Category: Nieuws

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

South Korean and Saudi Arabian leaders pledged stronger ties on Thursday in the fields of energy, defence industry and building projects, as the oil-rich kingdom signed investment agreements worth $30 billion with South Korean companies.

South Korean President Yoon Suk-yeol told Saudi Arabia’s Crown Prince Mohammed bin Salman he hoped the two nations can expand cooperation, calling the Middle Eastern country a key partner for its economy and energy security.

Yoon held talks in Seoul with Prince Mohammed, who arrived on Thursday from Bali, Indonesia, where he had participated in a conference of the Group of 20 (G20) major economies.

Yoon hoped to see South Korean companies’ participation in projects such as the NEOM smart city project in Saudi Arabia and further cooperation in defence industry and future energy such as hydrogen, his office said in a statement.

Prince Mohammed noted the role of South Korean businesses over the years in the development of Saudi Arabia’s national infrastructure and wanted to see stronger cooperation with South Korea based on the trust built between the two countries.

“In particular, he said he would like to drastically strengthen cooperation with South Korea in the areas of defence industry, infrastructure and construction,” Yoon’s office said.

Earlier, South Korea’s industry ministry said companies including Samsung C&T Corp (028260.KS) and POSCO Holdings Inc (005490.KS) had signed over 20 agreements with Saudi counterparts in fields such as energy cooperation, railways, chemicals, pharmaceuticals and gaming.

Saudi-based Asharq TV quoted the kingdom’s investment minister as saying deals signed on Thursday were worth $30 billion. It also quoted the Saudi Venture Capital Company as saying it had agreed to establish seven specialised funds.

Among the agreements, Korea Electric Power Corp (KEPCO) (015760.KS) and four other Korean firms signed a memorandum of understanding with Saudi Arabia’s Public Investment Fund to build and operate a hydrogen and ammonia production plant in the Saudi kingdom, the company said.

The project will be worth about $6.5 billion, said a source with knowledge of the deal, who was not authorised to speak with media on the matter and declined to be named.

The plant is expected to produce 1.2 million tonnes of green hydrogen and ammonia annually, KEPCO said. It is to be built over 2025-2029 and operate for 20 years, the Yonhap news agency reported on Thursday, citing industry sources.

Another pact is Hyundai Rotem Co’s (064350.KS) memorandum of understanding with Saudi Arabia to cooperate on a railway project for the Middle Eastern country’s $500 billion NEOM economic zone and smart city, the ministry said. It did not disclose the potential dollar amount of this agreement.

“The (South Korean) government will actively support the successful implementation of cooperative projects which apply Korea’s state-of-the-art architecture … in NEOM,” said South Korea’s trade minister, Lee Chang-yang.

Hyundai Rotem shares rose 8.5%, versus a 1.1% drop in the wider market (.KS11). Shares in Lotte Fine Chemical (004000.KS), which signed an agreement for chemical industry cooperation with the Saudi Ministry of Investment, rose 2.1%.

Also, S-Oil Corp (010950.KS), whose largest shareholder is Saudi Arabian Oil Co (Saudi Aramco) (2222.SE), said it plans to invest a total of 9.3 trillion won ($7.0 billion) into its Ulsan factory to produce more high-value petrochemical products.

Reuters by Joyce Lee, November 2022

Canadian renewable energy company Neogreen Hydrogen and Portuguese developer of photovoltaic solar parks Frequent Summer announced on Monday plans to invest more than 1 billion euros ($1.04 billion) in a green hydrogen plant in Portugal.

So-called green hydrogen, produced using renewable electricity such as wind and solar, is seen as a key power source that can reduce pollution from long-haul heavy transport, steel and chemical industries and power generation.

The plant will be built in the port city of Sines, 150 km (93 miles) south of Lisbon, and will include a 500-megawatt electrolyzer “for the production of ‘green’ hydrogen and derived fuels,” the companies said in a statement.

The agreement for the state to make 10.5 hectares available to install the plant will be formally sealed on Monday. The companies did not give a specific time frame for the investment nor say when hydrogen production would start.

NeoGreen Hydrogen Corp. chief executive Chris Corson said that “having a project in the heart of the European Union, which will be one of the main hubs of demand for hydrogen in the coming years, is strategic for us as a company.”

Portugal expects to become a major producer and exporter of green hydrogen with 70 private investors or groups planning to spend 10 billion euros ($10.2 billion), the environment minister said on Thursday. read more

Portugal’s largest utility EDP (EDP.LS) and oil and gas company Galp Energia (GALP.LS) and a Portuguese-Danish-Dutch consortium are each planning to build green hydrogen plants in the same industrial hub of Sines. read more

Portugal’s three main glass producers and two biggest cement makers, together accounting for 10% of the country’s industrial carbon emissions, also joined a new consortium to launch a green hydrogen plant.

By Reuters, November 22, 2022

PT PGN Tbk as Pertamina Gas Subholding is targeting the international natural gas market through fulfilling natural gas and Liquified Natural Gas (LNG) needs in Turkey. PGN cooperates with BOTAS or Petrolium Pipeline Corporation as a Turkish state-owned enterprise engaged in oil transportation and natural gas trading for natural gas or LNG supply to Turkey.

PGN and BOTAS signed a Memorandum of Agreement (MOU) on Sunday, November 13. The signing was carried out by the President Director of PT PGN Tbk M. Haryo Yunianto and BOD Member of BOTAS Corporation, Kerim Tamakiran, witnessed by the Minister of Energy and Mineral Resources of the Republic of Indonesia, Arifin Tasrif, President Director of PT Pertamina (Persero), Nicke Widyawati, Chairman of Kadin, Arsjad Rasjid, & Chairman of B20, Shinta Widjaja Kamdani.

PGN President Director M. Haryo Yunianto explained that PGN’s cooperation with Botas is not only limited to natural gas and LNG supply, but also regarding the development of hydrogen cooperation, LNG infrastructure, LNG Trading, underground gas storage facilities, human resource development, and other potential businesses.

“This collaboration will strengthen bilateral relations between Indonesia and Turkey, especially in diversifying energy distribution. Indonesia and Turkey can become an essential energy market for the sustainability of bilateral energy trading, especially natural gas. To support cooperation, PGN and BOTAS continue to coordinate on infrastructure readiness such as FSRU and LNG terminals,” said Haryo in a written statement.

According to Haryo, diversification of routes and natural gas supply sources is important for certainty of natural gas and LNG supplies. Therefore, the distribution of natural gas and LNG for Turkey will also come from other sources, not only from Indonesia.

Currently operating is the Arun LNG Hub managed by PT Perta Arun Gas (PAG) as an affiliate of Gas Subholding. The strategic location of Arun makes it the center of LNG trading Asia and global LNG Hub destinations such as China, Australia, Angola, Egypt, and the United States.

“PAG’s main business is LNG receiving terminals, regasifications and LNG Hubs. The strategic location is near the Malacca Strait with the potential of nearly 100,000 ships sailing through, thus becoming an important asset for PAG as a world-class LNG Hub center. Its operation is fully supported by the government through the appointment of PAG as the only LNG Bonded Logistics Center Manager in Indonesia,” explained Haryo.

“We hope that the cooperation with BOTAS will continue until the commercial execution stage. PGN will certainly get benefits to further widen its business to the international arena. On the other hand, Turkey can be helped in terms of fulfilling natural gas energy in big cities and industrial centers as natural gas consumers in large quantities,” concluded Haryo.

By Tank Storage Mag, November 21, 2022