Chinese oil demand to peak before 2030: CNPC
China's petrochemical needs will fuel oil demand growth while a slowdown in incremental oil demand in the transportation sector will contribute to a peak in overall oil consumption before 2030, according to the latest forecast by state-controlled CNPC's research arm the Economics and Technology Research Institute (ETRI).
Chinese oil demand is expected to peak at 18.2mn b/d (780mn t/yr) before 2030, with the petrochemicals sector driving oil demand through 2030. But oil demand is forecast to drop to 8.8mn b/d by 2050 and 5.4mn b/d by 2060.
This will exacerbate the oversupply in refining capacity after 2030, requiring refiners to increase production of higher-end products, rather than transportation fuels, as part of energy transition efforts, the ETRI said. Beijing has already outlined a crude distillation capacity limit of 20mn b/d for Chinese refining capacity in 2025.
Electrification, or the use of electric vehicles, will be especially rapid in the transportation sector between 2031-50. This will reduce gasoline and diesel demand, although petrochemicals demand is still expected to be relatively stable during this period.
Demand for oil products including gasoline, diesel and jet fuel could peak at 8.4mn b/d by 2025 and decline to 1.3mn b/d by 2060, driven by the rise of new energy vehicles (NEVs) and development of railways. Chinese apparent products demand, including gasoline, diesel and jet fuel, averaged 6.9mn b/d in January-November, data from the National Bureau of Statistics and Customs Bureau show.
China's auto fleet still has room to grow, the ETRI said. NEVs will account for 10pc of China's total auto fleet in 2028, and rise to 80pc in 2052. NEVs currently account for just 2.3pc of vehicles in China.
China's auto sales in 2022 are expected to rise by 5.4pc from a year earlier to 27.5mn, with NEVs leading the increase, according to the China Association of Automobile Manufacturers (CAAM).
Sales of NEVs are forecast to rise by 47pc to 5mn in 2022, the CAAM said.
The country's primary energy consumption could also peak during 2030-35, at around 6bn t of standard coal equivalent (tce), then decline to 5.7bn tce by 2060 as renewables production rises, according to the ETRI. China only just met its 2020 consumption target of 5bn t tce with demand of 4.98bn tce.
The ETRI has also forecast Chinese coal demand to peak by 2025, and gas demand by 2040.
The institute expects Chinese crude production to remain at around 4mn b/d before 2035 but for natural gas output to grow at a faster pace, reaching 250bn m³/yr by 2030 and 350bn m³/yr by 2060. Chinese crude output averaged 100,000 b/d or 3pc higher on the year at 3.94mn b/d in January-November. Gas output rose by 8.9pc on year to 186bn m³ in January-November.
For 2021, national crude output is expected at 3.98mn b/d and gas output at 206bn m³, the National Energy Administration said.
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Australia’s Ichthys LNG to restart liquefaction train
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Singapore, 26 July (Argus) — The second liquefaction train at Australia's 9.3mn t/yr Ichthys LNG export terminal plans to resume partial operations today, after going off line unexpectedly during 18-19 July, according to traders. The export facility is operated by Japanese upstream firm Inpex. Repairs at the affected train could take up to a month before it returns to full production, although the train is expected to restart by this weekend, according to market participants. Attempts to restart train two could take place by 26 July. Some delays to deliveries from the facility are expected, although there are also unconfirmed reports that up to two cargoes may have already been cancelled at the time of writing. The overall impact on the market is likely to be limited for now, with continuing weak spot demand from northeast Asian importers. Some term buyers previously requested for their deliveries to be deferred, traders said, although it is unclear just how many requests for deferment were received. But other participants have pointed out that the winter restocking season could soon start and any further impediments to train two's restart could lift prices. Recent temperatures in Japan have been higher than expected, with at least a 70pc probability of above-normal temperatures over the vast majority of the country until 23 August, according to the latest forecast issued by the Japan Meteorological Agency on 25 July. At least one Japanese utility may be considering spot purchases for August, owing to higher-than-expected power consumption because of warmer temperatures. But at least two other Japanese firms could be looking to sell a September and an October cargo each, traders said, which could indicate that the spot market is still sufficiently well-supplied to cope with additional demand from Japanese utilities. The 174,000m³ Grace Freesia departed from Ichthys on 25 July after loading an LNG cargo, according to ship tracking data from Kpler. The export terminal sold a spot cargo for loading over 2-6 June at around high-$9s/mn Btu through a tender that closed on 10 May, but further details are unclear. The US' 17.3mn t/yr Freeport export terminal also faced issues restarting since it was first taken off line on 7 July as a precautionary measure against Hurricane Beryl. The terminal loaded its first cargo on 21 July . All three trains are likely to be back on line as of 26 July, although production at the facility should still be closely monitored, traders said. By Naomi Ong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Technical issues shut Japanese crackers, delay restarts
Technical issues shut Japanese crackers, delay restarts
Singapore, 26 July (Argus) — A series of technical issues forced Japanese cracker operators to shut their units or delay restarts in July, resulting in lower olefins output and higher spot demand. Idemitsu Kosan shut its naphtha cracker in Tokuyama, Yamaguchi prefecture on 15 July, because of gas leakage at its complex. The cracker can produce up to 623,000 t/yr ethylene and 370,000 t/yr propylene. Associated downstream units at the Tokuyama site are likely still operating, resulting in spot demand for prompt ethylene cargoes in the Japanese market, according to market participants. The restart date of the cracker remains unclear, with some market sources saying that the cracker could be on line again in first-half of August. But others said the cracker will be off line until end of August to coincide with Idemitsu Kosan's planned maintenance schedule. Idemitsu Kosan originally planned to shut the Tokuyama-based cracker in September for a 50-day turnaround. The firm declined to comment on the turnaround schedule, citing that the cracker remains shut and it is unsure when it can resume operations. Mitsui's cracker in Sakai, Osaka prefecture also encountered technical issues during its cracker restart. The producer has completed the turnaround, which took place in early July, but will need to procure equipment to address technical issues for the cracker start-up, market participants said. Mitsui's cracker has a nameplate capacity of 600,000 t/yr of ethylene and 280,000 t/yr of propylene. Fellow producer Maruzen Petrochemical also delayed the restart of its cracker in the Chiba prefecture. The cracker was shut on 15 May and was supposed to restart by mid-July. The shutdown has been extended to the end ofJuly, according to market participants. The reason behind the extensions were unclear. Maruzen's Chiba cracker has a production capacity of 525,000 t/yr of ethylene and 335,000 t/yr of propylene. Tighter supplies Shutdown extensions and sudden outages at crackers have tightened olefins supplies in northeast Asia, with Chinese market participants reporting limited offers this week. Asian ethylene prices in the cfr northeast Asia market rose slightly this week to $860-880/t, up by $8/t from the last session, according to Argus ' latest assessments on 24 July. Japan experienced a heavy cracker turnaround season this year, with four crackers conducting scheduled maintenance in the first-half of 2024. Eneos' cracker in Kawasaki prefecture was shut from 5 March until mid-May. Tosoh's Yokkaichi cracker in Mie prefecture was also shut for maintenance from 4 March to the end of April. Keiyo Ethylene's cracker in Chiba prefecture went off line on 10 April for a 14-day planned maintenance. Mitsubishi Chemical's cracker in Kashima, Ibaraki prefecture was shut from May to June. Total ethylene exports from Japan this year are expected to fall from the previous year because of heavy cracker turnarounds. Japan's ethylene exports were at 239,642t during January-May, down by 5,733t from the same period in 2023, according to GTT data. Imports were at 20,296t from January to May, up by 13,500t or almost tripling on the year. By Nanami Oki, Brian Leonal and Toong Shien Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s Empire Energy signs deal to sell gas to NT
Australia’s Empire Energy signs deal to sell gas to NT
Adelaide, 26 July (Argus) — Australian independent Empire Energy has signed an agreement to supply the Northern Territory (NT) with gas from its Carpentaria project in the onshore Beetaloo subbasin. Empire will supply NT with up to 25 TJ/d (668,000 m³/d) of gas over 10 years, starting from mid-2025. This equates to an estimated total supply of 75PJ (2bn m3) of gas. The deal includes scope for an additional 10 TJ/d for up to 10 years if production level at the Carpentaria plant exceeds 100 TJ/d. The firm bought domestic utility AGL Energy's dormant 42 TJ/d Rosalind Park gas plant late last yearwith plans to reassemble the facility on site at Carpentaria, subject to a final investment decision on the project. Gas will be delivered to the NT government-owned Power and Water (PWC) via the McArthur River gas pipeline on an ex-field take-or-pay basis, Empire said on 26 July. PWC in April signed an agreement to buy 8.6PJ of gas from Australian independent Central Petroleum , to supply gas-fired power generation and private-sector customers. Low production at Italian energy firm Eni's Blacktip field, offshore the NT, has led PWC to court new supply while providing a new outlet for prospective producers operating within Beetaloo. The largest Beetaloo acreage holder, Tamboran Resources, has revealed ambitious plans for a 6.6mn t/yr LNG plant to be located near Darwin Harbour's two existing LNG projects, using the basin's shale gas resources as feedstock. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
South Africa adopts climate change law
South Africa adopts climate change law
Cape Town, 25 July (Argus) — South Africa's president Cyril Ramaphosa has signed into law the country's climate change bill, which sets out a national response to climate change for the first time. The new climate change act will enable the orderly reduction of greenhouse gas (GHG) emissions through the implementation of sectoral emission targets towards South Africa's commitment to reach net zero by 2050. Currently, the country is the 15th largest GHG emitter in the world, according to the World Resources Institute. The law provides policy guidelines to ensure South Africa reaches its nationally determined contribution (NDC) under the Paris climate agreement by assigning individual enterprises carbon budgets and facilitating public disclosure of their progress. In its updated 2021 NDC, the country has undertaken to cut its GHG emissions to 350mn-420mn t of CO2 equivalent (CO2e), equivalent to 19-32pc below 2010 levels, by 2030. The lower end of this range is in line with the Paris Agreement's 1.5°C global warming threshold. To meet this, South Africa will have to achieve a steep decline in coal-fired electricity generation. A carbon tax is seen as a vital component of the country's mitigation strategy, according to the president. "By internalising the cost of carbon emissions, carbon tax incentivises companies to reduce their carbon footprint and invest in cleaner technologies, and also generates revenue for climate initiatives," Ramaphosa said. South Africa's carbon tax was introduced in a phased approach in June 2019 at a rate of 120 rands/t ($7/t) of CO2 equivalent (CO2e) and increased to R134/t of CO2e by the end of 2022. But tax-free allowances for energy-intensive sectors such as mining, and iron and steel, along with state-owned utility Eskom's exemption, implied an initial effective carbon tax rate as low as R6-48/t of CO2e. South Africa's National Treasury is targeting an increase to $30/t of CO2e by 2030. But the extension of phase one from the end of 2022 to the end of 2025, together with an uncertain future price trajectory and lack of clarity on future exemptions, means the effective carbon tax rate is likely to remain well below the IMF's recommended $50/t of CO2e by 2030 for emerging markets. The new climate change act seeks to align South Africa's climate change policies and strengthen co-ordination between different departments to ensure the country's transition to a low-carbon and climate-resilient economy is not constrained by any policy contradictions. It outlines South Africa's planned mitigation and adaptation actions aimed at cutting GHG emissions over time, while reducing the risk of job losses and promoting new employment opportunities in the emerging green economy. The law also places a legal obligation on provinces and municipalities to ensure climate change risks and associated vulnerabilities are acted upon, while providing mechanisms for national government to offer additional financial support for these efforts. The new act formally establishes the Presidential Climate Commission (PCC) as a statutory body tasked with providing advice on the country's climate change response. Among other things, the PCC is developing proposals for a just transition financing mechanism, for which a platform will be launched in the next few months. Over the last three years, South Africa has seen an increase in extreme weather events often with disastrous consequences for poor communities and vulnerable groups. To address the substantial gap between available disaster funds and the cost of disaster response, the government announced in February that it would establish a climate change response fund. At the time of the announcement, Ramaphosa reiterated that South Africa would undertake its just energy transition "at a pace, scale and cost that our country can afford and in a manner that ensures energy security". Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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