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Wednesday, 12 February 20
REFINING SET FOR A CHALLENGING 2020 - WOOD MACKENZIE
 Downstream isn’t the glamorous end of the oil business. And in Big Oil, it’s typically dwarfed by upstream. Yet having been forced to restructure and focus on costs early this century, downstream’s cash flow has underpinned a third of the Majors’ shareholder returns over the last five years.
But a laser-like focus on costs and efficiency can only take you so far. If the external environment turns against you, downstream is as vulnerable as any part of the business. The Majors’ downstream results for Q4 2019 were among the poorest since 2015. Petrochemicals is part of that story, with earnings suffering from over-investment.
Now we’re also seeing refining margins come under increasing pressure, slipping to five-year lows in the last few weeks of 2019 and the first of 2020. Alan Gelder, VP Refining, identifies two main factors.
Firstly, new regulation on marine fuels was expected to boost refining margins this year – but that hasn’t played out as expected yet. The International Maritime Organization (IMO) regulations require all vessels to reduce the level of sulphur in their engine emissions from 3.5% to 0.5% or less from 1 January.
Essentially, IMO should trigger a shift out of low-value product (High Sulphur Fuel Oil, or HSFO) into higher value Very Low Sulphur Fuel Oil (VLSFO). Refinery capacity to make VLSFO is limited, so marine gasoil, which is closely linked to the price of diesel, would top up any shortfall. This shift to high-value products was expected to drive up refining margins in 2020.
It’s only half happened. The price of VLSFO surged in Q4 and HSFO duly collapsed. The surprise was that there’s been much more VLSFO available than expected. Traders had taken advantage of low-price feedstock in late summer 2019 and built up volumes of VLSFO in storage. When the demand came in, they were ready and cashed in, big time. A single tanker loaded with 2 million barrels of VLSFO could make over US$10/bbl on the spread and pull in US$20 million-plus in cash profit.
Producers with the right crude have also fared well. Santos revealed that it had sold a single cargo of heavy sweet crude, ideal feedstock for VLSFO, at an unheard-of US$30/bbl premium to Brent. Nice work if you can get it.
What didn’t really materialise was higher demand for marine gasoil – it’s just not been needed in the volumes anticipated. Weaker marine demand for gasoil has been compounded by soft demand from heating – a much bigger market – because of warm winter weather in the northern hemisphere and lacklustre economic growth. That’s led to a glut of gasoil in inventory which is depressing refining margins.
Second, global oil demand growth forecasts are falling back sharply – potentially a more fundamental problem. The biggest factor is the coronavirus, so we have reduced our demand forecasts in China by almost 0.6 million b/d for Q1 2020. We now expect China demand to fall year-on-year by 125,000 b/d for the quarter, the worst rate since 2009. Global demand will fall by 250,000 b/d, also the worst in over a decade.
So what’s next for refining?
The VLSFO surplus should be a short-term phenomenon. There’s not enough refining capacity to supply all bunker demand with VLSFO. That gap will have to be met by additional gasoil once the surplus VLSFO in inventory is soaked up, by H2 2020 at the latest.
The prospects for oil demand are more worrying and harder to call. At this stage, we have restricted our adjustments to Q1 and left the rest of the year largely unchanged. If the virus can be contained successfully in the coming weeks, demand could bounce back strongly – much as was the case with SARS in 2003.
Refining margins so far in Q1 suggest it will take a while before refining profitability recovers. Meantime, refiners will do what they must to keep costs down and maximise cash flows, including cutting refinery runs to limit the build-up in inventory. It’s about toughing it out, waiting and hoping for demand – China in particular – to perk up again.
Source: Wood Mackenzie
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Friday, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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Showing 11 to 15 news of total 6871 |
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- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- The University of Queensland
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- MS Steel International - UAE
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
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