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Iraq unlikely to increase crude exports in near term

  • Market: Condensate, Crude oil, Natural gas
  • 20/04/22

Iraq is "unlikely to export more crude" in the near term, but a reduction in its refined product import bill should free up investment for upstream capacity growth longer term, according to Iraqi finance minister Ali Allawi.

Iraq's reliance on oil product imports will fall when the country's new 150,000 b/d Karbala refinery comes on stream next year, Allawi told Washington-based think tank the Atlantic Council. "We are major importers of petroleum by-products because domestic refining is insufficient. So, as much as we are able to save on imports, there will be more resources available [to invest in crude capacity]," he said.

Iraq has been struggling to meet its Opec+ crude production quota of late. It fell 130,000 b/d short of its 4.37mn b/d target in March, according to Argus estimates.

Allawi defended Iraq's continued commitment to Opec. "The argument why Iraq should stay in Opec has been reaffirmed recently," he said, pointing to the fact that rising oil prices have more than offset the financial impact of the group's production cuts implemented in 2020. "Opec's oil cutbacks, which were driven mainly by Saudi Arabia, is a successful policy undoubtedly, and played a part in raising oil prices way beyond our production cutbacks," he said.

The wider Opec+ coalition has been urged repeatedly by major consumer nations such as the US to unwind its cuts more rapidly to soften oil prices and help guard against any supply disruptions stemming from Russia's invasion of Ukraine. But the group has stuck to its guns and followed its previously agreed strategy for gradual monthly increments, straining relations between Washington and Saudi Arabia, Opec's largest producer.

Allawi sought to avoid blame for high energy prices, saying Iraq is "basically a follower and does not set policy in Opec". But the minister did acknowledge, albeit apologetically, that Opec has been "a successful cartel" and that it would be "rather foolish to pull out from a successful cartel".

Gas arrears

Allawi also raised the problem of paying for Iranian gas imports, which account for 30pc of Iraq's electricity production. US sanctions against Tehran mean Baghdad's payments are frozen in Iraq's central bank, putting it in arrears with its neighbour.

Allawi said his visit to Washington this week for the annual spring meetings of the IMF and the World Bank is in principle aimed at strengthening "relations with international institutions", but the minister said he will also hold talks with the US Treasury about "important outstanding issues not necessarily related to American economic support". These talks could broach the subject of Iran's frozen funds in Iraq.

Iraq remains "gas deficient and will need to continue importing to meet its needs", Allawi said, possibly hinting at the need to maintain gas imports from Iran regardless of the outcome of the now-stalled talks to revive the Iran nuclear deal. The US has been encouraging Iraq to further develop its domestic production to cut gas and electricity imports from Iran. But US development finance for Iraq has been limited to projects that capture flared gas or extend transmission lines to Iraq's Mideast Gulf Arab neighbours.

Iraq's gas flaring is down by "nearly a third after the full operation of Iraq's Shell-led Basrah Gas", Allawi said, adding that flaring will be reduced by another 30pc over the next four years as TotalEnergies gets involved in major gas gathering projects.


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24/07/24

Indian budget lifts spending for refining, crude SPR

Indian budget lifts spending for refining, crude SPR

Mumbai, 24 July (Argus) — India allocated 1.19 trillion rupees ($14.2bn) to the oil ministry in its budget for the 2024-25 fiscal year ending 31 March, up from Rs1.12 trillion in the 2023-24 revised budget. The budget presented by finance minister Nirmala Sitharaman on 23 July was the first since the BJP-led administration was re-elected in June . Indian state-controlled refiner IOC was allocated Rs273bn for 2024-25, up from Rs270bn in the revised budget for 2023-24. Bharat Petroleum (BPCL) received an increased allocation of Rs110bn, up from 95bn, while Hindustan Petroleum (HPCL) was allotted Rs107bn that was up from Rs102bn previously. No capital support was allocated to the oil marketing companies in the budget given IOC, BPCL and HPCL all reported record profits in 2023-24. India's crude import dependency rose to 88.3pc in April-June from 88.8pc the previous year, oil ministry data show. India's crude imports during January-June were up by around 1pc on a year earlier at 4.65mn b/d, according to Vortexa data. ONGC's allocation rose to Rs308bn for 2024-25, while fellow state-controlled upstream firm Oil India's increased to Rs68bn from Rs305bn and Rs56bn rupees respectively in the revised budget for 2023-24. India has been trying to reduce its dependence on imports and will offer 25 oil and gas blocks in the tenth bidding round in August or September under the Hydrocarbon Exploration and Licensing Policy's Open Acreage Licensing Programme (OALP). It offered 136,596.45km² in 28 upstream oil and gas blocks in the ninth bidding round. ONGC in January secured seven of the 10 areas of exploration blocks offered under India's eighth OALP round. A private-sector consortium of Reliance Industries and BP, Oil India and private-sector Sun Petrochemicals received one block each. Allocation for the Indian Strategic Petroleum Reserve (SPR) received a push to Rs4.08bn for the construction of caverns under its second phase against Rs400mn in the previous budget. The first phase of India's SPR built 1.33mn t (9.75mn bl) of crude storage at Vishakhapatnam, 1.5mn t at Mangalore and 2.5mn t at Padur. A provision of Rs119.25bn was made for LPG subsidies in 2024-25 compared with spending of Rs122.4bn in 2023-24. By Roshni Devi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Repsol 2Q profit doubles but cash flow turns negative


24/07/24
News
24/07/24

Repsol 2Q profit doubles but cash flow turns negative

Madrid, 24 July (Argus) — Spanish integrated Repsol's profit more than doubled on the year in the second quarter, as lower one-time losses and better results in the upstream and customer divisions more than offset a weaker refining performance. But its cash flow turned negative as it completed the buyout of its UK joint venture with China's state-controlled Sinopec, raised investments and experienced weaker refining margins. Net debt was sharply higher, largely reflecting share buy-backs. Repsol has said it will acquire and cancel a further 20mn of its own shares before the end of the year, which will probably further increase its debt. It completed a 40mn buy-back in the first half of the year. Repsol's profit climbed to €657mn ($714mn) in April-June from €308mn a year earlier, when earnings were hit by a large provision against an arbitration ruling that obliged it to acquire Sinopec's stake in their UK joint venture. Excluding this and other special items, such as a near threefold reduction in the negative inventory effect to €85mn, Repsol's adjusted profit increased by 4pc on the year to €859mn. Repsol confirmed the fall in refining margins and upstream production reported earlier in July . Liquids output increased by 3pc on the year to 214,000 b/d, and gas production fell by 4pc to 2.1bn ft³/d. Adjusted upstream profit increased by 4pc on the year to €427mn. The higher crude production and a 13pc rise in realised prices to $78.6/bl more than offset lower gas production and prices, which fell by 6pc to $3.1/'000 ft³ over the same period. Adjusted profit at Repsol's industrial division — which includes 1mn b/d of Spanish and Peruvian refining capacity, an olefins-focused petrochemicals division, and a gas and oil product trading business — was down by 16pc on the year at €288mn. Profit fell at the 117,000 b/d Pampilla refinery in Peru after a turnaround and weak refining margins, and there was lower income from gas trading. Spanish refining profit rose on a higher utilisation rate and gains in oil product trading. Repsol's customer-focused division reported adjusted profit of €158mn in April-June, 7pc higher on the year thanks to higher retail electricity margins, a jump in sales from an expanded customer base, higher margins in aviation fuels and higher sales volumes in lubricants. Repsol swung to a negative free cash flow, before shareholder remuneration and buy-backs, of €574mn in the second quarter, from a positive €392mn a year earlier. After shareholder remuneration, including the share buy-backs and dividends, Repsol had a negative cash position of €1.12bn compared with a positive €133mn a year earlier. Repsol's net debt more than doubled to €4.595bn at the end of June from €2.096bn on 31 December 2023, reflecting the share buy-backs and new leases of equipment. By Jonathan Gleave Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Equinor 2Q profit supported by higher European output


24/07/24
News
24/07/24

Equinor 2Q profit supported by higher European output

London, 24 July (Argus) — Norway's state-controlled Equinor posted a small rise in profit on the year in the April-June period, as a lift in its European production offset lower gas prices. Equinor reported a profit of $1.87bn in the second quarter, up by 2.2pc on the year but down by 30pc from the first three months of 2024. The company paid two Norwegian corporation tax instalments, totalling $6.98bn, in the second quarter, compared with one in the first quarter. Equinor paid $7.85bn in tax in April-June in total. Its average liquids price in the second quarter was $77.6/bl, up by 10pc from the second quarter of 2023. But average gas prices for Equinor's Norwegian and US production fell in the same period by 17pc and 6pc, respectively. The company noted "strong operational performance and lower impact from turnarounds" on the Norwegian offshore, including new output from the Breidablikk field . Equinor's entitlement production was 1.92mn b/d of oil equivalent (boe/d) in April-June, up by 3pc on the year. The company cited "high production" from Norway's Troll and Oseberg fields in the second quarter, as well as new output from the UK's Buzzard field. But US output slid, owing to offshore turnarounds and "planned curtailments onshore to capture higher value when demand is higher", the company said. It estimates oil and gas production across 2024 will be "stable" compared with last year, while its renewable power generation is expected to increase by around 70pc across the same timespan. Equinor's share of power generation rose by 14pc on the year to 1.1TWh in April-June. Of this, 655GWh was renewables — almost doubling on the year — driven by new onshore wind capacity in Brazil and Poland. "Construction is progressing" on the UK's 1.2GW Dogger Bank A offshore windfarm , Equinor said. It is aiming for full commercial operations in the first half of 2025 at Dogger Bank A — a joint venture with UK utility SSE. Equinor was granted three new licences in June to develop CO2 storage in Norway and Denmark. The Norwegian licences — Albondigas and Kinno — together have CO2 storage potential of 10mn t/yr. The Danish onshore licence, for which Equinor was awarded a 60pc stake, has potential capacity of 12mn t/yr. Equinor has a goal of 30mn-50mn t/yr of CO2 transport and storage capacity by 2035. The company's scope 1 and 2 greenhouse gas (GHG) emissions amounted to 5.6mn t/CO2 equivalent (CO2e) in the first half of the year, edging lower from 5.8mn t/CO2e in January-June 2023. It also incrementally cut its upstream CO2 intensity, from 6.7 kg/boe across 2023, to 6.3 kg/boe in the first half of this year. Equinor has kept its ordinary cash dividend steady , at $0.35/share, and will continue the extraordinary cash dividend of $0.35/share for the second quarter. It will launch a third $1.6bn tranche of its share buyback programme on 25 July. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US House passes waterways bill


23/07/24
News
23/07/24

US House passes waterways bill

Houston, 23 July (Argus) — The US House of Representatives overwhelmingly approved a bill on Monday authorizing the US Army Corps of Engineers (Corps) to tackle a dozen port, inland waterway and other water infrastructure projects. The Republican-led House voted 359-13 to pass the Waterways Resources Development Act (WRDA), which authorizes the Corps to proceed with plans to upgrade the Seagirt Loop Channel near Baltimore Harbor in Maryland. The bill also will enable the Corps to move forward with 160 feasibility studies, including a $314mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. Water project authorization bills typically are passed every two years and generally garner strong bipartisan support because they affect numerous congressional districts. The Senate Environment and Public Works Committee unanimously passed its own version of the bill on 22 May. That bill does not include an adjustment to the cost-sharing structure for lock and dam construction and other rehabilitation projects. The Senate's version is expected to reach the floor before 2 August, before lawmakers break for their August recess. The Senate is not scheduled to reconvene until 9 September. If the Senate does not pass an identical version of the bill, lawmakers will have to meet in a conference committee to work out the differences. WRDA is "our legislative commitment to investing in and protecting our communities from flooding and droughts, restoring our environment and ecosystems and keeping our nation's competitiveness by supporting out ports and harbors", representative Grace Napolitano (D-California) said. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Gas discovery could extend Bolivia's export life


22/07/24
News
22/07/24

Gas discovery could extend Bolivia's export life

Sao Paulo, 22 July (Argus) — The estimated 1.7 Tcf of natural gas in Bolivia's Mayaya Centro-X1 field would expand the country's exporting capacity in 4-5 years but not much beyond that, according to market participants. The discovery — the largest find in Bolivia since 2005 and the first in the north of the country — was well-received in Bolivia and in neighboring countries. But some are skeptical about whether it actually holds 1.7 Tcf. "The government may be jumping to conclusions given the elements available so far," a hydrocarbons market consultant told Argus . Prior to the discovery, Bolivia was expected to cease exporting gas in 2030. By then, considering proved reserves, production will only be enough to supply domestic demand. Additionally, there are some logistics concerns, as the region around the Mayaya Centro-X1 field has no infrastructure for further exploration or pipeline transport systems. The mayor of the Bolivian capital La Paz, Iva Arias, said a hydrocarbons field would take 2-5 years to produce and start yielding royalties for the city. But if the reserves are indeed proven, the discovery would change Bolivia's natural gas reality, as its reserves dropped by around 70pc in the last decade. The expectations surrounding the find are added to the increasingly public animosity between President Luis Arce and former-president Evo Morales, his former boss. Both are claiming credit for the discovery and will use it to promote their 2025 presidential runs . Bolivia is still the largest exporters of natural gas to Brazil. State-controlled Petrobras and Bolivia's state-owned YPFB are partners in four Bolivian fields. Only four days prior to Mayaya Centro-X1 announcement, newly-appointed Petrobras chief executive Magda Chambriard visited Bolivia with Brazilan President Luiz Inacio Lula da Silva and announced plans to invest $40mn to drill an exploratory well in San Telmo Norte in 2025. Brazilian company Flxus also plans to invest in Bolivian gas . By Betina Moura Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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