Tag: Brent Crude

Trafigura Group Pte Ltd and Greenergy, a UK-based supplier of road fuels and a major biodiesel producer, today announce that Trafigura has agreed to acquire Greenergy’s European business from Brookfield Asset Management and its listed affiliate Brookfield Business Partners for an undisclosed sum. The acquisition is subject to customary closing conditions and regulatory approvals.

Initially founded in 1992 to supply diesel with lower emissions, Greenergy is today one of Europe’s largest suppliers of biofuels with manufacturing plants in the UK and the Netherlands and a leading distributor of road fuels in the UK.

The acquisition of Greenergy presents a unique opportunity for Trafigura to strengthen its fuel supply operations in Europe and to add the physical production and distribution of renewable fuels to its growing biofuels business. Post acquisition, the company will continue to be led by its current management team.

The combination of Trafigura’s and Greenergy’s commercial and market expertise will add value to the existing operations, and enable the company to explore opportunities for expansion into new markets and products.

In addition, Trafigura’s financial strength will provide a robust platform for growth, helping to drive Greenergy’s strategic initiatives and its decarbonisation plan.

Ben Luckock, Global Head of Oil at Trafigura, said: “As Europe transitions to a lower carbon future and the refining industry adapts to changing market dynamics, companies like Greenergy become increasingly important. This acquisition represents a major expansion of our existing biofuels and fuel supply capabilities, adding Greenergy’s production and distribution expertise and supporting customers’ transition to cleaner, more sustainable fuel options.”

Christian Flach, Chief Executive of Greenergy, said: “Trafigura brings additional understanding of global supply chains and energy markets and a track record of investing in renewables. This will further enhance our offer to customers through the energy transition and beyond.”

By: Trafigura , March 5, 2024

Vitol-backed energy storage company VTTI is close to acquiring a majority stake in Italy’s biggest liquefied natural gas import terminal from Exxon Mobil (XOM.N), opens new tab and QatarEnergy, two sources with knowledge of the matter said on Monday.

The deal, which sources previously said could value the entire terminal at about 800 million euros ($868 million), would give VTTI a role in the European LNG market at a time when flows of the liquefied gas to Italy are on the rise.

Exxon put its 70.68% interest in the Adriatic LNG terminal up for sale last year, as part of a strategy to divest non-core assets. QatarEnergy owns a 22% stake.

VTTI and QatarEnergy were not available for comment outside working hours in Europe and the Gulf. Exxon did not immediately respond to a request for comment.

Once a deal is signed, Italian gas grid operator Snam, which currently owns a 7.3% in the terminal, will have 45 days to decide whether to exercise its right of first refusal to increase its stake in the project.

The chief executive of state-controlled Snam said in January the group could increase its stake in the terminal to as much as 30% under an agreement with the current shareholders, boosting its influence over an asset considered strategic for the country.

One of the sources said last-minute surprises to VTTI’s purchase attempt could not be ruled out. The sources declined to be named because they were not authorised to speak publicly about the matter.

Investment manager BlackRock (BLK.N), opens new tab in December bowed out of exclusive talks to acquire the asset, reopening the possibility for VTTI to buy it.

The Adriatic LNG terminal is located about 9 miles (15 km) off the Veneto coastline and has a regasification capacity of 9 billion cubic metres of natural gas per year.

It is the only Italian LNG terminal that can receive so-called super large-scale LNG vessels with a capacity of up to 217,000 liquid cubic meters.

By: Reuters / Francesca Landini, March 5, 2024

Glencore may acquire Shell’s oil operations in Singapore after several previous candidates for the assets changed their minds about competing for them.

This is according to unnamed sources who spoke to Reuters, saying that the Swiss commodity trading major was currently in the process of evaluating the assets with the help of Indonesian PT Chandra Asri Petrochemical.

The assets in question include Shell’s Singapore refinery, which has a capacity of 237,000 barrels daily, an ethylene plant, and a mono-ethylene glycol production facility in the vicinity. These were subjected to a strategic review in June last year and following that, Shell decided to get rid of them.

The refinery started as an oil storage and refinery complex but over the years grew into a more complex facility that also produces biofuels and recycles plastics, according to the company.

Previously, there were four potential buyers of the assets that Shell said it wanted to divest from last year. These included Vitol and three Chinese companies, including CNOOC and two petrochemical producers—Befar Group and Eversun Holdings.

These, according to the Reuters sources, have now dropped out of the race, clearing the space for another buyer. Per the sources, Glencore is working with Morgan Stanley on drafting a deal with the Big Oil major.

China’s Sinopec was also among the prospective buyers for the Singapore assets but in August last year, it said it would instead invest in a natural gas project in Saudi Arabia, in partnership with TotalEnergies.

The acquisition will give the commodity trader a physical presence in Singapore, which is a major regional oil hub. However, Reuters notes that the two petrochemical facilities that Shell is selling are old and are finding it increasingly difficult to compete with newer refineries and petrochemical complexes in China.

Shell planned to have the fate of the Singapore assets sealed by the end of this year.

By: Oil Price / Irina Slav, February 29, 2024

Oil prices are being driven higher by geopolitical events, James Davis, FGE’s Director of Short-Term Global Oil Service and Head of Upstream Oil, told Rigzone.

“You can say there is some ‘risk premium’ as a result, but it would be more accurate to say part of this ‘risk premium’ is due to ‘trade friction’ as shippers avoid the Red Sea,” Davis added.

“Vessels avoiding the Red Sea, means longer voyage times, which means more oil on the water, less oil on the land, and as a result, premiums for prompt crude,” he continued.

“Whether you call it a risk premium or trade friction, the geopolitical events are pushing oil prices higher,” Davis went on to state.

When Rigzone asked Carole Nakhle, the CEO of consultancy Crystol Energy, if there is a geopolitical risk premium in the oil price right now, Nakhle said, “we all know that geopolitics affect oil markets but no one knows how to quantify the risk premium which depends on one’s own perception of the risk to supply disruptions”.

“But the geopolitical risk should not be taken in isolation from other important market conditions, including – how tight supplies are to start with? how rapidly demand is growing? Is there sufficient spare capacity in the system? The answer to these questions will determine the magnitude of the geopolitical risk premium,” Nakhle added.

“Today, we haven’t seen supply disruptions. Demand is not booming. Non-OPEC+ supply is healthy, so is the spare capacity largely thanks to OPEC+ cuts,” Nakhle went on to state.

When Rigzone asked Macquarie the same question, the company responded with a report published earlier in February, in which Macquarie strategists said, “a combination of factors have driven the recent oil rally”.

“The key factors include an increase in Middle East and Russia related risk premiums, and an unusually large number of global production outages,” the strategists added in that report.

In a separate report sent to Rigzone on January 23, Macquarie strategists noted that, “without current geopolitical tensions, we believe crude would sell off meaningfully”.

“Over time, we expect supply risk premiums to decouple from conflict risk, analogous to Russia-Ukraine,” they added at the time.

The Brent Crude oil price closed at $77.33 per barrel on February 2, $82.77 per barrel on February 13, $83.67 per barrel on February 22, and $83.65 per barrel on February 27.

Middle East Incidents

In a statement posted on its X page on February 28, U.S. Central Command (Centcom) noted that, on February 27, between the hours of 9.50pm and 10.55pm Sanaa time, U.S. aircraft and a coalition warship “shot down five Iranian-backed Houthi one-way attack (OWA) unmanned aerial vehicles (UAV) in the Red Sea”.

“Centcom forces identified these UAVs originating from Houthi-controlled areas of Yemen and determined they presented an imminent threat to merchant vessels and to the U.S. Navy and coalition ships in the region,” Centcom added in the statement.

“These actions will protect freedom of navigation and make international waters safer and more secure for U.S. Navy and merchant vessels,” it continued.

In a statement posted on its X page on February 27, Centcom revealed that, on February 26 between the hours of 4.45pm and 11.45pm Sanaa time, its forces “destroyed three unmanned surface vessels (USV), two mobile anti-ship cruise missiles (ASCM), and a one-way attack unmanned aerial vehicle (UAV) in self-defense”.

“The USV and ASCM weapons were prepared to launch towards, and the UAV was over, the Red Sea. Centcom forces identified the USVs and missiles in Houthi-controlled areas of Yemen, as well as the UAV over the Red Sea, and determined that they presented an imminent threat to merchant vessels and to the U.S. Navy ships in the region,” it added.

“These actions are taken to protect freedom of navigation and make international waters safer and more secure for U.S. Navy and merchant vessels,” Centcom continued.

In a previous X post, Centcom noted that, on February 24 at 11.45pm Sanaa time, “the Iranian-backed Houthis launched one anti-ship ballistic missile likely targeting the M/V Torm Thor, a U.S.-flagged, owned, and operated chemical/oil product tanker in the Gulf of Aden”.

“The missile impacted the water causing no damage or injuries. Earlier in the evening, at about 9pm Sanaa time, USCENTCOM forces shot down two one-way attack unmanned aerial vehicles over the southern Red Sea in self-defense,” it added.

“A third UAV crashed from an assessed in-flight failure. Centcom forces identified the UAVs and determined they presented an imminent threat to merchant vessels and to the U.S. Navy ships in the region,” it continued.

Coalition Strikes

In another X post on February 24, Centcom stated that, at approximately 11.50pm Sanaa time, Centcom forces, alongside UK Armed Forces, and with support from Australia, Bahrain, Canada, Denmark, the Netherlands, and New Zealand, “conducted strikes against 18 Houthi targets in Iranian-backed Houthi terrorist-controlled areas of Yemen”.

“These strikes from this multilateral coalition targeted areas used by the Houthis to attack international merchant vessels and naval ships in the region. Illegal Houthi attacks have disrupted humanitarian aid bound for Yemen, harmed Middle Eastern economies, and caused environmental damage,” it added.

“The targets included Houthi underground weapons storage facilities, missile storage facilities, one-way attack unmanned aerial systems, air defense systems, radars, and a helicopter. These strikes are intended to degrade Houthi capability and disrupt their continued reckless and unlawful attacks on international commercial and U.S. and U.K. vessels in the Red Sea, Bab AI-Mandeb Strait, and the Gulf of Aden,” Centcom went on to state in the post.

“The goal of this multi-national effort is to defend ourselves, our partners, and allies in the region and restore freedom of navigation by destroying Houthi capabilities used to threaten U.S. and partner forces in the Red Sea and surrounding waterways,” it continued.

By: Rigzone /  Andreas Exarheas, February 29, 2024 

Driven by China’s industrial decarbonisation, the global liquefied natural gas (LNG) market will continue to grow into the 2040s, according to a new report.

As industrial coal-to-gas switching gathers pace in China, amid its modest economic recovery, global demand for LNG is estimated to rise by more than 50% by 2040, according to Shell’s LNG Outlook 2024 report.

The report shows that the development of China’s gas infrastructure has been accelerating in recent years. The growth in scale and connectivity has also enabled China to balance the LNG market worldwide, it said.

According to the report, long-term gas and LNG demand outlook in China remains strong while supply diversification is also a key characteristic of the growth in the country.

China has been ramping up construction of LNG infrastructure in recent years, including receiving terminals and storage facilities, as the country prioritises a transition away from coal.

The total turnover capacity of LNG receiving stations in China reached 97.3 million tonnes per year by the end of 2022, according to the Economics and Technology Research Institute under China National Petroleum Corp.

“China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,” said Steve Hill, executive vice-president for Shell Energy.

Hill said gas has an essential role to play in tackling the carbon emissions in China’s steel sector by replacing coal during the production process.

China’s natural-gas market achieved growth last year amid economic recovery. Data from the National Development and Reform Commission revealed that China’s apparent natural-gas consumption exceeded 394.53 billion cubic metres, an increase of 7.6% year-on-year.

China also overtook Japan as the world’s largest LNG importer last year, with imports reaching 71.32 million tonnes, up 12.6% year-on-year, it said.

According to BloombergNEF, China’s optimised anti-Covid-19 measures last year have lifted gas consumption since the second quarter of 2023, with total demand in 2023 reaching 384 billion cubic metres, 4.8% higher than that the year before.

The residential and commercial sector’s gas demand gained from the optimisation of measures, while transport gas consumption spiked as LNG trucks became more cost-competitive compared with diesel ones, it said.

China has become the dominant force in LNG worldwide as it works toward a green transition with what is seen as a relatively clean bridge fuel, said Li Ziyue, an analyst with BloombergNEF.

Li said gas burn in the transport sector is set to see the fastest growth due to the favourable economics of natural-gas commercial vehicles.

“Power gas burn may grow fast with a gas power capacity expansion and lower fuel prices,” she said.

State-owned enterprises have led China’s expansion of its capacity to handle LNG, while private companies are playing an increasingly active role in building LNG terminals, she said.

About 60% of the LNG facilities under construction are by state-owned enterprises, while the rest are by private companies in China, Li added.

China is among the countries with an extensive list of LNG terminals under construction, with some being constructed from scratch and many existing terminals undergoing expansion, Anne-Sophie Corbeau, a researcher with the Center on Global Energy Policy at Columbia University, was quoted as saying by South China Morning Post.

BloombergNEF said it expects China’s base-case natural gas demand in 2024 to increase 7% year-on-year to 413 billion cubic metres, while LNG imports are estimated to rise 7% annually to 76 million tonnes this year.

By Zheng Xin / Investor , February 27, 2024

Canadian oil producers expect the discount on their crude to shrink significantly when the Trans Mountain pipeline expansion (TMX) starts this year, but the relief may be short-lived as surging supply looks set to exceed the country’s pipeline capacity in just a few years.

TMX will ship an extra 590,000 barrels per day (bpd) of crude, trebling existing capacity to Canada’s Pacific Coast once the C$30.9 billion ($22.8 billion) expansion is finally complete. The Canadian government-owned project has hit technical issues on its final leg of construction, but is still targeting a second quarter in-service date.

For much of the last decade, oil companies in the world’s No. 4 producing country have been forced to sell their barrels at a deep discount to global prices due to lack of pipeline capacity to export crude.

Once TMX is operating, Canadian heavy crude differentials should narrow to around $10-$12 a barrel under U.S. benchmark crude from more than $19 a barrel currently, BMO analyst Ben Pham said in a note to clients last week.

He estimated the expansion would lift Canada’s total takeaway capacity to 5.2 million bpd, leaving 220,000 bpd of unused space on pipelines.

Still, oil sands production is rising so rapidly that some market players think Canada could again run out of pipeline space in less than two years, said RBN Energy analyst Martin King.

“Originally it was thought TMX would give us a four- or five-year window,” King said. “It now looks like that window of spare capacity might actually be a lot smaller.”

Canadian producers could add up to 500,000 bpd of supply this year and next year alone, Colin Gruending, executive vice president of liquids pipelines at midstream firm Enbridge Inc (ENB.TO), opens new tab, estimated on an earnings call this month.

The prospect for more bottlenecks would likely widen the discount again, and could deter companies from longer-term investments in growing Canada’s production.

For existing pipeline operators, the rising production and strong demand for capacity is good news. Enbridge said it may continue rationing space on its 3.1 million bpd Mainline pipeline system even once TMX starts operating, allaying concerns among some analysts the company could see a drop in volumes and revenues.

MORE OPTIONS

Most of the new capacity on TMX will be for heavy crude barrels, meaning light and synthetic crude oil is most likely to face rationing on the Mainline and any resulting price discounts, said RBN’s King.

The new capacity on TMX will give heavy crude producers a choice of sending barrels to the U.S. west coast and Asia, or to the U.S. Midwest and Gulf Coast on existing pipelines.

On a recent earnings call, Imperial Oil (IMO.TO), opens new tab CEO Brad Corson said having spare pipeline capacity would lift the value of heavy crude for the entire Canadian oil industry.

Imperial will continue to move most of its barrels to the Midwest and Gulf Coast, while keeping a look out for the highest-value markets, he added.

Ryan Bushell, president of Newhaven Asset Management, which holds shares in pipeline companies including Enbridge, said TMX would likely run at less than full capacity if strong pricing on the Gulf Coast, the world’s largest heavy crude refining centre, drew barrels onto pipelines heading south.

“It all depends on where the best pricing is, for the first time in a long time producers will have optionality,” Bushell said.

No matter how fast TMX fills up, it is likely to be Canada’s last major export pipeline ever built, due to regulatory hurdles, environmental opposition and uncertainty about future oil demand.

“The potential for brand new pipelines getting built is pretty close to zero,” RBN’s King said.

By Nia Williams / Reuters , February 21, 2024