Category: Nieuws

Norwegian oil major Equinor announced Tuesday that it will be investing $1.3 billion in upgrading its Hammerfest LNG liquefaction plant, located on Norway’s far northern Barents Sea coast. 

The project will install new onshore gas compression capacity, ensuring enough flow to the plant to keep exports running at current levels through 2030. In addition, electrification will reduce the plant’s emissions by about 850,000 tonnes of CO2 annually – about two percent of Norway’s total yearly emissions. 

“Electrification will allow us to deliver this gas with close to zero greenhouse gas emissions from production. The project will secure long-term operations and gas exports from Melkøya towards 2050,” said Geir Tungesvik, Equinor’s executive vice president for projects.

Hammerfest LNG is important to Norway’s energy exports and to European energy security. It puts out more than four million tonnes of LNG per annum, equivalent to about five percent of all Norwegian gas exports and enough to fully supply one floating regasification and storage unit (FSRU) at a European port. 

The new project means major electrical system upgrades to the plant and to the nearby grid, including a new transformer station and a new high-voltage power line. These will supply new electric steam boilers, gas compressors and other equipment to switch the plant off of natural gas for power. Since Norway’s electrical grid is powered almost entirely by renewables, electrification means decarbonization.

According to Grete Haaland, Equinor’s senior vice president for exploration and production north, the project is one of the largest emission reduction measures undertaken in Norway’s oil and gas sector. “The project is a key contributor to the energy transition,” said Haaland.

Equinor has also brought online a new offshore gas field in the Barents Sea, Askeladd, which will add another 18 billion cubic meters of gas reserves to the supply for Hammerfest and keep the plant running at full tilt. 

“Askeladd is now producing, the gas will help extend plateau production from Hammerfest LNG on Melkøya up tothree years,” said Thor Johan Haave, Equinor’s vice president operations & maintenance at Hammerfest.

The Askeladd project is a satellite field developed with a tieback to the facilities at neighboring Snøhvit, the giant field that feeds Hammerfest LNG. Askeladd was finished two years ago, but its startup was delayed by a major fire at Hammerfest LNG, which took the plant offline until June 2022. 

By The Maritime Executive, December 27, 2022

The metamorphosis of global refining will likely resume in 2023, after a pause in 2022 and changing the shape of crude and product flows.

New oil refineries are set to come online in the East and old refineries will likely be converted into greener processing plants in the West, according to data from S&P Global Commodity Insights.

That will restart a trend seen in 2020 and 2021 that saw a flurry of closures and conversions — amounting to around 4 million b/d of refining capacity — predominantly in the Atlantic Basin.

“With the start-up of new refineries including mega-refineries in the Middle East and Asia, changes in crude and product trade flows are expected in 2023,” S&P Global oil analyst Rasool Barouni said.

“Sanctions of Russian oil product exports and China’s product export quotas will impact the global trade flows next year.”

The first phase of Kuwait’s new 615,000 b/d Al Zour refinery started in November 2022, and it exported its first naphtha, low sulfur fuel oil and jet fuel in the second half of November. The start-up of the first unit will be followed by the second and third units to reach full capacity next year, Barouni noted.

The commissioning and ramping up of other refineries in the Middle East including Saudi Arabia’s 400,000 b/d Jazan refinery, Iraq’s 140,000 b/d Karbala refinery and Oman’s 230,000 b/d Duqm refinery will increase the region’s crude runs to 9.30 million b/d in 2023, S&P Global estimated, predicting gross exports of major oil products, including gasoline, gasoil, kerosene/jet, and fuel oil, will increase to 3.37 million b/d early next year.

Once the long-awaited start of its hydrocracker comes into effect, Saudi Arabia’s 400,000 b/d Jazan refinery, which has been gradually coming online since late 2021, will fill the void in Europe left by Russian diesel exports.

Russian diesel is likely to travel to the Middle East, where it will be blended with regional material before being shipped back to Europe, analysts suggested.

“However, this may have an impact on diesel prices in the Middle East and Asia. European diesel stocks have been replenished in recent months, but sanctions against Russia could tighten the Atlantic Basin distillate market once again at least for a short period of time,” Refinitiv’s lead oil analyst Ehsan Ul-Haq said.

China

Two new plants in China will achieve full capacity in 2023.

After initially planned start at the end of 2021, China’s 320,000 b/d Shenghong Petrochemical complex commenced commercial operations in November.

In October, another greenfield refinery in China, the 400,000 b/d Guandong Petrochemical, started trial runs.

The two plants have helped boost global refinery throughput in November, the International Energy Agency said in its December report.

Over the next two years, China could see the start-up of two more refineries: the 400,000 b/d Yulong Petrochemical plant and the 300,000 b/d Huajin Aramco Petrochemical complex.

China’s Shenghong and Guandong as well as Malaysia’s 300,000 b/d Pengerang Integrated Complex in the Johor state, which finally resumed operations in May, following an incident in 2020, have also added to global refining capacity.

China will likely increase key product exports, particularly gasoline and kerosene/jet.

Africa

Elsewhere, the commissioning of Nigeria’s 650,000 b/d Dangote refinery was expected next year, though analysts remained skeptical given the project has experienced delays before.

Africa’s long-awaited ‘game changer’ should reduce Nigeria’s need for products imports. The country may actually be able to stop gasoline imports by the second half of next year if so, according to Nigerian National Petroleum Corp.

Also in Africa, a 40,000 b/d complex is getting close to being commissioned in Ghana, which will potentially help the country steer away from fuel imports on which it is now fully reliant due to ongoing problems with the 45,000 b/d Tema refinery.

“New refineries in the Middle East will result in more diesel supply for Asia and Europe in the medium term and Europe could transition from an undersupplied to an oversupplied market,” Ul-Haq said.

“The opening of Dangote’s refinery in Nigeria next year may tighten the light sweet market, particularly in the Mediterranean, while India may need to import more crude from the Caspian region and North Africa instead of West Africa.”

Europe’s green shift

In 2023, Italy’s Eni is likely to launch the transformation to a biorefinery of its Livorno site if it is to achieve the planned completion of construction by 2025.

Meanwhile, France’s Grandpuits is on track to be converted to a zero-oil platform in 2024 and start producing sustainable aviation fuel.

However no other imminent conversion plans are on the cards in Europe with Finland’s Neste exploring a switch of its Porvoo refinery to “non-crude oil refining” as far ahead as the mid-2030s.

Refineries in Japan are also proceeding with planned closures. ENEOS has cut the capacity of the Wakayama sole CDU before decommissioning it in October 2023. The company will also decommission secondary units at its Negishi plant which are attached to the taken out of service this year N0. 1 CDU.

By S&P Global, December 27, 2022

State energy firms Saudi Aramco and Sinopec plans to build a new refinery-petrochemical complex in southeast China which will commence operations by the end of 2025.

The companies have signed a heads of agreement to build the complex at Gulei, Fujian province, which will include a 320,000 barrels per day (bpd) refinery and a 1.5 million tonnes per year cracker, Aramco said in a statement on Sunday. It did not provide an investment figure for the project.

In addition, Aramco, Sinopec and SABIC have signed an initial agreement to study the economic and technical feasibility of developing a new petrochemical complex to be integrated with an existing refinery in Yanbu, Saudi Arabia.

“These projects represent an opportunity to contribute to a modern, efficient and integrated downstream sector in both China and Saudi Arabia,” Aramco Senior Vice President of Downstream Mohammed Y. Al Qahtani said.

“They also underpin our long-term commitment to remain a reliable supplier of energy and chemicals to Asia’s largest economy.”

Aramco seeks to expand its liquids to chemicals capacity to up to 4 million bpd by 2030.

Aramco and Sinopec jointly operate Yanbu Aramco Sinopec Refining Company (YASREF), a 400,000-bpd refinery located in Yanbu.

Nasdaq by Florence Tan, December 27, 2022

The European Union has enough gas for the winter but could face a shortage next year if Russia cuts supplies further, the International Energy Agency (IEA) said on Monday, urging governments to act faster to save energy and expand renewables.

Despite Russia slashing gas deliveries this year, Europe has averted a severe shortage and started the winter with brimming gas storage tanks – thanks in part to emergency EU measures to fill storage, plus a lucky spell of mild weather and high gas prices that dampened demand for the fuel.

But next year may pose an even tougher test than the energy crunch that has this year hiked fuel bills for European households and forced industries to temporarily close to avoid crippling gas costs.

If Russia was to cut the small share of gas it still delivers to Europe, and Chinese gas demand rebounded from COVID-19 lockdown-induced lows, the EU could face a gas shortfall of 27 billion cubic metres (bcm) in 2023, the IEA said. Total EU gas consumption was 412 bcm in 2021.

“This is a serious challenge,” IEA Executive Director Fatih Birol told a press conference with the European Commission in Brussels.

The shortage could be averted by expanding subsidies and policies to renovate gas-guzzling buildings, replace fossil fuel-based heating with heat pumps and massively expand renewable energy, the IEA said.

The 100 billion euro ($106 billion) investment this requires would be paid back within two years through lower gas bills, Birol said.

European Commission President Ursula von der Leyen suggested forming an EU “solidarity fund” to raise cash for energy investments – using both EU money and additional funding sources.

Von der Leyen said the bloc’s gas supply was “safe for this winter” and the 27-country EU was preparing for the next one.

EU country leaders will call for the preparation of early contingency plans for energy supply next winter at a summit in Brussels on Thursday, according to a draft of their meeting conclusions seen by Reuters.

However, countries are still at odds over how to address high energy prices. Their energy ministers hold an emergency meeting on Tuesday to attempt to agree a gas price cap that has divided the bloc.

Last month countries held up deals on other measures over the price cap spat – including faster permits for renewable energy projects that will be crucial to replacing Russian gas and meeting the EU’s climate goals.

Reuters by Kate Abnett, December 2022

Saudi Arabian Oil Company (Aramco) and TotalEnergies will join forces to build a new petrochemicals complex in Saudi Arabia, the French energy group said on Thursday.

The project involves investment of about $11 billion, of which $4 billion will be funded through equity by Aramco (62.5%) and TotalEnergies (37.5%), the statement said.

The investment decision is subject to closing conditions and approvals, with construction scheduled to begin in the first quarter of 2023 and commercial operation targeted for 2027.

The planned Amiral complex, integrated with the existing Saudi Arabia Total Refining and Petrochemical (SATORP) refinery located in Jubail on Saudi Arabia’s eastern coast, will be owned and operated by Aramco and TotalEnergies.

The overall complex, including adjacent facilities, is expected to create 7,000 jobs locally.

The petrochemicals facility will enable SATORP to convert its refinery off-gases and naphtha, as well as ethane and natural gasoline supplied by Aramco, into higher-value chemicals.

The complex will eventually provide feedstock to other petrochemicals and speciality chemical plants in the Jubail industrial area, requiring an estimated $4 billion of additional investment.

Yahoo! by Dominique Vidalon, December 2022

The Department of Energy announced Friday it would purchase 3 million barrels of oil to replenish the U.S. strategic reserve and strengthen energy security, as oil (and related gas) prices have dropped since the summer, when the administration tapped the reserve to counter an energy crisis sparked in part by Russia’s invasions of Ukraine.

The purchase, following an announcement by President Joe Biden in October, is an opportunity to buy the oil at a fixed price before repurchasing it for less than the average of $96 it sold for, the Department of Energy said in a statement.

Secretary of Energy Jennifer Granholm noted in May that the buyback process would coincide with lower oil prices—and consequently lower gas prices—which spiked following Russia’s invasion of Ukraine in February.

On Friday, the international benchmark Brent Crude futures measured at $77.16 per barrel, down from $96.96 at the time of Biden’s announcement in October.

The national average price of a gallon of gasoline in the U.S. is $3.178, according to a tracker by the American Automobile Association, down from last month’s average of $3.743.

The 3 million barrels represent 15% of the average number of barrels consumed per day in 2021 (19.89 million).

Crucial Quote

“As we are thoughtful and methodical in the decision to draw down from our emergency reserve, we must be similarly strategic in replenishing the supply so that it stands ready to deliver on its mission to provide relief when needed most,” Granholm said.

Surprising Fact

Following a subsequent decision by Biden in October to release an additional 15 million barrels after a record release of 180 million barrels in March, the U.S. strategic oil reserve dropped below 400 million barrels for the first time since 1984, according to the Energy Information Administration.

Key Background

The Department of Energy announced the purchase following a global energy crisis fueled by Russia’s invasion of Ukraine, which resulted in a spike in gas prices and the U.S. banning imports of oil, natural gas, coal and petroleum products from Russia. Other causes of the price spike were a refusal by OPEC+ to decrease production and diminishing U.S. refining capacity. Biden projected the U.S. will produce 1 million barrels per day by the end of the year and will continue repurchasing oil to replenish the Strategic Petroleum Reserve when prices fall to $70 a barrel.

Forbes by Ty Roush, December 22, 2022

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