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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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Wednesday, 26 February 20
SHIPPING MARKET INSIGHT - INTERMODAL
Coming from one of its busiest periods historically, with a list of scrubber and BWMS retrofits on a waiting list, the ship repair sector is witnes ...
Wednesday, 26 February 20
AS ALL OF THE GLOBAL COAL GIANTS EXIT SOUTH AFRICA, ESKOM TO DEPEND ON TWO MINERS FOR 70% OF ITS SUPPLY - BUSINESS INSIDER
While some of its politicians continue to imagine that coal has a future in South Africa, two key developments from the real world show that securi ...
Tuesday, 25 February 20
DELTA DUNIA MAKMUR REGISTERED A NET PROFIT OF US$20 MILLION FOR FY 2019
PT Delta Dunia Makmur, one of the largest coal mining company in Indonesia, has recorded an US$882 million revenue for FY 2019, 1% lower compared t ...
Tuesday, 25 February 20
SHIPPING UPDATE - ALLIED
The positive feeling and optimism for a fresh rally during the first few months of 2020 that prevailed in the tanker markets during the final quart ...
Monday, 24 February 20
COULD SOME VLSFO FUELS BE BANNED? - GIBSON
The run up to the implementation of the new IMO rules on marine fuels from1st January 2020 had owners and charterers analysing the vari ...
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Showing 1106 to 1110 news of total 6871 |
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- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Australian Coal Association
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- MS Steel International - UAE
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- PTC India Limited - India
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Planning Commission, India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
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