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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, 14 February 20
KOWEPO INVITED BIDS FOR 1.275 MILLION TONS OF MIN. 5,600 NCV COAL
COALspot.com: Korea Western Power Co. Ltd (KOWEPO). as a representative of five Korean Gencos has issued an international tender for total 1,275,00 ...
Friday, 14 February 20
IS THE US COAL INDUSTRY COMPLETELY BURNED OUT? -FORBES
This is the fourth of a multi-part series on the state of the main sources of energy in the US and how they compare globally. The series will cover ...
Friday, 14 February 20
FITCH RTGS: GLOBAL PORTS VULNERABLE TO CORONAVIRUS - RELATED VOLUME DECLINES
Global ports will see reduced trade volumes as a result of the coronavirus, COVID-19, which would become more severe should Chinese production take ...
Thursday, 13 February 20
INDIA: MAJOR PORTS SHOW MUTED GROWTH IN CARGO AS THERMAL COAL VOLUME SLIDES 15% - BUSINESS STANDARD
A sharp slide of 15 per cent in thermal coal volumes weighed on the performance of major ports during the period of April-January of FY20. The majo ...
Wednesday, 12 February 20
COAL INDIA WILL EXCEED LAST YEAR'S PRODUCTION FIGURES: OFFICIAL - PTI
Despite coal production being hampered at Dipka mines due to prolonged rains, Coal India Ltd will exceed last year’s production figures, a to ...
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- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
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