crude oil.

This comes within the framework of the government’s plans to develop the new Alamein area, as well as becoming a regional center for energy storage, trading and trade. 

Operated by the Western Desert Operating Petroleum Co. and built to handle ore produced in the Western Desert, Al-Hamra Port has six storage tanks and one buoy mooring facility for loading and unloading.

“Expansion plans have been in place for several years and today we laid the foundation stone for them. The aim of the expansions is to develop the new Alamein area and provide energy for the factories that will be established there,” the source added. 

By Arab News, August 9, 2022

The United States became the world’s largest liquefied natural gas (LNG) exporter during the first half of 2022, according to data from CEDIGAZ. Compared with the second half of 2021, U.S. LNG exports increased by 12% in the first half of 2022, averaging 11.2 billion cubic feet per day (Bcf/d). U.S. LNG exports continued to grow for three reasons—increased LNG export capacity, increased international natural gas and LNG prices, and increased global demand, particularly in Europe.

According to our estimates, installed U.S. LNG export capacity has expanded by 1.9 Bcf/d nominal (2.1 Bcf/d peak) since November 2021. The capacity additions included a sixth train at the Sabine Pass LNG, 18 new mid-scale liquefaction trains at the Calcasieu Pass LNG, and increased LNG production capacity at Sabine Pass and Corpus Christi LNG facilities. As of July 2022, we estimate that U.S. LNG liquefaction capacity averaged 11.4 Bcf/d, with a shorter-term peak capacity of 13.9 Bcf/d.

International natural gas and LNG prices hit record highs in the last quarter of 2021 and first half of 2022. Prices at the Title Transfer Facility (TTF) in the Netherlands have been trading at record highs since October 2021.

TTF averaged $30.94 per million British thermal units (MMBtu) during the first half of 2022. LNG spot prices in Asia have also been high, averaging $29.50/MMBtu during the same period.

Since the end of last year, countries in Europe have increasingly imported more LNG to compensate for lower pipeline imports from Russia and to fill historically low natural gas storage inventories.

LNG imports in the EU and UK increased by 63% during the first half of 2022 to average 14.8 Bcf/d.

Most U.S. LNG exports went to the EU and the UK during the first five months of this year, accounting for 64%, or 7.3 Bcf/d, of the total U.S. LNG exports. Similar to 2021, the United States sent the most LNG to the EU and UK during the first half of the year, providing 47% of the 14.8 Bcf/d of Europe’s total LNG imports, followed by Qatar at 15%, Russia at 14%, and four African countries combined at 17%.

In June, the United States exported 11% less LNG than the 11.4 Bcf/d average exports during the first five months of 2022, mainly as a result of an unplanned outage at the Freeport LNG export facility. Freeport LNG is expected to resume partial liquefaction operations in early October 2022.

Utilization of the peak capacity at the seven U.S. LNG export facilities averaged 87% during the first half of 2022, mainly before the Freeport LNG outage, which is similar to the utilization on average during 2021.

eia by Victoria Zaretskaya, August 5, 2022

Russian energy giant Rosneft (ROSN.MM) said on Tuesday it has started construction of an Arctic oil terminal at the Bukhta Sever port, part of its huge Vostok Oil project, aimed at facilitating development of the Northern Sea Route.

The port will become Russia’s largest oil terminal with 102 reservoirs to be built by 2030, the company said.

Rosneft is leading the project that is comparable in size to the exploration of West Siberia in the 1970s or the U.S. Bakken oil region over the past decade.

Russia is facing challenges in developing its oil industry due to the sweeping Western sanctions imposed against Moscow after the Kremlin sent troops into Ukraine on Feb. 24.

Global commodities trader Trafigura earlier this month sold its 10% stake in the Vostok Oil project to a Hong Kong-registered trading firm, Nord Axis.

Rosneft has also approached other trading firms about participation in the project and sold a 5% stake to rival trader Vitol and Mercantile & Maritime for $4 billion last year.

Rosneft plans to tranship some 30 million tonnes (600,000 barrels per day) of oil via the Bukhta Sever port per year initially with a gradual increase to 100 million tonnes by 2030.

The company said on Tuesday that it had also started production drilling at the northern Payakha oil field, also part of Vostok Oil.

Reuters by Kirsten Donovan, August 5, 2022

The two largest U.S. oil companies, Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N), posted record revenue on Friday, bolstered by surging crude oil and natural gas prices and following similar results for European majors a day earlier.

The U.S. pair, along with UK-based Shell (SHEL.L) and France’s TotalEnergies (TTEF.PA), combined to earn nearly $51 billion in the most recent quarter, almost double what the group brought in for the year-ago period.

Exxon outpaced its rivals with a $17.9 billion quarterly profit, the most for any international oil major in history.

Chevron, Shell and Total ran to catch up with Exxon’s aggressive buyback program, which was kept unaltered.

The four returned a total of $23 billion to shareholders in the quarter, capitalizing on high margins derived from selling oil and gas. The fifth major, BP Plc (BP.L), reports next week. read more

The companies posted strong results in their production units, helped by the surge in benchmark Brent crude oil futures , which averaged around $114 a barrel in the quarter.

High crude oil prices can cut into margins for integrated oil majors, as they also bear the cost of crude used for refined products.

However, following Russia’s invasion of Ukraine and numerous shutdowns of refineries worldwide in the wake of the coronavirus pandemic, refining margins exploded in the second quarter, outpacing the gains in crude and adding to earnings.

“The strong second-quarter results reflect a tight global market environment, where demand has recovered to near pre-pandemic levels and supply has attritted,” said Exxon Chief Executive Darren Woods, in a call with analysts. “Growing supply will not happen overnight.”

A combination of file photos shows the logos of five of the largest publicly traded oil companies; BP, Chevron, Exxon Mobil, Royal Dutch Shell, and Total.

The results from the majors are sure to draw fire from politicians and consumer advocates who say the oil companies are capitalizing on a global supply shortage to fatten profits and gouge consumers.

U.S. President Joe Biden last month said Exxon and others were making “more money than God” at a time when consumer fuel prices surged to records.

Earlier this month, Britain passed a 25% windfall tax on oil and gas producers in the North Sea. U.S. lawmakers have discussed a similar idea, though it faces long odds in Congress.

A windfall tax does not provide “incentive for increased production, which is really what the world needs today,” said Exxon Chief Financial Officer Kathryn Mikells, in an interview with Reuters.

The companies say they are merely meeting consumer demand, and that prices are a function of global supply issues and lack of investment. The majors have been disciplined with their capital and are resisting ramping up capital expenditure due to pressure from investors who want better returns and resilience during a down cycle.

“In the short term (cash from oil) goes to the balance sheet. There’s no nowhere else for it to go,” Chevron CFO Pierre Breber told Reuters.

Worldwide oil output has been held back by a slow return of barrels to the market from the Organization of the Petroleum Exporting Countries and allies, including Russia, as well as labor and equipment shortages hampering a swifter increase in supply in places like the United States.

Exxon earlier this year more than doubled its projected buyback program to $30 billion through 2022 and 2023. Shell said it would buy back $6 billion in shares in the current quarter, while Chevron boosted its annual buyback plans to a range of $10 billion to $15 billion, up from $5 billion to $10 billion.

Exxon shares rose 4.6% to $96.93. Chevron shares rose almost 9%, closing at $163.78.

Reuters by Sabrina Valle, August 5, 2022

In recent weeks, Rhine freight rates for transporting liquid bulk products up the Rhine rose significantly to the various destinations as market players cope with the retreating water levels, lack of available barges and a necessary re-supply of product into tanks.

The hefty backwardation in the gasoil markets, seen since the start of the Russian invasion of Ukraine, has prompted traders to cut back on stocks in hinterland depots and only move the bare minimum of product into tanks.

The current rise in demand from end consumers, along with a expected cutback in natural gas usage in favor of diesel and heating oil, adds up to the problems the market currently faces. Next, barges are in most cases secured for medium and long-term on a Time Charter basis or face long waiting times before loading at various terminals in ARA, thus limiting the spot barge supply even further.

Traders are not able to cover their positions and there are therefore concerns over local product availability, as alternatives like rail deliveries are coping with staff shortages and not all barges will be able to travel past bottlenecks like Kaub (draughts expected to drop below 150cm) and Maxau (expected to drop below 140cm) in the coming days. Freight rates were stable and low during the spring, although the warmer and dry weather has caused an early snowmelt season in the Alps. Since May, water levels have been retreating which started limiting the supply of product.

The situation deteriorated in July, with water flows currently reaching thresholds normally seen during autumn and even hitting the bottom of the five-year range, firmly below the levels seen during the drought period starting August 2018. This has all led to the freight rate levels we currently see in the market, with no idea when this situation will stabilize.

Insights Global keeps track of the spot market up the Rhine and in ARA and publishes daily benchmark rates that reflect the current market conditions. If you are interested in more information, please feel free to contact me or the office via info@insights-global.com!

Petrobras has restarted the sale processes of the Abreu e Lima Refinery (RNEST), in Pernambuco; Presidente Getúlio Refinery Vargas (REPAR), in Paraná; and Alberto Pasqualini Refinery (REFAP), in Rio Grande do Sul, Brazil, as well as the logistics assets integrated into these refineries.

The main subsequent stages of the sale processes of these three refineries will be informed to the market in a timely manner.

Petrobras’ refining divestment plan represents approximately 50% of the national refining capacity, totaling 1.1 million bpd of processed oil, and considers the full sale of the following assets: Abreu e Lima Refinery (RNEST), Shale Industrialization Unit (SIX), Landulpho Alves Refinery (RLAM), Gabriel Passos Refinery (REGAP), Presidente Getúlio Vargas Refinery (REPAR), Alberto Pasqualini Refinery (REFAP), Isaac Sabbá Refinery (REMAN) and Lubricants and Petroleum Derivatives do Nordeste (LUBNOR), as well as the logistics assets integrated to these refineries.

The sale of these eight refineries is being conducted in accordance with Decree 9188/2017 and the Petrobras Divestment System, through independent competitive processes, which are in different stages, as widely disclosed by the company. The operations are in line with Resolution No. 9/2019 of the National Energy Policy Council, which established guidelines for the promotion of free competition in the refining activity in the country, and are part of the commitment signed by Petrobras with CADE in June 2019 to the opening of the refining sector in Brazil.

Petrobras concluded the sale of RLAM, on 30 November 2021, and the REMAN, LUBNOR and SIX refineries have already had their purchase and sale agreements signed and are awaiting the fulfillment of the conditions precedent, among them, the obtaining of regulatory approvals, to be completed. REGAP is in the binding phase.

The divestments in refining are in line with the portfolio management strategy and the improvement of the company’s capital allocation, aiming at maximising value and greater return to society.

Hydrocarbon Engineering by Bella Weetch, July 28, 2022