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International News

Australia oil, gas capex at 12-year low in 2020-21

Capital expenditure (capex) in Australia's oil and gas sector dropped to a 12-year low in 2020-21 fiscal year to 30 June following the fall in global oil and gas prices because of the impact of the the Covid-19 pandemic. But spending by upstream firms started to recover during April-June in line with firmer oil and gas prices.

Oil and gas spending in 2020-21 represented the lowest spend by the upstream sector for a fiscal year since the A$7.35bn in 2008-09, according to Australia's Bureau of Statistics (ABS) data.
Rebounding upstream spending during April-June quarter was the highest quarterly spend since A$2.36bn in January-March 2020, when global oil prices started to slide in response to the pandemic. Argus' dated Brent crude price was assessed at $70.88/bl on 25 August, well above the long-term low of $19.17/bl in late April 2020 and from above $85/bl in October 2018.
Capex by metals producers in 2020-21 marked the highest spend for a fiscal year since the record A$27.14bn in 2012-13. The ABS data do not break down the segments of the mineral sector, but iron ore represents a significant share of the capex given it is Australia's largest export commodity by volume and value.
Source: Argus
China LNG import surge to cool in winter as high prices bite

China’s liquefied natural gas (LNG) imports are expected to increase at a slower pace in the second half of the year after blistering growth over the first six months, but the moderation is unlikely to put a brake on surging international prices.

China normally steps up imports of the super-chilled fuel in the second half to meet winter demand, but buying has been curbed by high prices, a pull-back in China’s economic recovery and a lack of new receiving terminals, traders and analysts say.
After 28% year-on-year growth in the first half, second-half shipments are estimated to rise 12%-13% from a year earlier, said Ricki Wang, an analyst at Chinese commodities consultancy JLC.
“Prices are way too high for my clients to bear,” said Li Ruipeng, a small gas distributor in north China’s steel capital Tangshan who trucks imported fuel in trailers to gas filling stations and industrial users.
Customers like steel mills and glass makers have either turned to domestic piped gas, which is about 10% cheaper than imported LNG, or cut production to stem losses, said Li, who has had to idle half of his 10-truck fleet because of dwindling sales.
China’s LNG imports will likely stay flat during the October-March heating season versus the previous winter, said a trader with a Chinese oil major, pointing to the high spot prices and also infrastructure constraints.
“China’s capacity to handle shipments rather than demand will be the key driver for winter imports. Barely any new terminals have come online this year,” said the official, who requested anonymity due to company policy.
A Singapore-based trader added: “There is little (Chinese) demand for October (delivery) given such prices. It seems they have contracted enough for winter.” TOO HIGH China’s strong economic rebound from the coronavirus and power crunches amid extreme summer weather led to a counter-seasonal spike in LNG imports during the traditionally low demand season in the second quarter.
But soaring spot prices began to deter purchases in July, with imports falling to the lowest since March.
Benchmark Asia spot LNG prices hit record highs earlier this year, driven by production losses combined with cold weather and increased use in China, India and elsewhere.
Prices this week stood at the highest for this time of the year since at least 2010. In Tangshan, wholesale LNG was quoted at 4.2 yuan ($0.65) per cubic meter, versus 1.7 yuan a year ago, Li said.
Analysts say global prices are expected to remain elevated despite China winding back the pace of imports over July to December.
China, which is on course to overtake Japan as the world’s biggest LNG importer, will still boost its full-year imports in calendar 2021 by 15-20%.
Asia, meanwhile, will have to compete for LNG in the second half with European buyers who are looking to replenish stocks after extreme summer weather thinned inventory to critical lows.
To meet gas demand, China is turning to increased supplies of domestic gas and piped gas from Russia’s vast Siberian fields.
China’s gas output rose 11% year-on-year in the first seven months following a call by Beijing to boost supply security.
“Pipeline gas will continue to ramp up to provide a supply cushion during winter,” said Maggie Kwang, gas analyst with PetroChina International.
That includes supplies from Russia, which is scheduled to increase the amount of gas pumped via the Power of Siberia pipeline by 50% by the end of the year versus August levels.
With oil-linked term LNG prices now below spot LNG prices, Chinese companies could also press their suppliers for extra volumes instead of buying from the spot market, traders said.
Meanwhile, Tangshan’s Li said his trucked LNG business has struggled to break even for most of this year.
Source: Hellenic Shipping
Hurricane Ida bears down on USGC production, refining

More than half of total US oil and gas production came offline in the Gulf of Mexico ahead of Hurricane Ida by Aug. 27, and Louisiana's refining and petrochemical operators were bracing for the heavy winds and the storm surge of a major hurricane.

Ida was upgraded from Category 2 to a Category 4 hurricane with maximum sustained winds of 130 mph on Aug. 29, according to the US National Hurricane Center.
The US Bureau of Safety and Environmental Enforcement said Aug. 27 that about 58.5% of the US Gulf's crude oil, or 1.065 million b/d, was already was shut in, as well as 48.8% of the region's approximately 2.2 Bcf/d of natural gas production, or about 1.088 Bcf/d. Ida is expected to become the first major hurricane of 2021 to significantly impact oil, gas and refining operations.
Close to 4 million b/d of operating refinery capacity is in the path of Ida as well, primarily in Louisiana. Ida's wind speed will play a major role in how hard it strikes at the heart of USGC refining centers, said Rick Joswick, head of oil pricing and trade flow analytics at S&P Global Platts Analytics.
Joswick said if the hurricane came in with the 120 mph winds forecast earlier, it would be "a major factor." Category 4 hurricanes have winds of at least 131 mph.
Source: SP Global
Russia Rosneft asks Putin to open access for gas exports

Russia’s largest oil producer Rosneft ROSN.MM asked President Vladimir Putin to allow it to export 10 billion cubic metres of gas per year via an agent agreement with pipeline gas exporting monopoly Gazprom GAZP.MM, Kommersant daily said on Friday.

The newspaper cited a letter by Rosneft’s head Igor Sechin to Putin, dated Aug. 13. It said the state budget will get an additional 37 billion roubles ($500 million) a year thanks to an increased gas production tax on the overseas supplies.
Rosneft has yet to respond to a Reuters request for comments.
The oil company and its shareholder BP BP.L have long planned to ship Russian natural gas abroad. Gas prices in Europe are currently at multi-year highs amid tight supplies and the economic recovery from the pandemic.
The Kremlin-controlled Gazprom has the monopoly for Russian natural gas exports via pipelines.
Sechin said in the letter, according to the newspaper, that the additional gas supplies by Rosneft will facilitate the removal of the European Union’s restrictions on undersea gas pipelines Nord Stream 1 and Nord Stream 2 as well as the land Opal pipeline, which connects with Nord Stream 1.
The proposal was put forward following an Aug. 5 fire at Gazprom’s gas facility in northern Russia, which led to a decline in Russian gas exports via the Yamal-Europe pipeline. Supplies have been restored since then.
Source: Hellenic Shipping
Cambodia oil export ambitions sink with stolen tanker standoff

When Cambodian officials commemorated the start of the country’s first oil project in June by preserving the first drops of production at a high profile ceremony, they heralded the country’s emergence as a budding oil exporter at the heart of Asia.

But instead of reaping royalties, Cambodia’s government has filed a theft complaint against the crew of the tanker that stored the crude, after they sailed away with the oil amid a payment dispute with the oil field’s developer.
Singapore-based KrisEnergy, which owns a 95% stake in the offshore Apsara field in the Gulf of Thailand, was forced into liquidation shortly after production began in December 2020. Cost overruns and poor oil yields from the project had left the company unable to repay debt.
KrisEnergy’s collapse also ended hopes of further oil sale proceeds for the Cambodian government, which owns the remaining 5% stake. All operations were halted and are deemed unlikely to resume given poor extraction rates, according to a local media report citing the Cambodian Ministry of Mines and Energy in July.
That’s likely to be a major disappointment to Cambodian authorities, who had anticipated roughly $500 million in tax and royalty revenues over the project’s lifetime.
The output stoppage means all there is left to show for Cambodia’s oil production efforts now lies in the belly of the MT Strovolos, the 300,000-barrel tanker that had stored the oil produced at the site until it was forced to divert last month in search of a fresh crew and has now been detained by the Indonesian navy.
The Cambodian energy ministry, KrisEnergy and its liquidators did not respond to requests for comment.
With the fully-laden vessel now impounded in Batam, and KrisEnergy’s liquidation proceedings still under way, lawyers who have been tracking developments predict a lengthy dispute over who owns and can sell the oil.
“I expect that if the Cambodian Government wants to detain the cargo and have it shipped back to Cambodia, there may arise competing claimants who are saying they are lawful owners of the cargo, potentially including the liquidator of KrisEnergy,” said Peter Doraisamy, managing partner at PDLegal LLC.
“It is likely to take several years at the very minimum depending on which jurisdiction is seized of the case, and there is possibility that cases may be brought in more than one jurisdiction and by different parties.”
A key fundamental question is who actually owns the crude cargo, currently valued at around $20 million, now that KrisEnergy has become insolvent.
“The ship owner may not actually know who owns the cargo, and he’s not a party to any of those contracts, he just gets told what to do by the charterer,” said Leon Alexander, partner at Clyde & Co.
“But the shipowner owes a legal obligation to that person who is the cargo owner, he’s got to look after and care for the cargo. And he’s not allowed to deliver the cargo to the wrong person or act in a manner inconsistent with the rights of the cargo owner, or he faces a legal claim in conversion.”
Indonesian authorities have taken steps to secure the vessel and its contents for investigation, Laode Muhamad, a spokesman for the Indonesian Navy told Reuters.
“Based on the provisions of the shipping law, the ship and its documents and cargo are evidence for which approval for confiscation is requested for investigation purposes,” he said.
While legal manoeuvring around the cargo is just getting under way, oil analysts say production at the field will likely remain stopped, even with the recovery in oil prices and demand this year.
“The poor publicity surrounding Apsara leaves the government with a Herculean task trying to attract other players into the Cambodian hydrocarbon sector,” said Rystad analyst Readul Islam.
“I suspect that the shadow of Apsara will hang over Cambodia’s hydrocarbon attempts for some time.”
Source: Hellenic Shipping
Extremely dangerous Hurricane Ida knocks out more oil than Katrina

U.S. oil and gas companies on Friday cut more than 1.6 million barrels of oil production as a major storm churned toward oilfields that provide 17% of the nation’s oil production.

Production cutbacks ahead of Hurricane Ida exceed those during 2005’s devastating Katrina
Ida barreled into Cuba on Friday after intensifying into a hurricane with 85 mile per hour (130 kph) winds, according to the National Hurricane Center https://www.nhc.noaa.gov/graphics_at4.shtml?start#contents (NHC). It could become “an extremely dangerous major hurricane,” and threaten the U.S. Gulf Coast “catastrophic wind damage,” the NHC said.
Top Gulf of Mexico oil producer Royal Dutch Shell Plc said it suspended production at seven offshore platforms and two processing plants onshore. BP Plc stopped work at four platforms. Both said they were evacuating offshore workers.
Chevron Corp. said it was shutting in production at its six Gulf of Mexico platforms and evacuating all workers. BHP and Equinor pulled workers from offshore facilities, spokespeople said.
Oil companies had shut 59% of Gulf oil production and 49% of natural gas output, according to the U.S. offshore regulator. A total of 90 offshore facilities were evacuated and 11 drilling vessels moved out of harm’s way.
“This could be comparable to hurricanes Laura and Harvey, as far as intensity goes,” said Joe Bastardi, chief forecaster with Weatherbell Analytics, referring to two hurricanes with winds of at least 130 mph (209 kph). “In the worst-case scenario it could go as high as a category 5,” he said.
During Katrina, a hurricane that wreaked havoc in Louisiana, supplies were cut by up to 1.53 million barrels per day. Production outages lasted for weeks due to damaged platforms and refineries. Last year’s Delta shut-in up to 1.69 million barrels per day.
Gasoline manufacturer PBF Energy pared production at its Chalmette refinery, said people familiar with the matter, and Phillips 66 said it was releasing non-essential workers and halting output at its Alliance, Louisiana, plant. Shell also is stopping fuel production at its Norco refinery, and chemical manufacturing at its Geismar, Louisiana, plant, it said.
Oil prices rose nearly 2% on Friday and posted their biggest weekly gain in over a year. Some U.S. Gulf Coast gasoline prices gained for a fourth day, with one type of gasoline feedstock up by 600% since Tuesday.
Over 45% of U.S. refining capacity lies along the Gulf Coast.
Louisiana’s governor called on residents to prepare for a major storm, President Joe Biden issued a federal emergency declaration and New Orleans and coastal officials asked residents to move to higher ground. Five storms made landfall in Louisiana last year, causing billions of dollars in damage.
Source: Hellenic Shipping
More than 2mn b/d US Gulf refining off line from storm

Hurricane Ida forced off line more than 2mn b/d of Louisiana refining capacity, which may take weeks to recover amid heavy inland flooding and widespread power outages.

Two of the region's largest refineries, Marathon Petroleum's 565,000 b/d Garyville site and ExxonMobil's 500,000 b/d Baton Rouge facility, were shut down today, the companies said. ExxonMobil Baton Rouge had previously only shut down some units but widespread power outages led to its complete shutdown today.
PBF Energy's 190,000 b/d Chalmette refinery has been without power since yesterday, when 22 barges docked on the Mississippi river near the facility broke loose, stoking concerns over a possible collision with levees along river.
In total, seven Louisiana refineries comprising 2.1mn b/d of throughput capacity were confirmed off line today. Assessment was underway at facilities today to determine the extent of damages, which, if significant, could lead to days or even weeks of effects on demand in the US Gulf coast crude market.
Hurricane Ida made landfall yesterday as a Category 4 storm near Port Fourchon in south-central Louisiana, bringing 150mph (240km/h) winds along with storm surge and heavy rainfall. The eight major power transmission lines serving the New Orleans area were knocked down, according to local utility Entergy, which said full power restoration to the region could take weeks.
Refined product pipelines and fuel distribution systems were also affected by the storm. The Colonial pipeline shut lines 1 and 2, the main gasoline and distillate pipes running from Houston, Texas, to Greensboro, North Carolina, but said service is expected to be restored later today. Fuel supplies continued to be available today throughout the southeast, Colonial said.
Kinder Morgan' 700,000 b/d Products (SE) Pipe Line system — formerly known as Plantation — was operating normally today but mainline operations may need to be curtailed later because of the loss of power at its Baton Rouge terminal. The system moves refined products from Louisiana to Virginia.
The National Hurricane Center said the threat of heavy rainfall and flooding was spreading across Mississippi, Alabama and much of the Florida panhandle this afternoon as the storm tracked northeast inland from the Gulf coast.
Chevron did not provide a status update on its 356,000 b/d refinery in Pascagoula, Mississippi, except to say it was "conducting post-storm assessments."
Source: Argus
TotalEnergies to use Indonesia Arun LNG storage tanks

TotalEnergies has signed a terminal use agreement with Indonesia's state-owned Pertamina to use two of its storage tanks from this year at the 3mn t/yr Arun LNG receiving and regasification terminal in Sumatra's Aceh province.

TotalEnergies will use the tanks to store LNG from its international portfolio, according to the agreement it signed with terminal operator Perta Arun Gas (PAG), which is a subsidiary of Pertamina Gas. The duration of the agreement is unclear.
The Arun terminal has four storage tanks with a total capacity of 508,000m³. TotalEnergies "will use two LNG tank units with a total capacity of 207,000m³", PAG's president director Arif Widodo said.
"Focusing on this deal, we plan to ship vessels from our LNG portfolio in Angola for storage at the Arun LNG hub before delivering cargoes to customers," TotalEnergies Gas and Power Asia's managing director Nic Poulteney said. TotalEnergies has a 13.6pc stake in Angola LNG.
The 160,276m³ Cubal vessel will supply the first shipment, Pertamina said. The vessel loaded at Angola's 5.2mn t/yr Soyo export facility on 8 August and is heading to the Arun terminal, where it is expected to discharge tomorrow, according to vessel tracking data from Vortexa.
PAG is also planning to refurbish an additional tank at the terminal and develop other businesses including its gassing up and cooling down services, LNG bunkering, as well as LPG hub and transshipment, Arif said.
The Arun terminal received its first international cargo in April 2019 from Australia's 8.9mn t/yr Chevron-operated Wheatstone LNG, with it having previously only received domestic LNG cargoes from the BP-led 7.6mn t/yr Tangguh for regasification. Arun was converted from a liquefaction plant to a regasification facility in 2013 because of Indonesia's rapidly depleting gas reserves.
The latest terminal use agreement reflects southeast Asian countries' increasing interest to develop as LNG hubs. The Thai government has been pushing for a hub to open up the country's gas market to more buyers and sellers, following its move to provide third-party access to gas infrastructure and offer services such as unloading, storage, reloading, break bulk and LNG bunkering.
Singapore LNG has also been offering storage and reload services at its terminal on Jurong island as part of its plan to develop Singapore as an LNG hub. It signed a five-year agreement with Singapore's Pavilion Energy last year.
Source: Argus
Japan KHI delivers first LPG-fuelled VLGC

Japanese shipbuilder Kawasaki Heavy Industries (KHI) delivered its first LPG-fuelled very large gas carrier (VLGC) yesterday to Singapore-based shipowner Kumiai Navigation.

Kumiai Navigation will operate the 84,229m³ VLGC Crystal Asteria for Japanese LPG importer Astomos, which has aimed to reduce carbon dioxide and sulphur oxide emissions while promoting LPG use as marine fuel. Japan's LPG industry is aiming to expand LPG use as a marine fuel following a shrinking domestic market.
The VLGC is equipped with KHI's dual-fuel LPG engine, known as ME-LGIP, enabling the vessel to use both pressurised LPG and very-low sulphur fuel oil.
KHI also received an order from domestic LPG importer Gyxis to build a LPG-fuelled VLGC, which can carry LPG and liquefied ammonia at the same time, targeting a delivery by the summer of 2023.
Source: Argus
OPEC+ raises 2022 oil demand growth forecast

OPEC+ revised up its 2022 oil demand forecast ahead of a meeting of the oil producing group on Wednesday, amid U.S. pressure to raise output more quickly to support the global economy.

Two OPEC+ sources said the group’s experts revised the 2022 oil demand growth forecast to 4.2 million barrels per day (bpd), up from the previous forecast of 3.28 million bpd.
OPEC+ expects global oil demand to grow by 5.95 million bpd in 2021 after a record drop of about 9 million bpd in 2020 because of the COVID-19 pandemic.
The Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, meet on Wednesday at 1500 GMT to set policy.
Sources told Reuters the meeting was likely to roll over existing policies despite pressure from the United States to pump more oil.
However, the higher demand forecast strengthens the case for a speedier output increases by OPEC+ as benchmark Brent crude traded above $72 per barrel, close to multi-year highs.
The demand forecast revision came during the OPEC+ joint technical committee (JTC), which on Tuesday presented an updated report on the state of the oil market in 2021-2022.
On Tuesday, OPEC+ sources said the report, which has not been made public, forecast a 0.9 million bpd deficit this year as global demand recovers.
The report had initially forecast a surplus of 2.5 million bpd in 2022 but this was later revised to a smaller surplus of 1.6 million bpd due to stronger demand, the sources said.
As a result, commercial oil inventories in the OECD, a group of mostly developed countries, would remain below their 2015-2019 average until May 2022 rather than the initial forecast for January 2022, the JTC presentation showed, according to the sources.
Source: Hellenic Shipping
First oil at Norway Rolvsnes field

Norway-focused independent Lundin Energy has started crude production from an extended well test (EWT) at the Rolvsnes field in the Norwegian North Sea.

An appraisal well — which was initially drilled in 2018 and flowed at 7,000 b/d during testing — has been converted to a development well and tied back to the Lundin-operated Edvard Grieg platform, located 3km away.
Rolvsnes is a 14mn-78mn bl of oil equivalent (boe) "weathered and fractured basement" oil discovery. The purpose of the extended well test is to investigate reservoir properties, connectivity and the long-term production performance of the field.
If successful, the test could unlock a full field development, thereby extending the plateau production period for the Edvard Grieg platform, which is one of Lundin's strategic priorities, according to chief executive Nick Walker.
The company said it could submit a full field development plan for Rolvsnes by the end of 2022 once sufficient data and production experience has been gathered. Lundin operates the Rolvsnes licence with an 80pc stake. Austria's OMV holds the remaining 20pc.
Source: Argus
OPEC sticks to 2021, 2022 oil demand forecasts despite virus challenges

OPEC on Thursday stuck to its prediction of a strong recovery in world oil demand in 2021 and further growth next year, despite concerns about the spread of the Delta coronavirus variant that has weighed on prices.

The Organization of the Petroleum Exporting Countries in a monthly report also raised its forecast of supply from rivals, including U.S. shale producers, next year, a potential headwind for the efforts of the group and allies to balance the market.
"The global economy continues to recover," OPEC said in the report. "However, numerous challenges remain that could easily dampen this momentum. In particular, COVID-19-related developments will need close monitoring."
OPEC's view that demand will shrug off the latest pandemic-related setback contrasts with that of the International Energy Agency, which trimmed its outlook on Thursday. The U.S. government's forecaster also kept its 2021 growth forecast steady, but trimmed that for 2022.
Oil demand will rise by 5.95 million barrels per day (bpd) this year, or 6.6%, unchanged from last month's forecast, OPEC said in the report. In 2022, fuel use will expand by 3.28 million bpd, OPEC said, also unchanged.
Oil LCOc1 was trading above $71 a barrel after the report was released. Prices have risen to pre-pandemic highs above $77 this year, boosted by economic recovery hopes and OPEC+ supply cuts, although concern about the Delta variant has weighed.
OPEC raised its forecast of 2021 world economic growth to 5.6% from 5.5% assuming the impact of the pandemic will be contained, although it warned of "significant uncertainties". The outlook for 2022 was raised by the same increment to 4.2%.
"The path of the COVID-19 pandemic will be the overarching factor impacting the near-term pace of the recovery, with the potential emergence of new COVID-19 variants and/or mutations posing a particular risk," OPEC said.
The report showed higher output from OPEC and forecast more supplies from rivals in 2022, including U.S. shale producers.
OPEC and its allies, known as OPEC+, are gradually unwinding record oil output cuts put in place last year when the pandemic hit demand. In July, they agreed to gradually boost output by 400,000 bpd a month from August.
The report showed OPEC output rose in July by 640,000 bpd to 26.66 million bpd, as Saudi Arabia unwound the rest of a voluntary supply cut it had made to support the market.
The report forecast a 2.9 million bpd rise in supply from OPEC's rivals in 2022, 840,000 bpd more than seen last month, partly because of the decision by OPEC+ to pump more and as higher prices spur investment.
OPEC sees output of U.S. tight oil, another term for shale, rising by 560,000 bpd in 2022, up 60,000 bpd from last month's forecast, after a contraction this year.
"In the U.S., operators have remained highly disciplined in 2020-2021," OPEC said. "Nevertheless, rig count continue to rise, more wells are being fracked and more frac crews are deployed, as firms are again flush with free cash flow."
The extra barrels will limit growth in demand for OPEC crude next year. OPEC sees the world needing 27.6 million bpd from its members, down 1.1 million bpd from last month but still in theory allowing for higher OPEC production.
Source: Zawya