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Regional News

Kuwait raises its liquefied gas shipments to 8 ships a month

Kuwait has raised its import of liquefied gas shipments to 8 ships per month because of the rising temperatures and subsequent power consumption, reports Al-Anba daily quoting senior oil sources.

The same sources said Kuwait imports between 7 and 8 LNG vessels per month to meet the country’s increasing needs for electricity, especially during the summer because of high temperatures based on a plan developed by the Kuwait Petroleum Corporation (KPC).
The liquefied gas is imported through the facilities in the Al-Zour region.
The sources said the gas import facilities, which were inaugurated last July, have succeeded in receiving about 25 gas shipments so far, saying each ship carries about 150-200 thousand cubic feet of gas.
The sources indicated the process of importing gas will decline as of next October with the decrease in temperatures and the improvement in weather conditions and the consequent decrease in power consumption in the country.
The sources added, “The load of the ships is completely transferred to the tanks and pumped into the gas network and stored. The pumping is done at a rate of up to or more than 500 million cubic feet per day.”
It is worth noting that the LNG import project is the first of its kind in Kuwait and the Middle East and one of the largest LNG import facilities in the world in terms of storage capacity, as it can import about 22 million tons annually, with a total storage capacity of 1.8 million cubic meters and with the regasification — regasification is a process of converting liquefied natural gas (LNG) at 162 °C (260 °F) temperature back to natural gas at atmospheric temperature — capacity of a maximum of 3000 billion British thermal units per day.
Source: Zawya
ADNOC sees August 2022 Murban crude exports rising to 1.422 million b/d

Abu Dhabi National Oil Co. has maintained the forecast of its flagship Murban crude available for export from September 2021 to July 2022 and added a figure for August 2022.

ADNOC will export 1.422 million b/d of Murban in August 2022, it said in an Aug. 29 report. That compares with 1.13 million b/d in September 2021, with volumes rising to 1.407 million b/d in July 2022, as previously stated.
Murban is ADNOC's largest crude by volume, with a production capacity of about 2 million b/d of the company's total capacity of around 4 million b/d. It is produced from 2,000 onshore wells, and the national oil producer describes the grade as light and sweet.
ADNOC sets the official selling price for Murban crude using the monthly average of the Singapore marker price of Murban futures on the ICE Futures Abu Dhabi exchange, which go to delivery two months after the month of trade.
OSPs for ADNOC's Upper Zakum, Das and Umm Lulu grades are priced at a differential to the Murban OSP.
ADNOC set the September official selling price for Murban crude oil at $73.50/b, the fourth OSP issuance after the launch of the Murban Futures contract on the ICE Futures Abu Dhabi exchange. The August OSP was $72.34/b.
Murban is the second physically delivered futures contract to trade on a regional exchange after the Dubai Mercantile Exchange's Oman crude futures.
It is also a deliverable grade in the S&P Global Platts benchmark Dubai and Oman crude assessments.
Source: SP Global
Lebanon awards Dubai Enoc tender to swap Iraqi fuel oil

Lebanon has awarded its first ever tender to swap Iraqi fuel oil with a specific fuel oil grade and gasoil for use in its power plants.

Lebanon's energy ministry said that Dubai's state-owned Enoc won the tender to swap 84,000t (542,000 bl) of Iraqi fuel oil with 30,000t of a specific fuel oil grade and 33,000t (246,000 bl) of gasoil.
Iraqi fuel is unsuitable for Lebanon's power plants, and the country has been experiencing an acute power shortage that has resulted in severe rolling blackouts.
This tender is part of a deal that allows Lebanon's cash-strapped government to buy and resell 1mn t of heavy fuel oil from Iraq through monthly spot tenders — in cargoes of between 75,000-85,000t — for one year on behalf of Lebanon's main power provider Electricite du Liban (EDL). The deal, which was signed in late-July, should cover around one third of EDL's fuel needs, and therefore tie the country over for around four months.
The Iraqi fuel will be delivered to Enoc between 3-5 September and it will deliver cargoes to Lebanon two weeks later, the ministry said. Two other companies participated in the tender, including Kuwaiti trading firm IPG and Coral Energy.
Lebanon's power plants run on fuel oil and on gasoil with particular specifications. Of the two grades of fuel oil used — Grade A and Grade B — Enoc will supply the latter. According to tenders issued by the ministry, imported fuel oil should have a maximum sulphur content of 1pc and gasoil should have maximum sulphur content of 0.001pc (10ppm), which Iraqi refiners do not produce.
This announcement comes a few days after the Lebanese government increased fuel prices, having partially reduced subsidies on fuel oil prices. Lebanon's central bank, which manages the system of fuel imports, said on 11 August that that it would be ending fuel subsidies as the country can no longer afford to foot the bill. The value of the Lebanese pound has fallen by 90pc in two years and around half the population live below the poverty line. Power cuts last for several hours each day and streets full of cars queuing for rationed allowances of fuel have become a common sight.
Other efforts have been made to ease the fuel shortage. Lebanon's Hezbollah said on 19 August that it has arranged the first shipment of fuel oil from Iran to Lebanon, without specifying details. It is unclear whether the shipment has been made. Three LPG carriers will discharge in Lebanon later this month.
Source: Argus
Oman Bolsters Sohar Ship-Fuel Services in Bid to Rival UAE Port

Oman, the largest Arab oil producer outside of OPEC, is bolstering ship-fueling services at the container and commodities port of Sohar as it looks to rival the region’s busiest shipping terminal in the neighboring United Arab Emirates.

Sohar Port and Freezone signed an agreement with Muscat-based Hormuz Marine to begin offering bunkering, as vessel-fueling is known, services from the the middle of September, the shipping facility’s operator said in a statement. Bulking up options for refueling vessels as they unload or pass by could bolster Sohar’s effort to capture business that’s dominated by Dubai’s Jebel Ali.
The Omani port is located outside the Strait of Hormuz, a vital shipping chokepoint at the mouth of the Persian Gulf. About a fifth of global crude suppliers pass through Hormuz, an area that’s been plagued with attacks on tankers in recent years. Jebel Ali is located on the UAE’s Gulf coast inside of Hormuz.
Sohar is expanding to serve as a container, food and chemicals entrepot for the Arabian Peninsula. Hormuz Marine plans to offer low-sulfur fuel oil, heavier bunkers and marine gasoil to vessels at Sohar, according to the statement. The Omani shipping terminal is a joint venture between the sultanate and the Port of Rotterdam.
Oman’s Sohar Port Plans Oil-Product Storage After Expansion.
Oman, which can pump as much as 1 million barrels of crude a day, allied with the Organization of Petroleum Exporting Countries and other producers that aren’t in the group to restrict output and help bolster prices after the coronavirus pandemic throttled global energy demand.
Source: Bloomberg
Global oil majors may be joining race to acquire BPCL

Global oil majors may be teaming up with investment funds that are already in the race to acquire Bharat Petroleum Corporation Ltd (BPCL), a document detailing steps needed to complete India’s biggest privatisation showed.

Billionaire Anil Agarwal’s Vedanta group as well as two US funds — Apollo Global and I Squared Capital – had last year submitted initial bids to buyout the government’s entire 52.98 per cent stake in India’s third-biggest oil refiner and second-largest fuel retailer.
Detailing the ‘Next Step’, the ‘Brief Note on BPCL Disinvestment’ said Transaction Advisor and Asset Valuer are to submit an inception report, bidders have to complete due diligence of the company and sale purchase agreement has to be finalised.
Also, “security clearance” of bidders may be needed “since consortiums are being formed”, it said without giving details.
The bidding process allows for other interested parties to join and form a consortium with any one of the bidders which had submitted an expression of interest (EoI).
Firms run by Indian billionaires Mukesh Ambani and Gautam Adani as well as global oil majors such as Royal Dutch Shell, BP and Exxon did not submit an EoI for acquiring BPCL at the close of the deadline on November 16, 2020.
However, several top oil producers from the Middle East and Russia’s Rosneft were said to be interested in BPCL which would give the buyer access to over 14 per cent of India’s oil refining capacity and 23 per cent fuel market share. But they hadn’t submitted any bids.
Industry sources said it was possible that one of the global oil majors or a Middle East oil producer may be teaming up with the investment funds already in race.
Ambani’s Reliance Industries Ltd and Adani group are “extremely unlikely” to join the race, a source said.
Steel magnate Lakshmi N Mittal, who runs an oil refinery in Punjab in joint venture with Hindustan Petroleum Corporation Ltd, was considered a potential candidate but sources said he was not interested in BPCL whose acquisition will cost nearly Rs 80,000 crore at current market trading price.
The document showed financial bids will be called after submission of asset valuation report and business valuation report by Asset Valuer and Transaction Advisor respectively.
Reserve price will be fixed thereafter and price bids will be opened after that.
If its bid is accepted, the bidder quoting the highest price will be called to executive share purchase agreement and make payment.
Open offers required under the extant guidelines/approvals shall follow, it said.
BPCL owns 35.30 million tonnes of oil refining capacity spread over three refineries at Mumbai, Kochi in Kerala and Bina in Madhya Pradesh. It has 18,768 petrol pumps and 6,169 LPG distributors.
Source: Hellenic Shipping
UAE ADNOC awards offshore exploration block to Pakistan Petroleum-led consortium

The Abu Dhabi National Oil Company (ADNOC) said it has awarded exploration rights to its Offshore Block 5 in its second competitive bid round to a consortium of Pakistani companies led by Pakistan Petroleum Limited (PPL).

Under the terms of the agreement, the consortium will hold a 100 percent stake in the exploration phase, investing up to $304.7 million to explore for oil and gas in the block, the state-held giant which pumps nearly all the oil in the UAE said in a statement on Tuesday.
Other participants in the consortium are Mari Petroleum Company Limited (MPCL), Oil and Gas Development Company Limited (OGDCL), and Government Holdings (Private) Limited (GHPL). This is the first time ADNOC has awarded an exploration concession to Pakistani energy companies, the statement said.
If the exploration is successful, the consortium will have the right to a production concession to develop and produce the commercial discoveries. ADNOC has the option to hold a 60 percent stake in the production phase of the concession. The term of the production phase is 35 years from the commencement of the exploration phase.
In addition to drilling exploration and appraisal wells, the consortium will contribute financially and technically to ADNOC’s mega seismic survey, which is acquiring 3D seismic data within the block area.
As part of Abu Dhabi’s second block bid round, ADNOC awarded Offshore Block 4 to a wholly-owned subsidiary of Cosmo Energy Holdings Co., Ltd.; Offshore Block 3 to a consortium led by wholly-owned subsidiaries of Eni and PTT Exploration and Production Public Company Ltd.; and Onshore Block 5 to Occidental. Estimates suggest the blocks in this second bid round hold “multiple billion barrels of oil and multiple trillion cubic feet of natural gas,” the oil company said.
Source: Zawya
SABIC JV in deal to build $6bln China petrochem complex

Saudi Basic Industries Corporation (Sabic) has signed an agreement to build a petrochemical complex in China at an investment of RMB40 billion ($6.15 billion) in a joint venture with Fujian Petrochemical Industrial Group.

The two companies will set up a 51:49 joint venture after receiving approval from the relevant Chinese government authorities.
The project will include a mixed feed steam cracker, numerous downstream facilities and several by-product units. It will boast a ethylene capacity of 1.5 million MT per year, senior company officials said after signing the online agreement.
The scope of work includes a series of downstream production units, including an ethylene glycol (MEG) unit, two sets of polyethylene (PE) unit, two of polypropylene (PP) units, a polycarbonate and other production units.
Source: Zawya
Iraq on track for Karbala refinery start-up next year

Iraq is testing power generation systems at its new 140,000 b/d Karbala refinery ahead of start-up next year. The plant, which was originally due on stream in 2018, is the country's first new downstream facility in decades.

Oil minister Ihsan Ismael visited the site earlier this week to inaugurate an administration building. Trials on the refinery's electrical power generation systems are under way, and "the process of introducing the rest of the production units is coming along", the oil ministry said.
A South Korean consortium led by Hyundai was awarded a $6.4bn construction contract for the refinery back in 2014. But the project has been beset by delays because of pressure on Iraq's finances, which have been exacerbated in the last 18 months by the Covid-19 pandemic. In May, the oil ministry said the refinery was more than 90pc complete and should be fully on stream in September 2022 after trial runs in the first quarter of next year.
The refinery will be an important addition to Iraq's downstream sector, serving growing domestic demand for oil products as well as fuelling a new power plant at Al-Khairat in the Karbala governorate.
Gasoline-producing units have already been completed, including a fluid catalytic cracker and a poly-naphtha unit that will produce gasoline with an octane rating of 95 and 90. Iraq's refineries currently produce 77 Ron, 82 Ron, 87 Ron and 93 Ron gasoline. The refinery will also produce LPG, jet fuel, gasoil, fuel oil and asphalt — all meeting standards equivalent to European production.
Source: Argus
Iraq SOMO may base future pricing of spot oil sales on benchmarks rather than OSPs

Iraq's State Oil Marketing Organization may base future pricing of spot oil sales on benchmarks rather the current practice of linking them to its official selling prices to eke out more profit for its crudes, its deputy director general told S&P Global Platts.

"All options are open," Ali al-Shatari said in a Sept. 1 interview. "If the market is really strong, why not link our spot cargoes directly to the benchmarks. It might happen to change to that mechanism when the market conditions allow so not to make losses but also to make a better profit out of it."
Several Middle East crude grades trade in the spot market against benchmark Platts Dubai crude assessments, which are also widely used in the official selling prices set by the region's producers. Since the launch of ICE Futures Abu Dhabi exchange in March this year, Abu Dhabi grades including Murban, Das Blend, Upper Zakum and Umm Lulu also trade in the spot market against the Dubai benchmark.
Iraq, OPEC's second biggest oil producer, usually issues a monthly tender for spot cargos that are normally sold at a premium or discount to its OSPs.
OSP `sensor'
For now, Iraq is using the OSPs basis because it wants to gauge interest and pricing for its crude, Shatari said.
"We are keeping this tool (of linking to OSPs) for the time being not only on selling for a better price but also as a sensor for OSPs," Shatari said. "With the current fast changes and the volatility in the market, we would need a sensor to tell us how our OSPs are preforming."
SOMO crude grades in the spot market have recently traded at sharp discounts to the respective OSPs, especially for Basrah Heavy, sources say.
In August, a September-loading Basrah Heavy cargo was sold at a discount of around $2.3/b-$2.5/b to its official selling price while trades for Basrah Medium were at discounts of around 30-50 cents/b to its OSP, traders said.
Prompt loading dates as well as a lengthy loading program along with weaker demand from Asian buyers for the Medium and Heavy sour grades were stated as key reasons for the drop in spot differentials, sources say.
In July, SOMO issued a tender offering 2 million barrels of August loading Basrah Medium crude which saw limited buying interest from Asian refiners, sources said.
SOMO also offered Basrah Medium cargoes during the Platts Market on Close assessment process and received bids in discounts with the highest bid at a discount of 15 cents/b to the grade's OSP. SOMO decided not to award the tender.
Spot cargo schedule
Apart from weak demand for medium and heavy grades, the higher official selling prices of Middle East crudes also weigh on sentiment among Asian buyers, traders say.
Market participants are waiting for the issuance of OSPs by Middle East producers for October with a sharper cut expected compared to previous months which is necessary to make the region's crude more affordable to buyers, a trader in Singapore said.
SOMO also may in the future issue spot tenders for cargoes loading two months ahead instead of the usual one month ahead schedule, Shatari said.
"Basically, for the spot cargoes we do a kind of review and study on market conditions and where the market is in need for more crude and where the market is not in need of more crude," Shatari said.
"Issuing a tender for the next month or issuing a tender for a month after depends on how far we can go to give trading opportunities for bidders."
October-loading cargo
In August, SOMO issued a tender for 2 million barrels of its Basrah Medium crude for loading in October and also provided some incentives to entice buyers.
"Taking into account that the market wasn't very strong over the [loading] months of September and August, we did a tender for October, two months ahead so that to give even more opportunities for the bidders to participate and to purchase," said Shatari. "The incentives and tender terms and conditions should be changeable and flexible in order to reflect what the market needs and what the customer needs so that we can sell that cargo with the best prices we can get."
SOMO, however, decided to sell the cargo to a term customer to get a better price for it. He declined to name the customer
"We sold it to one of our customers based on the term contract because the tender didn't really give a good price for that cargo and some of our customers prefer to take it to their own refineries rather than trading it," Shatari said. "Whenever there is strength in one side of the market, we will capture it."
Source: SP Global
Saudi Arabia may cut October crude prices for Asia
Top oil exporter Saudi Arabia is expected to cut prices for most crude grades it sells to Asia in October after Middle East benchmark Dubai weakened last month, a poll of six refiners showed.
The official selling price (OSP) for flagship Arab Light crude is expected to fall by 20-40 cents a barrel in October, tracking a 17-cent drop in Dubai's market structure, four of the respondents said. The remaining two expect prices to drop more than $1 a barrel.
That would mark the first Saudi price reduction in five months and comes after the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, agreed in July to ease supply cuts by 400,000 barrels per day (bpd) every month between August and December.
OPEC+ agreed on Wednesday to stick to this agreement which will see the group releasing 400,000 bpd to the market in October, after releasing the same amount in September. The group will meet again on Oct. 4.
Tight supplies have been supporting Saudi prices with Arab Heavy crude's OSP hitting its highest level since 2012 while other grades are at their loftiest since early 2020.
Saudi crude prices are "too far from where (the) spot market is", one respondent said, referring to last month's trade.
Spot premiums for October-loading Middle East light sour crude fell about 50 cents a barrel from the previous month while Banoco Arab Medium, similar to Saudi oil, was valued at discount to its OSP, traders said. Higher Iraqi supplies have also depressed September-loading Basra Heavy crude into deep discount of $2 a barrel to its OSP, they added.
"Prices definitely have to correct down," a second trader said, although the extent of cuts will depend on how much Saudi Aramco takes into account of what took place in the spot market.
Respondents were split about the price outlook for heavier Saudi crude as similar supplies traded lower but these grades also yield more fuel oil, for which margins and demand have risen.
Two respondents expected prices for Arab Medium and Arab Heavy to stay flat or rise by up to 40 cents, while three others called on Saudi to cut prices by 70 cents to $1.50. The sixth said it was hard to provide estimates.
Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 9 million barrels per day (bpd) of crude bound for Asia.
State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.
Saudi Aramco officials as a matter of policy do not comment on the kingdom's monthly OSPs.
Source: Zawya
Oil product stocks fall to pre-pandemic level for first time

Stockpiles of oil products at the UAE’s Port of Fujairah fell to a near two-year low, returning to levels prior to the COVID-19 pandemic for the first time, helped by increased demand for fuel oils for power generation and shipping that has pushed up prices.

The stockpiles were at 17.68 million barrels as of Aug. 30, down 3.3% from a week earlier and the lowest since Sept. 9, 2019, according to the Fujairah Oil Industry Zone data provided exclusively to S&P Global Platts on Sept 1. Heavy distillates, or fuel oils, dropped 5.1% on the week to 8.245 million barrels, the lowest since March 29. Heavy distillates dropped for the third straight week as of Aug. 30 and were down sharply by 46.8% compared with a year earlier.
An uptick in cargo throughput and vessel activity has fueled shipping activity in the Middle East, with Oman’s Sohar Port and Freezone the latest entrants in bunkering by mid-September. The increased demand and tight barge availability were reflected in rising prices at Fujairah, with the Fujairah-delivered 380 CST HSFO assessments up 11% since Aug. 19 at $445/mt as of Aug. 31, and the highest since September 2019, according to Platts data.
“Fujairah is seeing growing shipping demand for HSFO, while China’s independents are buying HSFO to use as an alternative refining feedstock, due to lack of crude import quotas,” Manish Sejwal, Asia oil markets analyst at S&P Global Platts Analytics, said. “There is also robust power generation demand in the Middle East so far, leading to increased demand for fuel oils,” he said.
Total inventories being lowest since Sept. 9, 2019, showed “tightened balance of fuel oil due to a combination of reduced supply and surging demand,” Sejwal said.
Middle distillates including jet fuel and diesel declined 7.2% on the week to 3.675 million barrels as of Aug. 30, the lowest in three weeks. Light distillates including gasoline and naphtha rose for a fourth consecutive week, climbing 2.3% to a five-week high of 5.762 million barrels.
Total stockpiles fell 33.7% over the past year as of Aug. 30, with light distillates down 18.4% and middle distillates off by 11.1%, the data showed.
Source: Hellenic Shipping