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Iran falls to 6th biggest oil supplier to India in November, from 4th in October

A worker walks atop a tanker wagon to check the freight level at an oil terminal on the outskirts of Kolkata in this November 27, 2013 file photo. REUTERS/Rupak De Chowdhuri/Files 

https://www.yahoo.com/finance/news/exclusive-iran-falls-6th-biggest-oil-supplier-india-134849196.html

NEW DELHI (Reuters) - India's monthly oil imports from Iran plunged to their lowest in a year in November with Tehran dropping two places to become only the sixth biggest supplier after New Delhi cut purchases due to the impact of U.S. sanctions, according to ship tracking data and industry sources.

Last month, the United States introduced tough sanctions aimed at crippling Iran's oil revenue-dependent economy. Washington did, though, give a six-month waiver from sanctions to eight nations, including India, and allowed them to import some Iranian oil.

India is restricted to buying 1.25 million tonnes per month, or about 300,000 barrels per day (bpd).

In November, India imported about 276,000 bpd of Iranian oil, a decline of about 41 percent from October and about 4 percent more than the year-ago month, ship tracking data obtained from shipping and trade sources showed.

After abandoning the 2015 Iran nuclear deal, U.S. President Donald Trump is trying to force Tehran to quash not only its nuclear ambitions and its ballistic missile programme but its support for militant proxies in Syria, Yemen, Lebanon and other parts of the Middle East.

India's imports from Iran in November, included some parcels that were loaded in October. In November, Iraq and Saudi Arabia continued to be the top two oil sellers to India. 

The UAE, which was the sixth biggest oil seller to India in October, became the third top seller to India in November, knocking down Venezuela by a notch to fourth position. 

Nigeria continued at No. 5 position, while Iran slipped to sixth place. 

"Iran do not have vessels to export oil on time ... some November loading vessels will arrive in December," said an industry source, with knowledge of the matter.

Local and international shippers are not carrying Iranian cargoes despite India winning a waiver, this source said. The key problem is that while India can import Iranian oil without falling foul of Washington, that may not apply to a shipping company signing a new delivery contract.

Instead, India is relying on Iranian tankers for crude imports and Iran is using many of its vessels for crude storage.

The sources declined to be identified citing the confidentiality of the numbers.

Indian refiners, wary of the impact of U.S. sanctions, had boosted imports from Iran ahead of their introduction, with imports averaging about 563,000 bpd in April-November, a growth of about 32 percent from a low base in the previous fiscal year, the data showed.

In the previous financial year to March 2018 India had cut oil imports from Iran due to a dispute over development rights of a giant gas field. 

Iran was hoping to sell more than 500,000 bpd of oil to India in 2018/19, its oil minister Bijan Zanganeh said in February, and had offered almost free shipping and an extended credit period to boost sales to India.

Government sources say Reuters' calculations showing India's oil imports from Iran in this fiscal year would be higher than the 452,000 bpd, or 22.6 million tonnes, it imported in the previous year, are correct.

During January-November this year India's oil imports from Iran rose by an annual 18.4 percent to 552,000 bpd, the data showed. 

(Reporting by Nidhi Verma; Edited by Martin Howell and David Evans)

China's flawed futures contract pushes oil trade to record high in 2018

https://www.reuters.com/article/us-crude-oil-futures-china-analysis/chinas-flawed-futures-contract-pushes-oil-trade-to-record-high-in-2018-idUSKBN1OB0K7

Shanghai’s new yuan-denominated derivatives contract is set to propel global crude oil futures trading volumes to a record high in 2018, eating into the market share of the two most active crude contracts, Brent and WTI. 

Launched in late March by Shanghai International Energy Exchange (INE), China’s first serious attempt to establish an Asian oil price benchmark has seen strong take-up, grabbing a spot market share of around 6 percent versus international Brent LCOc1 and U.S. West Texas Intermediate (WTI) CLc1, taken equally from both benchmarks. 

Spot crude oil volumes have more than doubled globally over the past five years, but exchange data shows Brent and WTI activity will dip this year for the first time since 2013. 

Brent and WTI volumes slipped to 207.2 million lots of 1,000 barrels each for this year by Dec. 10, down from 220.17 million lots in 2017. 

However, adding 13 million lots of Shanghai crude oil futures ISCc1 to those of Brent and WTI, and last year’s levels have been reached with around two weeks of trading left this year. 

“If a new exchange achieves 6 percent market share vs the two incumbents within the first year of trading that’s fairly impressive,” said John Driscoll, director of Singapore-based consultancy JTD Energy. 

Shanghai crude’s first year will have been better than Brent’s, which took 3.1 percent share from dominant WTI in its 1988 launch-year. 

(GRAPHIC: Shanghai crude oil futures vs Brent & WTI - tmsnrt.rs/2Pu8WeJ)

FLAWED CONTRACT

Despite the successful launch, Shanghai crude futures are fraught with problems preventing them from becoming an efficient hedging tool for oil producers and, ultimately, a benchmark on par with Brent or WTI. 

One of the main issues is a lack of international market participants. 

Matt Stanley, a fuel broker with Starfuels in Dubai, said most participants in Shanghai crude futures were Chinese individuals who don’t trade on market fundamentals. 

“It really has no bearing on the two main benchmarks (Brent and WTI) as it is a Chinese market for the Chinese, not a Chinese market for a global trading audience,” he said. 

Traders said to become more successful, the market needed a more diverse group of participants, including producers, end-users and international shippers to offset the dominance of the Chinese traders. 

“Chinese retail traders follow patterns that we in the oil industry don’t, while China’s oil majors also have very differing interests to us. Add intermittent trading, and this exposes us to the risk of being stuck with positions we don’t want to carry,” said one trader with an international oil major. 

He declined to be named as his company was still in talks on joining Shanghai crude futures. 

Other issues include incompatible trading hours with the rest of the world, including two short sessions between 0100 and 0700 GMT and a night session, and limited physical deliverability of its underlying crude grades in China.

CHOPPY TRADING

Inconsistent trading volumes make it difficult to use Shanghai crude as a financial hedge. 

“For industrial investors, they would need smooth trading of front-month to hedge risks,” said Chen Kai, head of research with Chinese brokerage Shengda Futures. 

Stock selloff snowballs on fresh fears for world growth

 

After a roaring start between March and August, front-month Shanghai crude futures virtually stopped trading until November, after which activity picked up again. 

Chen Kai said this behaviour by retail traders was common in China, with similar patterns seen in asphalt and metals futures. 

INE declined to comment for this article. 

To create more liquidity, the exchange is trying to attract so-called market makers, usually major oil producers, merchants or banks, often deployed by international exchanges such as CME Group (CME.O) and Intercontinental Exchange (ICE.N) to generate activity in contracts by providing constant bids and offers on the platform that counterparties can engage with. 

Jiang Yan, chairman of INE’s parent, the Shanghai Futures Exchange, said earlier this month in Shenzhen “gradual improvement of relevant domestic laws and regulations” would in time “greatly enhance” Shanghai crude’s recognition with international investors. 

Outside China, the contract’s denomination in yuan as part of Beijing’s drive to push its currency into global markets has also scared off some traders as it introduces foreign exchange risk to the market. 

To attract international participants, Stanley said a global exchange could “have a look-a-like contract in U.S. dollars, thereby eliminating any FX risk.” 

Stanley pointed to iron ore futures, where Singapore Exchange (SGX) SGX1.SG mirrors a yuan-denominated contract from the Dalian Exchange in U.S. dollars. 

Even without its flaws, some doubt whether Shanghai crude can break the dominance of Brent and WTI. 

“Liquidity is very hard to displace,” said Martijn Rats, Global Oil Strategist at U.S. bank Morgan Stanley, adding that any new product would need some big advantages to sap liquidity from the most active futures contracts. 

JTD’s Driscoll said the jury is still out but added: “It’s likely things will gradually move, mature and develop.” 

Reporting by Henning Gloystein in SINGAPORE; additional reporting by Meng Meng in BEIJING and Florence Tan and Roslan Khasawneh in SINGAPORE; Editing by Sonali Paul

OPEC misjudged the voracity of US shale: Canary CEO

US Leads New-Build Capex Globally Across Oil and Gas Value Chain, Says GlobalData

November 23, 2018 [Oil Review Middle East] – US is expected to spend US$521.4bn capital expenditure (capex) on 484 oil and gas projects by 2025, according to data and analytics company GlobalData.

A total capital expenditure (capex) of US$3.6 trillion is expected to be spent globally across oil and gas value chain on planned and announced projects during 2018 to 2025, the company added.

The company’s report: ‘Q3 Global Oil and Gas Capital Expenditure Outlook – Gazprom Leads New-Build Capex Outlook Among Companies has revealed that, globally, the US, Russia, and Canada are the top countries to lead the new-build capex outlook.

Russia and Canada are expected to spent US$317.3bn (192 projects) and US$309.8bn (119 projects), respectively.

In the upstream sector, Russia is expected to lead among countries with capex of US$77.5bn to be spent on 54 planned and announced fields globally. Brazil and the US follow, each with almost the same capex of US$70bn.

GlobalData’s report found that the US is expected to lead in the pipelines segment with capex of US$123.6bn to bring 165 planned and announced projects online by 2025.

In the gas processing segment, Russia is to spend US$40.8bn on 13 new projects, expected to come online during the outlook period. On the LNG liquefaction front, the US leads with estimated capex of US$216.4bn on 32 upcoming liquefaction terminals by 2025, while China leads in regasification capex, with US$18.1bn to be spent on 22 upcoming regasification terminals.

In the underground gas storage segment, Turkey leads with estimated capex of US$11.4bn to be spent on seven planned gas storage terminals by 2025, while for liquids storage terminals, the US leads with capex of US$9.3bn expected to be spent on 32 upcoming projects.

On the downstream side, India is expected to lead with estimated capex of US$89bn on the development of nine crude oil refineries globally by 2025. In the petrochemical sector, China is expected to lead with estimated capex of US$76bn to be spent on 215 upcoming petrochemical plants.

US Leads New-Build Capex Globally Across Oil and Gas Value Chain, Says GlobalData  

Lopez Obrador Says Mexico to Build an $8 Billion Refinery

 

Andres Manual Lopez Obrador Photographer: Cesar Rodriguez/Bloomberg

 

https://www.bloomberg.com/news/articles/2018-12-09/lopez-obrador-says-mexico-to-build-a-8-billion-refinery

• Mexico to start awarding construction contract by March 2019
• Pemex plans to improve operations of current six refineries

Mexico plans to start awarding the construction of its seventh refinery as soon as March 2019, President Andres Manuel Lopez Obrador said at an event at the Dos Bocas port, in Tabasco, even as the nation´s refining system is operating at its lowest levels in three decades.

Unveiling a plan for the nation’s refining system, Lopez Obrador said Mexico will invest $8 billion in the new processing facility at Dos Bocas. "We are going to start the bidding process for the refinery by March at latest," he said to a cheering crowd in the sun-drenched town in the Gulf of Mexico, reiterating his intentions to boost fuel self-sufficiency and end long-term declines in oil output. Mexico’s oil production, on track for its 14th consecutive yearly decline, will rise "realistically" to 2.4 million barrels per day by 2024, he said.

Lopez Obrador said a lot of 566 hectares of federal land is ready for the new plant, which will have crude processing capacity of 340,000 daily barrels, making it Mexico’s biggest refinery. It will include 17 processing plants, and 93 storage tanks or facilities, and link up to the Dos Bocas maritime terminal. A pipeline will be built connecting the refinery to the port.

Companies such as Ica Fluor, a joint venture between Mexico’s Empresas ICA SAB and Fluor Corp. in the U.S., and U.S.-based Bechtel, have previously expressed interest in participating in the public tender for the refinery project. Lopez Obrador didn´t said if the state-owned oil company, Petroleos Mexicanos, will operate the new facility.

"In three years we will be producing the gasoline that we consume in the country, so that now we can lower the prices of the fuel," he said.

Lopez Obrador also said the government will increase Pemex’s budget by 75 billion pesos for 2019 so the company will be able to invest in a series of new projects to improve its operations. He reiterated his government will submit the 2019 budget to the Congress on December 15 and said the nation won’t use the oil contingency fund to finance the new oil policy.