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International News

China ENN buys about 26 LNG cargoes for 2022-2023 delivery

ENN LNG (Singapore) Pte Ltd, a unit of private Chinese gas distributor ENN Group, has agreed via a tender to buy about 26 cargoes of liquefied natural gas (LNG) for 2022 and 2023 to replenish stocks as new storage becomes operational, two trading sources said.

The cargoes were bought at premiums of about $1-2 per million British Thermal Unit over Title Transfer Facility, or TTF, a virtual trading point for natural gas in the Netherlands, on a delivered basis, said one of the sources.
The two-year agreement was in addition to a 10-year tender ENN issued in March, as ENN's east China-based receiving terminal has since last August expanded in handling capacity thanks to a newly started pipeline to a provincial grid.
ENN picked TTF pricing instead of Japan Korea Marker (JKM) because the Netherlands-based TTF benchmark is more liquid and has more tools to hedge pricing risk than the latter, said the trader who has direct knowledge of the matter.
ENN added two storage tanks each sized 160,000 cubic metres around the end of June at its Zhoushan terminal, the source added.
As a result, ENN's imports of the super chilled-gas will likely amount to 5 million tonnes this year, nearly doubling the volume from that of 2020, the source said.
China has bucked the trend by making record imports of LNG in May, a typically low demand season, and may have extended peak purchases into June, buoyed by industrial and power demand.
But multi-month high Asian spot prices are set to slow imports in the coming months as importers find it increasingly difficult to pass on the cost to consumers, traders said.
Source: Zawya
Heavy sour crude imports to U.S. climb as refiners boost output

Heavy sour crude oil imports to the United States from countries including Mexico and Saudi Arabia have jumped to the highest level in about a year as refineries boost output to meet growing summer demand, traders and analysts said.

U.S. refiners have boosted refinery rates to pre-pandemic levels, with overall capacity use hitting 92.9% in the most recent week, the Energy Information Administration said. That is the highest since January 2020, reflecting a sharp rebound in fuel demand, which as of last week was just 4% below June 2019 levels.
The United States is the world’s largest gasoline consumer, and demand has picked up with more than half of the nation’s eligible population fully vaccinated from the coronavirus. However, U.S. oil production has not recovered its pre-pandemic peak of nearly 13 million bpd, instead sitting at around 11 million bpd.
The discount for U.S. oil futures to Brent futures has shrunk to its smallest since late last year, discouraging international purchases of American heavy sours.
Mars Sour, a grade produced off the Louisiana coast, sank to its lowest levels against U.S. crude in nearly a year earlier this month.
The combination of rising imports from Mexico and Saudi Arabia and the tight U.S.-to-Brent futures spread is expected to further weigh on U.S. heavy sour grades, traders said.
Maya crude imports into the U.S. Gulf are closing out June at over 530,000 bpd, the highest since May 2020, said Matt Smith, director of commodity research at ClipperData. “Mexico has ramped up exports this month to their highest pace since early 2019.”
Shipments from Saudi Arabia to the United States are expected to rise to 12.4 million barrels in July, the highest since June 2020, according to Refinitiv Eikon data, much of which is set to arrive on the U.S. West Coast, dealers said.
Imports of other Middle Eastern crude grades are also likely to pick up over the coming weeks, traders said, including Iraqi barrels, which are now priced more attractively than Saudi barrels, one trader said. Iraqi exports to the United States could pick up by August or September.
Source: Hellenic Shipping
Methanol – a bright future as a marine fuel

Drewry believes methanol can play a major role in meeting the IMO’s emissions reduction targets for the maritime sector for 2030 and zero-emission targets for 2050.

By 2023, the goal for the sector is to reduce the emission of greenhouse gases (GHG) through fuel-efficiency, slow-steaming and using LNG as fuel, among others. However, to meet the medium-term (between 2025 and 2040) goal of a heavy cut in emissions of GHG and particulate matter (PM), we expect methanol to play a key role as marine fuel, even though it is not a zero-emission fuel such as hydrogen and ammonia. The use of methanol is likely to gather momentum as a transition fuel since it is a commodity that shippers are familiar with and therefore offers handling and cost advantages while there is a long wait for the zero-emission options which lack even the basic infrastructure at present. However, in the long term, renewable methanol, hydrogen, green ammonia and solar power will be the options for zero-emission.
Methanol as a marine fuel
Methanol is an excellent replacement for traditional marine fuels due to its potential to reduce GHG emissions, while it is easy to handle; does not suffer from any operational safety issues and is generally compatible with most engine types.
It is readily available and easily accessible on a global scale with existing infrastructure that supports its use as marine fuel. Bunker ships and storage tanks can easily be converted to carry and store methanol.
From a safety viewpoint, methanol shares the same characteristic of a low flash point with LNG, but unlike LNG (which requires refrigeration and high pressure), it can be stored in an ordinary tank with few modifications. The shipping industry has ample experience in handling methanol and the conversion cost of existing engines to run on methanol is also significantly lower than other alternative fuel conversions. Methanol’s price will also be competitive with VLSFO between 2025 and 2050 and to top it all, natural gas is primarily used as feedstock for methanol production, the abundance of which can help ramp-up production when demand increases.
Furthermore, NOx and Sulfur are absent in methanol and PM emission is very low. Variants of methanol like bio-methanol and electro-methanol can help shipowners meet IMO-2050 GHG emission targets with almost negligible investments. Bio-methanol is produced from waste while electro-methanol is produced using carbon-capture and a storage method which is a major factor in the recent drives to reduce vehicular emissions.
History, current and future development
Waterfront Shipping, a subsidiary of Methanex, was the first company to place an order for dual-methanol-fuelled vessels and is still expanding its methanol-fuelled fleet with eight 50,000 dwt tankers on order and 11 ships sailing in the ocean. In 2019, a joint venture between Proman Shipping AG and Stena Bulk AB ordered two tankers and thereafter added two more tankers in 2020, reflecting their confidence in methanol as marine fuel.
Maersk announced that it will launch “the world’s first carbon-neutral liner vessel” by 2023, which will use methanol as its primary fuel. It will have a green methanol-powered vessel in 2023 and all its future vessels will be dual-fuelled vessels with methanol playing a key role. In March 2021, Eastern Pacific Shipping has also signed an MoU with MAN engines for conversion of their vessels into methanol dual-fuel engines.
Existing methanol carriers can easily be converted into methanol dual-fuel vessels with bunkering and storage becoming less of a challenge. All 11 current active methanol dual-fuelled vessels are methanol carriers, and in 2020, the total volume of methanol used as marine fuel was 133,000 tonnes.
Additionally, other IMO class tankers currently trading in chemicals and CPPs also present an opportunity for using methanol as fuel as they will face the least bunkering problems.
In short, Drewry expects half of the vessels ordered after 2025 to have dual-fuel engines, with a large percentage using methanol as marine fuel. We believe methanol will be one of the transition fuels to lead the maritime sector towards zero-emission options such as hydrogen, green ammonia or even solar power. As such, renewable methanol will be one of the fuels that will help the maritime sector to achieve the IMO’s 2050 carbon emissions targets.
Source: Hellenic Shipping
Australia June Gladstone LNG exports hit 10-month low

LNG exports from Australia's Gladstone port in Queensland dropped to a 10-month low in June, largely because of a fall in daily shipments to China to their lowest level since July 2020, latest port statistics show.

Total June shipments from Gladstone, the only LNG-exporting port in eastern Australia, eased by 1.91pc from May to 1.84mn t in absolute terms, although on a per day basis the June volumes were up by 1.4pc to 61,400 t/d from 60,500 t/d in May, according to latest monthly data from Gladstone Ports (GPC). The total June volumes were also up by 8.1pc from a year earlier, GPC said.
China accounted for around 63pc of the June export volumes, the lowest monthly share since 58pc in April 2020. Despite the decline in shipments to China, total LNG exports from Gladstone in the first six months of 2021 were up by 11.8pc on the year to 8.02mn t.
Chinese state-controlled firms hold the most sales and purchase agreements (SPAs) with the three LNG projects at Gladstone. China's state-controlled energy firm Sinopec has SPAs with the partners in the 9mn t/yr Australia Pacific LNG (APLNG) plant for 7.6mn t/yr. Sinopec also owns 25pc of APLNG.
There was a shipment of 70,000t to India, the first from Gladstone since the 63,000t cargo it shipped in September, the GPC data showed.
The second-largest buyer of LNG from Gladstone so far in 2021 is South Korea, which was the destination for 1.7mn t in the first six months of 2021, steady from the first half of 2020. South Korea's state-controlled Kogas has a 3.5mn t/yr deal with the 7.8mn t/yr Gladstone LNG (GLNG) venture, in which it owns 15pc.
Japan is Australia's largest LNG customer, but most cargoes are shipped from the other seven Australian LNG projects that are located in Western Australia and the Northern Territory (NT). The only SPA involving a Japanese company with any of the three LNG plants located at Gladstone is utility Kansai Electric Power's 1mn t/yr deal with APLNG.
Shipments to Malaysia rose to a four-month high of 187,000t in June. Malaysia's state-owned Petronas owns 27.5pc of GLNG and has equity offtake arrangements with the project's partners.
The third LNG plant at Gladstone is the Shell-operated 8.5mn t/yr Queensland Curtis LNG (QCLNG). Shell owns 50pc of train one at QCLNG, with Chinese state-controlled energy firm CNOOC owning the remaining 50pc. Shell owns 97.5pc of train two and Japanese utility Tokyo Gas owns 2.5pc.
The total June shipments represent a utilisation rate of around 88pc. Australian independent Santos, the operator of GLNG, has forecast that the project will produce around 6.2mn t/yr in 2021, which would mark a record since it started shipments in 2014. This implies that GLNG will operate at an average utilisation rate of 79.5pc over 2021.
Source: Argus
Malaysia Petronas agrees 10-year LNG supply deal with CNOOC valued at $7bln

Malaysia's state oil firm Petronas has signed a 10-year liquefied natural gas (LNG) supply agreement with a subsidiary of China's offshore oil and gas major CNOOC Ltd valued at about $7 billion, the firm said on Wednesday.

Petronas, or Petroliam Nasional Berhad, said the deal with CNOOC Gas and Power Trading & Marketing Limited is for 2.2 million tonnes per annum over a 10-year period.
"This long-term supply agreement also includes supply from LNG Canada when the facility commences its operations by the middle of the decade," Petronas said in a statement.
The deal is indexed to a combination of the Brent and Alberta Energy Company (AECO) indices, it said.
AECO is a Canadian natural gas price benchmark, similar to the Henry Hub index in the United States, but is not typically used as a pricing basis for LNG spot contracts.
In Asia, the S&P Global Platts' Japan-Korea-Marker (JKM) has been increasingly used as a pricing basis in spot contracts.
Petronas signed its first LNG cargo using the AECO index to a buyer in the Far East in May.
The deal with CNOOC reflects the markets' receptiveness and recognition of AECO indexed LNG into the world's largest LNG market, said Shamsairi M. Ibrahim, Petronas Vice President of LNG Marketing & Trading.
Source: Zawya
South American LNG imports reached record level in June

LNG imports into South America reached a record high in June led by strong demand from Argentina and Brazil.

Data from S&P Global Platts showed South American imports reaching 84 Bcf in June, slightly higher than the previous record of 78 Bcf set in August 2018.
Imports so far for 2021 are on pace to be the highest since 2015, with imports to June reaching 263 Bcf.
Brazil
Brazil is responsible for almost half of the imports into South America for the record month, accounting for almost half of the total demand, or 37 Bcf for the month. The county has, however, been importing higher volumes than usual due to a sever drought that has brought hydroelectric reservoir levels down to critical levels.
The most recent data from Brazil's electricity regulator, ONS, shows reservoir levels in the country's Southeast and Midwest, the regions with the most hydroelectric generating capacity, declining steadily from already low levels since March.
For July, reservoir levels in these regions dipped below 29% capacity. For reference, levels were at close to 50% in 2020 and close to 45% in 2019.
As a consequence of the lower hydroelectric generation, Brazil has been forced to rely more heavily on its gas-fired power plants, increasing its reliance on LNG imports to meet demand above its own production and waning pipeline imports from Bolivia.
Brazil's state-led Petrobras usually buys LNG cargoes on a spot basis, and so has been actively procuring cargoes to meet its domestic demand in recent months.
The timing of the demand has coincided with a bull run in spot LNG prices globally, and Brazil has been forced to compete with major buyers in Asia and Europe for Atlantic-sourced cargoes.
The vast majority of Brazilian imports are sourced from the US, and competition for flexible US-origin spot cargoes has recently pushed spot prices to all time highs.
The Platts Gulf Coast Marker, which tracks the value of a free-on-board US Gulf Coast, reached a record high of $11.90/MMBtu on July 5, reflecting both strong fundamental demand from Asia and growing price competition from Europe.
Brazil's appetite for cargoes, however, seem unaffected by the high prices.
Buying interest for DES Brazil cargoes for prompt-delivery was most recently heard at around the a $0.30/MMBtu premium to the TTF.
Argentina
Imports into Argentina have also been on the rise as domestic gas production and imports from Bolivia have proved insufficient to meet the projected demand for winter in the Southern Hemisphere.
Production complications caused by the global pandemic and insufficiently attractive downstream prices have stymied gas flows from the country's massive Vaca Muerta shale play in the middle of the country.
The country has taken extraordinary measures to increase the amount of LNG that can be imported during the winter months, re-chartering on a short-term basis the floating storage and regasification unit that formerly operated at Bahia Blanca.
So far for 2021, the country has issued five buy tenders seeing almost 60 full-sized and partial tenders.
Deliveries from the earlier tenders started in earnest in May and almost doubled in June to reach just over 25 Bcf for month. This represents the single highest month of imports since August 2018.
The most recent of the tenders closed on July 6, and sought a total of four partial cargoes for delivery into the country's Escobar terminal in August and September. Participation in the tender was heard to have been robust, with six trading housing submitting bids for the slots.
The pricing of this last tender is also likely to be impacted by the recent run up in LNG prices, with an additional premium charged for the less favorable logistics involved in delivering partial cargoes.
Source: SP Global
China Crude Imports Jumped Nearly 9% In June
China’s crude oil imports last month rose by 8.81 percent month-on-month in June to average 10.54 million bpd, energy analytics provider OilX said in its latest monthly report, adding that the number was still lower than last year’s June average, by 2.45 million bpd.
What’s perhaps more interesting is that, according to the OilX report, China’s crude oil in storage has been on the decline. Since April, the report said, oil in storage, as calculated through satellite data readings, has fallen from 436 million barrels to 414 million barrels. The period coincided with the latest sustained rally in oil prices.
That Chinese oil imports were about to drop was clear a month ago. The country’s refiners ramped up their output a bit too fast as the economy began to recover after the pandemic hit and soon this ramp-up led to excess fuel supply and pushed their margins close to zero.
Beijing intervened, asking state-owned oil majors to stop trading their crude oil import quotas with private refiners. The government also reduced the second batch of crude oil import quotas for private refiners by as much as 35 percent last month, to a total of 35.24 million tons.
This would be enough to suggest with a high degree of certainty that oil imports may remain subdued for the net few months despite the drawdown in oil inventories. However, Beijing is also cracking down on private refiners and this, according to a recent Bloomberg report, could have wide-reaching implications for the local oil industry.
The crackdown began last month at a regional energy hub, with state investigators looking into allegations for tax law and environmental legislation violations. According to analysts, the crackdown could reduce independent refiners’ influence over the Chinese oil market and give more power in the hands of state-owned majors. This, in turn, could have long-term implications for Chinese oil imports.
Source: Oil Price
The Canal Istanbul to Transform Turkey into a ‘Global Logistics Power’

Stating that the Canal Istanbul will leave its mark in history as a guarantee of the independence and sovereignty of the Republic of Turkey, Adil Karaismailoğlu, the Minister of Transport said: “With the Canal, Turkey will be among the world’s leading logistics powers. 500 thousand people will be employed, and an economic contribution of 28 billion dollars will be made. Turkey will become a playmaker in global maritime trade.”

The ground of the first bridge of the Canal Istanbul, Turkey’s strategic move, is being broken on Saturday, June 26. The Ground-breaking Ceremony will be held with the participation of President Recep Tayyip Erdoğan and Minister of Transport and Infrastructure Adil Karaismailoğlu.
Stating that the Canal Istanbul is “a project that will shape the world’s economy and trade”, Minister of Transport and Infrastructure Adil Karaismailoğlu also underlined the contribution that the project will bring to Turkey’s national independence:
“Our Canal Istanbul project, which will increase Turkey’s effectiveness in world’s trade and bring Turkey to a leading position in world economic corridors, will leave its mark in history as a guarantee of the independence and sovereignty of the Republic of Turkey, which is located on the most important trade corridors of the developing world.”
Why the Canal Istanbul?
Detailed analyses conducted within the framework of the Turkey Logistics Master Plan, which aims to make Turkey a global logistics power in the new world order, to develop Turkey as a whole, and to create more employment also revealed the need for an ‘alternative waterway’ transportation corridor in the region due to the increasing ship and cargo density in the Straits System.
It is aimed to manage the ship traffic of Istanbul, which is located at the intersection of the Central and North-South corridors, and to raise Turkey to a leading position in the world’s trade corridors thanks to the Canal Istanbul, which was designed to meet this need.
“Turkey will be the most important logistics centre of the world”
Reminding that within the framework of this plan, many projects such as Istanbul Airport, Filyos Port, Baku-Tbilisi-Kars Railway, Istanbul-Izmir Highway, Yavuz Sultan Selim Bridge have been put into practice, they have determined development areas, initiated breakthroughs in maritime transport and reform movements in railways, Minister of Transport and Infrastructure Adil Karaismailoğlu continued as follows: “One of the most important pillars of Turkey’s growth vision in the last 19 years is the claim we have made in terms of our transportation, communication and logistics infrastructure.
As a country that dominates the most important trade corridors of the developing world, Turkey will become the world’s most important logistics centre with the Canal Istanbul. Thus, the Black Sea will turn into a trade lake for Turkey.”
The Canal Istanbul, where 204 scientists take part in the engineering work, will fulfil an important task in highlighting the Istanbul Valley, which is at the crossroads of the world, and in establishing a logistics base, technology development and living centre in Turkey by creating a sustainable new generation city.
The Canal Istanbul, which is Turkey’s vision project in every aspect to protect the historical and cultural texture of the Bosphorus, to reduce the load caused by maritime traffic and to ensure traffic safety, will be put into the service of the country as an alternative waterway in Marmara, the locomotive of the Eurasian region.
Source: Hellenic Shipping
PetroVietnam pumps first condensate, gas from Su Tu Trang field
PetroVietnam and its foreign upstream partners have produced first condensate and gas from phase 2A project in Vietnam's offshore Su Tu Trang field, the state-run oil and gas company told S&P Global Platts June 28 without providing estimated output volume.
A virtual ceremony held last week to mark the production was participated by representatives from PetroVietnam, its upstream arm PetroVietnam Exploration Production Corp., Perenco, Geopetrol and South Korea's SK Innovation and Korea National Oil Corp., or KNOC.
The development plan for the phase 2A was approved by Vietnamese government in December 2019. With estimated CAPEX of around $140 million, the investors expect to produce 193 billion cubic feet of natural gas and 63 million barrels of condensate, or ultra-light crude oil, between June 2021 and September 2025.
Su Tu Trang is located in Block 15-1 in Cuu Long basin, about 62 km from Vung Tau city. PVEP holds 50% stake in the production sharing contract, which was signed in September 1998. The other stakeholders included Perenco (23.25%), KNOC (14.25%), SK Innovation (9%) and Geopetrol (3.5%).
The other operating fields in Block 15-1 are Su Tu Den, Su Tu Vang and Su Tu Nau. The total production from 68 wells in the four fields in Block 15-1 reached 40,000 b/d of oil and gas equivalent as of March.
Gas from Block 15-1 and other fields in Cuu Long basin are transported through pipelines run by PetroVietnam Gas to mainly serve power, fertilizer, and other industrial customers in southern Vietnam, according to PetroVietnam.
Source: SP Global
Petrobras LPG pricing shifts to track crude

Petrobras' LPG prices are starting to closely track rising international crude values as Brazil's state-controlled company seeks to attract imports of the fuel as well as investment in its refining assets.

Petrobras is making its LPG prices more responsive to crude price variations, partly to make its refineries more attractive to investors as it pushes to divest the assets by the end of the year,according to Brazil's LPG distribution industry association and a specialist.
Petrobras' sale of one of these units, Refinaria Landulpho Alves (RLAM), was approved this month by Brazilian competition watchdog Cade.
Petrobras' LPG prices for distributors rose by 83pc in the 12 months through mid-May, similar to Brent prices that rose in the same period by 90pc. Petrobras' LPG price was R3,208.85/metric tonne ($654/t) on 14 May 2021, up from R1,753.03/t a year earlier.
In the year-earlier period, there was little correlation between the two commodities. Petrobras' LPG prices fell by 10pc through 15 May 2020 from a year earlier, significantly trailing a 52pc drop in Brent.
The Brazilian association of LPG distribution companies, known as Sindigas, acknowledges that LPG prices track international crude prices, but only recently has there been an earnest effort to pass price fluctuations on to distributors. Petrobras is now more directly passing on international price fluctuations because the company is giving up its role as the sole guarantor of the national LPG supply as Brazil's new natural gas law opens up the market and Petrobras moves to reduce its share of domestic refining, the association said.
"Petrobras needs to price (LPG) in a way that generates incentives and gives confidence to potential investors," Sindigas said.
For residential consumers, the price of a 13 kilogram LPG cylinder rose by an average of 19pc to May 2021 from April 2020. Distributors say they reduced their sales margin by nearly 14pc to cushion customers from higher Petrobras prices. The federal government also reduced LPG taxes by 6.79pc in this period.
Petrobras adopted international price parity for its refined products in 2002, but it was only in 2015 that the company was allowed by its major stakeholder, the Brazilian Union, to increase prices frequently. By 2019, with a new board running the company and focusing on upstream activities, Petrobras planned for LPG prices to more closely reflect crude fluctuations, but when global Covid-19 lockdowns sent crude prices tumbling, the policy was not fully implemented.
The perception that Petrobras now is following the international parity pricing policy is an important signal for other companies to invest in Brazilian refining and also to start importing LPG, said Pedro Rodrigues, director at Brazilian Infrastructure Center (CBIE), a consultancy for energy and infrastructure.
"Petrobras pricing for LPG is changing as Petrobras follows its divestment plan in refining," Rodrigues said. "It gives autonomy to the company and more confidence to investors that the government is not going to interfere in pricing."
LPG sold in cylinders represents 25pc of Brazil's energy mix for residential consumers. Petrobras is the main supplier for LPG in Brazil, with 99pc of the market, selling the liquefied petroleum gas to distributors that package the gas and distribute it, typically via trucks, for sale to households.
Brazil is short on LPG and depends on imports to supply 34pc of the market. According to research conducted by BMJ Consulting, Brazil last year imported $309mn of mixed LPG, and pure propane and butane.
Petrobras did not immediately respond to a request for comment on its LPG pricing strategy.
Source: Argus
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