Duqm Refinery One of 6 Projects Totaling $10.3bn Completed by Oman Investment Authority

An oil refinery is one of six major national projects completed by Oman’s Investment Authority, with a value of over 4 billion Omani rials ($10.3 billion).

These initiatives form part of the National Development portfolio, aimed at bolstering economic diversification, stimulating regional development, attracting investments, and generating employment opportunities, particularly for small and medium-sized enterprises.

The Duqm Refinery and Petrochemical Industries project is the most significant venture, and is poised to transform the port town into a major industrial and economic hub in the region.

The initiative comprises a refinery with a capacity of 230,000 barrels per day, producing various petroleum products.

It also includes storage and export facilities at Duqm Port and an 81 km pipeline from Ras Markaz to the refinery, according to a report by the state-owned Oman News Agency.

In Al-Wusta Governorate, the Ras Markaz Crude Oil Storage Terminal underpins government efforts in economic diversification.

This facility holds a storage capacity of up to 200 million barrels, significantly enhancing Oman’s crude oil storage capabilities and export potential.

The Duqm Integrated Power and Water Project in Duqm, with a capacity of 326 megawatts of electricity and 36,000 cubic meters of water per day, aims to support industrial development in the Special Economic Zone at Duqm by catering to the energy and water needs of heavy industrial companies.

Another strategic initiative, the Rabt project in Duqm, comprises 660 km of transmission lines and five main stations.

This project is set to improve the efficiency and integration of the National Electricity Transmission network, focusing on renewable energy sources.

The Khuweimah Shrimp Farm project in Jalan Bani Bu Ali, South Ash Sharqiyah governorate, aims to achieve food security and leverage local raw materials.

The farm, spanning 200 hectares, includes shrimp cultivation and processing facilities with an annual production capacity of 4,000 tons.

Lastly, with its 304 rooms and suites, the JW Marriott Hotel Muscat represents Oman’s focus on tourism development.

This project aligns with the country’s efforts to diversify its economy, boosting the tourism sector’s contribution to the gross domestic product and creating direct job opportunities for the local workforce.

Oman releases 3 electronic platforms to boost investment climate

Oman’s Ministry of Commerce, Industry, and Investment Promotion has inaugurated three digital platforms in Muscat to boost its investment potential.

The Oman for Business, Hazm, and Maroof Oman platforms represent a significant leap toward comprehensive digital transformation in a bid to bolster the country’s business landscape.

Oman for Business streamlines the process for foreign investors to start businesses, while Hazm ensures consumer safety and streamlines customs processes.

Maroof Oman enhances the legal and regulatory framework for e-commerce, fostering a more efficient, secure online business environment.

These initiatives mark a strategic move toward modernizing Oman’s economy and simplifying commercial activities.

Arab News, November 18, 2023

ARA oil product stocks rise on weaker export demand (Week 46 – 2023)

Independently-held oil product stocks at the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose in the week to 15 November, as lower export demand helped drive a build-up of gasoline and fuel oil inventories.

Gasoline stocks at ARA increased, according to the latest data from consultancy Insights Global. Demand for gasoline to be barged up the Rhine river remained firm as a result of unplanned refinery outages in Germany but the arbitrage to ship gasoline to the US was not workable, according to Insights Global.

Fuel oil inventories rose the most in the past week. Arbitrage shipments to Singapore were difficult to work, although some high-sulphur fuel oil cargoes were sent to the US for use in cocker units.

Stocks of other products fell. Gasoil inventories dropped, the lowest level since October 2022 when French refinery workers were on strike. Tight supply in western and southern parts of Germany prompted traders to seek gasoil cargoes from ARA.

Naphtha stocks declined as demand for gasoline blending feedstocks increased. Demand for naphtha from the petrochemical sector remained low, with naphtha at a $127.25/t premium to competing petrochemical feedstock propane on 15 November.

Reporter: Mykyta Hryshchuk

EU Needs ‘Big’ Gas Storage Buffer at the End of Current Winter: EC Official

The EU will need to have a “big buffer” of gas in storage at the end of the current winter to help prepare for the following winter, a senior European Commission official said Nov. 14.

Paula Pinho, energy security director at the EC’s energy directorate, said Brussels was maintaining a “very high level of monitoring and preparedness.”

“I think we are prepared but we really cannot just sit back and relax,” Pinho said in comments posted to the EC website.

“We know that storage facilities are now full, but we cannot afford to just use up all the gas during the winter,” she said.

“As at the end of last winter, we still need to have a big buffer to allow us to go through into the next heating season,” she said, adding that the EC was already preparing for winter 2024-2025. “We cannot lower our guard.”

EU gas storage sites were filled to 99.5% of capacity as of Nov. 12, according to Gas Infrastructure Europe data, having hit 99.6% fullness last week.

The past summer’s stock build was made considerably easier by the warm winter of 2022/23, which left the EU’s storage sites still 55.6% full as of the end of March.

The last winter even saw a period of net injections in January 2023 — typically a peak withdrawal month — as temperatures rose well above seasonal norms.

The still healthy stock level in March 2023 was in stark contrast to the end of the 2021/22 winter when stocks were drawn down to just 25.6% of capacity.

Pinho also said the EC remained vigilant in terms of key energy infrastructure in light of damage to the Balticconnector between Finland and Estonia last month.

“Our infrastructure is critical and because of that, it remains at risk and we cannot exclude the possibility of bad things happening to critical energy infrastructure,” she said.

“If our infrastructure is exposed, we can all of a sudden lose the means to supply the stored gas.”

Demand reductions
Pinho also said the EU had reduced gas demand by 18% compared with the average of the past five years. “We believe that a big part of that is the result of structural measures — and these will stay in place,” she said.

“This means we will be able to continue to simply consume less, which is also our objective, if it doesn’t mean destroying industrial output, and we have good signals in that sense.”

EU member states in July last year agreed to voluntarily cut their gas consumption between August 2022 and March 2023 by 15% compared to the five-year average, and beat the target with demand reduced by 17.7%.

The agreement was extended in March this year and is now set to continue until the end of March 2024.

The biggest cuts in consumption last year were in the autumn on the back of high gas prices and warm temperatures.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at an all-time high of Eur319.98/MWh in late August 2022.

Prices are now lower thanks to healthy storage levels and demand curtailments but remain historically high, with Platts assessing the TTF month-ahead price on Nov. 13 at Eur47.76/MWh.

The EU rules on demand reduction also provide the possibility for the EU to trigger a “Union alert” on security of supply, in which case the gas demand reduction would become mandatory.

Pinho said “everyone” had contributed to the demand cuts. “When we look at the reduction in gas demand, the contribution from households and industry is 50/50 — so it’s really something that pulled everyone together,” she said.

S&P Global, Stuart Elliott, November 16, 2023

China’s Sany Renewable to Invest USD896 Million in Green Ammonia Project in Jilin Province

Chinese wind power firm Sany Renewable Energy intends to invest CNY6.5 billion (USD896 million) to build a green ammonia digital demonstration project in China’s northeastern Jilin province.

The project will use wind and solar power to produce renewable hydrogen, which will be used to synthesize green ammonia, the Beijing-based firm said in a statement yesterday. The green ammonia produced will also be used to store hydrogen.

Sany Renewable has already announced three such type of projects this year. In January, it began construction of a green ammonia project in Bayannaoer in Inner Mongolia Autonomous Region, with a total investment of CNY4.3 billion. In April, the company signed a deal with the city of Delingha in Qinghai province to invest and build another of such projects.

The latest project, which will be located in Changling county in the city of Songyuan, will include photovoltaic and wind power plants, transmission lines, hydrogen and ammonia factories, as well as storage and transportation facilities, Sany Renewable noted, adding that the construction schedule is expected to be 18 months.

Sany Renewable will use self-raised funds to finance the project, which will help its business structure, broaden its business layout, continue to strengthen its core competitive advantages, and ensure the realization of its strategic goals, the company pointed out.

In the first three quarters of the year, Sany Renewable’s revenue rose 18 percent to CNY7.5 billion, while its net profit fell 1.2 percent to CNY1 billion from a year earlier.

Shares of Sany Renewable [SHA: 688349] were trading up 0.5 percent at CNY29.91 (USD4.12) as of 10.55 a.m. in Shanghai today.

Yicai, Xu Wei, November 15, 2023

Oil Dips on Investor Caution as Market Eyes Middle East Turmoil

Oil prices eased on Tuesday after rallying more than 4% in the previous session, with traders cautious as they keeps tabs on potential supply disruptions amid military clashes between Israel and the Palestinian Islamist group Hamas.

Brent crude fell 30 cents, or 0.3%, to $87.85 a barrel by 0330 GMT, while U.S. West Texas Intermediate crude eased 31 cents, or 0.4%, to $86.07 a barrel.

Both benchmarks surged more than $3.50 on Monday as the clashes raised fears that the conflict could spread beyond Gaza into the oil-rich region. Hamas launched the largest military assault on Israel in decades on Saturday, while fighting continued into the night on Monday as Israel retaliated with a wave of air strikes on Gaza.

“There is still plenty of uncertainty across markets following the attacks in Israel over the weekend,” said ING analysts on Tuesday, adding that oil markets are now pricing in a risk premium.

“If reports of Iran’s involvement turn out to be true, this would provide another boost to prices, as we would expect to see the U.S. enforcing oil sanctions against Iran more strictly. That would further tighten an already tight market,” the ING analysts added.

While Israel produces very little crude oil, markets worried that if the conflict escalates it could hurt Middle East supply and worsen an expected deficit for the rest of the year.

Israel’s port of Ashkelon and its oil terminal have been shut in the wake of the conflict, sources said on Monday.

Iran is complicit even though the United States has no intelligence or evidence that points to Iran’s direct participation in the attacks, a White House spokesperson said on Monday.

“If the U.S. finds evidence directly implicating Iran, then the immediate reduction in Iran’s oil exports becomes a reality,” said Vivek Dhar, an energy analyst at CBA.

“We continue to believe that Brent oil will ultimately stabilise between $90-$100/bbl in Q4 2023,” said Dhar, adding that the Palestine-Israel conflict raises the risk of Brent futures tracking at $100/bbl and above.

In a more positive sign for supply, Venezuela and the U.S. have progressed in talks that could provide sanctions relief to Caracas by allowing at least one additional foreign oil firm to take Venezuelan crude oil under some conditions.

Reuters, October 10, 2023

Why Big Oil Is Beefing Up its Trading Arms

In the 1950s the oil market was in the gift of the “Seven Sisters”. These giant Western firms controlled 85% of global crude reserves, as well as the entire production process, from the well to the pump. They fixed prices and divvied up markets between themselves. Trading oil outside of the clan was virtually impossible.

By the 1970s that dominance was cracked wide open. Arab oil embargoes, nationalisation of oil production in the Persian Gulf and the arrival of buccaneering trading houses such as Glencore, Vitol and Trafigura saw the Sisters lose their sway. By 1979, the independent traders were responsible for trading two-fifths of the world’s oil.

The world is in turmoil again—and not only because the conflict between Israel and Hamas is at risk of escalating dangerously. Russia’s war in Ukraine, geopolitical tensions between the West and China, and fitful global efforts to arrest climate change are all injecting volatility into oil markets (see chart 1). Gross profits of commodity traders, which thrive in uncertain times, increased 60% in 2022, to $115bn, according to Oliver Wyman, a consultancy. Yet this time it is not the upstarts that have been muscling in. It is the descendants of the Seven Sisters and their fellow oil giants, which see trading as an ever-bigger part of their future.

The companies do not like to talk about this part of their business. Their traders’ profits are hidden away in other parts of the organisation. Chief executives bat away prying questions. Opening the books, they say, risks giving away too much information to competitors. But conversations with analysts and industry insiders paint a picture of large and sophisticated operations—and ones that are growing, both in size and in sophistication.

In February ExxonMobil, America’s mightiest supermajor, which abandoned large-scale trading two decades ago, announced it was giving it another go. The Gulf countries’ state-run oil giants are game, too: Saudi Aramco, Abu Dhabi National Oil Company and QatarEnergy are expanding their trading desks in a bid to keep up with the supermajors. But it is Europe’s oil giants whose trading ambitions are the most vaulting.

BP, Shell and TotalEnergies have been silently expanding their trading desks since the early 2000s, says Jorge Léon of Rystad Energy, a consultancy. In the first half of 2023 trading generated a combined $20bn of gross profit for the three companies, estimates Bernstein, a research firm. That was two-thirds more than in the same period in 2019 (see chart 2), and one-fifth of their total gross earnings, up from one-seventh four years ago. Oliver Wyman estimates that the headcount of traders at the world’s largest private-sector oil firms swelled by 46% between 2016 and 2022. Most of that is attributable to Europe’s big three. Each of these traders also generates one and a half times more profit than seven years ago.

Today BP employs 3,000 traders worldwide. Shell’s traders are also thought to number thousands and TotalEnergies’ perhaps 800. That is almost certainly more than the (equally coy) independent traders such as Trafigura and Vitol, whose head counts are, respectively, estimated at around 1,200 and 450 (judging by the disclosed number of employees who are shareholders in the firms). It is probably no coincidence that BP’s head of trading, Carol Howle, is a frontrunner for the British company’s top job, recently vacated by Bernard Looney.

The supermajors’ trading desks are likely to stay busy for a while, because the world’s energy markets look unlikely to calm down. As Saad Rahim of Trafigura puts it, “We are moving away from a world of commodity cycles to a world of commodity spikes.” And such a world is the trader’s dream.

One reason for the heightened volatility is intensifying geopolitical strife. The conflict between Israel and the Palestinians is just the latest example. Another is the war in Ukraine. When last year Russia stopped pumping its gas west after the EU imposed sanctions on it in the wake of its aggression, demand for liquefied natural gas (LNG) rocketed. The European supermajors’ trading arms were among those rushing to fill the gap, making a fortune in the process. They raked in a combined $15bn from trading LNG last year, accounting for around two-fifths of their trading profits, according to Bernstein.

This could be just the beginning. A recent report from McKinsey, a consultancy, models a scenario in which regional trade blocs for hydrocarbons emerge. Russian fuel would flow east to China, India and Turkey rather than west to Europe. At the same time, China is trying to prise the Gulf’s powerful producers away from America and its allies. All that is creating vast arbitrage opportunities for traders.

Another reason to expect persistent volatility is climate change. A combination of increasing temperatures, rising sea levels and extreme weather will disrupt supply of fossil fuels with greater regularity. In 2021 a cold snap in Texas knocked out close to 40% of oil production in America for about two weeks. Around 30% of oil and gas reserves around the world are at a “high risk” of similar climate disruption, according to Verisk Maplecroft, a risk consultancy.

Then there is the energy transition, which is meant to avert even worse climate extremes. In the long run, a greener energy system will in all likelihood be less volatile than today’s fossil-fuel-based one. It will be more distributed and thus less concentrated in the hands of a few producers in unstable parts of the world. But the path from now to a climate-friendlier future is riven with uncertainty.

Some governments and activist shareholders are pressing oil companies, especially in Europe, to reduce their fossil-fuel wagers. Rystad Energy reckons that partly as a result, global investment in oil and gas production will reach $540bn this year, down by 35% from its peak in 2014. Demand for oil, meanwhile, continues to rise. “That creates stress in the system,” says Roland Rechtsteiner of McKinsey.

Future traders
This presents opportunities for traders, and not just in oil. Mr Rechtsteiner notes that heavy investment in renewables without a simultaneous increase in transmission capacity also causes bottlenecks. In Britain, Italy and Spain more than 150-gigawatts’-worth of wind and solar power, equivalent to 83% of the three countries’ total existing renewables capacity, cannot come online because their grids cannot handle it, says BloombergNEF, a research firm. Traders cannot build grids, but they can help ease gridlock by helping channel resources to their most profitable use.

Europe’s three oil supermajors are already dealing in electric power and carbon credits, as well as a lot more gas, which as the least grubby of fossil fuels is considered essential to the energy transition. Last year they had twice as many traders transacting such things than they did in 2016. Ernst Frankl of Oliver Wyman estimates that gross profits they generated rose from $6bn to $30bn over that period. Other green commodities may come next. David Knipe, a former head of trading at BP now at Bain, a consultancy, expects some of the majors to start trading lithium, a metal used in battery-making. If the hydrogen economy takes off, as many oil giants hope, that will offer another thing not just to produce, but also to buy and sell.

AoL, October 23, 2023

Saudi Aramco Enters International LNG Market

Saudi Aramco is entering the global LNG business by signing a deal to buy a minority stake in LNG company MidOcean Energy, which is in the process of acquiring interests in four Australian LNG projects, the Saudi state oil giant said on Thursday.

Aramco has signed the definitive agreements to buy a strategic minority stake in MidOcean Energy for $500 million, which is the Saudi firm’s first international investment in LNG.

MidOcean Energy is formed and managed by EIG, an institutional investor in the global energy and infrastructure sectors, with which Aramco signed in 2021 a deal to sell a 49% stake in Aramco Oil Pipelines Company.

The LNG stake agreement announced today includes an option for Aramco to raise its shareholding and associated rights in MidOcean Energy in the future. The deal is subject to closing conditions which include regulatory approvals, Aramco said.

The Saudi giant, the world’s single largest crude oil exporter, has been looking for months to tap the global gas and LNG business and was rumored earlier this year to have been in early talks with developers aiming to secure a stake in a project in the United States or Asia.

Going into LNG trading would be another lucrative business for the Saudi oil giant, considering that LNG demand is only set to grow in the coming years as Europe ditches Russian gas and Asia looks to use more natural gas instead of coal.

Commenting on today’s deal, Aramco Upstream President, Nasir K. Al-Naimi, said: “This is an important step in Aramco’s strategy to become a leading global LNG player.”

“MidOcean Energy is well-equipped to capitalize on rising LNG demand, and this strategic partnership reflects our willingness to work with leading international players to identify and unlock new opportunities at a global level,” Al-Naimi added.

MidOcean Energy’s initial focus is on the LNG deals in Australia, but the company believes the opportunity set is global, said Blair Thomas, EIG chairman and CEO.

OilPrice.com, Tsvetana Paraskova, September 28, 2023

Decade-Low Stocks at Cushing May Send Oil Prices Even Higher

Crude prices will likely get a fresh boost this week, as stockpiles at the key US storage hub in Cushing, Oklahoma, risk collapsing to the lowest level (aka “tank-bottoms”) in almost a decade. Such a move would embolden those aiming for a return of $100 oil by year-end.

Cushing matters. Being the delivery point for the WTI futures contract, the rise and fall of the holdings is among the market’s most closely followed trends. So far in 3Q, inventories have slumped by ~47% to 22.9m barrels. That’s the lowest since July 2022 and that’s not far away from the 2014 lows.

If that comes to pass, it’d highlight the scramble for near-term supplies as the global market tightens up.

OilPrice.com, ZeroHedge, September 26, 2023

Chevron, Repsol Poised to Capitalize on Venezuelan Oil Opening

Venezuela has an opportunity to resuscitate the linchpin of its economy — oil — now that punishing US sanctions have been relaxed.

The surprise move on Oct. 18 allows international companies to apply the full weight of their expertise and technology to crude fields and infrastructure that atrophied amid years or underinvestment, civil turmoil and international isolation.

Here’s a snapshot of who stands to gain and who may be left out:

Chevron Corp.
The second-largest US explorer is best-positioned to benefit from the reopening. Chevron adopted a patient approach across the tenures of three CEOs by maintaining a presence in-country after late President Hugo Chavez nationalized oil assets during the first decade of this century.

The California-based company got a head start on the rest of the sector late last year when the US government awarded it a special license to commence limited operations at four joint ventures and sell Venezuelan crude to American refiners.

“We are a constructive presence in Venezuela, where we have dedicated investments and a large workforce,” Chevron said in an email. “We remain committed to the safety and wellbeing of our employees and their families, the integrity of our joint venture assets, and the company’s social and humanitarian programs.”

Rosneft PJSC
The Russian giant may have the most to lose because the US measure prohibits American companies from cooperating with or providing financing for Rosneft’s assets in Venezuela. The company’s trading arm, which accounted for half of Venezuelan crude exports as recently as 2020, has reduced operations in the country since it was hit with sanctions. Rosneft’s Venezuelan oil joint ventures are run mostly by crews from state-controlled Petroleos de Venezuela SA.

Rosneft didn’t respond to a request for comment left outside of normal business hours.

Repsol SA
The Spanish oil explorer has a stake in one of Venezuela’s biggest undeveloped fields with estimated potential output of more than 300,000 barrels a day. Repsol also is keen to recover money owed by PDVSA related to the offshore Cardon IV natural gas project.

Repsol and partner Eni SpA are in talks with the Nicolas Maduro regime for a license to export liquefied natural gas to European markets.

Repsol didn’t respond to a request for comment.

Eni
The Italian oil company holds stakes in three joint ventures. Prior to the Oct. 18 announcement, it had been permitted to take PDVSA crude in lieu of Cardon IV gas sales but now it will be able to receive direct payments from Venezuela.

Eni said the temporary easing of sanctions will increase “the flexibility and effectiveness of debt collection activities.”

Maurel & Prom
The French driller focused on Latin America and Africa has been expanding its footprint in Venezuela with an aim to boost oil production in Zulia state, Venezuela’s oil cradle. The company, which is 24% owned by Indonesia’s Pertamina, is a participant in the $1.5 billion plan to capture PDVSA’s methane emissions.

Maurel & Prom didn’t respond to a request for comment.

Bloomberg, Fabiola Zerpa and Joe Carroll, October 21, 2023

QatarEnergy Inks Multi-Million Tonne 27-year LNG Deal with TotalEnergies

A 27-year agreement signed between QatarEnergy and TotalEnergies will see Qatar supply up to 3.5 million tonnes per annum (MTPA) of liquefied natural gas (LNG) to France.

Affirmed through two long-term LNG sale and purchase agreements (SPAs), LNG will be delivered via ship to the Fos Cavaou LNG receiving terminal in southern France, with deliveries expected to start in 2026.

According to QatarEnergy, the LNG volumes will be sourced from the two joint ventures between the partners that hold interests in Qatar’s North Field East (NFE) and North Field South (NFS) projects.

Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, President and CEO of QatarEnergy, stated that the agreements ‘demonstrate our continued commitment to the European markets in general’, in particular the French market.

“The State of Qatar has been supplying the French market with LNG since 2009, and the new agreements reflect the joint effort of two trusted partners, QatarEnergy and TotalEnergies, to provide reliable and credible LNG solutions to customers across the globe,” he added.

Enthusing about the company’s new LNG expansion in Qatar, Al-Kaabi went on to say that the project is the least carbon intensive project in the world.

In addition to its projects in Qatar, the company has bolstered production capacity in the US through the Golden Pass LNG export project in addition to its commitments in LNG receiving terminals in Europe.

The NFE project is expected to increase the LNG production capacity of Qatar from 77mtpa to 11mtpa by 2025 by 2025.

Its second phase, the NFS project, is expected to further increase the LNG production capacity of Qatar from 110mtpa to 126mtpa by 2027.

Fears of overinvestment
A recently published study from the Institute for Energy Economics and Financial Analysis (IEEFA) revealed that France faces potential overinvestment in LNG infrastructure as the utilisation rates of existing terminals drop and gas consumption declines.

The research reveals that the average utilisation rate of France’s operational LNG import terminals stood at 60% during the period between January and August 2023.

This was down from the previous year’s rate of 74%, casting doubts on the need for the newly arrived floating storage regasification unit (FSRU) at the port of Le Havre.

Despite a 9% decrease in gas usage in 2022, France is considering an expansion of capacity for operational LNG terminals and international gas pipelines.

“If demand continues declining, France and neighbouring European countries risk investing in gas infrastructure that will fail to improve security of energy supply and could become underutilised,” said Ana Maria Jaller-Makarewicz, author of the IEEFA report and an energy analyst.

GasWorld, Anthony Wright, October 11, 2023