Category: Nieuws

The ongoing electrification drive and the EV revolution have elicited dire forecasts about the imminent demise of the nearly two-century old oil & gas industry.

Last year, Bloomberg predicted that global demand for road fuel will peak in 2027 at an all-time high of 49 million barrels per day before entering terminal decline. Bloomberg says that rapid adoption of electric vehicles, shared mobility and ever-improving fuel efficiency are the biggest bear catalysts for oil, with EVs expected to displace a staggering 20 million barrels per day in oil demand by 2040, or 10x the current estimate.
 

And, the Chinese EV sector is expected to play a big part in disrupting the global fossil fuel industry. China’s oil market is closely watched by energy experts not only due to its sheer size but also because of the ongoing EV revolution in the Middle Kingdom. According to Lu Ruquan, president of state-owned China National Petroleum Corp.’s Economics & Technology Research Institute, EVs will displace more than 20 million metric tons of crude demand this year, good for 10% of the country’s gasoline and diesel consumption.

At a time when internal combustion engine (ICE) vehicle sales continue to decline, retail sales of new-energy cars (NEV) in China, including electric vehicles and plug-in hybrids, rose 28.6% to 856,000 units in June from a year earlier, thanks to continued high demand for NEVs with by government subsidies, tax breaks and steep discounts helping bring buyers back into showrooms after a sluggish start to the year.

Not surprisingly, Big Oil companies are betting the farm on another pivotal energy sector: petrochemicals. Petrochemicals, which go into plastics, polyester and many other cheap and lightweight commodities that underpin modern life, could help oil companies stay afloat long after demand for transport fuels has peaked. As we have reported before, among the major energy agencies, the International Energy Agency (IEA) tends to be the most pessimistic about the long-term oil demand outlook.

Over the medium-and long-term, only the IEA sees global oil demand peaking before 2030, even in its most optimistic forecast (high growth). However, the IEA says an oil demand peak doesn’t necessarily mean a rapid plunge in fossil fuel consumption is imminent, adding that  it will probably be followed by “an undulating plateau lasting for many years.” The Paris-based energy watchdog has predicted that oil demand will grow to 105.45mn barrels per day in 2030, from 102.24mn bpd last year, with 2.8mn bpd–more than 85% of the overall increase in demand–coming from petrochemicals.

A 2023 review of the major oil and gas and chemicals companies found that over the next three years, Exxon Mobil Corp.(NYSE:XOM) plans to invest over $20 billion in expanding plastic production; CPChem will spend $14.5 billion andDow Inc. (NYSE:DOW) plans to invest USD 10 billion.

A lot of those petrodollars are flowing into the Chinese market. According to Ciarán Healy, oil market analyst at the IEA, ~6.7mn bpd, or 6.5 per cent of all global oil use, currently goes to supply China with petrochemicals. The International Energy Agency has reported that 90% of China’s increased oil demand from 2021 to 2024 comes from chemical feedstocks like LPG, ethane, and naphtha. IEA notes that between 2019 and 2024, additional Chinese production capacity for ethylene and propylene will exceed the combined current capacities of Europe, Japan, and South Korea. Between 2018 and 2023, China’s output of synthetic fibers alone rose by 21 million metric tons–enough to spin more than 100 billion T-shirts a year. A new breed of private refiners such as Hengli Petrochemical and Rongsheng Petrochemical has emerged in China whereby they are spending billions of dollars building plants specializing in chemicals, rather than gasoline and diesel.

Ironically, petrochemicals are crucial for the green energy transition, with EVs typically using more thermoplastics, foams, fibers and rubber pads than ICE vehicles. Indeed, US chemical practice leader at Deloitte David Yankovitz has told the Financial Times that EV makers are substituting plastic resins for metal parts to make lighter cars. Yankovitz says that roughly three-quarters of all emissions-reduction technologies require chemicals, most of which are oil-derived. China has met much of that demand through domestic processing of imported crude. But the US shale oil boom has also formed a mutually reinforcing “symbiosis” with growing Chinese demand for petrochemicals. According to ICIS data, between 2019 and 2023, the U.S. was the only major producer to boost its polymer exports into China,

Exxon is currently building a petrochemical complex in southern China’s Guangdong province, as well as expanding its own chemical production at existing facilities on the US Gulf Coast. According to Exxon, the chemical complex will produce performance polymers used in packaging, automotive, agricultural, and consumer products for hygiene and personal care.

“Demand for performance polymers will continue to increase in China, and we’re well positioned to meet the needs of that growing market,” “We look forward to progressing this exciting project as we work to build a competitive growth platform in Dayawan,” said Karen McKee, president of ExxonMobil Chemical Company, at the unveiling of the project in 2021.

Meanwhile, last year, Saudi Aramco acquired a 10% stake in Shenzhen-listed Rongsheng Petrochemical for $3.6bn, and has entered talks to buy a stake in Hengli Petrochemical, a top Chinese producer of chemicals for plastics. Last year, Aramco-owned S-Oilbroke ground on a $7bn petrochemical factory in South Korea.

By: Oilprice..com, Alex Kimani / July 31, 2024 

Crude oil prices have been tightly range-bound for about a year now, with bearish and bullish factors largely balancing each other out. But one Wall Street major believes the market is nearing a breakout point. The only question is whether the breakout will be a bearish or a bullish one.

In a recent note, Bank of America analysts referred to the current situation in crude oil as a Bermuda Triangle because of the region’s notoriety as a sort of black hole where vessels and aircraft disappear without a trace. In the case of oil, the disappearance could be that of demand worries about China or expectations of extended production cuts by OPEC+, Investing.com wrote.

The BofA analysis is based on technical indicators that suggest oil has been experiencing growing pressure, likening the past year or so in oil trade to a tightly wound spring. Sooner or later, the spring would be released, and per BofA, that moment is near.

Speaking practically rather than technically, the chances of OPEC+ rolling back their production cuts are not exactly great. The group has repeatedly made it clear that it would only do that if prices move much higher than they are now. Right now, prices are sinking because the war premium from the Middle East conflict is shrinking while the bearish demand attitude about China is getting reinforced by economic data. Earlier today, Brent crude sank below $80 per barrel.

Bank of America’s analysts seem to be leaning towards a bearish breakout, by the way. In fact, they expect oil prices to dive all the way to the $60s by the end of the year, meaning that negative expectations would trump any positive developments. This suggests that the focus on China will likely remain strong, with other fundamental factors taking the backseat, such as the state of world oil reserves.

Rystad Energy recently reported that the world’s recoverable reserves were lower than official reports showed, which should have sounded a bullish note for oil but did not because of the more abstract nature of total reserves as opposed to everyday output and demand trends. The energy research outlet calculated the total at 1.5 trillion barrels, which was down by some 52 billion barrels from last year’s calculations. Rystad attributed the decline to a year’s worth of production since 2023 and downward adjustments of resources.

Based on that total, Rystad forecast that oil production could peak at around $120 million barrels daily in 2035 and then decline to 85 million barrels daily by 2050. Yet that was in a “high case” scenario seeking oil demand as strong as it is now—which is not the scenario Rystad itself likes best. The company would much prefer a scenario where the electrification of transport reduces oil demand—because the available reserves are insufficient to support much higher demand.

Yet all these are long-term predictions, and these are notoriously inaccurate. In the short term, oil prices will most likely remain stuck between the rock of Chinese demand—meaning Chinese economic indicators—and the hard place of the Middle Eastern conflict. The sideshow is OPEC and its production cuts, which are probably safe to say are going nowhere until Brent crude moves closer to $90 or even tops it.

Indeed, Bank of America analysts have also allowed for such a development, saying that if Brent can top $89 per barrel, it could go to $105 per barrel by the end of the year. That would probably take a major escalation in the Middle East or a slump in U.S. shale output.

By Oilprice.com , Irina Slav / Jul 30, 2024

Energy Transfer LP announced the successful completion of its acquisition of WTG Midstream Holdings LLC. The total consideration for the transaction was $2.275 billion in cash, along with approximately 50.8 million newly issued ET common units.

This acquisition significantly expands Energy Transfer’s footprint in the Midland Basin by adding approximately 6,000 miles of gas gathering pipelines to its network. Additionally, the transaction includes eight gas processing plants with a total capacity of around 1.3 Bcf/d, as well as two more processing plants currently under construction.

The newly acquired assets are expected to enhance Energy Transfer’s system by increasing the supply of NGL and natural gas volumes. This will generate additional revenue from gathering and processing activities, as well as from downstream transportation and fractionation fees. Energy Transfer anticipates that the WTG assets will contribute approximately $0.04 of Distributable Cash Flow per common unit in 2025, with an increase to around $0.07 per common unit by 2027.

The completion of this transaction underscores Energy Transfer’s commitment to expanding its infrastructure and capabilities within the energy sector, reinforcing its position as a leading player in the industry.

By: Storage Terminals Magazine / July 16, 2024

The recent series of mergers and acquisitions of independent oil companies by major companies has reshaped the energy industry for the better in the Permian Basin.

Odessa oilman Kirk Edwards, State Rep. Brooks Landgraf and Waco economist Ray Perryman say one of the big benefits will be more stability in the oil and natural gas markets as the major companies prove much less reactive to price fluctuations than the independents always were.

Starting last fall and continuing through the spring, ExxonMobil bought Pioneer Natural Resources for $60 billion, Chevron merged with the Hess Corp. for $53 billion, Diamondback Energy obtained Endeavor Energy Resources for $26 billion and Occidental Petroleum acquired CrownRock Operating for $12 billion. ConocoPhillips bought Concho Resources for $13.3 billion in 2020.

“To me the consolidation that has taken place in the Permian over the last few years from the major independents going into the major oil companies can only spell good news for the Permian Basin economy ahead,” Edwards said. “The reason is that these majors make their budgets not just for 12 months ahead but for decades to come.

“They deal with price fluctuations much better than the independents do as usually the majors are also involved in downstream energy such as refining and then distribution. When one side of that equation is lower the other pieces are usually doing well and vice versa.”

What that means, Edwards said, is that the majors specify how many rigs and frac crews will run for a year or two and stick with that schedule no matter what pricing is doing.

“That creates stability in the market and it will certainly be celebrated by the service companies and communities that are so affected by their scope of work,” he said.

Landgraf, an Odessa Republican who chairs the House Environmental Regulation Committee in Austin, said it is reasonable to expect oil and gas prices to experience more stability following the wave of mergers and acquisitions.

“Due to a myriad of factors including tighter financial constraints, small oil companies are extremely responsive to price fluctuations,” said Landgraf, who represents Ector, Ward, Winkler and Loving counties in the 81st Representative District. “When oil prices rise production dramatically increases, which in turn pushes prices down.

“Conversely when oil prices fall, small oil companies drop production, causing prices to shoot back up again. While price and production volatility are part and parcel of this industry regardless of the size of oil companies, the existence of many small companies can exacerbate these fluctuations.”

In contrast, the representative said, larger companies are much less responsive to short-term price changes.

“This allows them to maintain more stable and consistent production levels,” he said. “With these mergers and acquisitions there are now fewer small producers and the large companies have expanded. Accordingly I expect oil and gas production and prices to fluctuate less.

“With greater price and production stability we will likely see more employment stability as well. Oilfield labor tends to balloon when production surges and pop when production is curtailed.

“If oil and gas flow at a more constant rate, these employment swings will be less frequent and less severe.”

While the mergers and acquisitions will provide a more predictable environment for producers, workers and consumers, Landgraf said, “I still want independent operators with a wildcatter spirit to have the opportunity to start up and grow in the industry.

“Fortunately I believe the consolidation of larger companies has not done anything to diminish that opportunity.”

Perryman said the increased concentration of resources in the Permian Basin is first and foremost a testament to industry leaders’ recognition that there will be strong demand for the area’s oil and gas in the coming decades.

“Drilling programs always have been and will continue to be based on the economic aspects of the potential wells and overall market conditions,” Perryman said. “Anticipated costs and potential revenues and therefore projected profit streams are essential to drilling decisions.

“To the extent that mergers could affect these economics such as through enabling lower costs, they could change drilling patterns. In addition the newly merged firms might have different priorities than were in place prior to the merger.

“The larger firms have a tendency to develop long-term drilling and capital allocation programs and communicate them to the financial market through their standard disclosure process. Having said that they also make changes rapidly to adapt to changing conditions.”

Perryman said he therefore expects somewhat greater predictability with the greater presence of major players in the region but that some degree of volatility will certainly remain.

“In many cases a drilling program that made sense before the mergers and acquisitions is likely to make sense afterwards,” he said. “It is worthy of note that while the Permian Basin is obviously a major production area, firms operating there remain ‘price takers,’ meaning that they do not have the ability to single-handedly shift prices in the large and complex international energy market.

“Global markets, production and supply and demand conditions are going to remain the primary determinants of oil prices and production decisions. The increased concentration should produce somewhat greater stability in regional activity, but oil and gas markets are volatile by their very nature and subject to policy issues, geopolitics and production priorities through the world.”

By oaoa, Bob Campbell / July 31, 2024

Saudi Aramco controls 259 billion barrels worth of oil and gas reserves, which is unmatched by any other company globally. This is a key factor in the company’s massive $1.8 trillion valuation.

To illustrate that, Visual Capitalist’s Marcus Lu created this chart to compare the proved reserves of major oil companies as of 2022.

Saudi Aramco is the national oil company of Saudi Arabia. As of 2024, it is the sixth-largest company in the world by market capitalization.

Its oil reserves are over four times bigger than the reserves of all the other six companies on our list combined.

Behind Saudi Aramco, American company ExxonMobil comes in second with 17.7 billion barrels of oil equivalent, followed by another American company, Chevron, with 11.2 billion barrels of oil equivalent.

Saudi Aramco produces 9 million barrels of oil a day, more than any other firm and nearly a tenth of the world’s total.

In addition, the state-run oil giant is the world’s most profitable company, generating $722 billion in profits between 2016 and 2023.

Saudi Aramco is also expected to play a big part in Saudi Arabia’s plans to diversify its economy and reduce oil dependence. Recently, Saudi Arabia’s Crown Prince Mohammed Bin Salman confirmed that the kingdom is in talks to sell a 1% stake in the state oil giant, which could help fund the country’s projects in clean energy and technology.

By: Oilprice / June 26, 2024

The International Energy Agency’s (EA) Oil 2024 report outlines a period
of significant transformation for the global oil market through to 2030.
While oil has historically fuelled economic growth. the report predicts a slowdown in demand growth, particularly in developed economies, as clean energy technologies and electric vehicles (EVs) gain traction.

This trend stands in stark contrast to the anticipated surge in ail production.
especially from non-OPEC+ countries, potentially leading to a substantial oil surplus by 2030.
Whe report suggests a global peak in oil demand by the end of the forecast period. driven by Two opposing regional trends. Emerging economies in Asia, particularly China and India, will experience continued growth in oil demand to supplet their expanding economies. In contrast, developed economies are expected to witness a steady decline in oil consumption as they transition tovares cleaner energy sourges ang emprace electric vehicles. This geographical disparity will reshape glopal oil trade fovs.
The anticipated rise in oil production capacity outpacing projected demand, could lead to a significant surplus of oil by 2030. This surplus has the potential to exert downward pressure on oil prices posing a chalenge for major producers. particularly the US shale industry, which is known for its rapid esporse to changing market conditions.

Eastward shift
The report noted that the centre of gravity for oil demand is migrating eastward, with Asia becoming a major mporter of crude oi, natural gas lougs NGLs, and refined products.
Emerging economies in Asia.particulary China and india. account for all of global demand
growth.By contrast.ordemnandinacvanced aconomee falla sharply said the reporty This
trend is fuelled by Asias burgeoning economic growth and riSing energy needs The Middle East and the Americas are expected to emerge as key suppliers, catering to this growing Asian certane, Ths eastward saft yil necessitate a reconfguration of global oft trade routes.

Added to this, the rise of NGLs and biofuels will disrupt the traditional landscape of refined products. A surge in natural gas liquids (NGLs) and condensates will account for 45% of new capacity increases over the forecast period, the report said. Refineries will be forced to adapt their production processes to accommodate this shift, potentially facing challenges as demand for some products wanes. For example, the report highlights a looming gasoline surplus as a consequence of increasing EV adoption and biofuel use. Conversely, the market for middle distillates like diesel is expected to remain tight, creating a product imbalance that refiners will need to navigate. Non-refined fuels are set to capture a staggering three-quarters of projected global demand growth over the 2023-2030 period,” the report said.
The report notes a major shift in strategy from Saudi Arabia, which has put on hold its planned crude dil capacity increase and will now focus on expanding natural gas liquids and condensates, which aligns with its efforts to boost domestic gas supply. “It may also reflect an acknowledgment of the rapidly building surplus in global crude oil production capacity, added the lEA.
As noted, a major challenge for the global oil market will be how the US shale industry reacts to a potential oil glut. This, in turn, could impact global oil supply and prices, creating a domino effect throughout the market. “How the industry will adapt and adjust to the new supply landscape will have wide-ranging consequences for producers and consumers globally through the remainder of the decade and peyondie lEA said.
Geopolitical considerations further complicate tie picture. The report acknowledges the ongoing influence of sanctions on Russian oil exports-which are pushing trade flows eastward
Asia’s thirst.

The surge in demana from Asia Cartcutary China anc incia, is poised to Gramatically reshape global product trade balances py 2039 The lEA report forecasts a rise in product exports from the Atlantic Basin, led by the US, to guench Asias growing torst.
The Middle East meanvnite sset t sauditi positiones the yards ung pted poduct
export kingpin. This dominance stems from a combination orfactorstinoreased retning activity and a regional decline in fuel oil demand. The surplus created oy these trends vill be readily absorbed by Asia’s import needs.

As noted. a major challenge for the global oil market will be how the US shale industry reacts to a potential oil glut. This, in turn, could impact global oil supply and prices, creating a domino effect throughout the market. “How the industry will adapt and adjust to the new supply landscape will have wide-ranging consequences for producers and consumers globally through the remainder of the decade and beyond, the lEA said.
Geopolitical considerations further complicate the picture. The report acknowledges the ongoing influence of sanctions on Russian oil exports, which are pushing trade flows eastward.
Asia’s thirst.
The surge in demand from Asia, particularly China and India, is poised to dramatically reshape global product trade balances by 2030. The lEA report forecasts a rise in product exports from the Atlantic Basin, led by the US, to quench Asia’s growing thirst.
The Middle East, meanwhile, is set to solidify its position as the world’s undisputed product export kingpin. This dominance stems from a combination of factors: increased refining activity and a regional decline in fuel oil demand. The surplus created by these trends will be readily absorbed by Asias import needs
Europe’s diesel demand is forecast to take a significant plunge. leading to a subsequent decline in net diesel imports. This creates an opportunity for North America to step in and fill the gap. potentially supplying the majority of Europe’s diesel needs by 2030.
Elsewhere. China is.on track to retain its crown as the world’s top refiner. However. the report highlights a potential challenge to Chinas product trade balance: its substantial need for petrochernical feedstocks such as LPG, ethane, and naphtha. This dependence is likely to keep.
China a net proquet impeter The potential for a gasoline glut may also prompt Chinese refineries to aust the rprecuction melas ta betenation with domestic demand for petrochemical feedstocks. This could lead to a risen naphtha and jet fuelylelds, potentially at the expense of gasoline ang ciese prectetion

By:International Shipping News / 02/07/2024.

Shell Nederland Raffinaderij B.V., a subsidiary of Shell plc, is to temporarily pause on-site construction work at its 820,000 tons a year biofuels facility at the Shell Energy and Chemicals Park Rotterdam in the Netherlands to address project delivery and ensure future competitiveness given current market conditions.

As a result, contractor numbers will reduce on site and activity will slow down, helping to control costs and optimise project sequencing.

Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,” said Huibert Vigeveno, Shell’s Downstream, Renewables and Energy Solutions Director.

“We are committed to our target of achieving net-zero emissions by 2050, with low-carbon fuels as a key part of Shell’s strategy to help us and our customers profitably decarbonise,” added Vigeveno. “And we will continue to use shareholder capital in a measured and disciplined way, delivering more value with less emissions.”

By AJOT /  Jul 02 2024 

Recently, Sungrow Hydrogen has won the bidding of China Energy Engineering Corporation (CEEC) Songyuan Hydrogen Energy Industrial Park project in Jilin China, which is the world’s largest green hydrogen, ammonia and methanol integrated project. Accounting for the largest share of this Section, Sungrow Hydrogen 1000Nm³/h ALK hydrogen production system will be applied in this project.

CEEC Songyuan Hydrogen Energy Industrial Park project is among the first batch of “Green and Low-carbon Advanced Technology Demonstration Projects” of China National Development and Reform Commission(NDRC), the largest green hydrogen, ammonia and methanol integrated project worldwide, and also the the first batch of large-scale demonstration projects of”Hydrogen Powers Jilin”. With more than $4 billion investment, this project is expected to produce 110,000 tonnes of green hydrogen, 600,000 tonnes of green ammonia and 60,000 tonnes of green methanol annually after it is put into operation.

Sungrow Hydrogen ALK and PEM water electrolyzer products have outstanding performance, and both of them had won the bidding of CEEC hydrogen production equipment centralized purchasing in 2023. Sungrow Hydrogen ALK hydrogen production system has reached the international leading level in technologies such as flexible green hydrogen production, electro-hydrogen coupling, energy management, and cluster control, and could realize efficient matching with synthetic ammonia and methanol production systems.

This project is the third project Sungrow Hydrogen won in Jilin province. In the future, Sungrow Hydrogen will actively promote the completion of the project and also the implementation of more projects on a global scale, opening up the path of large-scale production of green hydrogen, ammonia and methanol, promoting the further development of renewable energy hydrogen production and green hydrogen based chemical industry.

By: PR Newswire / July 01, 2024

Saudi Aramco has awarded contracts worth more than $25 billion to support projects aimed at growing sales gas production.

Saudi Aramco has awarded contracts worth more than $25 billion to support projects aimed at growing sales gas production by more than 60% by 2030, compared to 2021 levels.

The contracts relate to phase two development of its Jafurah unconventional onshore natural gas field, phase three expansion of Aramco’s Master Gas System, new gas rigs, and ongoing capacity maintenance.

Aramco contract awards

The operator awarded 16 contracts, worth a combined total of around $12.4 billion, for phase two development at Jafurah. The work will involve construction of gas compression infrastructure and associated pipelines, expansion of the Jafurah gas plant including construction of gas processing trains, and utilities, sulfur and export infrastructure. It will also involve construction of Aramco’s new Riyas NGL fractionation infrastructure in Jubail—including NGL fractionation trains, and utilities, storage, and export infrastructure—to process NGL received from Jafurah.

Another 15 lump sum turnkey contracts, worth a combined total of around $8.8 billion, have been awarded to begin the phase three expansion of the Master Gas System, which delivers natural gas to customers across the Kingdom of Saudi Arabia. The expansion, being conducted with the Ministry of Energy, aims to increase the size of the network and raise total capacity by 3.15 bscfd by 2028, through the installation of around 4,000 km of pipelines and 17 new gas compression trains.

An additional 23 gas rig contracts worth $2.4 billion have also been awarded, along with two directional drilling contracts worth $612 million. Meanwhile, 13 well tie-in contracts at Jafurah, worth a total of $1.63 billion, have been awarded between December 2022 and May 2024.

Jafurah

Jafurah unconventional gas field is estimated to contain 229 tcf of raw gas and 75 billion stb of condensate. Phase one of Jafurah development, which began in November 2021, is progressing on schedule with initial start-up expected in third-quarter 2025 (OGJ Online, Dec. 1, 2021). Aramco expects total overall lifecycle investment at Jafurah to exceed $100 billion and production to reach a sustainable sales gas rate of 2 bcfd by 2030, in addition to volumes of ethane, NGL, and condensate.

Master Gas System expansion

Aramco’s Master Gas System is a network of pipelines that connects Aramco’s gas production and processing sites throughout the Kingdom of Saudi Arabia. Its expansion will increase access to domestic gas supplies for customers in the industrial, utility, and other sectors—providing a lower greenhouse gas emission alternative to oil for power generation, the company said

By: Oil & Gas Journal / July 1, 2024