Category: Nieuws

Energy storage company VTTI BV, backed by Abu Dhabi’s main oil company and Vitol Group, is looking to invest in LNG import terminals in Asia as demand for the fuel increases in the region.

“There is a lot of potential in India, Bangladesh, Pakistan and the Philippines,” Chief Executive Officer Guy Moeyens said in an interview on Tuesday in Fujairah in the United Arab Emirates. “There will be a disproportionate need for regasification facilities in that region. More than, I would say, in Europe or the Americas.”  

The Rotterdam-headquartered company acquired a 50% stake in Dragon LNG, one of the UK’s three LNG import terminals, in August and agreed to buy a majority stake in Italy’s Adriatic LNG earlier this year. It also has an agreement with Hoegh LNG to jointly develop an energy terminal in the Dutch province of Zeeland. 

It’s now keen to expand in similar facilities in Asia by investing alongside a partner, Moeyens said.

LNG is taking on an increasingly important role in the world’s energy supply as countries look to use more of the cleaner-burning fuel amid concerns over climate change, while they also build more renewable energy projects. The US and countries in the Middle East are among regions expanding their LNG export capacities in order to meet the rising demand.           

VTTI counts Abu Dhabi National Oil Co. and Vitol as shareholders. Adnoc this year approved the construction of a new LNG export terminal, and bought stakes in projects in the US and Africa.

By Verity Ratcliffe, Bloomberg / October 02, 2024

The global refining industry is grappling with a notable downturn in profitability, with refineries in Asia, Europe and the United States facing pressure from weakened demand and increased supply. Refiners have seen exceptional profits in recent years due to pandemic recovery and geopolitical disruptions, but the current dynamics paint a different picture. New refining capacities, alongside tepid industrial demand, especially from China, have combined to push margins to multi-year lows.

The weak outlook for refining profitability translates into a significant headwind for companies like TotalEnergies TTE, Eni SpA E and PBF Energy PBF. On the other hand, diversified operators like Marathon Petroleum MPC and Phillips 66 PSX are better placed to weather the downturn.

Demand & Supply Woes Plaguing Refiners

Sluggish Demand Growth and EV Impact: One of the key reasons behind the fall in profits is sluggish fuel demand. This is particularly evident in China, the world’s largest oil importer, where the economic slowdown has hampered industrial output. In August, China’s oil refinery output declined for the fifth consecutive month, reflecting soft demand and weak export margins. Additionally, the rise of electric vehicles has started to dampen demand for traditional fuels, further straining the refining sector.

The impact of slow demand isn’t limited to Asia. In the United States, the 3-2-1 crack spread, a key profitability measure, has slumped below $15 a barrel, a level not seen since 2021. This indicates that U.S. refiners, too, are feeling the pinch, with gasoline and diesel margins declining sharply. Diesel, in particular, faces a global oversupply issue, which is expected to keep margins under pressure for the foreseeable future.

An Oversupplied Market: While demand weakens, supply continues to grow, thanks to several new refinery projects that have come online. Africa, the Middle East and Asia have all seen the start-up of large refineries, including Nigeria’s 650,000 bpd Dangote plant and Kuwait’s 615,000 bpd Al Zour facility. These additions have significantly increased global refining capacity, worsening the oversupply situation.

Older refineries, particularly in Europe, are feeling the brunt of this oversupply. For example, Scotland’s Grangemouth refinery is set to close in 2025 due to unsustainable margins. In response to the ongoing challenges, some refiners are cutting back on production, though this may not be enough to balance the market in the near term.

Some Refiners Feel the Pinch While a Few Stands Out

The oversupply issue is reflected clearly in profit margins. Diesel margins in Europe have tumbled to around $13 a barrel, the lowest since late 2021, while gasoline margins are under pressure despite relatively stable demand. This situation is further exacerbated by the fact that some U.S. refiners are entering one of the lightest fall maintenance seasons in three years, meaning that more capacity remains operational, adding to the supply glut.

European downstream operators like TotalEnergies and Eni, which benefited from soaring margins in 2022 and early 2023, are now facing headwinds. While some, like Italy-based Eni, have begun implementing measures to mitigate the drop in margins, others are still assessing their strategies. Among the U.S. companies most impacted by the current environment are PBF Energy and Delek US, which are already making difficult decisions regarding shareholder returns, with the potential for cuts in buyback programs. Valero Energy, another significant player, has seen downgrades as it faces near-term issues over refining income.

Meanwhile, Zacks Rank #3 (Hold) refiners with diversified operations, like Marathon Petroleum and Phillips 66, are better equipped to navigate the downturn. Their exposure to non-refining cash flows, combined with strong balance sheets, offers resilience in challenging market conditions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Way Ahead for Refiners

The short-term outlook for the refining industry remains muted. The International Energy Agency forecasts diesel and gasoil demand to contract 0.9% this year, with limited signs of recovery. However, there could be some support from higher seasonal demand for diesel during the winter months, particularly in Europe. Gasoline demand, though slightly more robust, is not strong enough to offset the overall downturn in the sector.

Despite the current challenges, some analysts maintain a cautiously optimistic view of the future. A light maintenance season could help soak up some of the excess crude supply, providing a slight lift to oil prices and potentially stabilizing refining margins.

By; Nilanjan Choudhury/ Sep 24, 2024

The U.S. Federal Trade Commission is expected to greenlight U.S. oil producer Chevron’s purchase of Hess as soon as this week, two people familiar with the matter said, leaving Exxon Mobil’s challenge to the $53 billion deal as its final hurdle.

The proposed merger was first announced last October, and the FTC sent a second information request to Chevron two months later. Hess shares were up as much as 3% in after-hours trading on Monday following the news.

Uncertainty over the deal’s closing has knocked Chevron shares down 1% this year compared to a 6.5% increase in energy share fund XLE.

Exxon and CNOOC Ltd, Hess’s partners in a Guyana joint venture, are challenging the deal by claiming a right of first refusal to any sale of Hess’s Guyana assets, the prize in the proposed merger.

A three-judge arbitration panel is due to consider the case in May 2025. Chevron and Hess say a decision is expected by August, while Exxon expects it by September 2025.

The proposed all-stock acquisition is one of the largest in a consolidating U.S. oil and gas industry where several multi-billion dollar deals have been disclosed.

Chevron’s announcement of the Hess deal followed Exxon’s $60 billion purchase of U.S. shale giant Pioneer Natural Resources, which closed in May.

Two other mergers, Occidental Petroleum’s deal for CrownRock and Diamondback Energy’s bid for Endeavor Energy Resources, have closed even though they came after the Chevron-Hess combination.

The FTC required Exxon to withdraw its offer of a board seat to Pioneer Natural Resources CEO Scott Sheffield as a condition for its go-ahead. The FTC alleged he colluded with OPEC to reduce U.S. oil and gas output to potentially raise the price of oil.

Sheffield denied the allegations and has asked the FTC to vacate its ban on his taking an Exxon board seat.

A spokesperson for the FTC declined to comment on Monday.

EXXON ARBITRATION

The dispute over terms of the contract governing the Exxon-CNOOC-Hess partnership stalls any closing to the second half of 2025. The Guyana consortium controls one of the world’s fastest growing and lucrative oil provinces with more than 11.6 billion barrels of recoverable oil and gas discoveries since 2015.

Exxon operates all production in Guyana with a 45% stake in an offshore oil production consortium with Hess and China’s CNOOC, as minority partners. Combined earnings for the trio from Guyana last year were $6.33 billion on $11.25 billion in revenue.

The information was first reported by CTFN, a data and news provider to financial professionals.

By: Reuters / September 24, 2024

OPEC raised its forecasts for world oil demand for the medium and long term in an annual outlook, citing growth led by India, Africa and the Middle East and a slower shift to electric vehicles and cleaner fuels.

The Organization of the Petroleum Exporting Countries, in its 2024 World Oil Outlook published on Tuesday, sees demand growing for a longer period than other forecasters like BP (BP.L), opens new tab and the International Energy Agency, which expect oil use to peak this decade.

Future energy demand is found in the developing world due to increasing populations, middle class and urbanization,” said OPEC Secretary General Haitham Al Ghais during the report’s launch in Brazil, a country with which the group is seeking to form closer ties.

Al Ghais’ speech in Rio de Janeiro was briefly disturbed by a protester from Greenpeace.

A longer period of rising consumption would be a boost for OPEC, whose 12 members depend on oil income. In support of its view, OPEC said it expected more push back on “ambitious” clean energy targets, and cited plans by several global carmakers to scale down electrification goals.

All policymakers and stakeholders need to work together to ensure a long-term investment-friendly climate,” Al Ghais wrote.

HIGHER 2029 FORECAST THAN IEA

OPEC also raised its medium term demand forecasts, citing a stronger economic backdrop than last year as inflation pressure wanes and central banks start to lower interest rates.

World demand in 2028 will reach 111 million bpd, OPEC said, and 112.3 million bpd in 2029. The 2028 figure is up 800,000 bpd from last year’s prediction.

OPEC’s 2029 forecast is more than 6 million bpd higher than that of the IEA, which said in June demand will plateau in 2029 at 105.6 million bpd. The gap is larger than the combined output of OPEC members Kuwait and the United Arab Emirates.

In 2020, OPEC made a shift when the pandemic hit oil demand, saying consumption would plateau in the late 2030s. It has begun raising forecasts again as oil use has recovered.

By 2050, there will be 2.9 billion vehicles on the road, up 1.2 billion from 2023, OPEC forecast. Despite electric vehicle growth, vehicles powered by a combustion engine will account for more than 70% of the global fleet in 2050, the report said.

“Electric vehicles are poised for a larger market share, but obstacles remain, such as electricity grids, battery manufacturing capacity and access to critical minerals,” it said.

OPEC and its allies, known as OPEC+, are cutting supply to support the market. The report sees OPEC+’s share of the oil market rising to 52% in 2050 from 49% in 2023 as U.S. output peaks in 2030 and non-OPEC+ output does so in the early 2030s.

By Alex Lawler, Reuters / September 24, 2024

Crude oil prices gained last week, reaching a two-week high, driven by a significant interest rate cut by the United States Federal Reserve (US Fed) and declining global stockpiles, which bolstered sentiment in both physical and futures markets. However, the surge was capped by forecasts of a decline in consumption in China, the world’s second-biggest economy. Analysts believe the energy sector will continue to gain in the near future, though global supply and demand uncertainty, following escalating geopolitical conflicts, remains a caveat.

Data compiled by Polymerupdate Research showed the benchmark Brent crude futures for near month delivery on the InterContinental Exchange (ICE) rose steadily by 4 percent last week, primarily due to cautious bullish activity despite the lack of a clear direction. The Brent crude contract started the week with a marginal gain, closing at US$ 72.25 a barrel on Monday, up from US$ 71.61 a barrel the previous Friday. The upward trend persisted across the energy contract, despite volatility, with the contract settling at US$74.49 a barrel on Friday.

A similar trend was observed in the Western Texas Intermediate (WTI) Cushing futures for near month delivery at the New York Mercantile Exchange (Nymex), with the contract starting the week with a gain, closing at US$ 70.09 a barrel on Monday, up from US$ 68.65 a barrel the previous Friday. With a weekly gain of 4.76 percent, WTI futures closed on Friday at US$ 71.92 a barrel.

Shaky fundamentals
Oil prices extended their recent recovery rally and rose last week as a 50 basis points (bps) interest cut to 4.75-5 percent in United States interest rates and declining global stockpiles helped offset some of the demand concerns arising from weak consumption in China. Interest rate cuts typically boost economic activity and energy demand, but some also saw the large cut as a sign of a weak United States labour market. The Bank of England on Thursday held interest rates at 5 percent. The declining global crude stockpiles should support oil prices going forward. Crude inventories in the U.S., the world’s top producer, fell to a one-year low last week.

A report from the broking and financial advisory firm AndndRathi Investment Services, said, “Oil may trade with upward bias in the near term on supply threat from renewed geopolitical tensions and weather disruptions along with declining Cushing stockpiles. But China remained a key pain point for crude markets, as economic readings from the world’s biggest oil importer showed little signs of improvement. Thus upside may remain capped around US$ 73.50 a barrel for WTI oil futures.

As expected, the People’s Bank of China (PBoC) kept its key lending rates unchanged at the September fixing, aligning with market estimates. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, was maintained at 3.35 percent. Meanwhile, the five-year rate, a reference for property mortgages, was held at 3.85 percent. Both rates remain at record lows following unexpected rate reductions in July. The government’s move came after the central bank delayed the medium-term lending facility (MLF) operation for the second time in two months, as the PBoC planned to let short-term rates play a bigger role in guiding markets.

Facing economic challenges across the region, the Bank of England kept the Bank Rate unchanged at 5 percent during its September 2024 meeting, following a 25 bps cut in August, the first reduction in over four years. This decision met market expectations, though one member favoured a further 0.25 percentage points cut to 4.75 percent. The annual inflation was 2.2 percent in August, and is expected to increase to around 2.5 percent towards the end of this year as declines in energy prices last year fall out of the annual comparison. The number of people claiming unemployment benefits in the United States dropped by 12,000 from the previous week to 219,000 on the period ending September 14h, significantly below market expectations of 230,000, and reaching a new 4-month low.

The world is facing two major geopolitical conflicts: the war between Russia & Ukraine, and Israel & Hamas-Hezbollah-Iran. These conflicts have created a global economic and oil supply uncertainty, especially in the Middle East, which accounts for over a third of production worldwide. Additionally, economic downturn in the United States with rising unemployment rates, and slow recovery in China, have also added to the existing problems.

Deceleration in China’s oil consumption
China, the world’s second-biggest economic after the United States, is facing an abrupt deceleration in oil consumption, which is cooling global demand growth sharply from the rates seen in recent years, according to the latest report by the International Energy Agency (IEA). World oil demand is on course to increase by 900 000 barrels per day (bpd), or 0.9 percent, in 2024 and 950 000 bpd next year, down from 2.1 million bpd, or 2.1 percent, in 2023. IEA’s monthly data reported by countries representing 80 percent of global oil demand for the first six months confirm the sharp slowdown in the rate of growth in oil consumption. Global demand rose by 800 000 bpd, or 0.8 percent, year on year during the first half of the year.

The recent downturn in China has been even more acute than expected, with oil demand in July declining year on year for a fourth consecutive month, according to IEA. At the same time, growth outside of China is tepid at best. This weaker demand environment has helped fuel a sharp sell-off in oil markets. Brent crude oil futures have plunged from a high of more than US$ 82 a barrel in early August to near three-year lows at just below US$ 70 a barrel on 11 September.

China has been the cornerstone of the growth in global oil demand so far this century. Dynamic factory activity, massive infrastructure investments and rising prosperity across a population of over 1 billion people driving what has, at times, felt like an inexorable expansion in oil consumption. Over the past decade, the annual increase in Chinese oil demand has averaged in excess of 600 000 bpd, accounting for more than 60% of the total global average increase. Moreover, China’s share of global demand growth has expanded since the pandemic. This year, demand outside China will remain 0.3 percent below 2019 levels, but in China, consumption will be 18 percent higher, IEA forecasts.

By: polymerupdate , DILIP KUMAR JHA / 23 Sep 2024 

Financial results for 36 publicly traded U.S. oil exploration and production (E&P) companies show that cash from operations in the first quarter of 2024 has decreased in real terms from the first quarter of 2023 due to lower natural gas prices.

Production expenses, which can also affect cash from operations, have stabilized after supply chain issues that caused increased costs appear to be largely resolved. Capital expenditures, which represent investment in oil and natural gas production, were flat over the same period.

In the first quarter of 2024, lower crude oil and natural gas prices helped reduce cash from operations by 12% compared with the first quarter of 2023, to $23.3 billion. Although West Texas Intermediate crude oil prices declined 2% over this period, U.S. crude oil production by these companies increased 5% to nearly 4.2 million barrels per day (b/d).

Relatively large production cuts by OPEC+ have supported crude oil prices and spurred production among non-OPEC+ sources, including U.S. producers. Increased production would normally result in more cash from operations, but substantially lower natural gas prices likely hampered revenue for these companies.

Natural gas prices fell 26% from the first quarter of 2023 to the first quarter of 2024 and reached their lowest average monthly inflation-adjusted price since at least 1997. Although the companies in this analysis focus on crude oil production, natural gas still typically makes up around 30% of what they produce because of associated natural gas present in crude oil deposits and more diversified operations by some of the E&P companies in the group.

Production expenses—such as the cost of goods sold, operating expenses, and production taxes—increased substantially per barrel of oil equivalent (BOE) in 2021 and 2022 as supply chain issues caused material and labor costs to more than double from the 2019 average. Production expenses have since declined, decreasing 40% between the second quarter of 2023 and the recent high in the second quarter of 2022.

Production expenses have been relatively flat since the second quarter of 2023, averaging $26/BOE. In addition to supply chain improvements, improved drilling productivity and increasing takeaway capacity in the Permian region have also reduced production expenses on a BOE basis.

We base our analysis on the published financial reports of 36 publicly traded oil companies that produce most of their crude oil in the United States. As a result, our observations do not represent the entire sector because we exclude private companies, which do not publish financial reports. The included 36 publicly traded companies accounted for 32% of the crude oil produced in the United States in the first quarter of 2024, or about 4.2 million barrels per day.

By: AJOT / Sep 23 2024 

Financial results for 36 publicly traded U.S. oil exploration and production (E&P) companies show that cash from operations in the first quarter of 2024 has decreased in real terms from the first quarter of 2023 due to lower natural gas prices.

Norway’s Equinor has scrapped plans to export so-called blue hydrogen to Germany because it is too expensive and there is insufficient demand, a spokesperson for the energy company said on Friday.

Equinor and Germany’s RWE signed a memorandum of understanding in January 2022 to build a hydrogen supply chain for German power plants to help reduce greenhouse gas emissions.

The plans included producing hydrogen from natural gas in combination with carbon capture and storage – known as blue hydrogen – in Norway and exporting it to hydrogen-ready gas power plants in Germany via the world’s first offshore hydrogen pipeline.

“The hydrogen pipeline hasn’t proved to be viable. That also implies that hydrogen production plans are also put aside,” Equinor spokesperson Magnus Frantzen Eidsvold told Reuters.

“We have decided to discontinue this early-phase project,” he added.

The pipeline was not RWE’s project, but required support from both Norway and Germany, the German company said in emailed comments.

Last year, Equinor CEO Anders Opedal said the cost of the total supply chain could run into the “tens of billion euros”, while the pipeline alone would cost some 3 billion euros ($3.35 billion).

Eidsvold said Equinor also could not continue maturing the projects without firm long-term commitments from European buyers to import hydrogen.

“We are not able to make this kind of investments when we don’t have long-term agreements and the markets in place,” Eidsvold said.

Plans to develop hydrogen-ready gas power plants in Germany with RWE will go ahead but hydrogen for them will be procured on the continent, not exported from Norway, Eidsvold said.

The German government has been in intensive talks on the issue with Norway, a German economy ministry official told Reuters on Saturday.

The official said the new plan now includes converting Norwegian gas into blue hydrogen in the Netherlands and shipping the captured carbon dioxide back to Norway for storage.

RWE said hydrogen-ready gas power plants could start production at earliest from 2030 provided the German government approves a support regime for such plants.

Equinor will continue other early-phase hydrogen projects, such as in Britain and the Netherlands, as well, Eidsvold added.

By: Reuters / September 23, 2024

As the U.S. transitions toward adopting more renewable liquid fuels, bulk liquid storage facilities serve as an ever-present constant in the supply chain, storing and handling commodities like petroleum-based products, biofuels like ethanol and beyond.

The public and market forces continue to push the industry to adapt to new and increasing quantities of greener, alternative forms of liquid energy. The federal government has developed several programs that terminal companies can leverage to jumpstart their efforts, capitalizing on these emerging markets.

Higher Blends Infrastructure Incentive Program

For example, in June 2023, the U.S. Department of Agriculture (USDA) announced the Higher Blends Infrastructure Incentive Program (HBIIP), designed to significantly increase the sale and use of higher blends of ethanol and biodiesel by expanding infrastructure for renewable fuels through quarterly grant competitions. The International Liquid Terminals Association (ILTA) held a webinar with Jeff Carpenter, HBIIP’s program manager, to discuss the initiative and how terminal companies can take advantage of the resources it offers.

Carpenter gave a high-level summary of the HBIIP program, outlining how it implements quarterly grant competitions for $90 million in projects to support higher blend fuel sales, including purchasing and installing or retrofitting fuel dispensers and related equipment and infrastructure. His presentation highlighted opportunities under HBIIP for fuel distribution facilities, and while installation of storage tanks for ethanol and biodiesel are common grant uses, the program is open-ended for terminal facilities if the project is tied to higher blends of biofuels. Carpenter also explained additional funding opportunities from the USDA for emissions reductions at liquid terminals, including the Rural Energy for America Program (REAP) and business and industry guaranteed loans. Although the last quarterly competition under HBIIP is open through September 30, 2024, Carpenter anticipates that the program will likely be renewed in the future because of its success and bipartisan support.

FAST-SAF programs

Likewise, in late 2022 the DOT and the Federal Aviation Administration established the Fueling Aviation Sustainable Transition (FAST) grant program. Created under the Inflation Reduction Act, the program offers funding to accelerate the production and use of sustainable aviation fuels (SAF) and the development of low-emission aviation technologies to support the U.S. aviation climate goal to achieve net-zero GHG emissions by 2050. For bulk liquid terminals, FAST offers almost $250 million in grants to support the build out of infrastructure projects related to SAF production, transportation, blending and storage.

Regional Clean Hydrogen Hubs program

Finally, the DOE formalized the Regional Clean Hydrogen Hubs (H2Hubs) in 2023, earmarking $7 billion in funding for seven clean hydrogen hubs across the U.S. These hubs work as a national network of clean hydrogen producers, consumers and connective infrastructure while supporting the production, storage, delivery and end use of clean hydrogen. H2Hubs is meant to accelerate the commercial-scale deployment of hydrogen, helping generate clean, dispatchable power, create a new form of energy storage and decarbonize heavy industry and transportation. Terminal companies can apply for funding to build hydrogen storage capabilities at their facilities if they are located within the seven hubs. The hydrogen hubs are named: Appalachian, California, Gulf Coast, Heartland, Mid-Atlantic, Midwest and Pacific Northwest.

As the bulk liquid terminals industry continues to navigate the wider energy transition, terminal companies will undoubtedly play a key role in the energy logistics supply chain far into the future. HBIIP, FAST-SAF and H2Hubs represent a unique opportunity for companies to hit the ground running as the nation moves to embrace more renewable liquid energies.

By  ILTA , JAY CRUZ / September 16, 2024