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IEA sees no slowdown in refining capacity additions

  • Spanish Market: Crude oil, LPG, Oil products, Petrochemicals
  • 09/03/20

The IEA said today that refining capacity additions will sharply outpace product demand growth in the next five years, as consumption of road fuels stagnates.

It said global oil demand will grow by around 950,000 b/d each year in 2020-25, which would be one-third slower than growth in the last 10 years. Transport fuel markets will bear the brunt of this change, as engine efficiency improves and electric vehicles take greater market share.

The increase in demand for refined products, of around 4.4mn b/d in total over that period, will be surpassed by refiners adding 6.2mn b/d of capacity, it said. More than 70pc of those capacity additions are in countries that are already net exporters of refined products.

The IEA said the weakest growth in demand over the 2020-25 period, at just 90,000 b/d per year on average, will be for gasoline. By the end of the forecast period, improved efficiency standards and electrical vehicle uptake will curb this demand growth to just 50,000 b/d per year, it said. Demand will decline in the US, the world's largest gasoline market, and in much of the OECD, and this will be barely offset by gains in China and elsewhere.

It expects diesel demand to hardly perform better, growing on average by 110,000 b/d per year in 2020-25.

Proportionally, kerosine and jet fuel demand growth will outstrip all the other transport fuels. Demand will grow by around 90,000 b/d each year, like gasoline, but from a much lower base.

The IEA shifted upwards its demand forecast for low-sulphur fuel oil to 1.3mn b/d in 2020 and to 2.1mn b/d in 2025. Demand for the high-sulphur equivalent (HSFO) will fall by 60pc this year before stabilising. Marine gasoil (MGO) demand will rise by 490,000 b/d in 2020, but will subsequently decline by 70,000 b/d per year in 2021-24 as it gets displaced by low-sulphur fuel oil and by higher uptake of exhaust scrubbers. Around 1.1mn b/d of HSFO will be burned in vessels using scrubbers in 2025, compared with 700,000 b/d in 2020, the IEA said.

The IEA expects naphtha, LPG and ethane to contribute half of all oil demand growth in 2020-25, as consumption of plastics rises.

Capacity growth will again be concentrated in China, which is set to add 1.8mn b/d by 2025 mainly in large petrochemical-integrated projects. Notably, the abundance of light-sweet crude is reducing the need for complex refinery unit upgrades. This "fit into the picture of both supply and demand developments," the IEA said, citing weakening demand growth for both gasoline and middle distillates.

"The premium transport fuels that support refinery margins are most susceptible to replacement by alternative fuels and technologies such as electric vehicles, compressed natural gas vehicles, and LNG-fuelled trucks" it said.


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06/12/24

Republicans weigh two-step plan on energy, taxes

Republicans weigh two-step plan on energy, taxes

Washington, 6 December (Argus) — Republicans in the US Congress are considering trying to pass president-elect Donald Trump's legislative agenda by voting first on a filibuster-proof budget package that revises energy policy, then taking up a separate tax cut bill later in 2025. The two-part strategy, floated by incoming US Senate majority leader John Thune (R-South Dakota), could deliver Trump an early win by putting immigration, border security and energy policy changes into a single budget bill that could pass early next year without Democratic support. Republicans would then have more time to debate a separate — and likely more complex — budget package that would focus on extending a tax package expected to cost more than $4 trillion over 10 years. The legislative strategy is a "possibility" floated among Senate Republicans for achieving Trump's legislative goals on "energy dominance," the border, national security and extending tax cuts, Thune said in an interview with Fox News this week. Thune said he was still having conversations with House Republicans and Trump's team on what strategy to pursue. Republicans plan to use a process called budget reconciliation to advance most of Trump's legislative goals, which would avoid a Democratic filibuster but restrict the scope of policy changes to those that directly affect the budget. But some Republicans worry the potential two-part strategy could fracture the caucus and cause some key policies getting dropped, spurring a debate among Republicans over how to move forward. "We have a menu of options in front of us," US House speaker Mike Johnson (R-Louisiana) said this week in an interview with Fox News. "Leader Thune and I were talking as recently as within the last hour about the priority of how we do it and in what sequence." Republicans have yet to decide what changes they will make to the Inflation Reduction Act, which includes hundreds of billions of dollars of tax credits for wind, solar, electric vehicles, battery manufacturing, carbon capture and clean hydrogen. A group of 18 House Republicans in August said they opposed a "full repeal" of the 2022 law. Republicans next year will start with only a 220-215 majority in the House, which will then drop to 217-215 once two Republicans join the Trump administration and representative Matt Gaetz (R-Florida) resigns. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US House panel approves river infrastructure bill


06/12/24
06/12/24

US House panel approves river infrastructure bill

Houston, 6 December (Argus) — A US House of Representatives committee has approved a bipartisan bill that authorizes improvements to navigation channels by the Army Corps of Engineers (Corps) and maintenance and dredging of river and port infrastructure projects. The House Transportation and Infrastructure Committee advanced the Water Resources Development Act (WRDA) after several months of political wrangling to integrate earlier versions of the legislation approved by the House and Senate . The bill will head to the full House next week, said committee chairman Sam Graves (R-Missouri). This would be the sixth consecutive bipartisan WRDA bill since 2014 if passed by congress. WRDA is a biennial bill that authorizes the Corps to continue working on projects to improve waterways, including port updates, flood protection and supply chain management. WRDA will also "reduce cumbersome red tape", which will allow for quicker project turnarounds, Graves said. The bill authorizes processes to streamline work, he said. The bill also adjusts the primary cost-sharing mechanism for funding for lock and dam construction and major rehabilitation projects. The US Treasury Department's general fund will pay 75pc of costs, up from 65pc, with the rest coming from the Inland Waterways Trust Fund, which is funded by a barge diesel fuel tax. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

S Africa EML gets 2-yr contract at Sunrise LPG terminal


06/12/24
06/12/24

S Africa EML gets 2-yr contract at Sunrise LPG terminal

Cape Town, 6 December (Argus) — South African terminal operator Sunrise Energy has awarded local firm EML Energy a 24-month storage contract at its 210,000 t/yr LPG import facility at Saldanha Bay. Eight companies participated in Sunrise's bidding process, of which five opted to proceed to full evaluation. After "a comprehensive vetting process," EML emerged as the preferred bidder, Sunrise's chief executive Rajen Singh told Argus . The contract will begin on 1 January 2025. EML aims to use the opportunity "to enhance its supply chain efficiency, expand its reach and solidify relationships with wholesalers and end-users," it said. Sunrise's facility is the Western Cape's only LPG import terminal, and the province is almost entirely reliant on imports because local refineries are unable to meet demand. EML replaced Vitol's local unit Vita Gas as the Western Cape's sole importer in June 2023, since when it has imported to Saldanha Bay on a temporary basis. Sunrise launched an invitation-only bidding round to find a new long-term supplier after EML's agreement ended in December 2023. Wholesalers in the province served by Sunrise's terminal have said they have to pay significant premiums since EML took over. This has pushed regional prices above the government-regulated maximum refinery gate price (MRGP), prompting the department of mineral and resources energy (DMRE) to review the formula it uses to determine domestic LPG prices. It currently uses Saudi state-controlled Aramco's monthly contract prices (CP) and Argus ' Ras Tanura-Richards Bay freight assessment to generate an import parity price. EML sells at about $280-320/t above the Aramco CP, while the MRGP is only around $160/t above the CP, a local trader said. The firm also varies prices between buyers and has no transparent methodology, revealing prices after the MRGP is published each month, according to a wholesaler that paid a premium of more than R2/kg, or around 14pc above an MRGP of R14/kg, last month. "Nothing justifies such a high premium", the wholesaler said. The price could be "optimised" through long-term contracts and by using a supplier with a sizeable footprint in multiple locations. EML said the MRGP as calculated by the DMRE does not include factors and circumstances such as demurrage and freight costs specific to the LPG terminal in Saldanha Bay. "DMRE is aware of this problem and is better placed to comment on this issue," EML said. DMRE deputy director of minerals and petroleum regulation Tseliso Maqubelo told Argus Saldanha is costlier than Richards Bay — where the Petredec-Bidvest 22,600t LPG terminal is located — because the size of vessel it can accommodate is much smaller. However, some LPG operators in the region have questioned the motivation behind EML's appointment given it has no operational experience and is unable to secure long-term agreements, which forces it to buy more expensive spot supply. At least one wholesaler with an international trading arm, which said it could bring LPG into the Western Cape in full compliance with the MRGP, took part in Sunrise's bidding round but was rejected. Another withdrew its bid because it found the process was not transparent. A second LPG import terminal will add competition once state-owned Strategic Fuel Fund (SFF) completes a pipeline to LPG supplier Avedia Energy's 2,000t storage facility in Saldanha Bay. A tender process to appoint a construction company for the pipeline is underway and work is expected to start in the first quarter of 2025, said the SFF, which acquired a 60pc stake in Avedia last year. The pipeline is expected to be completed by around August 2025, said Avedia chief executive Atose Aguele. This will allow initial imports of about 5,000-6,000 t/month, he said. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: Oman OQ’s fourth IPO draws firm investor interest


06/12/24
06/12/24

Q&A: Oman OQ’s fourth IPO draws firm investor interest

Muscat, 6 December (Argus) — Oman's state-owned OQ raised 188mn Omani riyals ($489mn) from its fourth initial public offering (IPO) this year with a "good mix of both international and local investors" flocking to the company's chemical and LPG subsidiary, OQ Base Industries (OQBI). OQBI's chief executive Khalid Al Asmi spoke to Argus at the Gulf Petrochemicals and Chemicals Association forum in Muscat about the company's expansion plans and its emission reduction targets. Shares in OQBI are expected to begin trading on the Muscat Stock Exchange on 15 December. OQBI has seen strong interest from some of the largest investors in Oman. How would you evaluate the investor interest so far? If we look into the overall average of the offering, the IPO price was 2.1 times oversubscribed by both retail and institutional investors, Looking at the trend of investors, it was a good mix of both international and local investors. The fact that the investors believed in our story by buying off our shares implies the trust that they have on our company and on our future plans. Are there any capacity expansion plans or new any projects in the pipeline for next year? We do not have any projects in line for next year. However, we have non-committed projects that are awaiting FID and other approvals from the shareholders. We are looking at a brownfield expansion project to increase our current methanol plant capacity by 50pc to 550,000 t/yr. In it, we are also exploring technologies for decarbonisation and carbon capture. Our aim is to get this project up and running by 2028. We have done an initial study and it was concluded that the project is valuable. How would you view the long-term outlook for petrochemical markets? The market segments that we are operating — methanol, ammonia and LPG— are all expected to grow in the future. Ammonia has already started penetrating into the marines [sector], same with methanol. LPG will grow to around 39mn t/yr by 2030. So the market is still hungry for our products. That will support the prices, which would either go up or go in line with the GDP. Looking forward, we are not worried about the markets, based on the available information that we have. How does OQBI's strategy fit into Oman's clean energy transition plans? We have both short-term and long-term targets for carbon emission reductions. For the near term, we expect to reduce our carbon footprint by 25pc by 2030 from our base target that was set in 2023. So far, we have reduced our energy intensity by 0.3mn Btu/t produced and now we are targeting 1.1mn Btu in 2025. By 2030, it would be a 25pc reduction. There is growing interest in green ammonia and blue methanol, how is OQBI positioned to capitalise on the interest? We are very well-positioned to capitalise on the shift. We have an ambitious growth target for both blue methanol and green ammonia for 2030 and beyond. That is in line with the net zero target that was set by the government of Oman. We currently have plans to start the transit but that will only happen when the right time comes. When the 365,000 t/yr ammonia plant was built, we took into consideration the need to achieve zero Scope 1 emissions. So the transition from ammonia to green is doable. When it comes to methanol, we will always rely on gas, so green methanol is not an option. But when the time comes, it can also be converted into blue methanol. How is methanol demand looking in the markets you are targeting? When we are referring to the market we are supplying to, we don't deal with the market directly. We are leveraging on the outreach of OQ Trading, which is considered one of the top five methanol traders globally. OQ Trading has a global reach from markets in Asia to Europe and even the Americas. The market is always dynamic and we will always target the market that gives us the highest netback. Currently, Asia is more profitable but tomorrow it could be somewhere else. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Opec+ delays unwinding of 2.2mn b/d cut again: Update


05/12/24
05/12/24

Opec+ delays unwinding of 2.2mn b/d cut again: Update

Updates throughout Dubai, 5 December (Argus) — Opec+ producers have delayed a plan to start increasing crude output by another three months to April 2025. Eight members of the group ꟷ Saudi Arabia, Russia, Iraq, Kuwait, the UAE, Kazakhstan, Algeria, Oman ꟷ were scheduled to begin gradually unwinding 2.2mn b/d of voluntary cuts from January over a 12-month period. They agreed today to postpone the start of the production increase until April and to return the full amount over 18 months rather than a year. The delay is designed "to support market stability", the Opec Secretariat said, adding that the unwinding of the cuts "can be paused or reversed subject to market conditions". The Opec+ group also agreed today that a 300,000 b/d production target increase for the UAE will now be phased in starting in April over an-18 month period. It was previously set to be phased in over nine months starting in January. These changes will effectively reduce the amount of additional oil being introduced to the market every month, compared to the previous plan. The return of the 2.2mn b/d of cuts should, in theory, be partially offset by those members that have pledged to compensate for exceeding their production targets this year. These compensation-related cuts were supposed to have been delivered by the end of September 2025 but this has now been extended until June 2026. Opec+ also agreed today to keep in place two other sets of cuts by an additional year to the end of 2026. These cuts — a group-wide 2mn b/d reduction to formal targets and 1.65mn b/d of voluntary cuts by nine members — had been set to remain in place until the end of 2025. And an update to the official crude production capacity levels of each member — from which quotas are calculated — was pushed back by another year to 2027. By Bachar Halabi, Nader Itayim and Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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