Category: Nieuws

El Musel LNG terminal in Gijon has received administrative authorization for its start-up from the Spanish Ministry for the Ecological Transition and the Demographic Challenge.

According to the Spanish energy company Enagás, the technical conditions for the provision of LNG logistics services at the plant are established, and for its start-up, only the Commissioning Act is pending by the Industry and Energy Area of ​​the Government Delegation in the Principality of Asturias.

Previously, in February, the plant received the approval of the singular economic regime for its logistic use by the National Commission for Markets and Competition (CNMC).

“The start-up of El Musel is a milestone for the start of commercial operations of the infrastructure, which is part of the Government’s More Energy Security Plan, and will make it possible to reinforce the security of energy supply in Europe,” Enagás said.

To note, on 6 June, Enagás began the binding phase of the capacity allocation process (Open Season) for logistics services at the El Musel, which is expected to end in July. The logistics services offered for this infrastructure are LNG unloading, storage and loading operations.

The Spanish major pointed out that the Gijón plant could contribute up to 8 bcm of LNG capacity per year to the security of the European energy supply and will allow the docking of ships of between 50,000 and 266,000 m3. The plant has two tanks with 150,000 m3 of LNG storage capacity, two tanker loading bays with a capacity to load a maximum of 9 GWh/d and a maximum emission capacity of 800,000 Nm 3/h.

On 28 February, Enagás and Spanish LNG terminal operator Reganosa signed an agreement by which Enagás acquired a network of 130 km of natural gas pipelines from Reganosa and in return, Reganosa purchased a 25% stake in the El Musel plant.

Enagás noted that the agreement reinforces both companies, allowing them to take advantage of their synergies and work together on new possibilities for collaboration to strengthen the security of supply and progress with the decarbonisation objectives of Spain and Europe.

To note, the start-up of El Musel is also a part of Enagás’ 2030 strategic plan.

By Offshore Energy, June 16, 2023

Port of Rotterdam has awarded a feasibility study contract to Proton Venture, an ammonia engineering company, for the scoping and conceptual design of an ammonia export terminal in Western Australia (WA).

Via this future ammonia hub to be located in Oakajee, the Dutch port aims to import 3 million tons of ammonia per year by 2030. As explained, the facility will employ proven technology in a new application for the transfer and loading of ammonia onto marine vessels.

Under the feasibility study contract, Proton Venture will demonstrate the technical and economical feasibility of an integrated port terminal facility for ammonia storage and loading.

As the main contractor, Proton Venture teamed up with Intecsea, a company designing the subsea pipelines, and Bluewater, a designer of the single point mooring (SPM), to employ storage tanks in combination with a unique SPM.

This innovative approach will accelerate the export of ammonia supporting Port of Rotterdam’s import targets, the company said.

In addition to ammonia export, the Netherlands and Australia have already established collaboration on renewable hydrogen.

Earlier this year, the Netherlands and Australia signed a memorandum of understanding (MoU) to support the development of a renewable hydrogen supply chain from Australia to Europe, including hydrogen trade policy, standards and certification schemes, port infrastructure and supply chain development, innovative hydrogen technologies, including shipping, equipment and services, and government policies about safety, social licence and regulations for hydrogen.

The MoU is said to have the potential to make Rotterdam an international hub for hydrogen imports, including for transport to other countries in Northwest Europe.

Shortly after signing this MoU, the two countries formed a tripartite partnership with Germany, aiming to develop a joint hydrogen hub in Western Australia, known as TrHyHub.

The objective of the project is to develop a new and modern port industrial complex for large-scale hydrogen production for both local use and export.

OFFSHORE ENERGY by Ajsa Habibic, June 16, 2023

Investment Thesis

Valero Energy (NYSE:VLO) has continued to demonstrate strength in its fundamentals as well as commitment to future growth through investment and diversification, however immediate wider restrictions and volatility serve only to dampen price action in the short term. We think VLO presents an immediate Hold opportunity until these uncertainties are navigated, at which point sustainably executed strategies will serve to give VLO the edge into the next uptrend.

Supply and Demand Imbalance

VLO is a refinery company based out of San Antonio whose core operations revolve around the manufacture, marketing, and distribution of petrochemical products, including ethanol and renewable diesel fuels. VLO has strategically grown its presence around the North American Gulf Coast, as well as select areas mid-continent.

The recent OPEC+ announcements involving the ceiling on oil production has persuaded analysts and the wider market that oil prices are set to rise as a result of a consistently strong and growing demand, pulling back refinery stocks due to fears of greater operating costs and weaker refinery margins. It can be said that this move by OPEC has provided an indicator of an immediate unsteady outlook for global oil.

As a refinery company, the profitability of VLO rests principally on the spread between crude oil and that of its refined products; a variable dependent on supply and demand. On the demand side it seems clear that businesses are continuing to transition back to office-based working, and China’s production ramp up tells the same story. When factoring in supply cuts it seems to complete a clearer picture of the potential for oil prices rising back towards triple digits, a vision shared by Paul Sankey.

There is currently an aggressive bill to enforce maximum refining margins on refinery companies to control price gauging in the face of increased costs of living. Higher oil prices are typically pushed forwards, absorbed by the consumer, however, supply cuts and refinery margin limits as a result of political pressures may prevent this going forwards. Volatility in the price of oil poses a greater risk to VLO going forwards because of potentially damaged refinery margins.

Diligent Diversification

VLO has committed to continued Investment into the Permian basin, one of North Americas most prominent energy sources, via its McKee refinery in the Texas Panhandle. Development in such a strategic location serves to further grow its asset base and out-muscle other immediate competition.

VLO has recently sought US approval to import Venezuelan oil, demonstrating efforts to renew energy deals and diversify its import options. The configuration of VLO refineries render them an industry leader in the number of unrefined crude oils that can be processed, however they are capable of processing heavier and lower quality crude with particularly high efficiency. It seems obvious that Venezuelan imports would serve to raise margins and encourage sustainable profitability, but this is all easier said than done.

Venezuelan import requires approval from Biden Administration following sanctions in 2019, and the US may not want to be seen easing sanctions amidst rising tensions. Nevertheless, Chevron (NYSE:CVX) was recently granted approval to continue limited operations, which may provide some light at the end of the tunnel for VLO regarding this matter.

Further evidence of growth and diversification is demonstrated by the successful acquisition of a defense contract with the defense logistics agency for the development of aviation fuels, with a maximum value of $906 million.

As well as this, there is a continued commitment to innovative renewable fuel development through sustainable aviation fuel production, achieved by investment into the Diamond Green Diesel Port Arthur plant in Texas. This will be critical when considering the importance of long-term carbon reduction strategies.

Reinforced Strategic Edges

Earnings throughout 2022 were record breaking due to the strength of refinery volumes (Q4 2022 refineries were running at 97% capacity) and margins amidst wider chaos surrounding energy market. The free cashflow generated as a result of this has opened up a plethora of positive options for VLO, namely debt management, share buybacks and increased dividend pay-outs. An opportunity for management to focus on shareholders is of course good news for the bulls.

It was partly for these reasons that it was expected Q1 2023 earnings (reported on the 27th of April) would remain strong as a result of favorable demand economics, outweighing the impact of turnaround experiencing lower throughput. VLO certainly didn’t disappoint, with an earnings beat of over 14% and a revenue beat exceeding 6%. It was clear that the 97% refinery capacities witnessed last year were unsustainable, however Q1 2023 capacities of 93% continue to impress and may provide an early signal of further strength for the next quarter.

Despite this, positive price action has been reluctant, in our opinion this is likely as a result of wider macroeconomic fears and general caution surrounding supply-demand uncertainty. The price of VLO is down around 7% year to date and down 15% over the last 3 months alone.

Nevertheless, it seems clear that foundations are continuing to strengthen, with a declared quarterly dividend of $1.02 which went ex-dividend last week, representing a forward yield of 3.76%. VLO has demonstrated remarkable stability with its dividend as a result of growing margins leading to a manageable pay-out ratio of 11.5%. The reliability of dividends is a clear indicator of sustainable shareholder initiatives, investors looking for income opportunities would be likely be well served in the long term by VLO if seeking some comfort within energy diversification.

VLO currently boasts an industry ranking of 3rd out of 23 on the seeking alpha platform, with a Quant rating that was recently downgraded from Strong Buy to the current Buy consensus. As well as this, Bank of America have awarded VLO with a top sector rating, citing favorable leverage to refining environments. Investors will feel that VLO has largely felt underappreciated by the market, but this recognition may well represent the start of a new chapter for market growth.

Strategic balance sheet diversification through added exposure to alternatives such as natural gas also demonstrates a commitment to sustainable growth, which is necessary to maintain the edge once the economic slowdown comes to a halt.

This provides a logical view into why Seeking Alpha’s current growth factor grade of a B may seem reliable when exploring further growth potential, this is to say that it seems likely growth will only strengthen from this point onwards.

Long-Term Technical Uncertainty

VLO recently broke beneath the 200-Day EMA which is relatively significant when considering the price of VLO has been more or less consistently above this long-term indicator for almost 2 years. This demonstrates that recent weakness runs deeper than a light sell-off and provides a strong argument that rushing in to buy shares just because they appear cheap could be a mistake without considering the full picture.

The integrity of a medium term buy case for VLO may rest on its’s ability to demonstrate a confident recovery towards this key indicator within the coming weeks, which it has achieved in past periods with little resistance.

The potential for a sharpish return to levels above the 200-Day EMA may also be supported by the recent MACD cross, which has historically provided a decent indication of future price strength as seen in December of last year.

Conclusion

In conclusion, recent OPEC activity has thrown a degree of uncertainty into energy markets which presents possible immediate supply volatility and a moderate threat to refinery margins as a result of unstable operating expenses.

Despite this volatility, VLO continues to diversify its refinery environments, revenue streams and balance sheet exposure; demonstrating a fundamentally strong and strategically sound foundation which could serve as an excellent edge once the economic slowdown cools off.

Superb refinery operating capacities, which have continued into 2023, have served to pull in record cashflows which enable an experienced management team to consider approaches to address additional shareholder benefits. When combined with a stable and growing dividend pay-out, VLO becomes an attractive option for those seeking income investing strategies during this wild energy market.

We are optimistic about the long term of VLO, however investors will be keen to see strength in the coming weeks for a possible return towards the 200-Day EMA to confirm a level of resistance against any potential severe downtrend.

This, when combined with ever present risks such as consumer behavioral changes, resource volatility and forced production cuts mean that we would like to see VLO weather the immediate storm before returning to a confident Buy rating, although investors willing to navigate these risks will likely find joy on the other side in a great refinery company.

By SeekingAlpha, June 16, 2023

Hedge funds have long been a favored investment vehicle for high net worth individuals and institutions looking to diversify or enhance their portfolio returns, providing sophisticated investment strategies unavailable to the average investor. One such hedge fund, HRT Financial LP, has recently purchased 119,459 shares of Ultrapar Participações S.A. (NYSE:UGP) during the fourth quarter, valued at approximately $289,000 according to its most recent Form 13F filing with the Securities and Exchange Commission.

Ultrapar Participações S.A., an oil and gas company with a market capitalization of $4.03 billion, operates through several segments including fuel distribution, LPG distribution, chemicals, storage terminals, and drugstores. Shares in the firm opened at $3.62 on Wednesday – a healthy boost from its 52-week low of $2.13 – with a fifty-day moving average of $3.11 and a two-hundred-day moving average of $2.72.

The company’s financial standing is sound, evidenced by its debt-to-equity ratio of 0.92 and quick ratio of 1.41 as well as its tripling of net profit in Q3 2020 compared to the same quarter in the previous year. Moreover, analysts expect continued growth for Ultrapar Participações S.A.: the company boasts a price-to-earnings ratio (P/E) of 12.91 and a PEG ratio of 0.61 indicating that it is undervalued in relation to expected earnings growth.

Investors interested in exploring what other hedge funds are holding UGP can use HoldingsChannel.com to get the latest 13F filings and insider trades for Ultrapar Participações S.A.

In conclusion, HRT Financial LP’s purchase gives further credence to Ultrapar Participações S.A.’s success story despite economic headwinds wrought by COVID-19. With its sound financial standing and strategic positioning as a diversified oil and gas company, Ultrapar Participações S.A. remains an intriguing investment opportunity for discerning investors seeking exposure to the sector.

BestStocks by Yasmim Mendonça, June 16, 2023

The OPEC+ voluntary production cuts, on paper promising curtailments amounting to 1.66 million b/d, should have been the main story for May. Regrettably for many in the Middle East, just as participating countries were preparing to curb output, the overall market sentiment worsened greatly.

First it was refinery margins that forewarned of difficulties ahead, then data on Chinese manufacturing depressed markets even further and protracted negotiations on the US debt ceiling put the icing on the bearish cake.

As Middle Eastern producers were thinking of formula prices for their cargoes loading in June, they did not necessarily see the scope of the headwinds that they were up against. There was still no mention of ouching, of punishing market short-sellers and there was hope that the negative trends in market positioning could be turned around once the reality of OPEC+ production cuts brakes through the clouds.

Things have taken an awkward turn, however, and clouds have been the mainstay for the region’s main exporters.

Saudi Aramco’s Official Selling Prices for Asian Cargoes (vs Oman/Dubai average).

Saudi Arabia’s national oil company Saudi Aramco has cut all its Asian formula prices for June-loading cargoes going to Asia, simultaneously ramping up the OSPs for European destinations.

For Asia, the month-on-month downward revision was expected. Despite the slight increase in the Dubai cash-to-futures spread, up $0.15 per barrel compared to March, refinery margins have been in freefall throughout April and that gloom has set the sentiment for prices. Surprisingly, the biggest month-on-month drop (down $0.90 per barrel compared to May OSPs) came for Arab Heavy, a grade that saw the biggest increases in the past months, whilst Arab Light was only cut by $0.25 per barrel to a $2.55 per barrel premium vs the Oman/Dubai average.

Considering the substantial pricing decrease and Saudi Arabia’s pledge to cut 500,000 b/d from its production targets, it might come as surprise that Saudi Aramco vowed to allocate full requested volumes to Asian customers. Assuming Aramco will cut output, this can only mean that demand for Saudi barrels is getting weaker amidst recessionary pressures.

Formula prices of US-bound cargoes by selected grades (vs ASCI).

Saudi exports to the United States have halved year-on-year so far, averaging a meagre 230,000 b/d this year, according to Kpler tracking data. Not only that, the Gulf Coast is no longer the key region for whatever remaining volumes still are delivered to the US as crude-strapped refiners in PADD 5 have been ramping up their purchases recently.

Saudi OSPs have been at their highest in years and remain well above any other Middle Eastern exporter for some time already. The difference between a Basrah Medium and an Arab Medium cargo into the US Gulf Coast stands at an unbelievable $8 per barrel, even though the latter’s quality is only marginally better than the former’s. Despite its pricing, Saudi Aramco profits fell 19% year-on-year to $31.9 billion, declining in unison with the average realized crude price that dropped to $81 per barrel in the January-March period.

ADNOC Official Selling Prices for 2017-2023 (set outright, here vs Oman/Dubai average).

The headache of setting official selling prices in such a volatile market is no longer there for ADNOC as its formula prices are set by the Murban contract which came in at $84.11 per barrel, up almost $5 per barrel from May. Whilst the flat prices have moved up, the weakness of light grades globally has also seep into Middle Eastern pricing as the region’s main benchmark has been gradually getting closer to Murban, finishing the month at a meagre $0.71 per barrel discount to the UAE grade.

This is a notable feat considering in early 2023 the same Murban-Dubai spread ticked in at around $5 per barrel. As Dubai was strengthening on the heels of the upcoming OPEC+ cuts, the UAE’s other key export grade Upper Zakum finally edged nearer to Murban with its differential hiked $0.40 per barrel to a $0.70 per barrel discount. Considering Dubai was trading almost neck-to-neck to Murban in the first half of May, Upper Zakum should see further increases when the time will come for July 2023 formula prices. The other light grades Umm Lulu and Das saw only marginal changes as their quality characteristics are very similar to Murban.

Iraqi Official Selling Prices for Asia-bound cargoes (vs Oman/Dubai).

For Iraq, the fact that Turkey seems to be stalling the resolution of the Kurdish issue (at least until the second round of presidential elections is over) has been an unnecessary hindrance to the state oil marketing company SOMO. Should President Erdogan get re-elected in the second round, the resumption of exports will most probably be a matter of several weeks if not days. After all, the debts that Turkey owes the Iraqi federal government were all incurred in the Erdogan era. For its Asian buyers, SOMO decided to roll over Basrah Medium prices (quite the contrast to Saudi Aramco which cut every single Asia-bound grade) and increase Basrah Heavy formula prices by $0.10 per barrel compared to May, placing it at a -$3.30 per barrel discount to Oman/Dubai.

Iraqi selling prices for Europe-bound cargoes (vs Dated Brent).

Mirroring Saudi Aramco, SOMO’s European formula prices are much more in line with the overall Middle Eastern trend. For Iraq, a downward pricing correction has been long overdue as the levelling out of Brent Dated and ICE Brent (the former is used by SOMO, the latter is used by Saudi Aramco) has rendered Iraqi barrels much cheaper than its peers. To take but one example, Basrah Medium is some $4 per barrel cheaper than Arab Heavy, despite being less sulphurous. Despite such discrepancies, Iraqi exports into Europe didn’t pick up and have been hovering around the same 600,000 b/d for most of this year and even the halting of Kurdish exports failed to boost Europe-bound outflows above this level.

Iranian Official Selling Prices for Asia-bound cargoes (vs Oman/Dubai average).

Iran has been enjoying a surprisingly undramatic 2023 so far, with a prospective Iran nuclear deal being completely scrapped from the geopolitical agenda of the day. Enjoying a period of strong exports with monthly outflows coming in above 1 million b/d every month of the year so far, Iran’s authorities also claim that production has surpassed the 3 million b/d mark for the first time since late 2018. The figures came from Javad Owji, Iran’s oil minister, and are more some 400,000 b/d above consensus figures provided by OPEC secondary sources. Perhaps reflecting this increasing confidence, Iran’s national oil company NIOC has the formula price of its Iran Light grade to Asia 5 cents per barrel above Arab Light, for the first time this has happened since November 2020. Overall, Iran has followed Saudi Aramco’s pricing strategy and cut its Asian OSPs by $0.20 per barrel and $0.80 per barrel, respectively for Iran Light and Iran Heavy.

Kuwait Export Crude official selling prices into Asia, compared with Arab Medium and Iranian Heavy (vs Oman/Dubai average).

Kuwait has managed to bounce back from the series of hard knocks it has endured last month, restarting the second CDU of the al-Zour refinery after month-long repairs. Seeking to start up the third (and last) distillation unit of the 615,000 b/d refinery in June-July, Kuwait might finally be reaching that point when all its capacity is at last commissioned. As Kuwaiti exports continue to decline and currently are some 200,000 b/d below the 1.8 million b/d average of 2022, the ramp-up of al-Zour is set to shrink crude availability even further. As for formula prices of Kuwaiti crude in June, the state oil company KPC lowered its Kuwait Export Crude OSPs to Asian customers by $0.70 per barrel to a $1.70 per barrel premium vs the Oman/Dubai average. With this, Kuwait’s pricing changes were more modest than Saudi Aramco’s hikes for Arab Medium and Arab Heavy, a trend that was also reflected in KPC increasing Europe-bound cargoes by $0.50 per barrel, half the Saudi increases to European customers.

Oilprice.com by Gerald Jansen, June 9, 2023

OPEC producer Iraq has awarded a project to a Chinese firm to build its largest crude oil depot for export with a capacity of around 3.2 million barrels, according to officials.

The China Petroleum Pipeline Engineering Company (CPP) will build the storage facility in Nasiriyah city in the Southern Dhi Qar Governorate, they said.

“It will be Iraq’s largest crude oil storage facility as it will be built on an area of around 2.5 million square metres,” project manager Ali Ibrahim said in a statement published on Monday by Aliqtisad News and other Iraqi publications.

Ibrahim said the facility would comprise seven large storage tankers, including four tankers for heavy crude and four for light crude.

He noted that the project aims to pump crude through a pipeline to Faw Port, which is under construction in South Iraq.

“Crude will then be exported through Arabian Gulf ports….there are also plans to transport crude from the storage tankers through pipelines to refineries and power plants in central and North Iraq,” Ibrahim said, adding that the project is expected to be completed in the second quarter of 2025.

ZAWYA by Nadim Kawach, June 9, 2023

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Kinder Morgan, Inc. (NYSE: KMI) today announced its plan to expand the working gas storage capacity at its Markham Storage facility (Markham) in Matagorda County along the Texas Gulf Coast.

KMI has reached an agreement with Underground Services Markham, LLC, a subsidiary of Texas Brine Company LLC, to lease an additional cavern at Markham to provide more than 6 billion cubic feet (Bcf) of incremental working gas storage capacity and 650 million cubic feet per day (MMcf/d) of incremental withdrawal capacity on KMI’s extensive Texas intrastate pipeline system.

Anchor shippers have subscribed to approximately half of the available capacity under long-term agreements, and commercial in-service for the project is expected in January 2024.

“During Winter Storm Uri, KMI’s storage portfolio was critical to supplying human needs customers in Texas while also providing much needed supply to numerous electric generation facilities during the storm.

We are pleased to increase our natural gas storage solutions to further support Texas customers, particularly during severe weather events,” said KMI Natural Gas Midstream President Tom Dender. “Storage capabilities on highly utilized assets are critical to support Texas’ ability to respond to an energy crisis and ensure energy reliability as renewables become a greater portion of the state’s energy mix.

This expansion will provide much needed capacity that could supply gas-fired electric generation facilities within ERCOT and provide electric service to well in excess of one million homes in Texas.”

Prior to the expansion, Markham had 21.8 Bcf of working gas storage capacity with peak delivery of 1.1 Bcf/day of natural gas with multiple receipt and delivery points on KMI’s nearly 7,000-mile Texas intrastate system.

By Kinder Morgan, June 9, 2023

Gasunie and Vopak today announced that they have entered into a cooperation agreement.

The aim is to jointly develop future terminal infrastructure projects that will facilitate the necessary imports of hydrogen into Northwest Europe via Dutch and German ports. Both parties have been working together in the Gate LNG-terminal in the Port of Rotterdam that came into operation in 2011.

Alongside domestic production of hydrogen, large-scale import of green hydrogen will become essential for reaching the European Green Deal and the Fit for 55 targets.

Import initiatives are developing rapidly: the first import streams to Germany and the Netherlands are expected by 2025. Global supply chains and logistics infrastructure need to be developed and operated to facilitate the import of green hydrogen required for the energy and feedstock transition.

The cooperation agreement includes import projects for hydrogen through green ammonia, liquid organic hydrogen carriers, and liquid hydrogen technologies.

To safely and reliably handle products like hydrogen and ammonia, high quality infrastructure and operations are needed. Vopak and Gasunie will focus on developing import infrastructure related to storage that enables further distribution of hydrogen to end users (e.g. by means of pipeline, vessels, road and rail) and contributes to the security of supply in Northwest Europe.

Both parties have a long track record in developing infrastructure and safely storing and handling these types of products.

As independent infrastructure companies Gasunie and Vopak will focus solely on the development as well as safe and reliable operation of open access infrastructure. Open access logistics infrastructure that is available to all market parties is most effective, both from a cost and environmental footprint perspective.

It can further accelerate the import and use of green energy to a wide range of end markets. On April 11, 2023. Gasunie, Vopak and HES International announced that they joined forces to develop an import terminal for a hydrogen carrier in the port of Rotterdam, named ACE Terminal.

Ulco Vermeulen, Director Business Development Gasunie: “With this agreement, Vopak and Gasunie continue their many years of successful co-operation. Hydrogen is an essential component of the sustainable energy mix of the future.

Our joint goal is to enable the international hydrogen value chain by providing the necessary import infrastructure. As a renewable energy infrastructure company, we already function as a linking pin for the energy transition in various public private partnerships in the Netherlands. With this agreement, Vopak and Gasunie can play a role in the transport, storage and import as part of the international hydrogen value chain.”

Frits Eulderink, Executive Board Member and COO of Royal Vopak comments: “We are delighted to extend our partnership with Gasunie beyond our successful Gate LNG terminal operations in the Port of Rotterdam and jointly develop vital infrastructure supporting the energy transition. We are looking forward to working together with Gasunie in the development of new infrastructure for the future vital products.”

By Vopak, June 2, 2023