Category: Nieuws

Commodity trader Trafigura Group Pte. Ltd. said Thursday the outage at the Freeport LNG terminal in Texas has removed much needed supply and “significant flexibility” from its portfolio, but said the scale of its operations have offset issues and helped it turn in record profits for 2022.

Trafigura, a dominant trader in the global liquefied natural gas market, has a three-year offtake agreement for 0.5 million tons/year with Freeport that expires in March. The plant has been offline since June, when an explosion halted operations. Freeport expects to resume service by the end of the year. 

The trading firm said it was able to capitalize on extreme volatility in the global commodity market following a reshuffle of energy supply flows after Russia invaded Ukraine in February.

Trafigura reported $7 billion in profits for fiscal 2022, which ended Sept. 30, versus fiscal 2021  earnings of about $3 billion. Revenue was up by 38% over the same time to $318.5 billion. 

Unsettled 2023 Oil, Gas Trading?

Looking ahead, the company expects the crude oil and natural gas markets to remain unsettled next year. Europe will need “to import huge volumes of LNG in 2023 given the massive reduction” in Russian imports, management said.

“For liquefied natural gas to continue to flow to Europe as opposed to other demand centers, the price will need to remain elevated, and we expect security of supply to remain paramount for customers in Europe through next winter and beyond.”

The sharp profit gain came despite a year/year decline in oil and petroleum products trading. The decline resulted from terminating long-term contracts for Russian crude and other fuels following international sanctions. 

Trafigura said it traded an average of 6.6 million b/d of oil and petroleum products during the year, down from 7 million in 2021. 

Trafigura also said a steep increase in margin requirements by futures exchanges and clearing brokers during a volatile year “substantially increased the cost of moving physical cargoes.” That reduced liquidity in the physical and financial markets and “exacerbated volatility.”

The firm said it used its capacity on pipelines in the United States to carry natural gas from the Permian Basin to liquefaction plants on the Gulf Coast. Cargoes were mostly moved across the Atlantic to Trafigura’s regasification slots in Europe. 

“From here, our LNG and natural gas team was able to trade and deliver the molecules to where they were needed,” the firm said.  “In many instances, the gas went into leased storage ahead of the winter.”

Overall, for LNG, Trafigura said it traded 13 million metric tons of oil equivalent, down 7% from last year. Traded natural gas volumes were flat at 23.7 million metric tons of oil equivalent.

NGI by Jamison Cocklin, December 13, 2022

The Western Cape and Northern Cape have signed a Memorandum of Understanding to develop a green hydrogen corridor and hub.

The MoU contains heads of agreement on the principles and areas of cooperation towards creating the Western SADC Green Hydrogen Corridor.

Western Cape Premier Alan Winde said the MoU is the beginning of the development of a green hydrogen economy based on critical relationships – in this case with the Northern Cape and the role players in the private sector.

“We cannot afford to wait for solutions to be delivered to us to address the dual challenges of the climate and the energy crisis, both of which continue to worsen. We, along with our strategic partners, must create and jump on opportunities,” said Winde.

He toured the mothballed Saldanha Steel plant which will form a crucial component of the planned Western SADC Green Hydrogen Corridor. The Western Cape will also be able to take advantage of the planned new bulk export port at Boegoebaai in the Northern Cape.

“This project will secure foreign direct investment, earn foreign revenue as well as generate economic growth and jobs. There must be a sense of urgency in this project, given the seriousness of the challenges we are facing,” added Winde.

Meanwhile the Public Investment Corporation (PIC) said it has now adopted a hydrogen investment strategy to unlock value through funding and provision of early-stage capital to develop the hydrogen value chain in South Africa. The PIC strategy will beto leverage the more than 200 hydrogen projects announced worldwide.

The PIC believe it will take approximately R4.3 trillion ($250 billion) in investment to develop a hydrogen economy in South Africa. The South African Hydrogen Roadmap identifies the PIC as a potential co-investor with other finance institutions into hydrogen projects.

The Roadmap identifies hydrogen as the next frontier in clean energy technology because of the promise it holds for extensive value chain applications. These include industralisation, job creation, localised manufacturing and the potential for SA to become one of the largest exporters of green hydrogen in the world.

South Africa’s high solar radiation levels and large area of coastline for wind deployment creates significant renewable energy potential. Hydrogen can augment renewable energy production by offering a way to store and transport excess energy produced from RE sources.

South Africa also hosts the world’s largest platinum group metal resources which would benefit from the demand brought about by a well-developed hydrogen sector.

Increasing global demand for green hydrogen could contribute to economic growth
Western Cape Finance and Economic Opportunities Minister Mireille Wenger said green hydrogen is emerging decarbonisation solution that would create benefits for the country as a whole. “By working together the Western Cape and Northern Cape are perfectly position to explore the potential of green hydrogen and increasing demand through production, bulk exports, and by attracting foreign direct investment which will contribute to economic growth and job creation in the context of ensuring a just energy transition,” said Wenger.

Wesgro, the Western Cape official tourism, trade and investment promotion agency also welcome the MoU. Wesgro CEO Wrenelle Stander said the world’s attention is on achieving net-zero carbon emissions by 2050, with trillions of dollars being invested into the renewable energy and energy efficiency required to meet the target.

“At this pivotal moment we have a unique opportunity access a large piece of the investment pie. South Africa’s energy crisis has catapulted our capability in the global race for energy transition,” said Stander.

By Esi Africa, December 9, 2022

The global oil market is signaling a potential shift, as traders and analysts worry about reduced crude demand and an oversupplied market in the coming months.

After months of strength, crude futures are flirting with lows not seen all year as top oil consumer China enters additional COVID-19 lockdowns while central banks hike interest rates to combat inflation.

Front-month global oil prices in the last week have traded weaker than future-dated contracts, while prices for physical crude grades throughout the world have declined, market participants said.

“Differentials are confirming what outright prices have been implying – there is a demand deficit and/or supply surplus,” said Tamas Varga of oil broker PVM.

The murkier environment comes at a fraught time for the market. On Dec. 5, a European Union ban on Russian crude imports is set to start, along with a plan by the G7 nations to force shippers to comply with a price cap on Russian oil sales.

Meanwhile, OPEC+ – the grouping of the Organization of the Petroleum Exporting Countries (OPEC) and allied producers including Russia – is set to meet to consider output levels on Dec. 4.

The changes are evident in the market’s structure – a comparison of near-term versus longer-dated contracts. In the last week, crude futures contracts have flipped in and out of contango, where the prompt price of a commodity is lower than the future price, which suggests short-term weakness.

The front-month U.S. crude futures contract traded as low as 38 cents weaker than the second-month contract , the weakest differential since November 2020, Refinitiv Eikon data showed. The front-month contract for the Brent international benchmark traded as low as 6 cents below the second-month , the weakest since August.

The inter-month spread for December and January Dubai swap flipped into contango last week for the first time in one and half years.

WEAKER DEMAND FROM ASIA

In China, traders are worried about oversupply if China and India continue importing large amounts of discounted Russian oil. At the same time, additional COVID restrictions are expected to weigh on demand.

Offers of Angolan and other West African crude oil to China, a main customer, are a barometer of physical crude demand from the country. China’s Unipec, a major world oil trader, offered for sale several cargoes of crude shipments set to load in December, in a rare sign of slackening interest.

Meanwhile, Norway’s Equinor this week offered a cargo of Angolan Pazflor crude for a discount of $2.50 a barrel to dated Brent, down more than a dollar in a week. Spot prices for crude out of Oman – a key supplier to China – have fallen to 82 cents over Dubai crude from as high as $15.06 a barrel in early March.

OVERSUPPLIED

Oil storage in several regions is building, said Norbert Rucker, head of economics and next generation research at Swiss wealth manager Julius Baer.

In addition, European refiners have found themselves oversupplied with crude as an expected shortage owing to the looming EU ban on Russian oil has yet to materialise.

The premium for North Sea crude Forties to dated Brent reached an all-time high of $5.40 in July, but has narrowed sharply to just 75 cents this week. Forties usually sets the value of dated Brent.

In the United States, WTI Midland prices have weakened to just a 20-cent premium to crude futures, falling from a premium of more than $2 about a month ago. That’s even though inventories at Cushing, Oklahoma, a key storage hub in the United States, are at a two-month low.

Reporting by Stephanie Kelly in New York, Muyu Xu in Singapore, Noah Browning and Alex Lawler in London and Arathy Somasekhar in Houston;

Reporter: Kenneth Maxwell

Air Products and Mabanaft announced their intention to build Germany’s first large-scale, green energy import terminal in the port of Hamburg.

The project was announced on 17 November at a ceremony in Hamburg, which was supported by German Federal minister for economic affairs and climate action Robert Habeck and first mayor of Hamburg Dr. Peter Tschentscher.

This announcement follows a Memorandum of Understanding that Air Products and the Hamburg Port Authority signed in February 2022.

The planned import terminal is to be located at #Mabanaft’s existing tank terminal in the German port and the purpose is to provide hydrogen to Germany in 2026.

This location offers access to green ammonia from large-scale green hydrogen production facilities operated by Air Products and its partners around the world.

According to Port of Hamburg, it is aimed to convert the ammonia to green hydrogen via Air Products’ facilities in Hamburg, before distributing it to buyers locally and across northern Germany.

“Together with Mabanaft, we look forward to further progressing our plans of importing needed-renewable energy into Germany, through our planned facility,” commented Air Products’ chairman, president and CEO, Seifi Ghasemi.

He added, “As the world’s largest producer of hydrogen, Air Products is in an excellent position to meet demand, having committed billions of dollars to produce renewable energy at locations around the world.”

By Tank Storage Mag, December 1, 2022

As U.S. production of crude oil continues to climb towards its pre-pandemic production levels of 13 million barrels a day—a welcome development given high gas prices—the need for new investment to facilitate exports and imports is growing.

While U.S. consumption almost equals what we produce, we still export and import a considerable amount of oil for a variety of reasons, most of which have to do with the capacity of U.S. oil refineries as well as the grade of oil that can be refined domestically.

One development that has both made shipping oil more cost effective and reduced its environmental impact has been the advent of Very Large Crude Carriers, or VLCC, which have the capacity to carry as much as 80 million gallons (2 million barrels) of crude at a time. Having fewer and larger ships carrying crude reduces emissions and lessens the risk of an incident that might potentially spill oil.

The United States has only one deepwater port currently operating that can load VLCC’s directly, but several more are in the planning and approval process, nearly all of which would be off of the Texas Gulf Coast. These offshore ports are being touted by the industry as an important step for domestic energy exports.

There are numerous steps in the process to obtain a license from the U.S. Maritime Administration that must be accomplished before any construction can begin, including a thorough environmental impact and safety review.

Enterprise Products’ Sea Port Oil Terminal (SPOT) is the first applicant in the queue, having recently gone through its public comment period for its Final Environmental Impact Statement (FEIS). As expected, SPOT (and all deepwater port applicants) received significant commentary from the public, including many environmental organizations.

But the public isn’t the only group weighing in on SPOT’s deepwater port project. Notably, the American Bureau of Shipping (ABS), the preeminent ship classification society in the country and one of the biggest in the world, filed a comment indicating that SPOT’s deepwater port design would not meet its new rule requirements that take effect in 2023.

The issue, which several marine experts also identified in their public comments, concerns the risks created by SPOT’s plan to put their Single Point Mooring (SPM) buoys over half a mile closer to their platform than any other design under consideration—or other existing designs elsewhere.

It appears that this rule change by ABS will ultimately require a design change to SPOT’s offshore terminal, which may not come until after SPOT receives its license. But according to these marine experts that commented on SPOT application, the likely design change is extremely problematic because moving the SPM further from the platform would result in different environmental impacts that were not evaluated and disclosed in this recent process.

The ABS and some of the other commenters are strong supporters of deepwater ports, so raising these alarm bells appears to come from a place of concern that design flaws could create unnecessary risks and problems for the industry writ large and are not merely dilatory. The question is whether the government will grant a license to SPOT amid this significant development or require SPOT to adjust their design before the process can continue.

It is clear this issue is significant enough to warrant further consideration before a flawed system design carries the fate of an industry with it.

Forbes by Ike Brannon, December 1, 2022

Norway’s oil and gas firms have raised their investment forecasts for 2022 and 2023 as more development plans are being made, a national statistics office (SSB) survey showed on Thursday.

The country’s biggest business sector now expects to invest 175.3 billion Norwegian crowns ($17.50 billion) in 2022, up from a forecast of 172.8 billion made in August, the SSB said.

Next year’s investments are seen at 149.7 billion crowns, up from a previous view of 135.3 billion, but the figure is expected to increase as companies plan to approve more projects by the end of this year, it added.

Spending on new offshore fields is only included in the survey when companies submit plans for development and operation (PDO) to the authorities.

Oil companies are expected to approve more than a dozen new projects by the end of this year, when Norway’s temporary tax incentives, which were approved in 2020 to support offshore investments, expire.

As a result, the estimate for 2023 will likely increase significantly when numbers are next updated in February, SSB said.

“In that survey, the first estimate for 2024 is also published. With all these developments included already then, there is reason to expect a relatively high initial estimate for 2024,” SSB said in a statement.

The investments in field development for 2023 rose by 12% to 50.2 billion crowns compared to the previous survey, mainly due to higher cost estimates at some fields, it added.

Expected spending on exploration was broadly unchanged.

Rising costs and supply chain bottlenecks, as well as market uncertainty could put some planned projects on hold.

Last week, Equinor (EQNR.OL) postponed a decision on whether to develop the Arctic Wisting oil discovery, which would have become the world’s northernmost producing field.

Reuters by Nerijus Adomaitis, November 2022