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Algeria Sonatrach says it has terminated Ain Tsila contract

Algerian state oil company Sonatrach said on Thursday it had terminated a 2004 contract with Petroceltic PLC, which was later bought by Sunny Hill Energy, for exploration and production in the Ain Tsila gas field.

Sonatrach, which has faced years of declining energy output, said in an emailed statement that the termination was in accordance with the contract, and that it had taken the step after Petroceltic failed to comply with contractual obligations.
Algeria is trying to encourage investment in its energy sector by international oil companies to reverse its falling production levels, which have hit state finances.
Sunny Hill said in a statement that it intends to pursue legal action to compensate it for the loss, which it values at over $1 billion, after having invested hundreds of millions of dollars in the project.
Sunny Hill holds a 38.25% stake in Ain Tsila after buying Petroceltic, which was formerly listed in London and Ireland.
Sonatrach said in its statement that Petroceltic had twice reduced its participation in the project, which was 75% when the contract was signed.
It said a development plan for the project had been approved in 2012 with a forecast commissioning date of 2017 to produce at least 10 million cubic metres of natural gas, 17,000 barrels of liquefied petroleum gas and 11,500 barrels of condensate a day.
It said it would continue development efforts to bring it into production in November 2022.
Algeria is Sunny Hill's only operation.
"We have fully met our contractual obligations including providing our full share of resources required for the operation of the joint venture with Sonatrach. We will robustly pursue our claims taking all actions to protect our interests," Angelo Moskov, chairman of Sunny Hill, said.
Sonatrach holds the remaining interest in the field.
Source: Zawya
ADNOC keen to explore hydrogen potential with India

Abu Dhabi National Oil Company (ADNOC) is keen to explore the potential of hydrogen, with both the private and public sectors, to support the growing demand for energy of its major trading partner, India.

Dr Sultan Ahmed Al Jaber, ADNOC’s managing director and Group CEO, as well as the UAE’s minister of industry and advanced technology, said although hydrogen is in its infancy, it has the potential to be a genuinely zero carbon fuel, and it presents an opportunity to accelerate the energy transition.
“Today, India is one of our biggest and most important trading partners, particularly in the field of energy. And as India’s demand for energy grows, we stand ready to help meet that demand by making the full portfolio of our products available to the Indian market,” he told a virtual Hydrogen Roundtable organised by the Energy Forum and the Federation of Indian Petroleum Industry.
Al Jaber said ADNOC currently produces about 300,000 tons of hydrogen per year.
He said the company’s existing infrastructure and commercial-scale carbon capture utilisation storage (CCUS) capabilities meant it can become a major player in the developing blue hydrogen market.
ADNOC, Abu Dhabi state fund Mubadala and industrial holding company ADQ signed an agreement in January to form a hydrogen alliance focusing on low-carbon green and blue hydrogen as part of the UAE’s continued energy diversification efforts.
The partnership aims to establish Abu Dhabi as a "trusted exporter of hydrogen to emerging international markets and build a substantial green hydrogen economy in the UAE".
“Working together, we are identifying viable international market opportunities and developing a roadmap to create a Hydrogen ecosystem to serve both the UAE and the global market. That said, we recognise that the key to developing the hydrogen economy of the future will be aligning supply and demand,” Al Jaber said.
Source: Zawya
Iraq says seeking buyers for Exxon West Qurna 1 stake

Iraq's oil ministry today raised the possibility of ExxonMobil exiting its major investment in federal territory, saying that it is talking with other unspecified US firms to buy the firm's stake in the West Qurna 1 oil field.

Exxon,which signed a 20-year service contract for the field in 2010, has made no comment.
ExxonMobil operates the 500,000 b/d capacity West Qurna 1, in the southern Basrah province, with a 32.7pc stake, alongside Chinese state-controlled PetroChina, which holds 32.7pc, Japanese trading house Itochu with 19.6pc, Indonesia's Pertamina with 10pc, and Iraq's state-owned exploration company with 5pc.
ExxonMobil is pursuing a $15bn divestment target for 2019-21, but its asset sales amounted to just $1bn last year. Earlier this year, it agreed to sell its 32pc interest in the Baeshiqa license in Iraq's semi-autonomous Kurdistan region to Norwegian independent DNO.
The sale of its West Qurna 1 stake would come as a blow to Iraq's oil sector, which has struggled to attract and retain large international oil firms in recent years as a result of commercially unattractive contractual terms and payment difficulties. Iraq may face further struggles as investors focused on environmental, social and governance (ESG) metrics force firms to assess the climate impact of their assets.
ExxonMobil had been in talks with Iraq's oil ministry to invest in the Common Seawater Supply Project (CSSP) — key to maintaining and growing Iraq's southern crude production — alongside the multi-billion dollar South Integrated project. Disagreements over the terms prolonged negotiations for years, and the possibility of Exxon investing in the projects appears to have drawn to a close following last month's preliminary agreement for Total to invest in the CSSP alongside three other southern projects.
Source: Argus
Iran imposes bitumen tax to lift domestic market

The Iranian government has imposed a tax on bitumen exports from the current financial year, starting on 21 March, in an effort to support asphalt consumption within Iran.

It was announced in the annual budget that "in order to supply the required bitumen for domestic consumption by the country, the income from bitumen exports is subject to tax".
This rule was approved and announced in March but executive regulations have not been announced yet.
This new rule will increase costs for bitumen exporters from the current year after bitumen exports were free of tax in the past.
The Iranian government has allocated bitumen supply subsidies in its annual budget for the current financial year. "Oil ministry should allocate 150,000bn Iranian Rials ($3.56mn) for asphalt paving of rural roads and their maintenance activities," according to the budget statement.
The government could be suffering from the shortage of cash flow and there are outstanding payments to bitumen producers, said local market participants.
Bitumen prices have risen by around 250-300pc in the domestic market over the past year due to stronger vacuum bottom prices, which may have bolstered margins for bitumen producers.
"It is not clear how much export tax will be added this time, but bitumen exporters' margins were on average around 3pc in the past years, but the government has received about 25pc tax from domestic sales performance, according to local participants. As a result of this new tax, higher bitumen consumption in the domestic market and a fall in bitumen export volumes are anticipated this year.
Iran produced about 6mn t of bitumen in April 2020-March 2021. Bitumen exports were around 4.5mn-5mn t with domestic consumption of 1mn-1.5mn t during the same period.
Source: Argus
South African refinery shutdowns boost fuel oil demand

South Africa's Engen is looking as far afield as Singapore and Malaysia for fuel oil as refinery shutdowns curb domestic availability and raise import demand.

Engen has issued a tender seeking to buy 35,000t (226,000 bl) of very low-sulphur fuel oil (VLSFO) for loading from Singapore, Malaysia or the Mideast Gulf over 17-29 May, market participants said.
Engen typically seeks fuel oil from Europe and the Mideast Gulf but rarely buys from Malaysia and Singapore. It may have been prompted to look to Asia-Pacific because of tight supplies in Europe and more ample availability in the east, said traders, although this could not be confirmed with the company.
European fuel oil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) trading and storage hub fell to around a two-month low of 1.517mn t (9.78mn bl) in the week to 7 April. Singapore's onshore residual fuel oil stocks rose to a more than four- month high of 23.62mn bl in the same period.
Engen does not produce 0.5pc sulphur LSFO and typically seeks supplies from the import market. But its latest tender comes as South African demand is rising because of prolonged shutdowns at Engen's 105,000 b/d Durban refinery and other domestic plants, market participants said.
About 123,000t (26,000 b/d) of fuel oil is on course to arrive in South Africa next month, the most since April 2018, according to data from oil analytics firm Vortexa.
Engen's Durban refinery has been shut since December because of a fire, with its operating permit revoked until it submits a comprehensive report on the cause of the incident and a set of preventative measures. Astron Energy's 110,000 b/d Cape Town refinery is expected to remain shut until some time next year after a fire in July 2020. And the BP-Shell Sapref joint venture has extended a full shutdown at its 180,000 b/d Durban refinery to mid-June. The Engen and Sapref refineries supply all the local bunker fuel needs at the port of Durban.
Engen's VLSFO tender closes tomorrow and the winner will be notified on 16 April. The company is seeking a cargo with maximum viscosity of 180cst at 50°C, maximum sulphur content of 0.5pc and minimum flash point of 60°C, priced against either Singapore spot 10ppm gasoil or 180cst LSFO assessments.
Source: Argus
China Iranian oil buying spree crushes demand for Brazil, Angola crude

China's record imports of Iranian crude in recent months has squeezed out supply from rival producers, forcing sellers of oil from countries such as Brazil, Angola and Russia to slash prices and divert shipments to India and Europe.

The jump in Iranian volumes took the market by surprise and has capped global oil prices although the Biden administration had been expected to resume talks with Tehran to revive a nuclear deal.
Iranian oil started to slip into China from late 2019 despite tough U.S. sanctions, but volumes began to surge only since late last year as oil rebounded above $60 and buyers were emboldened by the prospect of the United States lifting sanctions under President Joe Biden.
China received a daily average of 557,000 barrels of Iranian crude between November and March, or roughly 5% of total imports by the world's biggest importer, according to Refinitiv Oil Research, returning to levels before former U.S. President Donald Trump re-imposed sanctions on Iran in 2019.
Most of these oil ended up in the eastern province of Shandong, China's hub for independent refiners.
"These 'sensitive' barrels are hammering supplies from everywhere, as they are simply too cheap," said a Chinese trader who handles oil sales to Shandong, referring to Iranian oil which was sold $6-$7 a barrel below that from Brazil earlier this year.
A second trader said suppliers from South America to West Africa and North Sea are boosting efforts to find new markets as Chinese demand plummeted.
South America's top exporter Brazil and West Africa's Angola were among the worst hit, while Russia's far-east grade ESPO crude recorded some rare flows to the U.S. pinched by falling Chinese demand.
Shipments from Brazil, which last year overtook Angola as China's No. 4 supplier thanks to aggressive marketing and attractive pricing, fell 36% in January-February versus a year ago, though volumes climbed 16% on-year in March, according to Chinese customs and Refinitiv assessment.
While China's appetite for Brazil's sweet oil from Tupi field is "endless" - and the Asian country still pays a premium for it - current margins are less competitive, Roberto Castello Branco told Reuters on Sunday, in his last interview before stepping down as Petrobras Chief Executive Officer on Monday.
India has become a bigger market for oil from Brazil, West Africa and even North Sea as China's demand cools, providing the world's No. 3 importer with ample alternatives as New Delhi cuts Saudi oil purchases.
India's imports of Brazilian and Angolan crude jumped for March to May arrivals while Europe took in more Brazilian oil between March and April than at the start of the year, Refinitiv data showed.
The onslaught of Iranian crude, passed off as oil from Oman, the United Arab Emirates (UAE) and Malaysia, has dampened prices for competing supplies like Norway and Brazil to multi-month lows, though they recovered moderately in the last couple of weeks.
Spot premiums for Brazil's Tupi crude delivered into China in May earlier dropped to 10 cents a barrel to ICE Brent, down from more than $1 a barrel for late December arrival before clawing back to 30-40 cents last week.
"The Chinese are now hunting for light crude to blend down the heavy Iranian," said a second source with a West African producer, adding that they managed to sell only two spot cargoes for May, at slightly better prices versus "a bad month" in April.
They could barely compete with Iranian barrels at Brent minus $3-$5 a barrel.
"China doesn't want to pay high (prices) with all the sensitive barrel," said a third trading executive.
The surge in Iranian supplies, however, has not affected the market share of Saudi Arabia, China's top oil supplier, as the OPEC kingpin serves a different client base - China's state refiners and mega private plants.
With transactions mostly done in Chinese currency and in some cases end-buyers offered open credit, Iranian oil flows are expected to continue, especially as the private firms face little political pressure to quit the lucrative business.
"Imagine you're a teapot boss, all you care is if the oil is cheap enough and if your plant is equipped to process that," said a fourth Chinese trading executive.
Source: Zawya
Aramco to meet partial Mediterranean May crude demands

State-controlled Saudi Aramco will meet only some of European refiners' higher interest in May-loading crude.

Three Aramco clients in the northwest European and Mediterranean regions said they would receive the crude they had requested for May-loading, and three others said that they were only approved for allocations below what they had nominated. A further refiner did not ask for any May-loading Saudi crude.
European and Mediterranean interest in May-loading Saudi crude appears to have picked up from the April cycle, when three local refiners abstained from purchases because of unattractive official formula prices. With depressed spot prices for Russian medium-sour Urals crude, Aramco made small adjustments to its May pricing for the European regions — largely rolling over prices for its northwest European customers, barring a 20¢/bl trim for Arab Light, and lowering most Mediterranean prices by 5-30¢/bl on fob Ras Tanura and fob Sidi Kerir sale terms.
Aramco will meet most May requirements in its core Asia-Pacific market, for which it raised official formula prices by 20-50¢/bl from April. Opec+ policy has met some criticism from India, a major regional purchaser of Saudi crude, which has been frustrated by the price effects of output cuts. Indian state-controlled refiners have nominated lower May allocations, in line with government guidelines to reduce their dependence on Mideast Gulf crude.
Aramco's capped European May allocations come as Saudi Arabia prepares to gradually increase output next month. It will return 250,000 b/d of the voluntary 1mn b/d cut that it deducted from its 9.119mn b/d Opec+ quota over February-April, putting Saudi production at around 8.369mn b/d in May.
Saudi Arabia abided by an 8.119mn b/d quota in February and March, when Argus tracking data puts its exports — including its portion of shipments from the Neutral Zone it shares with Kuwait — at 5.69mn b/d and 5.49mn b/d, respectively. Saudi February loadings were just 251,000 b/d under January exports, as Aramco took crude from storage to meet some customer obligations, according to a Saudi source.
Shipments of Saudi crude to destinations west of Suez were 968,000 b/d in February and 806,000 b/d in March. This comprised direct shipments from Saudi ports and crude discharged for transit to Egyptian storage in Sidi Kerir. Most European buyers and some US refiners procure their Saudi crude allocations with Sidi Kerir loading, to bypass the journey from the Mideast Gulf.
Source: Argus
Somo restricts pricing basis of Basrah crude tender

Iraqi state-owned oil marketer Somo has restricted the pricing basis in its latest Basrah tender, a practice it normally adopts in periods of high sour crude demand either globally or in its key market of Asia-Pacific.

The firm is offering 1mn bl of resellable Basrah Medium crude, loading on 29-31 May. Somo is selling the cargo on behalf of state-owned Basrah Oil (BOC), based on the latter's entitlement in the 13bn bl Majnoon oil field. The Basrah Medium is being offered without destination restrictions, but Somo has requested that bids must be at premiums to its official May formula price for Asia-Pacific customers — traditionally, the company's costliest price. Somo's formula price for May-loading Basrah Medium cargoes to Asia-Pacific was set at a 60¢/bl premium to the monthly average of Oman-Dubai assessments. Tender submissions will be accepted until 12:00 Baghdad time on 17 April.
This is Somo's third Basrah Medium sell tender since the new grade debuted in January. The company has also placed one Basrah Heavy shipment via spot tender this year. Of the four tenders, Somo's latest for Basrah Medium is the only one that places restrictions on the pricing basis. The other three all accepted bids at premiums to the official formula price of the destination region — which Somo divides into Europe, the Americas and Asia-Pacific. Typically, the company only specifically requests bids against the official Asia price when sour crude demand is high, either globally or in Asia-Pacific. Interest from European and Mediterranean buyers tends to be lower on these occasions.
Asia-Pacific is the core market for Somo's Basrah crude exports, making up 78pc of its total Basrah loadings, or 2.27mn b/d, in January-March, according to Argus tracking.
Source: Argus
ADNOC unit boosts VLCC fleet with two strategic acquisitions

Adnoc Logistics & Services (Adnoc L&S), the shipping and maritime logistics arm of Abu Dhabi National Oil Company (Adnoc), today (April 13) announced the acquisition of two additional very large crude carriers (VLCC), bringing the total number of VLCCs added to its fleet in 2021 to eight.

The VLCC fleet expansion plays a significant role in supporting ICE Murban Futures, which is expected to boost trading of the UAE’s flagship Murban crude oil, enabling it to reach new customers and markets around the globe.
Adnoc is developing one of the most sustainable, modern crude fleets in the world. The vessels added are a blended mix of new orders (four new builds on order) and modern existing vessels (four recently acquired).
The latest acquired vessels have a length of 336 metres with a deadweight of 300,000 metric tonnes. The existing vessel is equipped with a scrubber, which is an exhaust gas cleaning system that removes sulphur oxides from the ship’s engine, improving its environmental performance.
The new build vessel, made by Daewoo (South Korea), is fitted with a propulsion dual-fuel engine, providing a more environment-friendly operation.
The launch of Murban Futures contracts will also allow Adnoc L&S to further improve its vessel capacity utilisation in the crude oil sector.
The growth of Adnoc L&S’s VLCC fleet supports Adnoc Group’s commitment to increase its crude oil production capacity by 25 percent to 5 million barrels per day (mmbpd) by 2030.
The new acquisitions include a new-build VLCC, equipped with dual-fuel technology, which is expected to be delivered in Q1 2023, and an existing vessel that is scheduled to join the fleet in Q2 2021. These latest acquisitions mean that Adnoc L&S has now added a total crude oil cargo capacity of 16 million barrels this year.
CEO Captain Abdulkareem Al Masabi said: "The acquisition of these VLCCs further consolidates our highly competitive offering, which covers the full spectrum of the oil and gas value chain. Following our strategic vessel acquisitions in 2020-2021, and combined with our integrated logistics and marine solutions, we are confident that our customers will gain a significant edge in terms of time and cost savings for their upstream and downstream operations, including Adnoc Group entities."
Adnoc L&S, which is the largest integrated maritime logistics and shipping company in the GCC, and owner and operator of the largest shipping fleet in the UAE, has been pursuing a smart fleet expansion programme, driven by increased demand from its affiliates, in particular Adnoc Trading and Adnoc Global Trading, and favorable asset prices for crude vessels.
In 2020, Adnoc L&S grew its fleet with 16 deep-sea vessel acquisitions. As a result of the additional fleet capacity, Adnoc L&S can further improve cost efficiencies while providing a comprehensive service to its customers.
Source: Zawya
Kuwait Al-Zour refinery completion rate reaches 97.83%

The Minister of Oil and Minister of Higher Education Dr Muhammad Al-Fares revealed that the completion rate of the Al-Zour refinery project reached 97.83 percent at the end of February 2021, reports Al-Nahar daily.

He said the first mini-refinery is expected to operate in November 2021, and the last units will start operating at the end of March 2022.
In a press statement, Dr Al-Fares explained that the biofuel project has been gradually processed through the operation of the main units in Ahmadi and Mina Abdullah refineries, with the completion rate reaching 99.29 percent.
The operation of all units of Mina Al- Ahmadi Refinery has been completed. The remaining units of the project, which are located in Mina Abdullah refinery, are expected to operate in July 2021.
In response to a question about the number of jobs that these projects will provide to national workers, the minister explained that the Kuwait Petroleum Corporation (KPC) and its subsidiary companies seek to employ new graduates and experienced national workers according to the needs of KPC and its subsidiary companies based on a well studied employment plan.
Source: Zawya
Saudi Aramco mostly fulfils Asia May crude allocations

Saudi Arabia's state-controlled Saudi Aramco has provided most Asia-Pacific refiners with their requested volumes of term crude for May loading, as Riyadh prepares to gradually unwind its voluntary 1mn b/d output cut.

Two northeast Asian refiners nominated their normal contractual crude volumes from Aramco for May loading, and will receive all of their requested allocations. Two Chinese refiners were heard to have asked for about 50,000-100,000 b/d less than their term contractual volumes for loading in May, and will get their requested volumes, traders said. Destocking and a heavy refinery maintenance programme may have reduced Chinese refiners' appetite for sour crude.
Japanese refiners requested regular contractual volumes of crude for May loading, and received cuts of around 5-10pc from their nominated levels. This was smaller than the reductions of around 10-15pc that Japanese buyers received for April loading.
State-controlled Indian refiners earlier asked to buy around 9.5mn bl (305,000 b/d) of term crude from Saudi Arabia for May loading, lower than typical levels, in line with a government directive to reduce the country's dependence on Mideast Gulf crude.
Saudi Arabia has said it will unwind its voluntary 1mn b/d cut by 250,000 b/d in May, 350,000 b/d in June and 400,000 b/d in July, as part of this month's Opec+ agreement to incrementally increase output quotas in May-July.
Aramco issued its official May crude formula prices last week, raising prices for its customers in Asia-Pacific by 20-50¢/bl against the previous month. The increases were on the higher side of market expectations.
Source: Argus
UAE Mubadala may join $12bln Saudi Aramco oil pipelines deal

Abu Dhabi sovereign investor Mubadala Investment Co is in talks with a lead member of a US-based consortium investing $12.4 billion in Saudi Aramco’s oil pipelines, Bloomberg reported, citing a spokesperson for the UAE fund.

However, Bloomberg noted that a final agreement is yet to be reached between the two parties.
On Friday, the Saudi oil producer agreed to a $12.4 billion deal to sell a 49 percent stake in its pipelines to a consortium led by US-based EIG Global Energy Partners. It is Aramco's largest deal since its record $29.4 billion initial public offering in late 2019.
According to Aramco, sale of its stake in Aramco Oil Pipelines Company will not impede its crude production.
“This transaction will not impose any restrictions on Saudi Aramco’s actual crude oil production volumes that are subject to production decisions by the Kingdom of Saudi Arabia,” Saudi Aramco said in a bourse filing to the Saudi Stock Exchange (Tadawul) on Sunday.
Source: Zawya
$12.4bln stake sale in subsidiary will not affect crude production

Saudi Arabian Oil Company (Saudi Aramco) said on Sunday that the sale of its 49 percent stake in Aramco Oil Pipelines Company will not impede its crude production.

The oil giant had entered a share sale and purchase agreement with an entity controlled by EIG Global Energy Partners on April 9, Friday.
The equity stake being sold for 46.5 billion riyals ($12.4 billion) is in Aramco Oil Pipelines Company, a recently established wholly owned subsidiary of Aramco.
“Saudi Aramco will at all times retain title to, and operational control of, the pipeline network” the company said in a bourse filing.
“This transaction will not impose any restrictions on Saudi Aramco’s actual crude oil production volumes that are subject to production decisions by the Kingdom of Saudi Arabia,” the company said in a bourse filing to the Saudi Stock Exchange (Tadawul) on Sunday.
The transaction is expected to close “as soon as practicable”, including any required merger control and related approvals.
“Upon closing of the transaction, the purchaser will pay Saudi Aramco $12.4 billion for a 49 percent equity interest in Aramco Oil Pipelines Company,” the statement said.
Source: Zawya