Gunvor set for buying spree after windfall: CEO

  • Spanish Market: Biofuels, Crude oil, Electricity, Emissions, Metals, Natural gas, Oil products
  • 12/04/24

Trading firm Gunvor plans to use part of a massive earnings windfall over the past two years to build out its asset base, its chief executive Torbjörn Törnqvist told Argus.

"Today, we are under-invested in assets so we will change that," Törnqvist said, adding that investments would be broad based and to some extent opportunistic. "We will employ quite a lot of capital in investments."

Independent commodity trading companies are sitting on unprecedented piles of cash after two years of bumper earnings arising from supply chain disruptions and market volatility. While Geneva-based Gunvor is smaller than its peers Vitol, Trafigura and Mercuria, it is still a huge company by most metrics. It reported revenues of $127bn in 2023 and a profit of $1.25bn, following a record $2.36bn in 2022. It has kept most of its earnings in house and had an equity position of almost $6.16bn by the end of 2023 — its highest ever.

Törnqvist is eyeing further growth.

"We will definitely be a much bigger company, that I can say," he replied when asked where he saw Gunvor in 10 years' time. "I think we will grow in tune with the [energy] transition."

Trading firms are looking for ways to keep their competitive advantage, particularly given the uncertainties associated with the energy transition. One emerging trend is an appetite for infrastructure. Vitol is in the process of buying a controlling stake in Italian refiner Saras, which operates the 300,000 b/d Sarroch refinery in Sardinia. Trafigura said this week that it is in talks to buy ExxonMobil's 133,000 b/d Fos refinery on the French Mediterranean coast.

Part of the rationale behind these moves is to increase optionality and take advantage of the loss of Russian products to the European market, as well the closure of large chunks of local refining capacity.

Gunvor owns the landlocked 100,000 b/d Ingolstadt refinery in Germany and a 75,000 b/d refinery in Rotterdam, where it plans to shift away from fossil fuel use.

"Many oil refineries have been up for sale and still are," Törnqvist said. Asked if Gunvor was looking for something similar, he said the company is interested in the "right opportunity" whether in upstream, downstream, midstream or shipping.

"It all feeds into what we are doing and all supports our underlying trading," he said.

But Törnqvist suspects a lot of Gunvor's growth will come from gas and power — areas where trading companies are already seeing rising profits. The company made its first investment in a power generation asset late in 2023, when it agreed to buy BP's 75pc stake in the 785MW Bahia de Bizkaia combined-cycle gas turbine plant in Bilbao, Spain. It has signed a slew of LNG offtake agreements in the past year and continues to grow its LNG tanker fleet.

"We're building logistical capabilities in LNG," Törnqvist said.

"Oil is here to stay"

Törnqvist said Gunvor is well placed to navigate the energy transition, and is stepping up investments in renewables and biofuels and expanding into carbon and metals trading.

"There will be disruptions, there will be different paths to the transition in different parts of the world which go at different paces and have different priorities and ways to deal with it," he said. "This will create opportunities."

But Törnqvist is clear that oil and gas will remain an integral part of Gunvor's business.

"We feel that oil is here to stay," he said. "And it will grow for several years."


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Dangote refinery to export 10ppm diesel in June


24/05/24
24/05/24

Dangote refinery to export 10ppm diesel in June

London, 24 May (Argus) — Nigeria's 650,000 b/d Dangote refinery will start exporting diesel conforming to European specifications along with gasoline sales in June, its vice president for oil and gas Devakumar Edwin has said. "We expect before the end of next month we'll also have gasoline in the market, and we'll also have Euro V diesel for export, that is below 10ppm", Edwin said this week at a Society of Petroleum Engineers event in Lagos. Dangote chief executive Aliko Dangote reiterated the planned June start for gasoline on 17 May. Dangote started its crude distillation unit in January, and received approval to start up a mild hydrocracker with its desulphurisation units in March. A source at Nigeria's downstream regulator NMDPRA said the refinery has now received approval to start its residual fluid catalytic cracker. Dangote started naphtha exports in March, low-sulphur straight run fuel oil (LSSR) exports in May and began selling diesel and jet fuel domestically in April. It has a waiver from NMDPRA to sell diesel with sulphur levels above 600ppm into the local market. At full capacity Dangote will be able to more than meet Nigerian domestic gasoline demand. But a trader in the region said gasoline production is unlikely to start next month, citing the amount of cargoes to be delivered to the country. Exports of naphtha, a key blending component in finished-grade gasoline, are continuing from the refinery, with 80,000t due to load on 31 May according to Kpler. And Edwin hinted at a slowing of spot sales. "We had a meeting to see, probably, how we can slow down our sales because we've already made quite a few forward bookings," he said this week. "Export, for example, aviation/jet, the last vessel went to the Caribbean islands. The next vessel, we are booking for US market." Dangote recently added TotalEnergies as a buyer in a deal that could see the French company take refined products for its African network of 4,800 retail fuel stations, including more than 540 in Nigeria. The deal could also see the oil major supply crude to the refinery. A source told Argus there is a deal for TotalEnergies to supply two crude cargoes each month, or around 2mn bl. Indications based on the refinery's slate to date and TotalEnergies' Nigerian crude equity suggest one cargo of the very light Amenam blend one of Bonny Light. By Adebiyi Olusolape and George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: Shell Oman to balance upstream with renewables


24/05/24
24/05/24

Q&A: Shell Oman to balance upstream with renewables

Dubai, 24 May (Argus) — Shell has been in Oman for decades now and had a front row seat to its energy evolution from primarily an oil producing nation to now a very gas-rich and gas-leaning hydrocarbons producer. Argus spoke to Shell Oman's country chairman Walid Hadi about the company's energy strategy in the sultanate. Edited highlights follow: How would you characterize Oman's energy sector today, and where do new energies fit into that? Oman is one of the countries where there is quite a bit of overlap between how we see the energy transition and how the country sees it. Oman is clear that hydrocarbons will continue to play a role in its energy system for a long period of time. But it is also looking to decrease the carbon intensity to the most extent which is viable. We need to work on creating new energy systems or new components of energy system like hydrogen and EV charging to facilitate that. It is what we would like to call a 'just transition' because you think about it from macroeconomic perspective of the country and its economic health. Shell is involved across the energy spectrum in Oman – from upstream gas to alternative, clean energies. What is Shell's overall strategy for the country? In Oman, our strategic foundation has three main pillars. The first is around oil and liquids and our ambition is to sustain oil and liquids production. At the same time, we aim to significantly reduce carbon intensity from the oil production coming from PDO. The second strategic pillar is gas, and our ambition here is to grow the amount of gas we are producing in Oman and also to help Oman grow its LNG export capabilities. The more committed we are in unlocking the gas reserves in the country, the more we can support Oman's growth, diversification, and the resilience of its economy through investments and LNG revenue. Gas also offers a very logical and nice link into blue and green hydrogen, whether in sequence or as a stepping stone to scale the hydrogen economy in the country. The last strategic pillar is to establish low-carbon value chains, predominantly centered around hydrogen, more likely blue hydrogen in the short term and very likely material green in the long term, which is subject to regulations and markets developing. How would you view Oman's potential to be a major exporter of green hydrogen? When examining the foundational aspects of green hydrogen manufacturing, such as the quality of solar and wind resources and their onshore complementarity, Oman emerges as a highly competitive country in terms of its capabilities. But where we are in technology and where we are in global markets and on policy frameworks — the demand centers for green hydrogen are maturing but not yet matured. I think there will be a period of discovery for green hydrogen globally, not just for Oman, in the way LNG started 20-30 years ago. When it does, Oman will be well-positioned to play global role in the global hydrogen economy. But the question is, how much time it is going to take us and what kind of multi-collaboration needs to be in place to enable that? The realisation of this potential hinges on several factors: the policies of the Omani government, its bilateral ties with Japan, Korea, and the EU, and the technological advancements within the industry. Shell has also been looking at developing CCUS opportunities in the country. How big a role can CCUS play in the region's energy transition? CCUS is going to be an important tool in decarbonising the global energy system. We have several projects globally that we are pursuing for own scope 1, scope 2 emissions reductions, as well as to enable scope 3 emissions with the customers and partners In Oman, we are pursuing a blue hydrogen project where CCUS is a clear component. This initiative serves as a demonstrative case, helping us gauge the country's potential for CCUS implementation. We are using that as a proof point to understand the potential for CCUS in the country. At this stage, it's too early to gauge the scale of CCUS adoption in Oman or our specific role within it. However, we are among the pioneers in establishing the initial proof point through our Blue Hydrogen initiative. You were able to kick off production in block 10 in just over a year after signing the agreement. How are things progressing there? We have started producing at the plateau levels that we agreed with the government, which is just above 500mn ft³/d. Block 10 gas is sold to the government, through the government-owned Integrated Gas Company (IGC), which so far has been the entity that purchases gas from various operators in Oman like us, Shell. IGC then allocates that gas on a certain policy and value criteria across different sectors. We will require new gas if we are going to expand LNG in Oman. There is active gas exploration happening there in Block 10. We know there is more potential in the block. We still don't know at what scale it can be produce gas or the reservoir's characteristics. But blocks 10 and 11 are a combination of undiscovered and discovered resources. We are aiming to significantly increase gas production through a substantial boost. However, the exact scale and timing of this expansion will only be discernible upon the conclusion of our two-year exploration campaign in the block. We expect to understand the full growth potential by around mid to late 2025. Do you have any updates on block 11? Has exploration work there begun? We did have a material gas discovery which is being appraised this year, but it is a bit too early to draw conclusions at this stage. So, after the appraisal campaign is completed, we will be able to talk more confidently about the production potential. Exploration is a very uncertain business. You must go after a lot of things and only a few will end up working. We have a very aggressive exploration campaign at the moment. We also expect by the end of 2025, we would be in a much better position to determine the next wave of growth and where it is going to come from. Shell is set to become the largest off taker from Oman LNG, how do you view the LNG markets this year and next? As a company, we are convinced, that the demand for LNG will grow and it needs to grow if the world is going to achieve the energy transition Gas must play a role, it has to play a bigger role globally over the time, mainly to replace coal in power generation and given its higher efficiency and lower carbon intensity fuel in the energy mix. While Oman may not be the largest LNG exporter globally or hold the most significant gas reserves, it is a niche player in the gas sector with a sophisticated and high-quality gas infrastructure. Oman's resource base remains robust, driving ongoing exploration and investment efforts. This growth trajectory includes catering to domestic needs and servicing industrial hubs like Duqm and Sohar, alongside allocating resources for export purpose. We have the ambition to grow gas for domestic purpose and for gas for eventual exports Have you identified any international markets to export LNG? We have been historically and predominantly focused on east and we continue to see east as core LNG market with focus on Japan, Korea, and China. Europe has also emerged on the back of the Ukraine-Russia crisis as growing demand center for LNG. Over time we might focus on different markets to a certain extent. It will be driven on maximising value for the country. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Indonesia plans 15mn electric vehicles on roads by 2030


24/05/24
24/05/24

Indonesia plans 15mn electric vehicles on roads by 2030

London, 24 May (Argus) — The Indonesian government aims to have 2mn four-wheeled electric vehicles (EVs) and 13mn two-wheeled EVs on its roads by 2030, to cut emissions and save energy. This will bring about energy savings of 29.79mn bl of oil equivalent (boe) and cut exhaust emissions by 7.23mn t of CO2 in 2030, according to special staff to the minister of energy and mineral resources (ESDM) Agus Tjahjana. Indonesia's transport sector makes up around a third of the country's energy consumption and the 11mn cars on Indonesian roads produce more than 35mn t/yr of CO2, while trucks emit more than 50mn t/yr, according to ESDM secretary general Dadan Kusdiana. The country's vehicle fleet is likely to grow in coming years because of its economic development, so decarbonising the transport sector is critical to achieving net zero emissions by 2060, said the ESDM. Greater electrification of transport will also allow Indonesia to reduce its fossil fuel imports. Indonesia is keen to develop the EV battery supply chain from upstream to downstream, in view of its large nickel resources that can support the development of the industry, said Agus. Indonesia currently has nine facilities processing nickel ore into nickel and cobalt sulphate, which is one of the materials used in making EV batteries. Out of these, four are already operational while three are in the construction stage, and the remaining two are still undergoing feasibility studies. The next step is to promote the manufacture of battery precursors, cathodes, battery cells and batteries, considering that the electric charging and battery recycling industries already exist, said Agus. But there is still a large price gap between EVs and conventional vehicles, said Dadan. The Indonesian government is hence providing tax incentives and subsidies for electric cars, hybrid cars and electric motorbikes to cover this gap. "Indonesia has prepared $455mn to subsidise the sale of electric motorbikes," said Dadan, adding that the subsidy covers the sale of 800,000 new electric motorbikes and the conversion of 200,000 combustion engine motorbikes. The government estimates that 32,000 charging stations will be needed to meet demand by 2030. The total number of charging stations available was 1,566 as of April, said Agus, adding that the government aims to add up to 48,118 charging stations by 2030. The ESDM has just approved 204 nickel mining work plans for exploration and production. The country produced 175.6mn t of nickel ore output in 2023. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Global AI smartphone shipments to boost Co, Li demand


24/05/24
24/05/24

Global AI smartphone shipments to boost Co, Li demand

Beijing, 24 May (Argus) — Global shipments of artificial intelligence (AI) smartphones will more than double this year, according to US firm International Data Corporation (IDC), in a potential boost to demand for battery metals such as cobalt and lithium. IDC forecasts that shipments of next-generation AI smartphones will hit 170mn units this year, more than double last year's level, to account for almost 15pc of total smartphone shipments. Cobalt and lithium are used in the production of lithium-ion battery cathodes for smartphones. "This AI development, if it proves to be enough revolutionary, is likely to encourage people to change their phones earlier and then bolster cobalt and lithium demand," a China-based market participant said. About 30pc of cobalt and 7pc of global lithium production is consumed in the consumer electronics industry. Some phone manufacturers have released or outlined plans to release AI smartphones in the future. Chinese phone company Meizu on 16 May released its FlymeAIOS operating system and Meizu 21 Note phone, which provide generative AI capabilities. South Korea's Samsung has deployed Google's generative AI technology Gemini Nano in its Galaxy S24 series smartphones, which were released early this year. Other Chinese phone manufacturers Xiaomi, Oppo, Vivo and Huawei have also developed phones that run on-device AI. Shipments of AI smartphones are expected to rise to 550mn units globally in 2027, making up more than 40pc of total phone shipments, according to industry estimates. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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