Thursday, November 15, 2018
Monday, November 12, 2018
NNPC Considers Crude-for-Product Deals with Shell and ExxonMobil
Nigerian
oil company Nigerian National Petroleum (NNPC) is reportedly
considering crude-for-product deals with Shell and ExxonMobil.
The potential deal could be similar to NNPC’s agreement with
British firm BP last week, Reuters reported citing the former’s upstream
chief operating officer Bello Rabiu.
NNPC depends on foreign imports for the country’s fuel needs as it
buys 70% of the demand, especially gasoline, through swap deals with
overseas companies.
The national oil company signed such contracts with ten consortiums, including Vitol, Trafigura, Mercuria and Total.
Rabiu was quoted by the news agency as saying: “Unfortunately,
Shell and ExxonMobil exited the downstream sector in Nigeria a couple of
years ago, but they are coming back for this particular arrangement
because it’s an opportunity for them to get crude and sell their
products to the refineries.”
The company extended the existing contracts to June next year,
however, several trading sources in the consortiums have reportedly
sought new price terms.
Furthermore, Rabiu stated that the company aims to create savings of around $1bn, as achieved in 2016, during next year.
He further added that the existing arrangement of crude-for-product swaps could end once NNPC enhances its refineries.
Rabiu said: “If our refineries are back, which we want in the
next 18 months, this thing will stop. So, all these things are just
stop-gap measures, but the key issue is that we wanted to import at the
least cost before our refineries come back on-stream.”
In a bid to reduce its dependence on fuel imports, the company has
been engaged in discussions with consortiums such as traders, energy
majors and oil services companies to improve its oil refineries. Talks
are said to be in the final stages and the company is expecting to reach
a deal by the end of this year.
Railed Refined Products to Mexico Hinge on Storage
Railed
movements of refined products are a small portion of Mexico's total
imports, but they will grow once Mexico builds new terminals and storage
to handle increased traffic, industry officials said at the Argus
Mexican Refined Products Markets conference.
Railed crude shipments from Canada to the US Gulf coast run
along more efficient networks and offer better returns for energy
companies looking to deploy their fleets of owned or leased railcars,
said Jennifer Fussell, assistant vice president of sales and marketing
for chemicals and petroleum at Kansas City Southern (KCS). The railway
runs unit trains from US Gulf coast refining centers into central
Mexico.
"These energy companies are looking at … crude by rail that's
getting incredible turn times on equipment that is expensive, and then
looking at the current infrastructure limitations for Mexico," Fussell said. "Those railcar turns are not as efficient, but they will be."
Terminals capable of unloading unit trains within 24 hours
will be key to boosting railed refined products shipments, Fussell
said. To that end, KCS said it expects substantial storage to be built
in Mexico, to the tune of about 1.5mn bl each year from 2019-2021.
About 60pc of US refined exports to Mexico move by vessel, followed
by pipeline at 20pc, truck at 12pc and rail at 8pc, based on an analysis
of US cross-border trade data, said Rangeland Energy vice president of
business development Michael Moss.
Rail could boost its share to 15-20pc of US refined products exports
by 2020 as more terminals and storage are built, Moss said. Rangeland Energy's Corpus Christi products-by-rail and LPG loading terminal came on stream for manifest carload service in June, and is targeting unit train shipments by late in 2019.
Truck operations have had first-mover advantages in Mexico, with
cross-border shipments from Corpus Christi and even Houston moving "deep into Mexico,"
Moss said. Trucking operations will be increasingly limited to
border-area deliveries once rail and port options are built out, Moss
said.
New international marine fuel rules set to go into effect in 2020 could create new opportunities for Mexico's rail networks.
Pemex's six refineries produce a large amount of high-sulfur residual
fuel, which is mostly sold into the bunkers market from Mexico's ports.
Once the marine fuels rules take effect, Pemex will need to find other
markets for its high-sulfur material. Both Rangeland and KCS said they
were targeting ways to tap additional business to carry fuel oil.
The new marine rules will be a significant challenge for Mexico and
its refineries, said Jerry Phillips, global market analysis manager for
Phillips 66. Mexico's refineries yield about 30pc high-sulfur residual
fuel, versus about 3pc for US Gulf coast refineries, Phillips said.
Railroads could support imports of US light, sweet crude to Mexico,
which could help Pemex's refineries decrease their residual fuel output
because US crude has less sulfur content than many Mexican grades.
"There is no reason why clean products can't import in and crude import out, or even bringing some light sweet into the country," Fussell said. "We see that as an opportunity for Mexico."
Friday, November 9, 2018
Keystone XL pipeline project blocked by judge in Montana
https://www.houstonchronicle.com/business/energy/article/Keystone-XL-Pipeline-Project-Blocked-by-Judge-in-13377532.php
TransCanada Corp.’s long-delayed Keystone XL pipeline
project was blocked by a Montana federal judge pending further
environmental review.
Thursday
night’s ruling is the latest set-back for the Calgary-based pipeline
company in its decade-long push to construct a 1,179-mile long conduit
to deliver crude from Alberta’s oil sands to a Nebraska junction, en
route to refineries near the Gulf of Mexico.
The
Indigenous Environmental Network, River Alliance and Northern Plains
Resource Council filed a pair of lawsuits against the U.S. in March 2017
shortly after President Donald Trump gave his approval for the project
to cross the U.S.-Canada border. TransCanada joined the litigation to
defend the permit approval.
U.S. District Judge Brian Morris in Great Falls
agreed with the groups’ argument that a 2014 environmental impact
assessment fell short of the National Environmental Policy Act and other
regulatory standards.
The
judge barred both TransCanada and the U.S. from "from engaging in any
activity in furtherance of the construction or operation of Keystone and
associated facilities" until the U.S. State Department completes a
supplemental review.
Morris
was appointed in 2013 by then-President Barack Obama, who had refused
to grant a cross-border permit for the international project. Morris has
ordered it vacated.
Nebraska’s Supreme Court last week heard arguments
from attorneys for landowners seeking to overturn that state’s public
service commission approval of its route there.
The case is Indigenous Environmental Network v. U.S., 17-cv-00029, U.S. District Court, District of Montana (Great Falls).
©2018 Bloomberg L.P.
Zero US Crude oil exports to China recorded for second month
Eddie Seal | Bloomberg | Getty Images
The Eagle Ford crude oil tanker sails out of
the the NuStar Energy dock at the Port of Corpus Christi in Corpus
Christi, Texas, U.S., on Thursday, Jan. 7, 2016.
The lack of US seaborne exports of crude oil to China recorded in August, continued into September.
This is despite crude oil not being a part of the ‘official trade war’, BIMCO’s Peter Sand said.
“The trade war between the US and China is now impacting trade in both
tariffed and some untariffed goods with both countries looking
elsewhere for alternative buyers and sellers.
“Tonne/mile demand generated by total US crude oil exports has risen
17% from August to September, but is down 4.8% from the record high in
July.
“For the crude oil tanker shipping industry distances often matter more
than volumes, with exports of US crude oil to Asia generating 74% of
tonne/mile demand in September, up from 70% in August,” Sand explained.
In 2017, Chinese imports accounted for 23% of total US crude oil
exports. For the first seven months of this year, the number was 22%,
but has dropped to zero in August and September.
For the seventh month in a row, total US crude oil exports, excluding
to china, hit a new all-time high reaching 7.9 mill tonnes in September.
South Korea has become the largest long-distance importer of US crude
oil taking 1.1 mill tonnes in September, the highest level. Similarly,
the next top three overseas importers of US crude oil, namely the UK,
Taiwan (both at 0.94 mill tonnes) and the Netherlands (0.74 mill tonnes)
all imported more in September than before.
Exports to Asia jumped in June and July, from a 43% share of total
exports since the start of 2017 to reach a 56% share. This share was
down to 46% in August, but climbed back to 51% in September.
The two other major importing regions in September were Europe (33%)
and North and Central America (13%), while South America (2%), the
Caribbean (1%) make up the rest.
Thursday, November 8, 2018
Venezuela to Present Petro to Intergovernmental Group OPEC as Unit of Account for Oil
Venezuela will present its state-backed cryptocurrency Petro
as a unit of account for crude oil trading to the Organization of the
Petroleum Exporting Countries (OPEC) in 2019, the country’s oil company
PDVSA reports on its Twitter Nov. 7.
The PDVSA has cited its president Manuel Quevedo, who also holds the position of Venezuela’s Minister of Oil and Mining, speaking about the future presentation:
"We will be presenting Petro to OPEC in 2019 as the main digital currency backed by oil."
According to the PDVSA, Quevedo also added
that Petro will be offered as a unit of account for global crude oil
trading, noting that all Venezuelan oil will be traded for Petro.
OPEC
is a global intergovernmental organization made up of 15 nations,
founded in 1960 in Baghdad to develop regulation and policies for the
world’s main oil exporters. According to OPEC’s website, the organization has not yet scheduled its agenda for 2019; the nearest meeting of the oil industry members will be held Dec. 6 in Vienna, Austria.
Venezuela officially launched
the sale of its widely discussed oil-backed cryptocurrency at the end
of October. 11 months after country’s leader announced the national
coin, Petro can now be purchased directly from its official website or from six local crypto exchanges authorized by the government. However, crypto wallets for trading the coin have reportedly been suspended by Google.
As Cointelegraph has often reported, the Venezuelan government is actively promoting Petro. For instance, Maduro appealed to the county’s citizens in October, asking them to invest in gold and Petro while the national currency, the sovereign bolivar, is facing hyperinflation.
The country’s president also stated that Petro would be used for international commercial transactions starting in October 2018. Moreover, Venezuela announced that the currency would be used as a unit of account within the country, making salaries and pricing systems tied to Petro.
However, some experts, journalists, and economists are sceptical about Venezuela’s coin. A Reuter's report
claimed that Petro was not backed by oil nor mined anywhere in the
country. The news agency also cited former Oil Minister Rafael Ramirez
who wrote that "the petro [...] only exists in the government’s
imagination.”
Experts also told
media outlet Wired that PDVSA, which reportedly backs Petro, had $45
billion in debt and showed no signs of any trading activity. The
publication noted that this might mean the currency is only a "smoke
curtain" to conceal Maduro's recent failure to reanimate the national fiat currency.
Wednesday, November 7, 2018
World’s Most Indebted Oil Company Reports 20-Fold Increase in Profit
Brazilian state-run oil firm Petrobras (NYSE:PBR)
reported on Tuesday a net income for Q3 surging more than 20 times
compared to the profit for the same quarter last year on the back of
higher oil prices.
Petrobras reported
a consolidated net income of US$1.77 billion (6.644 billion Brazilian
reais) for Q3 2018, up from just US$70 million (266 million reais) for
Q3 2017. Compared to the second quarter of 2018, Petrobras’s net income
dropped by 34 percent, due to higher net financial expenses and
increased income tax expenses, the company said in its earnings release.
In the second quarter of 2018, Petrobras had reported an even stronger
surge in earnings, as net income jumped thirty-fold on the year, benefiting from the rising oil prices.
The third quarter this year was the third consecutive quarter in which Petrobras has booked a profit, it said.
Petrobras’s
domestic crude oil and natural gas liquids (NGLs) production, however,
dropped in the third quarter—at 1.937 million bpd, it was 6 percent
lower compared to Q2 2018 and lower than the 2.134 million bpd
production in Q3 2017.
The company attributed the lower production
of oil, NGLs, and natural gas mostly to maintenance and the sale of a
25 percent stake in the Roncador field, partially offset by the start of
production of the FPSO Cidade dos Campos dos Goytacazes in the
Tartaruga Verde Field.
Related: Analysts See Opportunities In Embattled Energy Stocks
Related: Analysts See Opportunities In Embattled Energy Stocks
For
the nine months January to September, Petrobras’s crude oil and NGL
production in Brazil declined by 6 percent to 2.028 million bpd.
For the nine months to September, Petrobras reported a net income
of US$6.3 billion (23.677 billion reais), the best result since 2011
and a 371-percent surge compared to the same period of 2017, thanks to
higher oil prices, the depreciation of the Brazilian currency, higher
diesel sales, and lower general and administrative expenses.
Petrobras,
considered the most indebted oil company in the world, said that its
net debt was US$72.888 billion at end-September, down by 14 percent
compared to end-2017, and down from the US$73.662 billion net debt at
end-June 2018.
By Tsvetana Paraskova for Oilprice.com
By Tsvetana Paraskova for Oilprice.com
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