We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
 A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to get tough, very tough.
The service sector is already on the ropes but will be first port of call when operators look to save money. IOCs and NOCs need to recognise they’ll want a functioning, reliable service sector when things pick up, as they will. I talked it all through with Andy Tidey, Head of our Performance Improvement team.
Covid-19 has already disrupted the supply chain. The ability of service companies to manufacture and deliver equipment and supply personnel to industry sites is seriously compromised by restrictions on travel and movement of people.
Last downturn, the service sector did its bit in getting costs down. The Majors reduced unit development costs by 55% between 2014 and 2019; our Upstream Cost Survey shows that almost half was rate cuts by suppliers.
It’s taken its toll on service sector finances. Margins for five leading service companies fell by an average of 65% between 2014 and 2019. EBITDA margins (earnings before interest, tax, depreciation and amortisation) for the wider sector have shrunk close to zero.
IOCs will look to cut more to get their own finances on an even keel and reassure shareholders. Cash flow breakevens for the Majors averaged US$55/bbl pre-crisis. BP said this week it aims to reduce underlying breakeven to below US$35/bbl in 2021, and others are heading in the same direction. The primary lever is to cut investment – discretionary spend by IOCs will all but dry up in 2020.
Operators are signalling cuts of up to 50% to expenditure in the US Lower 48. Only a handful of the 53 conventional pre-FID projects we expected to get sanctioned in 2020 will get the green light. These cuts make up a big chunk of the 20% to 25% reduction in spend the Majors have announced.
What drives NOC decisions isn’t quite so straightforward. Their stakeholder is the government, and the NOC may be central to their national economy – big employer, investor and a source of revenue through dividends and taxation. US$20/bbl oil isn’t just a problem for the NOC, it’s a national problem. We estimate that, pre-crisis, Angola needed US$75/bbl to fund its 2020 budget, Saudi Arabia US$85/bbl and Nigeria US$131/bbl – prices of a long-gone era.
Overall cuts in spend by NOCs so far are more muted, averaging 10% to 15%. Chinese NOCs are prioritising domestic investment to maintain production and employment. In the Middle East, ADNOC and Qatar Petroleum will likely proceed with big new gas projects where the scale and economics will win investment from the big IOCs. There have been concerns about market tightness in certain segments in the Middle East.
Many others face an investment drought. Ten higher cost projects at pre-sanction stage in Nigeria, Mexico, Libya and Angola won’t get the support they need from IOC partners. Combined spend will be pushed out indefinitely into the future along with 0.4 million boe/d of new production.
NOCs have to perform a tricky balancing act. To keep investment moving, costs need to come down. The service sector is the easy target; but the service companies are sizeable employers, too. They may be bound into the domestic economy through local obligation requirements and, in certain cases, may even be government-owned.
So, where do NOCs go from here? The adversarial approach between operator and suppliers is counterproductive and could end badly – for both sides. What’s needed is a change in relationship, built on openness, transparency and trust. We are starting to see alliances and partnerships emerging between mid-sized operators and service companies. That could be the template for a win-win – more competitive prices for the operator, and acceptable returns for the supplier. It’s a model NOCs need to consider if they are to foster and preserve a strong supply chain through the coming challenges.
NOCs need to take a strategic view of how they address the cost challenge of US$20/bbl oil. As operator and “national champion”, many NOCs can shape the service sector, in ways not open to the IOCs. There are opportunities to change the commercial model with individual suppliers and bring in practices from other sectors, such as true open-book pricing. Many NOCs could also act as an aggregator of plans, providing the service sector with an aggregated demand profile.
Simon Flowers
Chairman, Chief Analyst and author of The Edge
Source: Wood Mackenzie
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 14 May 20
OPEC REVISES DOWN GLOBAL OIL DEMAND FORECAST AGAIN
Crude Oil Price Movements
Crude oil prices recorded a second sharp monthly drop in April, amid an increasing oil surplus in the spot market. Th ...
Thursday, 14 May 20
NEW COVID-19 GUIDELINES FOCUS ON SAFE INTERFACE BETWEEN SHIP AND SHORE STAFF - GARD
At a time when the COVID-19 pandemic is affecting the global population, it is important that ships’ crew and port workers protect each other ...
Wednesday, 13 May 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.4 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.93 points Monday, down 0.4 percent week on week.
The index, released by Chin ...
Tuesday, 12 May 20
IN THE FIRST 4 MONTHS OF 2020, SOUTH KOREA IMPORTED 46.6 MLN TONNES OF CRUDE OIL BY SEA, A NET DECLINE OF 14.1% YOY - BC
South Korea is certainly one of the countries which has handled better the current Covid-19 crisis. In the first week of May 2020, new cases of ...
Tuesday, 12 May 20
OIL MARKET TURBULENCE PIVOTS FOCUS ON FLOATING STORAGE TECHNICAL NEEDS - LLOYD'S REGISTER
KNOWLEDGE TO ELEVATE
Negative oil prices and off-the-scale volatility in crude markets are positive for floating storage, as the next chapter ...
|
|
|
Showing 966 to 970 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Planning Commission, India
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- The University of Queensland
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
|
| |
| |
|
