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Regional News

ABU DHABI PORTS COLLABORATES WITH ROBERT ALLAN LTD. TO DEVELOP THE WORLD’S FIRST UNMANNED AUTONOMOUS COMMERCIAL TUGBOATS

Abu Dhabi Ports announced yesterday its collaboration with a global commercial vessel designer and tugboat leader, Robert Allan Ltd., to develop the world’s first fully unmanned autonomous commercial marine tugs.

Once developed, the tugs will join SAFEEN, Abu Dhabi Ports’ maritime service arm, which maintains an expanding fleet of world-class service vessels. One of the primary advantages of the innovative design includes greater capability, as shifting the human element from on-board to on-shore, will allow such vessels to operate in far more adverse weather conditions. Furthermore, the new technology will help increase efficiency and enhance operational safety.

Abu Dhabi Ports will work closely with one of Canada’s oldest privately-owned Naval Architectural and Marine Engineering firms on the research and development of remotely-controlled marine tugs that will be fully unmanned, and be able to operate within a wide spectrum of autonomy.

The two entities have recently signed a Memorandum of Understanding to this effect at the International Maritime Organization gathering in London.

His Excellency Falah Mohammad Al Ahbabi, Chairman of Abu Dhabi Ports said: “In line with our leadership’s guidance, this agreement marks a milestone in our digital transformation, and confirms our commitment to ensure the Emirate of Abu Dhabi strengthens its reputation as a leading centre for digital innovation regionally and globally. It’s a top priority for Abu Dhabi Ports to lead the charge towards digitalising the region’s maritime operations, and we are committed to providing a pioneering model for the sector. Adopting digital solutions and keeping up with the changing demands of global trade have proven to be key drivers for economic growth and are integral towards achieving our goal of being a smart port.

“Developing solutions and building strategic partnerships with industry experts will help achieve a paradigm shift in maritime operations worldwide, and globally in line with the directives of the leadership.”

Captain Mohamed Juma Al Shamisi, Abu Dhabi Ports Group CEO, said: “Our cooperation with Robert Allan to develop a new generation of tugboats equipped with superior capabilities and modern technologies, reflects our commitment to ensuring that the infrastructure at Abu Dhabi Ports is at the cutting edge. We are engaged to provide smart and innovative digital solutions to the marine trade and port community, and to our valued customers. This agreement marks another qualitative addition to our digital armoury that will enhance performance efficiency, productivity, transparency, and safety, as well as reduce costs. Continuing our investment in technology and advanced infrastructure ensures the growth and sustainability of our business, and increases our contribution towards the diversification of Abu Dhabi’s knowledge-based economy.”

Commenting on the MoU, Mike Fitzpatrick, President and CEO of Robert Allan Ltd., said: “We are excited to cooperate with Abu Dhabi Ports in this initiative, which provides us with an optimal opportunity to develop the world’s first fleet of remotely-operated tugboats for the commercial sector. The unique aspect of this project is the active participation of all the various stakeholders in Abu Dhabi and the UAE, which should ensure that we can progress smoothly from construction of the vessels to commercial operations.”

“Robert Allen Ltd. has been working on solutions to the technical challenges of an unmanned tugboat for several years now, but we were somewhat stalled in progressing to a commercial construction without an opportunity like this with Abu Dhabi Ports.”

Source: Hellenic Shipping

MERCURIA SUBSIDIARY MINERVA BUNKERING STARTS OPERATIONS AT FUJAIRAH

Minerva Bunkering, the world’s largest physical supplier of bunker fuels, has started operations at the port of Fujairah on the eastern coast of the UAE following its acquisition last year of Aegean Marine Petroleum Network.

As part of Minerva’s April 2019 acquisition, Minerva Bunkering has taken over the license of Aegean (Fujairah) Bunkering SA, becoming the 13th active licensed bunker supplier at the port, according to Tyler Baron, CEO of Minerva Bunkering in Geneva.

Minerva, a subsidiary of the Swiss trading giant Mercuria Energy Group, has two bunker tankers to supply marine gasoil and low sulfur fuel oil to vessels at Fujairah. It also owns a terminal, currently full, capable of storing 465,000 cubic meters of fuel.

“We have a very strong portfolio of assets in the region. Between our bunker tankers and the storage terminal we think we’re logistically well positioned,” Baron said Tuesday in an interview with S&P Global Platts.

“Minerva’s presence in the big hubs is important to our customers because we can provide them optionality where they can shift volume to Singapore where we can supply them, shift it to Fujairah, shift it to Amsterdam-Rotterdam-Antwerp, or shift it to the Mediterranean. We can supply them wherever it’s most cost-effective and efficient for them to take bunkers.”

Minerva’s Fujairah terminal can accommodate clean products (marine gasoil) with half of its capacity and dirty products (0.5% low sulfur oil), the other half, Baron said. Minerva intends to import product from Northwest Europe and buy fuel from Fujairah’s local sources, such as two local topping units operated by Uniper and VTTI, he said.

Fujairah has attracted large stockpiles of fuel oils after being one of the most expensive bunkering markets in the world. But the coronavirus “caused demand to drop off quite a bit,” Baron said. “The Fujairah market is as we speak in a significant period of adjustment given all the fairly high cost oil that was brought in over a short period of time right before demand and pricing fell off.”

Asked how long it will take to balance the market, Baron said: “You’d have to tell me what’s going to happen with coronavirus. It’s having a material impact on trade and as a derivative on bunker consumption. We hedge all of our molecules but many of the players in Fujairah do not. So given what’s happened in both premiums and the flat price and a lot of unhedged operators in Fujairah, the market is having to readjust quite significantly.”

Fujairah is one of the world’s leading ship refueling destinations with estimated bunker fuel sales of 650,000-700,000 mt/month, prior to the coronavirus outbreak. Saudi Aramco opened up a trading office in the emirate last year and the UAE’s Abu Dhabi National Oil Co. took a 10% stake in Vitol’s part-owned energy storage and refining operation, VTTI. ADNOC is also planning to store crude in underground caverns in the mountains of Fujairah. BP, PetroChina and VTTI are also licensed bunker suppliers providing compliant fuels there.

Minerva has physical operations at 30 ports and 24-hour trading covering 150 ports. It owns 40 vessels and operates 1.9 million cubic meters of storage on the bunkering side.

Source: Hellenic Shipping

OPEC FEBRUARY OIL OUTPUT PLUNGES ON LIBYAN UNREST, SUPPLY CUTS

OPEC oil output dropped in February as Libyan supply collapsed due to the blockading of ports and oilfields, while Gulf members overdelivered on a new production limiting accord, a Reuters survey said.

On average, OPEC pumped 27.84 million barrels per day (bpd) in February, according to the survey, down 510,000 bpd from January’s figure. This is the lowest figure in ten years.

Despite the drop in supply, crude prices have dropped to below $50 a barrel on concern that the coronavirus outbreak will shrink oil demand.

OPEC will meet this week to discuss further steps to support the market, said Reuters.

OPEC, Russia and other allies, known as OPEC+, agreed to deepen an existing supply cut by 500,000 bpd from Jan. 1, 2020.

February’s output was the lowest by OPEC since at least 2009, the year in which the group implemented supply cuts due to the financial crisis, according to Reuters survey records.

Oil output in Libya has dived due to a blockade of ports and fields by groups loyal to eastern-based commander Khalifa Haftar. 

Production in Libya averaged 155,000 bpd during the month, the survey found, down from 760,000 bpd in January.

Source: Oil&Gas

IRAQ EXPORTS RISE 3.3% FROM SOUTHERN TERMINALS

Iraq's federal crude oil exports rose 3.3% in February compared to the previous month, according to official data seen by S&P Global Platts.

Federal exports from OPEC's second-largest oil producer climbed to 3.415 million b/d in February, up from 3.306 million b/d in January, from a month earlier on increased shipments from southern terminals.

The February figure is 311,000 lower than the all-time record of 3.726 million b/d in December 2018, according to figures from State Oil Marketing Organisation obtained by Platts.

The February figure is 311,000 lower than the all-time record of 3.726 million b/d in December 2018.

Exports in January fell 3.5% from a month earlier due to bad weather in the upper Persian Gulf that affected loadings, said Platts.

OPEC+, led by Saudi Arabia and Russia, are currently trimming global output by 1.7 million b/d to soak up excess supply in the first quarter.

In February, Iraq said its January production fell 70,000 b/d to 4.47 million b/d, still above its OPEC+ quota.

The latest S&P Global Platts OPEC survey also showed overproduction in January at 4.6 million b/d, breaking a four-month trend of improving compliance.

Weakened global oil demand, caused by the effects of the coronavirus, is outweighing declines in supply.

More than 89,000 people across 58 countries have been infected by the coronavirus, while the death toll has exceeded 3,000.

Source: Oil&Gas

“OIL DEMAND WILL RECOVER AFTER CORONAVIRUS” – ARAMCO

Oil markets will begin to recover in the second quarter after the effects of coronavirus subside, the head of Saudi Aramco’s trading unit has said.

“By the end of April, we will not have that fear,” Ibrahim Al-Buainain, CEO of Aramco Trading, said in an interview with Arabian Business in London. “I am confident that the support and measures taken by countries will contain the virus.”

Oil prices have dipped to the lowest in a year as the coronavirus causes economic disruption in China and spreads globally.

“Jet fuel demand has been slashed by about 300,000 to 400,000 barrels a day, mostly in China,” said Al-Buainain.

While the abrupt halt in the movement of people and commercial activity threatens to “create a huge dent in the global economy,” trading has so far remained “resilient”, said Al-Buainain.

The trading unit has requested its full monthly allocation of crude from its parent, which in turn is seeing normal customer demand from China, he said.

The London office typically buys and sells about 300,000 to 400,000 barrels a day of crude oil, most of it produced by third parties rather than Aramco itself, Al-Buainain said.

Source: Oil&Gas

SAUDI ARABIA SLASHES APRIL CRUDE OIL PRICES AFTER OPEC’S SUPPLY PACT COLLAPSED

Saudi Arabia slashed its official selling price (OSP) for April for all its crude grades to all destinations, after OPEC’s oil supply cut pact with Russia fell apart on Friday, sending oil into a tailspin.

State oil giant Saudi Aramco has set its Arab light crude oil to Asia for April at a discount of $3.10 to the Oman/Dubai average, down $6 a barrel from March, the company said in a statement late on Saturday.

It cut the April OSP of its Arab light crude oil to the United States to a discount of $3.75 per barrel versus ASCI, down $7 a barrel from March.

Aramco lowered its OSP for Arab light crude oil to Northwestern Europe to a discount of $10.25 per barrel to Ice Brent, down $8 a barrel.

A three-year pact between OPEC and Russia ended in acrimony on Friday after Moscow refused to support deeper oil cuts to cope with the outbreak of coronavirus and OPEC responded by removing all limits on its own production.

Oil prices plunged 10% as the development revived fears of a 2014 price crash, when Saudi Arabia and Russia fought for market share with U.S. shale oil producers, which have never participated in output-limiting pacts.

Saudi Arabia is OPEC’s defacto leader and the world’s biggest oil exporter.

Source: Hellenic Shipping

UAE SUSPENDS ALL CRUISE SHIP OPERATIONS

The Federal Transport Authority of United Arab Emirates has decided to suspend all cruise operations at the country’s ports as part of precautionary measures to prevent the spreading of coronavirus.

The number of coronavirus cases in the United Arab Emirates has risen to 45 from 30, and the region reported a new surge in coronavirus infections over the weekend.

The country has advised citizens and residents against traveling abroad and all schools are closing for a month from Sunday. Events across the country have also been canceled or postponed.

Late in February, UAE suspended ferry services to and from Iran.

Coronavirus has hit both passengers and crew on a number of cruise ships including Diamond Princess, Grand Princess and World Dream.

Source: Splash247

REFINERY NEWS ROUNDUP: WORKS UNDER WAY IN MIDDLE EAST

A number of refineries in the Middle East are carrying out planned maintenance in Q1. Petro Rabigh started works in March, while Ras Tanura’s maintenance, which was also expected for March, will now be carried out in June.

Separately, a minor fire at Iran’s Abadan refinery that occurred in storage tanks of light oil products last week night local time has been controlled and extinguished quickly, according to local media reports. The fire, which was caused by lightning, did not affect operations.

NEW AND REVISED ENTRIES

–Saudi Aramco confirmed that it plans to commence the “temporary shutdown” of Ras Tanura on June 1. “The company conducts periodic maintenance on its facilities from time to time to ensure continuous reliable supply to its customers,” it said in a statement. Previously, the refinery was expected to undergo a month-long turnaround in March. According to traders, the maintenance would last around a month.

–Saudi Arabia’s Petro Rabigh said that maintenance at the plant starts March 1 and will last around 60 days. The company plans “to perform comprehensive and scheduled periodic maintenance work for all operating facilities and production units in the company complex, which requires the complete suspension of these units,” it said in a statement. Traders had previously said that maintenance on the site is expected in Q1.

–Maintenance has been completed at Dubai’s Emirates National Oil Co.’s Jebel Ali refinery, with expansion work at the facility still ongoing, trading sources said. Some maintenance reported last year to various units at ENOC’s plant has been completed, sources said.

EXISTING ENTRIES

–Bahrain’s Bapco will halt its Sitra refinery for works around mid-March, according to sources close to the matter. Market sources expected the works to last around three weeks. The shutdown was expected to impact gasoil and jet fuel, but gasoline and fuel oil are not likely to be affected, according to traders. The FCC and hydrocracker are not expected to be affected by the works, while the reformer will likely be halted for the duration of the maintenance.

–Abu Dhabi National Oil Company’s refinery in Ruwais is scheduled to restart end-March following its shutdown in February for maintenance, market sources with direct knowledge of the matter said. Despite being shut for a turnaround for more than a month, the company does not expect any impact to supply, one of the sources said, as it is a scheduled maintenance program. ADNOC declined official comment. Both the west and east part are undergoing works, while the condensate part would keep running, according to sources.

–Saudi Yasref (Yanbu) refinery is due to carry out a full turnaround early in 2020, according to market sources.

–Germany’s Uniper said it has “identified even more improvements than previously expected” for its Fujairah facility, which will be implemented in phases over 2019-20. The first of the phases started in August and was “expected to contribute to our production gains and operating flexibility objectives for IMO 2020”. Uniper has two 40,000 b/d distillation columns in Fujairah that have been designed to process low sulfur crude oils to produce ULSFO.

UPGRADES

NEW AND REVISED ENTRIES

–Iran’s Bandar Abbas and Imam Khomeini refineries will build coke plants, according to local media reports. The units, which will use fuel oil as feedstock, will take three years to complete and will produce high value products. They will produce around 700,000 mt/year, mostly of needle coke. Separately, the sulfur granulation unit at Isfahan has been completed and launched. It has 300 mt/day production capacity. The refinery last year launched a Phase 3 distillation unit, which adds 120,000 b/d capacity to the existing two distillation units, whose total capacity is 145,000 b/d.

–Maintenance has been completed at Dubai’s Emirates National Oil Co.’s Jebel Ali refinery, with expansion work at the facility still ongoing, trading sources said. Some maintenance reported last year to various units at ENOC’s plant has been completed, sources said. ENOC is currently undertaking a $1 billion expansion program to boost the refinery’s capacity to 210,000 b/d and meet Euro 5 emissions standards. It signed a contract with France’s Technip in September 2016 for the engineering, procurement and construction of a new 70,000 b/d condensate processing train.

EXISTING ENTRIES

–Bahrain Petroleum Company’s (Bapco) expansion of its Sitra refinery is set for commissioning by 2022, according to a local media report. The project is 40% complete and will raise the refinery capacity to 380,000 b/d. The expansion is handled by a consortium including TechnipFMC, Samsung Engineering and Tecnicas Reunidas.

–The Abu Dhabi National Oil Company (ADNOC) and India’s Reliance Industries signed an agreement to explore development of an ethylene dichloride facility in Ruwais. The facility would be adjacent to the Ruwais integrated refining and petrochemical site, with ADNOC supplying ethylene to the potential joint venture and RIL delivering operational expertise and “entry to the large and growing Indian vinyls market,” ADNOC said.

–Saudi Arabia’s Rabigh Refining and Petrochemical Co., or Petro Rabigh, has successfully passed a reliability test of the phase 2 expansion. The test will enable the integration between phases 1 and 2, with phase 2 adding 15 chemical units in the Petro Rabigh complex. Petro Rabigh — a joint venture between Saudi Aramco and Japan’s Sumitomo producing 2.4 million mt/year of chemicals on Saudi Arabia’s Red Sea coast — delayed the start-up of its expansion complex to add 2.6 million mt/year of petrochemical production capacity. Separately, US-based Jacobs has been awarded a contract to provide front-end engineering and design work, as well as project management consultancy, for a fuel oil upgrade project dubbed “Bottom of the Barrel”. The project aims to convert residue from crude distillation.

–Saudi Aramco plans to complete a $2.5 billion clean fuels projects at its Ras Tanura refinery in the first quarter of 2021. Work on the clean fuels project at Ras Tanura, which started in 2018, is 62% complete. The clean fuels project will produce lower sulfur diesel with low benzene content.

–Saudi Aramco has awarded a contract to KBR to provide technology, license, basic engineering design and equipment for its solvent deasphalting for the Riyadh refinery residue upgrading and clean fuels project. The solvent deasphalter technology assists refiners in complying with new International Maritime Organization fuel regulations in 2020, KBR said.

–Satorp has awarded a contract to KBR to debottleneck Train 2 in Jubail, KBR said. The debottlenecking project is expected to increase the original refinery’s throughput by 15% once completed in August. The project will be delivered “to support the upcoming major refinery turnaround in 2020,” KBR said. The refinery’s capacity was increased by 10% in 2018, to 440,000 b/d, after major maintenance on one of its distillation units. Upon the completion of the debottlenecking project, the refinery’s capacity will be increased to 460,000 b/d. A major project for a new petrochemical complex at the site is moving to the FEED stage. The $5 billion project, first announced in April 2018, will be next to the Satorp refinery in Jubail and is due to start up in 2024.

–US engineer CB&I has been awarded a $95 million contract for the expansion and modernization of Sasref.

–Abu Dhabi National Oil Co. will look to bring in partners for its new refinery project in the industrial hub of Ruwais as part of plans to boost refining capacity to 1.5 million b/d by 2026. ADNOC Refining currently has a processing capacity of crude and condensate exceeding 922,000 b/d. ADNOC awarded Scotland-based Wood an $8 million contract to deliver pre-front end engineering and design (pre-feed) for the new refinery project in Ruwais, which is expected to have a capacity of 600,000 b/d.

–KNPC launched a new diesel production unit at its Mina Abdullah refinery, part of the Clean Fuels refinery project. Work on the estimated $16 billion project has been going on since 2014. It will see the 466,000 b/d Mina al-Ahmadi and 270,000 b/d Mina Abdullah refineries integrated into a single complex, with new units added that will increase total capacity to 800,000 b/d.

–Iraq has agreed a $1 billion soft loan with Japan to fund a landmark fluid catalytic cracking complex at the Basra refinery. The Japan International Cooperation Agency said the new plant was expected to process 55,000 barrels per stream day of residue crude from the crude distillation unit in the existing Basra refinery. The complex is targeting a 2024 completion date. Separately, throughput at Shuaiba is set to rise to 280,000 b/d.

–Iraq has added another 10,000 b/d of refining capacity after completing the rehabilitation of a CDU at the Kasik refinery in the north of the country, the oil ministry said. Rehabilitation work continues at the refinery’s other 10,000 b/d CDU.

–The Kermanshah oil refinery in the west of Iran plans to raise capacity by 15,000 b/d and upgrade its products output. “With the implementation of this project, Kermanshah oil refining capacity will reach 40,000 b/d and quality of its products will be upgraded to Euro 5,” the head of the refinery’s board of directors, Sohrab Barandishan, was quoted as saying. No target date for the start or completion of the work was given.

–Iran’s Persian Gulf Star condensate refinery plans to raise its capacity by 140,000 b/d to 540,000 b/d.

–Following a major upgrade project, Iran’s Tabriz refinery expects to reduce its fuel oil production. The refinery currently produces 4 million l/d (1.416 million mt/year) of fuel oil, which is primarily used as a feedstock for tar, production of which amounts to around 1.2 million l/d. Around 2022, the refinery is expected to reduce fuel oil, or mazut, production from around 25% of product output to below 5%.

–Iran’s Abadan, with 400,000 b/d nameplate capacity, aims to stabilize its throughput at 360,000 b/d. It is building a 210,000 b/d distillation unit as part of its upgrade project, which started in 2012 and is scheduled to be finished in 2021. It expects — following the upgrades that consist of four stages — to reduce its fuel oil output by 40%. It is also working on increasing its gasoline production to 20 million l/d from 12 million l/d.

–A gas condensate project is under construction in Iran as part of eight planned 60,000 b/d condensate refineries around Siraf, Bushehr province. The National Development Fund is financing one of the plants.

–Iraq has added another 10,000 b/d of refining capacity after completing the rehabilitation of a CDU at the Kasik refinery in the north of the country, the oil ministry said. Rehabilitation work continues at the refinery’s other 10,000 b/d CDU.

–Jordan Petroleum Refinery Co. has awarded a contract to US engineer KBR for the design of a new residue hydro-processing unit as part of its expansion of the Zarqa refinery in Jordan.

LAUNCHES

NEW AND REVISED ENTRIES

–The first 25,000 b/d unit of UAE-based Brooge Petroleum & Gas Investment Co.’s refinery plans in Fujairah will be operational by the end of the year, CEO Nicolaas Paardenkooper said. The company earlier this week inked an agreement with Al Brooge International Advisory to finalize the technical and design feasibility studies for the refinery. It is slated to produce low sulfur fuel oil in compliance with the International Marine Organization’s sulfur regulations on marine fuels that went into force January 1. BPGIC and BIA are also in talks on sublease and joint venture agreements, under which BIA would sublease land from BPGIC and construct the refinery, and BPGIC would operate the refinery. Once complete, the refinery would be the third in Fujairah alongside units owned by Vitol and Uniper. BPGIC formally signed its land lease agreement for 450,000 square meters in the Fujairah Oil Industrial Zone to build a separate 180,000 b/d oil refinery and 3.5 million cu m of storage tanks.

EXISTING ENTRIES

–Saudi Aramco’s Jazan refinery on the Red Sea was expected to be ready for full operations in the second half of 2020. The refinery and petrochemical complex, expected to reach full capacity of 400,000 b/d by 2021, was on track to start up by the end of this year, Saudi Aramco’s Senior Vice President for Downstream Abdulaziz al-Judaimi said in October.

–Kuwait Integrated Petroleum Industries Company has awarded Honeywell a contract to expand the Al-Zour refinery, Honeywell UOP said. Honeywell UOP will revise the configuration and capacity of the gasoline production facilities and will also supply licenses and design services and key equipment “to produce clean-burning fuels, paraxylene, propylene and other petrochemicals.” The gasoline section will include a 98,000 b/d RFCC complex, a UOP Selectfining unit for the production of low sulfur gasoline components as well as two UOP Merox for treating propane for propylene production and isobutane for clean-fuels blending components. The CCR platformer and naphtha hydrotreater have been expanded “to meet the needs of the larger gasoline and aromatics complexes.” The petrochemical section will include an aromatics complex with capacity to produce 1.4 million mt/year paraxylene. The 615,000 b/d refinery is targeted for completion by 2020. The petrochemicals complex at Al-Zour is due for completion in 2023, with start-up expected in 2024.

–Angola’s state-owned oil company, Sonangol, is working with Iraq’s ministry of oil to build a complex refinery in Mosul. The discussions between Sonangol and the ministry are for a refinery with a capacity of 100,000-150,000 b/d of complex products.

–The Duqm refinery project in Oman was expected to start up in 2022. Construction of the plant, located in the special economic zone in Duqm, began in June 2018.

–Kuwait may add a new refinery in the south of the country, which could add 130,000-160,000 b/d of capacity.

–Canada’s Pacific Future Energy has been awarded a contract to build a 150,000 b/d refinery outside the southern Iraqi town of Nassiriya. Though the contract would be between Pacific Future Energy and the oil ministry, it would be supervised by state-owned South Refineries Company.

–Iraq opened a downstream tender, hoping to attract engineering and construction companies to build a new refinery in Basra province.

–Iraq signed a contract with two Chinese companies for the country’s first new refinery to be built with foreign investors. The contract, with PowerChina and Norinco, covers construction and operation of a new 300,000 b/d export-oriented refinery, along with an integrated petrochemicals complex near Iraq’s existing oil export facilities on the southern Al-Fao peninsula, which leads to the Persian Gulf. The oil ministry is still seeking investors for a 100,000 b/d refinery in Wasit province, a 70,000 b/d refinery in Samawa province, and a 70,000 b/d refinery in Kirkuk. For the latter, it signed a contract with Rania International in February 2018. It has also added a 70,000 b/d site at Diwaniya, in Qadisiya province, south of Baghdad, a new 150,000 b/d project to be built in the west Anbar province and another in Qayarah, a territory previously occupied by the IS. It did not say if it will be a completely new construction or a building out of the existing Qayarah refinery, which has a 20,000 b/d nameplate capacity but has been operating at 4,000 b/d.

–Construction of the 140,000 b/d Karbala refinery, Iraq’s first new downstream facility in decades, has been stalled due to lack of finance. Work has yet to start on the 150,000 b/d Missan refinery.

–Houston-based GTC Technology has agreed to a deal to provide a gasoline production unit to Iraq’s Al-Barham Group, which plans to build a refining complex in the northern city of Kirkuk.

Source: Hellenic Shipping

BAHRAIN COULD CONSIDER SELLING OFF OIL AND GAS ASSETS

Bahrain is set to move some of its energy assets into a state-run fund and sell shares to investors as the kingdom seeks to balance its budget.

The country is working on the project and may decide to proceed with it later this year, Oil Minister Mohammed bin Khalifa Al Khalifa said in an interview with Bloomberg.

After Saudi Arabia sold a stake in national oil company Saudi Aramco last year, “nothing is not for sale anymore,” Al Khalifa told the newswire.

Falling oil prices since 2014 have pushed the Gulf countries to open up to foreign investors to try to boost state income.

Bahrain’s deficit narrowed in 2019 to 4.7% of economic output from 6.3% a year earlier, the Finance Ministry said last month.

The proposed fund and the sale of a stake in it would serve as “a channel for private investors to come in, which they haven’t really done in the oil and gas sector in Bahrain,” Al Khalifa told Bloomberg.

The government is monitoring test wells for oil production at the Khaleej Al Bahrain shale oil and gas deposit discovered in 2018, while gas is in early development there, he said.

The Bahrain ministry plans to organise a roadshow later this year to invite international oil companies to sign deals to produce at three new offshore gas blocks, he added.

Source: Oil&Gas

QATAR EMERGES AS STRATEGIC SHIPPING AND MARITIME HUB

By expanding the size of its fleet, entering into joint ventures agreements, Nakilat has reinforced its position as a global leader in energy transportation and maritime services in 2019, Dr. Mohammed bin Saleh Al Sada, Chairman of Nakilat Board said yesterday.

Addressing the Annual General Meeting of Nakilat yesterday, the Chairman noted that Nakilat currently stands out with a fleet strength of 74 vessels, comprising of the world’s largest fleet with 69 LNG carriers, one Floating Storage Regasification Unit (FSRU) and four large LPG carriers. The majority of Nakilat’s vessels are fixed with long term world class charterers, securing steady and healthy cash flow for the company. Through its in-house ship management, Nakilat operates and manages 18 vessels comprising of 14 LNG and four LPG carriers, he said.

In line with Qatar’s ambition to enhance the resilience of its energy sector supply chain and Nakilat’s business diversification strategy, Nakilat entered into a joint-venture agreement with international service-provider McDermott, to establish Qatar Fabrication Company (QFAB). The establishment of this new joint-venture will further complement Nakilat’s existing range of maritime services.

Dr. Al Sada said Nakilat’s integrated shipping and maritime operations has contributed towards developing Qatar as a strategic shipping and maritime hub.

Highlighting the achievements of Nakilat’s joint-ventures in 2019, Dr. Al Sada said the Erhama Bin Jaber Al Jalahma Shipyard surpassed its 1,000th project milestone since establishment in 2010. Nakilat-Keppel Offshore & Marine (N-KOM) marked its 200th LNG carrier repair and delivered the largest topside fabricated in Qatar for QP’s Bul Hanine project. NSW has undertaken 13,550 tug jobs in 2019, a 1.5 percent increase from 2018 and NAC commenced its global hub agency service and attended to a total of 4,600 vessel calls locally and internationally in 2019, he said.

Abdullah Al Sulaiti, Chief Executive Officer, Nakilat said that after expanding its international presence with a larger fleet, Nakilat is working to take on greater ship management responsibilities in the coming period, as Nakilat steadily consolidate into a fully-fledged shipping and maritime company. “The agreement signed with Maran Ventures for four new-build LNG Carriers will not only enhance the capacity of four fleet, but will strengthen our vessel management and market capabilities for the world’s largest LNG fleet.”

The full ownership acquisition of four Q-Flex LNG carriers that Nakilat currently manages will provide greater operational flexibility and optimization of resources, providing greater value to our customers.

Al Sulaiti said Nakilat is always on the lookout for potential business partnerships and collaborations that would strengthen its portfolio and generate positive return for the shareholders. “Our local ventures continue to value-add to our maritime operations and contribute towards the establishment of an integrated maritime industry in Qatar. The successful completion of one of the most complex offshore projects undertaken at the Erhama Bin Jaber Al Jalahma Shipyard to date, marked a historical milestone for Nakilat-Keppel Offshore & Marine (N-KOM).Made with pride in Qatar, the 877-tonne topside fabricated by N-KOM is the first and largest to be constructed locally.”

With its solid foundations, Nakilat has gained growth momentum to propel it forward from good to great in the coming years. “The future holds such promise for Nakilat and we are confident in continuing to deliver value for our shareholders while bringing the company to greater heights,” he said.

Source: Hellenic Shipping

VLCC RATES SURGE AS SAUDI BAHRI CHARTERS 14 TANKERS AHEAD OF ARAMCO OUTPUT HIKE

VLCC freight rates surged in Asia Wednesday as Saudi Arabian shipping company Bahri chartered more than a dozen VLCCs from the spot market with the country planning to step up crude output by 3 million b/d from April, market participants said Wednesday.

From April, Saudi Aramco aims to pump 12.3 million b/d of crude, which is not only 27% above current output, but would exceed the company’s maximum production capacity by 300,000 b/d.

“In line with Saudi Arabia’s decision, the VLCC market was buzzing [all of] last night,” said Sunil Thakur, a Mumbai-based VLCC broker with Straitship Brokers.

In what was a hectic day for chartering in a long time, apart from Bahri, there were 24 other fixtures done out of the Middle East and separately five other VLCCs booked on the West Africa-East Asia routes. Also, another five were taken for loading in the US Gulf and East Coast Mexico for voyages to East Asia.

“The sentiment is strong and the outlook is bullish,” Thakur said.

Bahri is one of the world’s largest tanker companies with its own fleet of 42 VLCCs, but with Saudi Arabia stepping up output, it will need more tankers to store and deliver this output to prospective buyers, including refineries in the US, sources said.

RATES ON THE RISE

VLCC rates on the hitherto inactive Persian Gulf-US Gulf route rose by 35 Worldscale points to w70 Wednesday, due to these upcoming deliveries, S&P Global Platts data showed.

Several of the ships were chartered by Bahri under Contract of Affreightment, or CoA, deals wherein they can be used to move crude in back-to-back multiple voyages, they said.

This demand is getting reflected in the VLCC rates, which have risen by more than w59.5 day on day Wednesday to w115 on the Persian Gulf-China route, Platts data showed.

The higher rates also benefit Bahri, as they can offer their tankers to other charterers at higher rates.

On the benchmark Persian Gulf-China route, VLCCs were chartered overnight at rates ranging from w56.5 to w82.5.

Bahri is rushing to contain the fire … It will take a few days for the rates to stabilize if all the fixtures are finalized, one of the VLCC brokers said.

Ships are first taken tentatively in what is described as placed on subjects, and within a few days, these deals are either finalized or cancelled.

Bahri’s determined bookings had a spillover impact on other charterers such as GS Caltex, SK Energy, S-Oil and Day Harvest which rushed to cover their cargoes and avoid steep hikes in rates.

There is also a strong demand to take tankers for storing crude now, in anticipation of rates rising in the next few months.

Trading companies such as Vitol and Trafigura, and oil majors including Shell, have made inquiries for floating storage of crude, a tanker broker said.

Owners are now again aiming for rates of over w100 for VLCCs on the Persian Gulf-China route. These rates, seen earlier this year, can now fetch daily earnings of at least $100,000 as bunker prices have declined, thereby reducing operational costs.

Source: Hellenic Shipping

SAUDI OIL PRICE WAR UNLIKELY TO HAVE QUICK END, SAYS GLOBALDATA

Following the news that Saudi Arabia is responding to Russia’s refusal to a new oil production cut agreement by cutting oil prices and boosting supply, Will Scargill, Managing Oil & Gas Analyst at GlobalData, a leading data and analytics company, offered his view:

“The Saudis’ apparent price war is a risky strategy that may take months to play out. In reality, the brunt of the previous OPEC+ production cuts were borne by OPEC members and Saudi Arabia more specifically, with Russia not implementing significant cuts. It appears unlikely that it will allow itself to be forced into them now in response to the reduced demand caused by coronavirus.

“The effect of the price drop will certainly be seen on US shale producers in the coming months. In Russia, taxes on oil producers automatically adjust to price and shield margins, so the effects will mainly be felt by the state, which has a longer time horizon. If Saudi Arabia was hoping to force Russia back to the fold on production cuts it may be left disappointed. Given the evidence of recovery of US shale since the last price crash, it may also gain little from the strategy in the longer term if it persists.”

Source: Oil&Gas

SAUDI ARABIA’S DECISION WILL SEE OIL MARKETS TAKE A BATH – AND OTHER PRODUCERS COULD JUMP IN

The optimism that was very much present in the offshore market at the turn of the year has ebbed away with the spread and impact of COVID-19. What little was left by early March evaporated completely with the collapse of OPEC’s alliance with Russia.

The latter’s decision to not participate in further production cuts that were designed to prop up the market led to Saudi Arabia cutting prices to refiners and moving to increase production after the current cap expires at the end of March.

OPEC+ had been intending to cut a further 1.5 Mn b/d from total production of around 41 Mn b/d, taking the total cuts to 3.6 Mn b/d in order to restore the price floor. Instead, the roof has caved in. At the timing of writing, only Saudi Arabia had communicated its intention to increase production. Its reaction caused oil prices to collapse by 25%, with Brent at around $35/bbl and WTI at $32/bbl.

Having produced around 9.7 Mn b/d in January and given its 2 Mn b/d of spare capacity, Saudi Aramco’s intention to bring production back above 10 Mn b/d looks eminently plausible. The ramp-up could be followed by other increases from the likes of the UAE, Kuwait, and Angola. Russia, which had cut production by around 230 k b/d could also increase its output.

That said, there is still some hope for reconciliation. The UAE’s Oil Minister has stated that given time, Russia could return to the fold. In the absence of such a U-turn, the potential reactions of other states puts downside pressure on commodity prices. The potential price war is still in its infancy.

With oil prices entering Bear territory yet again, the near-term prospects for the offshore market will be called into question. Equities could arguably be oversold but it seems that any marginal projects that were close to a final investment decision will be deferred. We think that West African work, which already had questionable economics, looks particularly at risk, while investment plans in Brazil could be scaled back.

Middle Eastern offshore activity looks to be more resilient. We’d expect Saudi Aramco to continue tendering its Zuluf Redevelopment work, while ADNOC is unlikely to stop the Hail and Ghasha projects. The immediate impact could be that in the absence of work elsewhere these tenders become even more competitive.

We had already expected project awards to decline in 2020. In these early stages of what could be a prolonged event, it seems that we were not conservative enough.

Source: Oil&Gas

ADNOC COULD INCREASE SUPPLY TO OVER 4 MILLION BARRELS PER DAY IN APRIL

ADNOC Group CEO, H.E. Dr. Sultan Ahmed Al Jaber commented on recent market developments:

“Today, as a result of the steps we’ve taken over the last four years, ADNOC is far stronger and better positioned to respond to current market conditions. Our focus on driving performance, profitability and efficiency has made us more resilient, agile and responsive to market dynamics. These guiding principles remain unchanged as we move forward with projects across our value chain.

“In line with our production capacity growth strategy announced by the Supreme Petroleum Council, we are in a position to supply the market with over 4 mbpd in April. In addition, we will accelerate our planned 5 mbpd capacity target.

“In response to market conditions, and to provide better forward visibility to our customers, ADNOC will shortly announce forward prices for the months of March and April 2020. This decision has been made to ensure that our customers have visibility of the price so they can plan accordingly.

“As announced in November 2019, ADNOC remains firmly committed to moving from its current retroactive pricing mechanism to a new forward pricing mechanism for its flagship Murban crude oil. This will be traded on a new independent exchange, ICE Futures Abu Dhabi (IFAD), which is expected to launch after the necessary regulatory approvals are obtained.

“As planned, we remain committed to creating and maximizing value from across our portfolio, while we advance our smart growth strategy.”

Source: Oil&Gas

GAS: A GROWTH OPPORTUNITY

Gas production has been a mainstay of the Middle East’s growth since the first reserves were discovered in the 1900s, and the recent discoveries in excess of 80 trillion cubic feet of gas reserves in Jebel Ali and Sharjah is a prime example of the role of gas in the region’s energy mix. Today, the Middle East region can deliver approximately 8,500 billion cubic meters (bcm) of gas with average breakeven prices of $2.5 per MMBtu (million British Thermal Units) by 2030, according to analysis by Boston Consulting Group (BCG), in reference to a recent report by BCG, Snam and IGU.

Not only has the region grown at an average of 4.6% per year, which is double the rate of global primary energy demand, but its cost of supply has remained competitive in the long-term despite the shale revolution. To assess what drove the rapid growth in the gas market and the ongoing sustainability of that growth, the energy trilemma framework is a useful tool, outlining a distinct interpretation for gas based on an assessment of historical drivers of gas market growth.

Firstly, the cost competitiveness of natural gas continues to improve and new technology and innovation continue to bring down breakeven costs. Secondly, the security of supply of natural gas is also improving, due in large part to the rapid growth in the availability of LNG. Thirdly, sustainability is a key driver of natural gas consumption growth, now and likely in the future.

Developments in each of the three components of the energy trilemma contribute to strong growth in gas markets. However, there are challenges within each dimension that must be overcome in order to sustain the rapid growth of gas markets in the future, including the following.

1. Cost competitiveness: Gas is an abundant resource, and cost position has improved in the past years, but local market regulations and infrastructure still constrain the competitiveness and monetization of gas. As a matter of fact, Middle East gas prices are still largely subsidized and pricing structures largely regulated.

2. Security of supply: Supply continues to grow and become more diverse, supported by large discoveries and greater and more flexible gas liquefaction capacity. Yet the limited scale of cross-border pipelines and gas trading continue to limit access to gas in many Middle East markets as pipeline networks are not unbundled, privatized, and independently operated by pipeline operators and geopolitical tensions do not favor cross-border commercial agreements. There are some signs of change as NOCs with large pipeline operations are now actively looking to monetize their assets, creating the opportunity to more flexible operations and infrastructure investments.

3. Sustainability: Government policies continue to recognize the role of gas in reducing Greenhouse Gas (GHG) intensity and improving local air quality, spurring further gas market development. But methane emissions present a strong challenge to the industry with gaps in the available data on emissions, and a large disparity between different assessment methods.

The future of Middle East gas

The Middle East could maintain its best-in-class position to 2030, despite a rise in production costs is forecasted, BCG data shows. Assessing what is required for strong, sustained gas growth relative to recent trends reveals several key themes that will shape the future of gas in the region and across the globe:

• More widespread development of low-cost gas resources and unconventional gas will be critical for ensuring the ongoing cost competitiveness of gas versus other energy sources. The more consistent development of lower-cost means of delivering gas to end markets will be critical to sustaining greater and more consistent gas market growth.

• Infrastructure for accessing multiple gas supply, flexible terms, and storage capacity are key gaps in multiple markets with the greatest growth potential. Infrastructure investment to date appears to be insufficient to achieve long-term growth expectations and commercial relations shall be normalized and harmonized across all Middle East markets.

• Government policy mechanisms will be critical for internalizing the cost of environmental impacts, supporting the development of low carbon gas technologies, and developing viable pathways for using gas to achieve deep GHG emissions reductions.

To diversify the growth of natural gas and achieve future projections, further key developments are required, including cost innovation. Despite an abundance of low-cost gas reserves globally and in the Gulf region, there are multiple infrastructures, commercial and regulatory barriers to the supply of gas at competitive costs in key markets.

Substantial infrastructure investment is required across natural gas supply chains to enable growth. Given that gas is not always the incumbent fuel source and is infrastructure-intensive to transport, investment requirements in gas are even greater than other sources of energy. Historically, evidence from established gas markets demonstrates that once the infrastructure is developed, gas demand tends to be resilient, so the challenge is to establish infrastructure in the first instance.

As infrastructures are developed, it is not necessary to remove commercial barriers to the gas market, to facilitate commercial transactions across multiple gas operators. The transmission network shall be unbundled and access to the infrastructure shall be granted to multiple operators, disintermediating transactions between buyers and sellers. Recently, Snam has managed in Europe, a global first for the sector, bilateral transactions for the purchase and sale of natural gas are based on blockchain technology. The Middle East gas market could leapfrog other regions, crate a regional gas hub built on the abundance of resources and leverage the advantages in terms of immutability, security and transparency of the data guaranteed by the blockchain.

Finally, Middle East governments should look at enabling policies in terms of extraction, commercialization and use of gas. Multiple examples of policies supporting gas exist in specific governments, but few governments have combined all the tools that can be applied to accelerate a transition to gas in the near term while also developing low carbon gas technologies for the medium to long term. Doing so will be increasingly critical to combatting the dual global environmental challenges of climate change and air pollution. Consistent policies will also be critical to enabling the development of technologies to reduce the emissions intensity of gas itself.

Source: Oil&Gas

US GOES AFTER IRAN’S FLOATING OIL STORAGE

Washington has plans to issue warnings to oil shippers, insurers, and port authorities that storing Iranian crude oil will bring the wrath of US sanctions, a US State Department official said on Monday, according to Reuters.

The US will target those who store Iranian oil or oil products in violation of current sanctions, “no matter where they are” David Peyman, Deputy Assistant Secretary of State for Counter Threat Finance and Sanctions, said in a statement.

The US is also looking to ship captains to obtain and submit to US authorities photo evidence of anyone engaged in the practice of ship-to-ship transfers of Iranian oil,

The United States is still working to get Iran’s oil exports to zero, but China, for one, continues to import the sanctioned oil.

The warning from the United States are likely not empty threats. Last year, Chinese shipper COSCO had several units sanctioned after transporting Iranian crude in violation of the sanctions, resulting in a significant increase in shipping costs for the crude trade.

And just two weeks ago, five US citizens were charged with violating Iranian sanctions by buying Iranian oil and selling it on to China. The accused, if convicted, face up to 25-year prison sentences and fines of up to $1.25 million each.

The increased campaign on Iranian sanctions highlight the United States’ dedication to bring about change after the US pulled out of the nuclear deal. While exports haven’t fallen to zero, exports from Iran have fallen sharply, even after Iran’s efforts to circumvent US sanctions by conducting ship to ship transfers and turning off transponders to avoid detection.

Iran has admitted that the US sanctions have stymied its oil industry, but vowed to continue to resist the effects of the sanctions by increasing subversive activities in the way it ships its crude oil.

Source: OilPrice

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