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International News

Total Delivers its First Carbon Neutral LNG Cargo

Total has delivered its first shipment of carbon neutral1 liquefied natural gas (LNG) to the Chinese National Offshore Oil Corporation (CNOOC).

The loading operation was carried out at the Ichthys liquefaction plant in Australia, and the shipment was delivered on September 29 to the Dapeng terminal, China.
“We are proud to have completed this first shipment of carbon neutral LNG with CNOOC, a long-standing partner of Total. This first LNG shipment, whose carbon emissions have been offset throughout the value chain, represents a new step as we seek to support our customers towards carbon neutrality,” explains Laurent Vivier, President for Gas at Total. “The development of LNG is essential to meet the growth in global demand for energy while reducing the carbon intensity of the energy products consumed.”
The carbon footprint of the LNG shipment was offset with VCS (Verified Carbon Standards) emissions certificates financing two projects:
• Hebei Guyuan Wind Power Project, which aims to reduce emissions from coal-based power generation in northern China.
• Kariba REDD+ Forest Protection Project, which aims to protect Zimbabwe’s forests
Total, Second Largest Private Global LNG Player
Our Group has made natural gas, the least pollutant of all fossil fuels, a cornerstone of its strategy to meet a growing global demand for energy while helping to mitigate climate change. We are focusing in particular on LNG, which can be easily transported and delivered as close as possible to consumer markets. Total is present across the entire LNG value chain, from production and liquefaction of natural gas to LNG shipping and trading, regasification using terminals and floating storage regasification units (FSRUs) and contributes to the development of the LNG sector for maritime transportation.
Total is the second-largest global LNG stakeholder in the private industry, with an overall portfolio of nearly 50 Mt/year by 2025 and a worldwide market share of 10%. With over 34 Mt of LNG sold in 2019, the Group has solid and diversified positions across the LNG value chain. The Group sells LNG in all world markets via its stakes in liquefaction plants in Qatar, Nigeria, Russia, Norway, Oman, Egypt, the United Arab Emirates, the United States, Australia and Angola.
Source: Hellenic Shipping
China crude storage flows accelerate as last of cheap oil offloads

China’s flow of crude oil into storage accelerated in September, reversing two months of declines, as the world’s biggest importer of the fuel continued to work its way through massive volumes purchased during a brief April price war.

The flow of crude into commercial and strategic stockpiles was about 1.75 million barrels per day (bpd), according to calculations based on official data for crude imports, domestic output and refinery runs.
China doesn’t disclose flows into the nation’s Strategic Petroleum Reserve (SPR) or commercial storage tanks, but an estimation can be made by deducting the amount of crude processed from the total amount of crude available from imports and domestic output.
China’s crude output was 16.1 million tonnes in September, while imports were 48.48 million tonnes, giving total available crude of 64.58 million tonnes, or about 15.71 million bpd.
Refinery throughput in September was 57.35 million tonnes, equivalent to about 13.96 million bpd, leaving the difference between the two at 1.75 million bpd.
That was up from 1.1 million bpd in August, but lower than 1.92 million bpd in July, and well below the 2.77 million bpd seen in June.
The September storage flows were also slightly below the 1.83 million bpd average for the first nine months of the year, although still higher than the 940,000 bpd for 2019 as a whole.
The rise in flows into storage tanks in September was largely driven by higher crude availability, given that refinery processing was more or less steady, with September’s 13.96 million bpd only just below August’s 14.0 million bpd.
September crude imports were 11.8 million bpd, up 620,000 bpd from 11.18 million bpd in August, and also marking the fifth consecutive month imports have exceeded 11 million bpd.
It’s no secret that the high levels of crude imports by China are the result of a buying spree during the brief price war between top exporters Saudi Arabia and Russia in April.
That price war, coupled with the economic hit caused by lockdowns to combat the spread of the novel coronavirus, sent global benchmark Brent crude to the lowest in 17 years in late April.
While the Saudis and Russians, and other members of the group known as OPEC+ soon reached an agreement to extend and deepen crude output cuts, the price war allowed China to gorge on cheap oil.
So much oil was purchased that tankers were waiting for more than a month outside Chinese ports to discharge cargoes.
However, the overhang of imports is almost over, with Refinitiv Oil Research estimating about 2.7 million tonnes, or about 635,000 bpd, remains to be offloaded in October.
Source: Hellenic Shipping
China Guangzhou Gas says LNG import terminal to begin operations by H2 2022

China's Guangzhou Gas Group said on Wednesday the liquefied natural gas (LNG) storage tank and jetty it's building on the southern coast in Guangzhou is expected to begin commercial operation by second-half 2022, with initial annual throughput of 1 million tonnes.

In slides presented at a gas conference in Shanghai, the company said it would begin issuing tenders to buy over 1 million tonnes per year of LNG for the medium and long term in 2021.
Local government-backed Guangzhou Gas, one of China's fast-growing players in the LNG sector outside the national state giants, had earlier planned to build a 2 million tonnes per year LNG terminal by 2020.
Phase 1 of the terminal project on the southern coast includes building two 160,000 cubic metre LNG storage tanks, while Phase 2 includes building two 200,000 cubic metre LNG storage tanks, according to the presentation.
The jetty will be able to berth a 80,000 tonne LNG tanker.
Source: Zawya
Philippines PNOC aims to start S.China Sea venture with CNOOC by 2021

The president of the exploration arm of the Philippine National Oil Company (PNOC) said on Tuesday the company aimed to start an energy exploration venture with China National Offshore Oil Corp (CNOOC) in the South China Sea by 2021.

PNOC was awarded Service Contract 57 by the Department of Energy in 2005 covering the Calamian oil and gas prospect, near the Philippines' Malampaya natural gas discovery.
Service Contract 57 is among five Philippine exploration projects that can now proceed following President Rodrigo Duterte's decision to lift a six-year-old moratorium on energy-related activities in the South China Sea.
The Malampaya gas field in western Philippine waters, outside the disputed areas in the South China Sea, supplies fuel to four power plants that deliver about a fifth of the country's electricity requirements.
Malampaya is projected to dry up by 2027, based on the latest energy department projection. In 2006, CNOOC acquired a 51% interest while Mitra Energy Ltd took 21% in the Calamian prospect, leaving PNOC Exploration with 28%, but the deed of assignments remained pending at Duterte's office.
Source: Zawya
Singapore Ocean Tankers wants to return most ships to owners

The court-appointed manager for Ocean Tankers Pte Ltd has applied to the Singapore court to return most of the ships the company manages to the shipowners, as cash is running low and Ocean Tankers will not be able to maintain the fleet, two sources with knowledge of the matter told Reuters.

If successful, the move will allow Ocean Tankers, the chartering arm of embattled oil trader Hin Leong Pte Ltd, to resume its cash-generating business such as its oil lubricants business, for which a sales process is underway, the sources said.
Ocean Tankers, Hin Leong, Xihe Holdings and four special purpose vehicles all owned by oil tycoon Oon Kuin Lim and his son and daughter have been placed by the Singapore High Court under judicial management for restructuring after Hin Leong raked up nearly $4 billion of debt.
Ocean Tankers is spending $540,000 a day to maintain around 150 vessels, the sources said, citing judicial manager EY’s update sent to creditors and other stakeholders last week. Ocean Tankers had chartered these vessels, mostly owned by the Lim family, before it ran into financial problems.
EY estimated that “by early November 2020, (Ocean Tankers) will not have sufficient cash to continue maintaining the vessels in the company’s fleet and the operations of the company’s lube plant, storage and terminal business”, according to the update, reviewed by Reuters.
A spokeswoman for EY declined comment to Reuters, citing client confidentiality. Hin Leong’s judicial managers at PricewaterhouseCoopers (PwC), the Lim family and their lawyer also did not immediately respond to a request for comment.
The vessels are incurring costs at a time when they are not generating income, the sources said.
“The JMs are trying their best to preserve the oil lubricants business,” one of the sources said.
According to the update, the Lim family was no longer interested in restructuring Ocean Tankers because the judicial managers of Hin Leong had sued the family.
The Lim family had on Sept. 30 proposed that Ocean Tankers “should be placed into liquidation instead”, the update said.
Source: Hellenic Shipping
OPEC+ fears second virus wave could lead to oil surplus in 2021

OPEC and its allies fear a prolonged second wave of the COVID-19 pandemic and a jump in Libyan output could push the oil market into surplus next year, according to a confidential document seen by Reuters, a gloomier outlook than just a month ago.

A panel of officials from OPEC+ producers, called the Joint Technical Committee, considered this worst-case scenario during a virtual monthly meeting on Thursday. In September, the panel had not seen a surplus under any scenarios it considered.
Such a surplus could threaten plans by OPEC, Russia and allies, known as OPEC+, to taper record output cuts made this year by adding 2 million bpd of oil to the market in 2021.
The Organization of the Petroleum Exporting Countries has not indicated any plan so far to scrap that supply boost.
“The earlier signs of economic recovery in some parts of the world are overshadowed by fragile conditions and growing scepticism about the pace of the recovery,” according to the document used in the panel’s monthly meeting in October.
“In particular, a resurgence of COVID-19 cases across the world and prospects for partial lockdowns in the coming winter months could compound the risks to economic and oil demand recovery,” it said.
The document presented scenarios that included a base case that still showed a deficit in 2021 of 1.9 million barrels per day (bpd) on average, albeit less than the deficit of 2.7 million bpd forecast in the previous month’s base case.
But under its worst-case scenario, the document said the market could flip into a surplus of 200,000 bpd in 2021.
This year, OPEC+ agreed to make record output cuts to support plunging prices as oil demand collapsed. It cut 9.7 million bpd from May, tapering that to 7.7 million bpd from August. From January, cuts are due to ease to 5.7 million bpd.
However, since the JTC met in September, Libyan output has climbed and a global rise in coronavirus cases has led to renewed restrictions on movement in some countries, weakening demand for crude.
OPEC-member Libya is exempt from any production cuts.
Source: Hellenic Shipping
Global oil market to rely more on Middle East as U.S. output falls, experts

Global oil market will rely more on the Middle East as U.S. shale oil production is expected to continue to fall, according to industry experts.

U.S. shale oil production will fall by 900,000 barrels per day in 2020 and drop another 1.1 million barrels per day in 2021, according to S&P Global Platts.
“It will be OPEC (the Organization of the Petroleum Exporting Countries) that will fill the gap for that supply loss as demand recovers,” although some of the non-OPEC countries like Canada, Brazil and producers from Europe’s North Sea will fill some of the gap, said Chris Midgley, global head of analytics with S&P Global Platts, on Friday.
Speaking at a media briefing, Midgley said “ultimately, it will be OPEC that will be needed to fill the gap if it’s required.”
For the week ending Oct., 9, U.S. averaged daily crude oil stood at 10.5 million barrels in comparison with 13 million barrels or higher in February and March 2020, according to the website of U.S. Energy Information Administration (EIA).
The EIA predicted that U.S. averaged crude oil production will fall from 12.2 million barrels per day in 2019 to 11.5 million barrels per day in 2020 and 11.1 million barrels per day in 2021.
However, U.S. crude oil production will be 2 million barrels per day lower by 2024 if Democrats win in the upcoming general election and ban fracking of shale oil and gas, according to S&P Global Platts.
In the long run, U.S. tight oil production is not likely to reach heights projected in previous years and will peak around 2030 while OPEC liquids will fill the gap, according to 2020 OPEC World Oil Outlook, a report issued recently.
Higher dependence on crude oil supply from the Middle East will be bearish to oil prices as Libya’s crude oil output now is set to increase and Iranian crude oil could come back to the market if the United States resumes renegotiations on Iran nuclear issues, according to Shin Kim, head of supply and production analytics with S&P Global Platts.
Kim added that OPEC is also set to taper their production cuts in January 2021.
Source: Hellenic Shipping
China oil buying frenzy slows on high stocks, limited quotas

China has hit the brakes on its oil buying spree as swelling inventories and limited import quotas stifle purchases.

Softening Chinese demand in the final quarter of 2020 comes as renewed lockdowns and a spike in coronavirus cases across Europe and the United States curtail oil consumption, adding more downward pressure on oil prices.
The world’s top crude oil importer has been a critical market for oil producers forced to dump excess supplies at decades-low prices during the height of the COVID-19 pandemic.
“The recovery in China’s demand has been very, very strong, and so if you remove part of that strength, that would have a bearish impact on the (global oil) market,” said Lachlan Shaw, director, head of commodity research, markets at the National Australia Bank (NAB).
China was the only major crude consumer with increased oil demand in the April-September quarters from the year before.
It imported a record 2.108 billion barrels, or 12.8% of total global oil supplies, during that period, according to China customs and International Energy Agency (IEA) data.
Averaging 11.36 million barrels per day (bpd) in Q2 and 11.68 million bpd in Q3, that buying binge from April through September was 16.5% higher from the same stretch in 2019, and provided vital support to prices when the global economy tanked.
However, China’s imports may now fall as much as 1.7 million bpd, or 14.5%, from the Q3 pace for the last three months of 2020, said Shi Fenglei, associate director at IHS Markit.
Seng Yick Tee, senior director with SIA Energy, estimates imports for the remainder of 2020 could fall by 1.2 million bpd from the third quarter, and down 785,000 bpd on year.
Refinitiv analyst Emma Li expects a more than 10% quarterly drop in imports, and a 5% year-on-year dip in Q4 to around 10 million bpd.
Source: Hellenic Shipping
Philippines PXP Energy in talks with CNOOC on S.China Sea development

The Philippines' PXP Energy Corp said it was in ongoing negotiations with China National Offshore Oil Corp (CNOOC) relating to a memorandum of understanding between Manila and Beijing on joint oil and gas development in the South China Sea.

In a market disclosure, PXP said on Monday the talks were being handled by Forum (GSEC 101) Ltd, a subsidiary of its unit Forum Energy Ltd, but the parties had yet to agree on any disclosable definitive agreement.
In what it described as a unilateral decision, Manila has lifted a six-year-old moratorium on oil and gas exploration in the disputed waters believed to be rich in energy and marine resources, a move Beijing did not oppose.
Source: Zawya
Saudi crown prince and Putin discuss OPEC+ agreements and coronavirus

Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman discussed energy markets and the implementation of agreements by the oil producers group known as OPEC+, the Kremlin said in a statement on Saturday.

"Both sides have reiterated their willingness to continue close coordination in this area in order to maintain stability on the global energy market," it said.
The two leaders also discussed cooperation in combating the spread of coronavirus infections and the prospect of using the Russian vaccine Sputnik V in Saudi Arabia.
Source: Zawya