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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

Sasol Ltd., South Africa’s largest fuel producer, declared force majeure on the supply of petroleum products due to delays in deliveries of crude to the Natref refinery it owns with TotalEnergies SE, leaving just a fraction of the country’s fuel-production capacity still operational.

Natref, a 108,000 barrel-a-day plant, was forced to shut after the late oil shipments, the company said in a statement. “Sasol Oil will not be in a position to fully meet its commitments on the supply of all petroleum products from July 2022,” the firm said.

The shutdown means the whole of South Africa’s oil-refinery fleet is out of action after a string of other facilities suspended production over the past two years. As a result, the country’s monthly petroleum product imports are set to as much as triple by next year from pre-pandemic levels, energy consultant Citac said in a May report.

Only Sasol’s synthetic fuel operations, which use coal as a feedstock, remain fully operational, making up about a fifth of nationwide capacity.

A fire at the Engen oil refinery, which will be converted into a terminal, and an explosion at Glencore Plc’s Cape Town refinery, have rapidly curbed capacity.

Sapref, the country’s biggest plant, which is owned by Shell Plc and BP Plc, stopped operations ahead of a sale and was subsequently damaged by floods. State-owned PetroSA’s gas-to-liquids plant, another synthetic operation, has run out of feedstock.

Meanwhile, a clean-fuels policy that’s set to take effect next year raises the likelihood that refineries unable to meet the new standards will have to shut permanently.

For now, the outage at Natref is temporary. Crude oil shipments are expected to start arriving shortly, with the plant expected to ramp up to maximum production by the end of July, Sasol said.

The partners have yet to conclude options on the future of the plant, Sasol Chief Executive Officer Fleetwood Grobler said earlier this year.

The Cape Town refinery is also expected to restart in the second half of 2022.

Bloomberg by Paul Burkhardt, July 28, 2022

The International Energy Agency (IEA) estimates that global refining capacity decreased by 730,000 barrels per day (b/d) in 2021—the first decline in global refining capacity in 30 years.

In the United States, refining capacity has decreased by about 1.1 million b/d since the start of 2020, contributing 184,000 b/d to the global decline in 2021. Global demand for refined products dropped substantially in 2020 as a result of the COVID-19 pandemic.

Less petroleum demand and the associated lower petroleum product prices encouraged refinery closures, reducing global refining capacity, particularly in the United States, Europe, and Japan. However, the US Energy Information Administration (EIA) notes that a number of new refinery projects are set to come online during 2022 and 2023, increasing capacity.

As global demand for petroleum products returned closer to pre-pandemic levels through 2021 and early 2022, the loss of refinery capacity contributed to higher crack spreads—the difference between the price of a barrel of crude oil and the wholesale price of petroleum products—which serve as one indicator of the profitability of refining.

After Russia began its full-scale invasion of Ukraine in late February 2022, the impacts of reduced global refining capacity were exacerbated.

Associated sanctions on Russia—with more than 5 million b/d in crude oil processing capacity—disrupted exports of Russia’s refined products into the global market, and will likely continue to do so as import bans in the European Union and United Kingdom come into full force.

Constraints on global refinery capacity have been contributing to higher crack spreads in the first half of 2022, and they are likely to continue contributing to high crack spreads through at least the end of this year.

In its June 2022 Oil Market Report, the IEA expects net global refining capacity to expand by 1.0 million b/d in 2022 and by an additional 1.6 million b/d in 2023. New refining capacity growth includes several high-profile, high-capacity refinery projects underway, particularly in China and the Middle East, which could add more than 4.0 million b/d of new capacity over the next two years.

High-capacity refineries require access to reliable sources of crude oil inputs to maintain higher utilization and to a sufficiently large pool of potential customers to supply. Many of these new refineries are located in coastal areas and have easy access to export refined products that are not consumed domestically.

The most global refining capacity under development is in China. Chinese capacity is scheduled to increase significantly this year because of the start of at least two new refinery projects and a major refinery expansion.

The first new refinery is the private Shenghong Petrochemical facility in Lianyungang, which has an estimated capacity of 320,000 b/d and reported trial crude oil-processing operations beginning in May 2022.

The second new refinery is PetroChina’s 400,000 b/d Jieyang refinery, in the southern Guangdong province, which is expected to come online in the third quarter of 2022 (3Q22). A planned 400,000 b/d Phase II capacity expansion also began operations earlier in 2022 at Zhejiang Petrochemical Corporation’s (ZPC) Rongsheng facility.

Although these projects are the most imminent new capacity expansions in China, the country is expected to continue increasing its refining and petrochemical processing capacity through a number of additional projects expected to come online by 2030.

Most noteworthy among these additional expansions are the 300,000 b/d Huajin and the 400,000 b/d Yulong refinery projects, which both have target start dates in 2024.

Outside of China, the 300,000 b/d Malaysian Pengerang refinery restarted in May 2022 after a fire forced the refinery to shut down in March 2020. The refinery’s return is likely to decrease petroleum product prices and increase supply, particularly in south and southeast Asian markets.

Substantial refinery capacity was also added in the Middle East during the past year. The 400,000 b/d Jizan refinery in Saudi Arabia reportedly came online in late 2021 and began exporting petroleum products earlier this year.

More recently, the 615,000 b/d Al Zour refinery in Kuwait—the largest in the country when it becomes fully operational—began initial operations earlier this year and the facility’s operators expect to increase production through the end of 2022.

A new 140,000 b/d refinery is scheduled to come online in Karbala, Iraq, this September, targeting to be fully operational by 2023. A new 230,000 b/d refinery operated by a joint venture between state-owned-firms OQ (of Oman) and Kuwait Petroleum International is set to come online in Duqm, Oman, likely in early 2023.

More than 2 million b/d of new refining capacity construction is expected to come online to support markets in the Indian Ocean basin in 2022. At the same time, a handful of major projects are also planned in the Atlantic basin.

The 650,000 b/d Dangote Industries refinery in Lagos, Nigeria, set to be the largest in the country when completed, may come online in late 2022 or 2023. The refinery would most likely meet Nigeria’s domestic petroleum product demand as well as demand in nearby African countries, and it would also reduce demand for gasoline and diesel imports into the region from Europe or the United States.

In Mexico, state-owned refiner Pemex has been building a 340,000 b/d refinery in Dos Bocas, which hosted an inauguration ceremony on 1 July, even though the refinery is still under construction and is unlikely to begin producing fuels until at least 2023.

TotalEnergies is planning to restart its 222,000 b/d Donges refinery along the Atlantic Coast of France in May 2022, after closing the facility in late 2020, and some reports indicate the facility has begun importing crude oil for processing.

In addition to major new refinery projects, other facilities are also moving forward with capacity expansions at existing refineries—particularly in India. HPCL’s Visakha Refinery is undergoing a major expansion, estimated at 135,000 b/d, which is scheduled to come online by 2023. A number of other similar expansions are underway in India that may come into effect in 2024 or later.

Although no projects to build new refineries in the United States are currently planned, major refinery expansions are underway at a handful of Gulf Coast refineries, most notably ExxonMobil’s Beaumont, Texas refinery, which plans to increase its capacity by 250,000 b/d by 2023.

Facilities along the Gulf Coast currently account for 54% of all US domestic refining capacity. They supply fuels for US domestic petroleum consumption, but they are also substantial exporters into the Atlantic basin market, particularly into Central and South America and also into Europe.

If the projects mentioned above were to come online according to their present timelines, global refinery capacity would increase by 2.3 million b/d in 2022 and by 2.1 million b/d in 2023.

EIA cautions that the estimate is not necessarily a complete list of ongoing refinery capacity expansions. Moreover, many of these projects have also already been subject to major delays, and the possibility of partial starts or continued delays related to logistics, construction, labor, finances, political complications, or other factors may cause these projects to come online later than currently estimated.

By Green Car Congress, July 28, 2022

Shell, French utility Engie, gas shipping company Anthony Veder and tank storage firm Vopak have agreed to study the feasibility of shipping hydrogen from Portugal to the Netherlands, signalling progress for a project that was hit by the exit of Portugal’s two largest energy companies last year.

The companies plan to produce 100 t/d of hydrogen via electrolysis using renewable power at the Portuguese port of Sines from 2027, with the potential to scale this up over time. The hydrogen would be liquefied and shipped to the port of Rotterdam for distribution and sale.

The companies’ agreement to progress towards a feasibility study will help move forward plans outlined by the Netherlands and Portugal to develop a strategic export-import value chain for renewable hydrogen.

The countries in 2020 signed an agreement to combine their respective 2030 national hydrogen strategies. But Portugal’s Galp and EDP quit the H2Sines project for exports to the Netherlands last year. Galp said at the time it would instead focus on “supplying hydrogen for our Sines [oil] refinery”, and EDP said “its future green hydrogen investments should be directed at other projects”.

Shell could draw on the experience in shipping liquid hydrogen it gained as a member of the HESC project, which earlier this year undertook the first seaborne movement of liquid hydrogen on a 75t vessel to Japan from Australia.

Rotterdam-based Vopak operates a storage terminal at the port for a wide variety of oil products, chemicals, and gases, and Anthony Veder owns a fleet of 33 gas carriers for LNG, ethylene, and LPG.

The firms have applied for funding for the project through the EU-managed Important Projects of Common European Interest (IPCEI) framework.

Argus by Sheel Bhattacharjee, July 28, 2022