Tag: crude price

Speculators are often drawn to organisations that have a track record of failure and no revenue or profit because of the thrill of investing in a business that has the potential to turn a profit.

However, the truth is that investors will typically collect their loss share when a company has annual losses over an extended period of time. A business operating at a loss has not yet demonstrated its worth through profits, and soon outside funding may stop coming in.

Even in this day of tech-stock blue-sky investing, a lot of investors stick to a more conventional approach, purchasing stock in successful businesses like Aegis Logistics. Now, this is not to argue that the business offers the greatest investment opportunity available, but business success largely depends on profitability.

From a COVID low of 2020, the company has given a return of 190 percent. But the stock has been volatile for the past one year just giving a return of 20 percent. So, should you take the opportunity of this consolidation to invest for the long term? Well, for that let’s understand the business of Aegis Logistics and what the future holds.

Corporate Overview Of Aegis Logistics

Aegis Logistics is the top private player in India for LPG imports and handling, and it leads the country in integrated oil, gas, and chemical logistics. The company uses its cutting-edge Necklace of Liquid & Gas terminals, which are located in India’s main ports and have a static capacity of 1,14,000 MT for LPG and 15,70,000 KL for Chemicals & POL storage.

With its headquarters located in Mumbai, Aegis Group was established in 1956. Aegis Logistics is a well-known Liquefied Petroleum Gas (LPG) parallel marketer with a strong presence in India.

The company has a sizable network of distributors that offer LPG cylinders and appliances to residential, commercial, and industrial clients. It also has a large distribution of retail outlets that dispense autogas.

To help major enterprises switch from alternative fuels to LPG and optimize their economic benefits, Aegis also offers LPG installation and interfuel services.

Business Segments Of Aegis Logistics

The company has two primary business segments – the Liquid Logistics Division and the Gas Division.

Liquid Logistics Division

Revenues from liquid terminalling increased by approximately 54.80% to ₹417.97 crore from ₹270.01 crore in the prior year. The division’s EBITDA also increased, reaching ₹271.50 crore from ₹195.59 crore. This segment contributed the highest percentage to the overall revenue.

The product mix and the capacity increase at Mangalore, Kandla, and Haldia increased EBITDA performance by 38.81%. Future capacity increases at Haldia, Kandla, Mangalore, and Kochi, along with increased capacity utilization and a better mix of products handled at those ports, will drive growth in this segment. The Mumbai terminals are still operating at maximum capacity.

Gas Division

Aegis Group encompasses the entire logistical value chain, from LPG distribution to sourcing and terminalling. Due to increased volumes and prices, the division’s revenues in FY 2022–2023 were ₹8,209.25 crore as opposed to ₹4,360.97 crore in the prior year.

The Gas division’s EBITDA climbed to ₹526.23 crore from ₹389.32 crore the year before, mostly as a result of increasing terminalling and distribution volumes. This segment contributed almost 95 percent to the overall revenue.

For FY 2022–2023, distribution of LPG and propane across all channels in bulk and packaged cylinders remained a priority. The integrated logistical services offered by Aegis Group position the company to win market share and realize the aim of a more sustainable future, while the continuous development indicates an increasing demand for LPG.

Financials Of Aegis Logistics

In the fiscal year 2023, Aegis Logistics saw a substantial increase in revenue, surging by 86.3% to reach ₹8,627.21 crore as opposed to ₹4,630.98 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a Compound Annual Growth Rate (CAGR) of 6.3% in revenue.

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 33% increase from ₹384.94 crore in FY2022 to ₹510.7 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased 56.21% CAGR.

In FY23, Aegis Logistics maintained favorable financial metrics with a Return on Equity (ROE) of 17.88% and a Return on Capital Employed (ROCE) of 17.08%.

Future Plans Of Aegis Logistics

Better Economics With LPG

According to the Kelkar Committee report, the industrial sectors primarily rely on imported LNG, which costs INR 45.6 per scm, while domestically produced natural gas is primarily utilized for PNG in households and CNG in automobiles. Compared to propane LPG, which costs INR 42.2 per square meter, this is more expensive.

Furthermore, the heat content of natural gas is 10,000 Kcal/scm while that of propane is 12,467 Kcal/scm. Propane uses less energy density and has a higher calorific value to generate the same amount of heat. Therefore, propane is less expensive than natural gas at INR 3.38 per million calories compared to INR 4.56 per million calories for natural gas.

To get LPG gas at a lower cost, Aegis Logistics has a joint venture (JV) with Itochu Corporation, a Japanese multinational corporation. This allows AEGIS to offer more competitive propane LPG rates in the industrial gas market.

New Storage for Green Ammonia

Aegis Logistics and Royal Vopak NV, a Dutch multinational company that specializes in the storage and management of a range of products, including chemicals, oil, gases, biofuels, and vegetable oils, have formed a 51:49 joint venture known as Aegis Vopak Terminals Ltd (AVTL).

Across five important Indian ports on the east and west coastlines, this joint venture oversees 11 terminals. With a total capacity of over 960,000 cubic meters, AVTL is becoming a significant participant in the independent LPG and chemical tank storage market in India.

The company’s next phase of growth would involve investing INR 1,000 crore to build a plant in Odisha that can store 80,000 tonnes of green ammonia.

Robust Expansion Plans

The company has several upcoming port construction projects that will boost the capacity of the Liquids division in the future. The Kandla Port which has a capacity of 35,000 KL is expected to commission in Q4FY24.

The company expects the JNPT Port which has an 110,000 KL capacity to be commissioned in phases and will be fully operational by June 2024. The Mangalore Port which has a 76,000 KL capacity is also expected to be partially operational by the end of FY24 and the balance in Q1FY25.

Conclusion

After understanding Aegis Logistics’ financials, growth drivers, and future expansion plans, it seems the company is well-positioned for long-term growth. With strong profitability, increasing capacity, and focus on the high-potential LPG market, Aegis could continue its upward trajectory.

However, with some recent volatility, investors should assess if the current valuation prices are too much for future optimism. What do you think – is Aegis’ growth story still intact and is now the time to buy in?

By: Tank Terminals / Trade Brains , April 09, 2024

Vitol, the foremost independent commodity trader globally, has for the second consecutive year, secured profits surpassing its competitors, solidifying its status as a dominant force in the international energy markets.

Headquartered in London, the privately-owned conglomerate recorded a net profit of $13 billion in 2023, as reported by individuals familiar with the company’s financial performance.

According to a Financial Times report, although down from the record $15.1 billion Vitol made in 2022, the net profit figure is more than three times higher than the $4 billion it reported in 2021, illustrating how much Vitol has benefited from disruption to energy markets in the past two years.

Russia’s invasion of Ukraine

Russia’s invasion of Ukraine in February 2022 sent energy prices soaring as the west responded with sanctions, leading to one of the biggest shifts in global commodity flows in history. Price volatility eased in 2023, but commodity flows remain disrupted.

According to the report, Vitol does not publicly release its financial results, which are only available when its accounts are filed in the Netherlands later in the year.

The company declined to comment on the profit figure, which dwarfed its biggest competitors and was larger than some of the world’s biggest oil producers, including Italy’s Eni.

Lower commodity prices meant turnover fell to $400 billion from $505 billion in 2022 but the total volume of energy products traded by Vitol increased by 4% year-on-year, last month’s statement said.

The growth was driven by gas and liquefied natural gas volumes, which grew by 19% and 24% respectively. The volume of oil and refined petroleum products that the group traded remained roughly flat at 7.3 million barrels per day.

Vitol’s closest rival Trafigura made net profits of $7.2 billion in its last financial year, which ended in September, while fellow privately held energy trader Gunvor made $1.3 billion, it said last week.

Bumper payout

The report noted that the second consecutive blockbuster year will mean another bumper payout for Vitol’s approximately 450 senior partners spread across the trading hubs in London, Geneva, Singapore and Houston.

It will also add to the cash pile Vitol has available to expand the business. In 2022 the group doubled its shareholder equity to $25.8 billion, according to its last set of accounts.

Vitol has already begun spending some of the windfall, launching in January a €1.7 billion bid to acquire Italy’s Saras, which owns the biggest single refinery in the Mediterranean on Sardinia. Last year its Turkish subsidiary Petrol Ofisi agreed to acquire BP’s downstream business in Turkey. On completion, Vitol will have invested in about 9,000 petrol stations worldwide, including 3,900 it owns in Africa through Vivo Energy.

In the UK, Vitol owns and operates five power plants through its partially owned subsidiary VPI, making it a bigger power generator than Centrica. VPI also has three more power facilities being built in the region — two in the UK and one in Ireland.

By: Nairametrics, April 09, 2024

The panel’s next meeting is scheduled to be held on June 1, ahead of a planned full OPEC and OPEC+ ministerial meetings, which are expected to decide whether to proceed with the current level of cuts beyond June or reverse some of the reductions.

After the meeting today, Ole Hansen, Head of Commodity Strategy at Saxo Bank, commented,

“Brent crude oil toys with $90 after OPEC+ decided to stick with oil supply cuts for the first half of the year, keeping global markets tight and potentially sending prices higher.”

Brent Crude was up by 0.73% at $89.61 early on Wednesday ahead of the weekly EIA inventory report.  

In early March, the members of the OPEC+ alliance that had pledged the Q1 cuts announced they would roll over the supply reductions until the end of the second quarter.

Saudi Arabia, Iraq, the United Arab Emirates (UAE), Kuwait, Kazakhstan, Algeria, Oman, and Russia are now cutting their respective crude oil production and exports in the first half of 2024 with extra voluntary reductions, on top of the voluntary cuts OPEC+ previously announced in April 2023 and later extended until the end of 2024.  

Russia will be cutting oil production instead of exports in the second quarter of 2024 so that all OPEC+ producers that reduce output contribute equally to the cuts, Russian Deputy Prime Minister Alexander Novak said last week.  

The OPEC+ group is set to continue with its production cuts until at least the end of the first half of 2024 as the alliance’s Joint Ministerial Monitoring Committee (JMMC) did not recommend any changes to output policy at its meeting on Wednesday. 

The JMMC is the OPEC+ panel that monitors the situation in the oil market and assesses compliance with the cuts. It doesn’t take decisions on policy as it just recommends possible actions to the full OPEC+ ministerial meetings.

After a short regular meeting today, the panel did not recommend to the OPEC+ ministers any change to the current levels of production, as widely expected.

By Oilprice.com / Charles Kennedy , Apr 03, 2024

INEOS has completed the acquisition of TotalEnergies’ 50% share of Naphtachimie (720 ktpa steam cracker), Appryl (300 ktpa polypropylene business), Gexaro (270 ktpa aromatics business) and 3TC (naphtha storage) announced on 5 July.

These businesses had previously been joint ventures between the two companies. A number of other infrastructure assets have also been acquired including part of TotalEnergies ethylene pipeline network in France.

INEOS will now fully integrate the Naphthachimie, Gexaro and Appryl petrochemical businesses, assets and infrastructure into INEOS Olefins & Polymers South at Lavera in Southern France. Gexaro, which is located on the Lavera refinery site will continue to be operated by Petroineos.

Xavi Cros, CEO of INEOS Olefins & Polymers South adds: ‘We are pleased that we have today completed the acquisition of TotalEnergies petrochemical assets at Lavera. This is a major step forward for the INEOS French and South European businesses. We will now fully integrate these assets and enhance the competitiveness of our offer.’

By Tank Terminals, April 02, 2024

Hess Corp. and Chevron Corp. have insisted they can complete their merger mid-2024 despite arbitral proceedings launched by Exxon Mobil Corp. over Guyana’s Stabroek block.

“The parties currently expect to complete the transaction in the middle of 2024”, Hess said in a letter to shareholders, made public as an attachment to a recent regulatory disclosure by Chevron. The joint announcement of the merger last year gave the first half of 2024 as the expected date of closure.

The merger would result in Chevron taking over Hess’ stake in Stabroek. ExxonMobil operates the offshore block with a 45 percent interest through Esso Exploration and Production Guyana Ltd., while Hess subsidiary Hess Guyana Exploration Ltd. (HEGL) holds a 30 percent interest. China National Offshore Oil Corp’s CNOOC Petroleum Guyana Ltd. holds the remaining 25 percent.

However ExxonMobil initiated arbitration proceedings March 6 before the International Chamber of Commerce tribunal asserting that a pre-emption right accorded to each of the three parties in the Stabroek joint operating agreement (JOA) applies to Chevron’s acquisition of Hess. A pre-emption right or right of first refusal (ROFR) allows a partner to prevent a co-venturer from selling a stake to an outside party without first offering the stake to the partner.

Hess filed for arbitration March 11 with the opposite claim. China’s state-owned CNOOC followed suit March 15 with the same claim as ExxonMobil.

The cases have been confirmed in filings with the U.S. Securities and Exchange Commission (SEC).

In a simplification of the court process, Hess said in the letter the three Stabroek co-venturers agreed to unify the arbitration cases into one. “On March 26, 2024, following a joint application by the parties, the authority administering the arbitration consolidated the three arbitration proceedings”, Hess told stockholders in the letter.

“Chevron and Hess believe that the Stabroek ROFR does not apply to the merger due to the structure of the merger and the language of the Stabroek ROFR provisions”, Hess said.

“HGEL intends to vigorously defend its position in the arbitration proceedings and expects the arbitration tribunal will confirm that the Stabroek ROFR does not apply to the merger”, Hess added.

“If the arbitration does not result in a confirmation that the Stabroek ROFR is inapplicable to the merger, and if Chevron, Hess, Exxon and/or CNOOC do not otherwise agree upon an acceptable resolution, then there would be a failure of a closing condition under the merger agreement, in which case the merger would not close, and, pursuant to the terms of the Stabroek JOA, the Exxon affiliate and the CNOOC affiliate would cease to have rights under the Stabroek ROFR with respect to the merger”, the letter said.

“In that event, Hess would remain an independent public company and would continue to own its participating interest in the Stabroek Block.

“Based on the express terms of the Stabroek JOA, Chevron and Hess do not believe there is any material likelihood that the circumstances described in this paragraph will occur”.

With discovered recoverable resources of over 11 billion barrels of oil equivalent according to Hess, the 6.6 million-acre block is the main reason behind Chevron’s $60 billion purchase of Hess announced October 23.

Chevron or Hess may themselves junk the merger deal if completion is not achieved by October 22, 2024, or if extended, April 22, 2025, or October 22, 2025, under the terms of the agreement, according to Hess.

The merger agreement had set April 18, 2024, as the end date but both New York-based Hess and California-based Chevron have waived the termination right available to either party with respect to the April end date, according to Hess.

In another potential hurdle, Guyanese authorities could assert a requisite approval on their part over the merger, Hess said.

“As of the date of this proxy statement/prospectus, the parties do not anticipate that any such approval will be required from any Guyanese governmental body, agency or authority”, read the letter.

Meanwhile in the U.S., Chevron and Hess continue to work to clear an anti-trust review by the Federal Trade Commission, Hess said in the letter.

While the letter voiced confidence about the closure timeline, Hess had told employees in an email March 6, 2024, a copy of which was posted on the SEC, that the consummation could be delayed due to the arbitration.

by Rigzone Staff / Jov Onsa, Monday, April 01, 2024

The biofuels industry in the U.S. is booming.

That’s what Rystad Energy stated in a release sent to Rigzone recently, adding that a “fresh surge in production is just around the corner thanks to increased demand for renewable diesel and sustainable aviation fuels (SAFs) in the coming years”.

Rystad noted in the release that its research predicts biofuel production in the U.S. will increase by about 53 percent by the middle of next decade, “jumping from 850,000 barrels of oil equivalent per day (boepd) in 2023 to about 1.3 million boepd in 2035”.

“Domestic output is expected to surpass one million boepd as early as 2026,” the company added.

As governments and industry strive to decarbonize the transportation sector, the role of biofuels will continue to expand, Rystad noted in the release.

“Widely considered a core component of the energy transition, these plant-based alternatives to traditional fuels like gasoline and diesel could play a fundamental role in limiting emissions from road vehicles, shipping, and aviation,” the company said in the release.

“For instance, SAFs are almost identical to conventional jet fuel but produced using plant-based feedstocks like fats, oils, and agricultural and municipal waste,” it added.

“As their usage requires minimal aircraft and logistical modifications, SAFs could significantly reduce the aviation industry’s emissions impact,” it continued.

Focusing on 2035, Rystad said in the release that the U.S. is expected to dominate production of both ethanol and diesel, as well as advanced biofuels.

“The U.S. will produce about 1.3 million boepd of biofuels in 2035, 40 percent of the total global output,” it noted.

“Of that 1.3 million boepd, advanced fuels will account for about 50 percent of domestic production,” it continued.

Europe and Brazil will be the next biggest producers, but “significantly behind the U.S.”, according to Rystad. Europe is expected to produce about 580,000 boepd in 2035 and Brazil is expected to produce 510,000 boepd, Rystad outlined in the release.

“Biofuels look likely to play a crucial role in the future low-carbon energy world, and the U.S. is uniquely positioned to capitalize,” Artem Abramov, the head of clean tech research at Rystad Energy, said in the release.

“The market’s momentum has gathered in recent years, and its growth is assured through the end of this decade, but some uncertainty remains into the 2030s,” Abramov added.

Rystad highlighted in the release that its output forecast uses the company’s base case expectations for technology advancements, electric vehicle (EV) adoption, and the availability of biofuel feedstock, and said it assumes existing policy support remains in place.

The company pointed out that it has also mapped out two other scenarios – a high case and a low case. The high case assumes rapid technological advances, slower EV adoption, favorable biofuels policy, and ample feedstock availability, while the low case assumes slower technological development, faster EV adoption, reversed biofuel policy support, and feedstock supply challenges, the release outlined.

According to a chart included in the release, Rystad’s high case sees biofuel production above 1.6 million boepd in 2035 and its low case sees this output at around one million boepd in 2035. The chart showed that U.S. biofuel production was at around 600,000 boepd back in 2012. Rystad’s U.S. biofuel forecasts include ethanol, biodiesel, renewable diesel, and SAF, the chart revealed.

The Energy Institute’s (EI) latest statistical review of world energy, which was released last year, shows that the U.S. was the largest producer of biofuels in 2022, with 728,000 boepd. That figure represented a 6.3 percent year on year rise and 38.1 percent of total biofuel production in 2022, the review highlighted.

From 2012 to 2022, U.S. biofuel production has grown by an annual average of 3.2 percent, according to the review.

Brazil ranked second in terms of biofuel production in 2022, with 409,000 boepd, and Indonesia ranked third, with 174,000 boepd, the review showed. Brazil’s output represented 21.4 percent of total biofuel production in 2022, while Indonesia’s represented 9.1 percent, the review pointed out.

The EI’s biofuel production figures include biogasoline, such as ethanol, and biodiesel.

by Rigzone Staff / Andreas Exarheas, Monday, April 01, 2024

For the big four of oil and gas, the first three months of 2024 have largely been taken up with stock-takes from the previous year.

Full-year results season for UK supermajors BP and Shell, as well as US giants Exxon and Chevron, did not bring the riches of 2023.

All suffered double-digit return falls at the hands of more stabilised oil prices, but investors were kept satiated through the promise of hefty buyback programmes.

The oil behemoth led its peers across the board, with $36bn (£28.5bn) in earnings during 2023, $55bn (£43.5bn) in cash flow from operations and a total of $17.5bn (£13.8bn) of buybacks last year.

It remains the unassailable king of the peer group as the world’s largest investor-owned oil company and shows little sign of giving up its crown anytime soon.

The group plans to go steady on an expected, yet modest, demand in the rise for crude oil in 2024, forecasting a less-than-2 per cent production increase for the year.

This would result in an average net production of about 3.8m barrels of oil equivalent per day (mboe/d) in 2024, versus 3.74mboe/d in 2023.

And while the world is caught up on 2030 net zero targets, Exxon has a milestone for that year of its own that it is already beginning to work towards.

The firm is ahead of schedule with its plan to double the size of its liquefied natural gas LNG portfolio to 40m tons per year (mtpa) by 2030.

This wouldn’t put it on par with rivals and LNG-leader Shell in terms of size, but the group sees the potential to succeed through other metrics.

“We want to have the leading LNG portfolio in the world in terms of its financial robustness and financial returns and I would say we’re well on the way to doing it,” the company’s senior vice president for global LNG, Peter Clarke said last week.

Additionally, Exxon is due a big windfall in 2024 when its $64bn (£50.6bn) splash on Pioneer Natural Resources, announced at the tail end of last year, completes in a few months time.

It’s estimated that the move will likely more than double the company’s Permian Basin footprint.

Chevron: America’s little brother

Chevron is playing little brother in the US fossil fuel game, but playing it well.

The firm was beaten into third place for 2023 earnings by Exxon and Shell, returning $21.4bn (£16.9bn), a 39 per cent slide on the previous year.

Part of its plan to climb the petrogiant leader board is to go hard on oil and gas spending, with an $18.5-19.5bn (£14.6-15.4bn) tranche for this financial year alone.

In context, this is more than the $14-18bn (£11-14bn) BP has scoped to spend annually on its building its entire energy portfolio between now and 2030.

Chevron is also waiting on a windfall of its own from the pending $53bn (£41.9bn) buy of Hess at the end of last year, a move that boosts its US and Guyana footprints.

Shell: Easy does it

Shell meanwhile, through its chief executive Wael Sawan, has been clear to its shareholders and the public that it will invest prudently and scrupulously in projects that return value to investors.

The firm recently caught some flak when it revealed that it was dropping a 2035 emissions target to reduce carbon intensity of its products by 45 per cent due to “uncertainty in the pace of the energy transition”.

The group also added the equivalent of 200,000 barrels of oil and gas production to its target output, and it plans to start enough new fossil fuel projects to add half a million barrels a day to its oil and gas production by 2025.

BP: A crisis of identity

BP has a lingering identity issue it’s struggling to shake off, amidst reports of growing investor disquiet over proposals to expand its clean energy portfolio.

The company has struggled to keep within remote touching distance of Shell in recent years.

Former chief executive Bernard Looney laid the groundwork for a future BP that embraced the energy transition, a move that his successor Murray Auchincloss seems to have partially retained.

But there is reportedly a groundswell of investor ire at BP’s pursuit of this strategy, one that activist investor Bluebell has been and is continuing to try and stoke further.

A greener future for Big Oil?

In an ironic twist, it was the petrostate of Dubai and its COP 28 summit held last year that seems to have instigated a feeling globally to energy transition moving.

And while the energy industry still largely feels like an echo chamber, more of the shouting seems to be leaking out into the worlds of big business and politics.

But for as long as big oil is seen to be investing in clean energy, to whatever extent, its conscience is clear.

Fossil fuel profits will keep coming for the foreseeable future, in part because their largest operators say they cannot profitably perform an instant pivot to renewable energy projects.

“Roll the clock back four or five years ago, they were like: ‘Oh, it’s all going to be renewables and batteries’ — and now they’re saying: ‘Wow, wow, this is going to be way too expensive,” Alan Armstrong, head of the US’ largest gas pipeline company, Williams, told the Financial Times last week.

Shell’s Sawan has echoed this sentiment saying that until low carbon initiatives become “commercially available,” it will continue to invest in oil and gas, but with lower emissions.

Exxon’s chief Darren Woods went one further earlier this month, telling Fortune Magazine that the high cost of clean energy transition is the “dirty secret” that the public cannot or will not accept.

For investors, particularly of Shell, Exxon and Chevron, the sentiment is likely welcome news, for now at least.

Each is pretty set on their respective courses for this year; maximise profitability, diversify where possible, make it clear that renewable energy projects are risk-ridden.

The public’s ‘they are not doing enough’ charge as it pertains to the big four’s green priorities tends to spike four times a year, coinciding with results reporting milestones.

But this year, with November’s US and UK elections sitting on a bedrock of future energy policies, it’s fair to assume that the group might find themselves increasingly in the spotlight as 2024 rolls on.

By: Cityam.com / RHODRI MORGAN, SUNDAY 31 MARCH 2024