Base Oil Market

F+L Week in Singapore: Final Call for Papers

Thu, 26 Aug 2010 00:00:00 +0200

Co-located in Singapore, F+L Week allows for maximum networking not only among participants during the week, but also for individual company visits in Asia's oil refining and trading center in between the two events.

F+L Week is an excellent industry platform for your company to:
• Present the latest industry trends
• Discuss your business strategies
• Talk about your latest product offerings

Theme: "Technology & Innovation: Creating More with Less"

Our theme, "Creating More with Less," underlines the issue of energy efficiency/savings on the agenda, as we all face the challenge of resource limitation and serious concerns about the environment. Hence, there is a need to explore all possible avenues to reach the goals/aspirations/targets of energy savings in both the transportation and industrial sectors.

Technology & innovation is undoubtedly the key to success, as we move forward in the transition from the traditional mobile sources of energy to new and renewable forms of energy. Partnership and collaboration can help to deliver more efficient solutions. The SAE F&L Council's Steering Committee for Asia will meet during F+L Week to try to establish a more structured form of collaboration among all key stakeholders in Asia-Pacific.

How to present a paper

If you are interested in making an oral presentation, you may propose a 500-word abstract by sending an e-mail to editor@fuelsandlubes.com no later than August 31, 2010. Your abstract will be reviewed by our conference advisory board.

If your paper is among those selected for oral presentation, you will receive an e-mail notification no later than September 30, 2010.

Belong. Engage. Learn. Benefit.

Below are some of the benefits from speaking at F+L Week:

• Interaction with industry stakeholders--conference participation cuts across a swathe of industry stakeholders, from original equipment manufacturers (OEMs) to government regulators, from oil companies to additive formulators, from different regions of the world.

• Excellent meeting set-up--Our cluster-style set-up, sufficient time allotted per speaker, a pre-conference speaker breakfast--which allows each speaker to meet and interact not only with the session chairman, but also with his/her fellow speakers--give you the best platform to deliver your message.

• Excellent speaker support team--A dedicated portal has been set up in our website where speakers can download presentation guidelines and templates, as well as interact with our team, your session chairman, other speakers, as well as conference participants, months in advance of the conference. F+L Asia supports speakers by providing complimentary editorial and proofreading services in the preparation of their presentation.. Plus, our conference advisory board provides peer review. Finally, we won't publish your paper until we get your written consent.

• Excellent meeting venue--We do not compromise quality. Over the last 16 years, even during recessionary years, we have stuck to our formula: to hold our event in a five-star venue. Our meticulous choice of meeting venues is legendary and our negotiating skills have allowed us to offer these venues at extremely competitive rates. This formula has earned us the reputation of being one of the best organized not only in Asia, but around the world.

• Post-conference exposure--Through our flagship publication, Fuels & Lubes International, and our weekly and monthly publications, Fuels & Lubes Weekly and Oiltrends, we provide you with the vehicle for getting the most media mileage. In addition, our conference proceedings are widely disseminated as these are abstracted by Elsevier's EnCompass and others, and are available for purchase after the conference through our website.

5th Asia-Pacific Base Oil Conference
March 7-8, 2011

17th Annual Fuels & Lubes Asia Conference
March 9-11, 2011

For more infomation and registration please visit:

Fuels & Lubes http://www.fuelsandlubes.com/

F+L Asia Phone: +63.2.772.4731
+63.2.985-0929

Indonesia's Chandra Asri Wants Piece of $7B Refinery Project

Thu, 12 Aug 2010 00:00:00 +0200

Indonesian petrochemical company PT Chandra Asri said it wants to take part in a US$7 billion oil refinery project to be built in Bojonegara, Banten.

The project, which will have a processing capacity of 300,000 barrels of crude oil per day, has long been planned by Pertamina in a joint venture with Iran's NIORD and Malaysia's Petrofield.

Chandra Asri corporate secretary Suhat Miyarso said the company hopes to have a 20-25 percent stake worth around US$1.85 billion in the joint venture.

Other foreign investors, such as those from South Korea, have showed interest in the project but collapsed after failures in share splitting and difficulty in crude oil supply.

Chandra Asri produces ethylene and propylene for which it needs naphtha as feedstock to be produced as a by product by the oil refinery.

Chandra Asri depends on imports for naphtha.

Source: Downstream Today

China: Big Boost in Store for Oil Stocks, Demand

Thu, 05 Aug 2010 00:00:00 +0200

Oil market bulls becoming jittery about the outlook for China's oil demand growth as Beijing taps the brakes on the economy should take heart: the tanks are on their way.
China is on the cusp of a major expansion of its oil storage capacity that will boost its oil imports and underpin its refinery runs going forward, even if the country's GDP doesn't again reach the giddy 11.9% growth seen in the first quarter of the year.

According to the official Xinhua News Agency, China's oil product storage capacity may reach close to 500 million barrels by 2015, nearly 50% above last year's level.

In addition, the country is expanding its strategic petroleum reserve for crude oil with a view to adding capacity of 338 million barrels in two phases to existing stocks of 102 million barrels of crude.

These moves are significant as filling the tanks largely won't be related to how China's economy is performing at any one time, in part because the cost of maintaining unused storage capacity is higher than if it's full.

"There is little doubt that when China starts to build its oil (both crude and products) inventory, it will have a large impact on the global oil landscape, including oil price," says Paul Ting, a U.S.-based independent analyst specializing in China.

It's a hugely expensive operation, both for the oil and the cost of the tanks--China National Petroleum Corp. says it is spending CNY2.4 billion on one storage site in Lanzhou, northwestern China, which will be able to hold 19 million barrels of crude when its ready in the first half of 2011.

China has been the driving force behind the rise in global oil demand in recent years, especially since the second-half of 2008 when government stimulus spending was channeled into energy-intensive infrastructure projects. This is reflected in the price of oil, with benchmark West Texas Intermediate crude currently up nearly 85% on where it finished 2008, despite stagnant demand in many other big oil-consuming countries, like the U.S.

The International Energy Agency predicts China will remain the engine of oil demand in 2010, forecasting consumption to rise 761,000 barrels a day this year to 9.13 million barrels a day, or over 40% of the total growth globally.

However, China badly lags developed countries in terms of having enough oil in reserve to guard against potential supply disruptions.

IEA members such as the U.S. and Japan are required to hold oil stocks equivalent to 90 days' worth of net imports. In contrast, China's end-June crude oil inventory--both commercial and strategic--wouldn't cover more than two months of net imports.

This shortfall was sharply in focus last month when an oil pipeline explosion at the port of Dalian forced some China-bound tankers to divert to Korea, and at least one local refinery had to trim output temporarily. Recent heavy rains also cut output from PetroChina Co.'s (PTR) Liaohe oil field, reducing supply to local refineries.

China--the world's second-biggest oil consumer after the U.S.--has long recognized the need to store more oil.

Fuel storage capacity operated by the country's top refiners, China Petroleum & Chemical Corp. (SNP) and PetroChina, will reach 314.5 million barrels by 2015, Xinhua said last month, citing a senior researcher at China Petroleum and Petrochemical Engineering Institute.

Storage capacity operated by China National Offshore Oil Corp. and private firms will reach around 176.1 million barrels by 2015, Xinhua said.

"These massive storage capacities will not remain unused. China cannot afford to allow its oil inventory to be stagnant. It must build oil inventory at a faster pace than demand if China wants to improve its consumption-day coverage," Ting said.

Demand growth projections point to an eye-catching acceleration in stockpiling. In its medium-term oil market report, the IEA forecast China's total oil use will rise to 11.6 million barrels a day by 2015.

Torbjorn Kjus, an oil analyst at DnB NOR Markets, said an expansion of storage capacity as envisaged by the Xinhua report would increase the need for oil deliveries into China by about 130,000 barrels a day if spread out over five years.

Each new 200,000-barrel-a-day refinery built by China would require about 10 million barrels of oil inventory, Kjus added.

Source: Downstream Today

European Base Oils & Lubricants 2010

Fri, 30 Jul 2010 00:00:00 +0200

European Base Oils & Lubricants 2010

22nd & 23rd September in London, UK

To receive a full brochure or to register simply contact:
Marisa Magtultol on +44 (0)20 7981 2503 or email mmagtultol@acieu.net

ACI's European Base Oils & Lubricants Summit is the ideal meeting place for all senior executives involved in the industry to meet on an annual basis to discuss the challenges that are being faced and to learn about the latest developments making an impact on the sector.

Panel Members Include:

• Geeta Agashe, VP Energy,
Kline & Company
• Katty Hoste, Marketing Specialist,
Chevron Global Base Oils
• Derek Mackney, Chairman of the Management Board,
CEC
• Thomas Norrby, Manager Research & Development,
Statoil Lubricants
• Kari-Matti Elo, Trader,
EcoStream
• Thomas Hickl, Base Engine Hardware, Lubrication Systems,
GM Powertrain Germany GmbH
• Fabio Dalla Giovanna, Director, Technology, Development & Strategic Projects,
Viscolube

and many more.

Key Topics:
• European base oil supply and demand outlook
• The future of Group I base oil plants in Europe
• Raw material availability forecast
• The European re-refining industry
• Latest developments in base oils and lubricants from renewable sources
• Challenges and opportunities arising from HSE policies and regulations
• Forging the future of European base oils and lubricants
• Current and future lubricant market requirements
• Performance specifications for automotive oils and lubricants
• Lubricant industry advancements to meet new requirements

Why Attend?
Following a challenging year for the industry in 2009, the event will be looking at the recovery forecast in the European market and also contain a substantial focus on sustainability issues as well as taking an in-depth look into the current and future lubricant performance requirements from equipment manufacturers and lubricant consumer industries.

We look forward to welcoming you on board. Venue:
Pestana Chelsea Bridge Hotel
354 Queenstown Road
London, SW8 4AE
+44 (0) 20 7062 8000
res.uk@pestana.com

US Bars PetroChina from Processing Sudanese Crude at New Refinery

Thu, 08 Jul 2010 00:00:00 +0200

PetroChina, the largest oil and gas firm in China, has scrapped plans to process Sudanese crude at its new refinery in south China under U.S. pressure, sources told Reuters.

"There is a freeze on Sudanese crude into the new plant, as it is under the U.S.-listed PetroChina, not the parent company CNPC which produces crude in Sudan," said an industry official with direct knowledge of the issue.

Qinzhou refinery was due to become operational next August and was to mainly refine low-cost Sudan crude oil via ship and PetroChina has revamped the port to accommodate 300,0000 deadweight ton.

C1 Energy journal says that the refinery, located in Guangxi Zhuang region, is the first oil refining project of PetroChina in South China with topping capacity of 10-mil mt per year. It is equipped with 2.2-mil-mt/yr continuous reformer, 2.2-mil-mt/yr hydrocracker, 3.5-mil-mt/yr fluid catalytic cracker, etc. It is capable of producing 7-mil mt of oil products annually.

The refinery was supposed to be online last year, but was delayed for insufficient storage capacity and unfavorable domestic product oil market.

Company sources told Reuters last May that Qinzhou is geared to process mostly low sulphur crude oil with a cap on sulphur content at 0.5 percent. The new plant will also be able to process acidic grades such as Dar Blend and Nile Blend that the Chinese state oil giant is producing as an equity investor in Sudan in northeast Africa.

PetroChina started test runs last week at the 200,000 barrels-per-day refinery in Guangxi region, which borders Vietnam, the sources said.

Because of the political pressure, PetroChina has for now shifted to more West African crudes for the new plant, which is slated to enter commercial productions around the end of August.

PetroChina's Hong Kong-based spokesman declined to comment.

It was not immediately known how the freeze on Sudan oil could be executed, as the African state is already China's sixth-largest crude supplier, with daily exports of 252,000 barrels in the first five months of this year, as reported by official Chinese customs data

"One possible way out is for PetroChina to transfer the refinery assets to parent company CNPC," said a second senior industry source

Washington imposed economic sanctions on Sudan in 1997 and strengthened them in subsequent years.

Foreign activity in Sudan's oil industry has come mainly from Asian investment, while Western oil companies have been reluctant to work in the country due to U.S. sanctions and higher risks associated with the country's instability.

China National Petroleum Corp (CNPC), Malaysia's Petronas and India's Oil and Natural Gas Corp (ONGC) are among the foreign oil firms in Sudan.

Source: Downstream Today

Russia May Hike Price Tariff for East Siberia Oil Pipeline - Report

Tue, 06 Jul 2010 00:00:00 +0200

Russia may increase the tariff for shipping crude oil through the East Siberia-Pacific Ocean pipeline, or ESPO, from Aug. 1, the Interfax news agency reported Monday citing an official from the Federal Tariff Agency.

State-controlled oil pipeline operator OAO Transneft (TRNFP.RS) plans to increase tariffs in the overall pipeline system by between 3% and 3.5% from Aug. 1, and prices for shipping crude through ESPO may also be reviewed at the same time, said Denis Volkov, head of the Federal Tariff Agency's oil and gas tariff department.

The ESPO pipeline, which started operating last year, carries 300,000 barrels of crude oil from East Siberia to the Pacific Coast, from where it is shipped to Asian and U.S. markets.

Both export duty on East Siberian oil and transportation through the pipeline are subsidized by the government.

Source: Downstream Today

China Currency Move Poses Oil Demand Puzzle

Thu, 24 Jun 2010 00:00:00 +0200

It's a riddle that might have confounded Confucius: Will China's surprise currency move shift the engine of growth in world oil demand into higher gear or tap the brakes to slow surging consumption?

Oil prices rose 2% early in reaction to China's moves to loosen its exchange rate, but analysts said the knee-jerk reaction faded, as costlier exports may slow exports, reducing the manufacturing sector's oil needs. In an oft-played scene, oil markets are trying to puzzle out the impact of policy shifts in the world's second-biggest oil consumer, expected to account for about 40% of growth in global oil demand this year.

The oil market may have over-simplified the impact of the currency move, seeing only the potential for lower fuel prices at the pump for China's ever-increasing numbers of automobile owners.

"Traders take the view that oil has been re-priced lower in local terms to domestic Chinese consumers," said analyst Paul Sankey at Deutsche Bank. "In fact, Chinese oil product prices are controlled and part-linked to international crude prices, so will not necessarily fall."

Sankey said the bank left its forecast for 2010 growth in Chinese oil demand unchanged at 700,000 barrels a day. "This move may provide a short-term driver to oil markets, but they remain essentially well-supplied," he said, adding it maintains a below-consensus oil-price forecast this year of $71 a barrel.

China announced over the weekend it is effectively ending an informal peg of the yuan to the dollar, but without a direct revaluation of the currency. That dollar peg fueled a surge in Chinese exports by keeping them cheap, but that agitated the U.S.

Jun Ma, Deutsche Bank's chief economist for China, said in report that if the dollar is stable against the major currencies, the move would imply a 3% to 4% annual appreciation in the Chinese currency, which is "less aggressive" than the bank had forecast "as rapidly growing wage inflation ... will also reduce China's export competitiveness." Ma expects the move to cut gross domestic product growth by 0.2% annually and reduce export volume growth by 0.7%.

"The economy [exporters] will slow, but domestic consumption will increase ... this could mean more cars on Chinese roads; but manufacturing growth may be slower," David Hurd, the bank's China-based oil analyst, said in a note distributed by Sankey. "The net effect is probably not that great."

Analysts don't see the currency move curbing Chinese petroleum-products exports.

Paul Ting, a U.S.-based independent analyst specializing in China, said a stronger yuan-dollar exchange rate would reduce Chinese oil import costs, but this would likely be gradual. "The perception may be more important than the physical market response" in pushing up oil prices, he said. But the stronger yuan "can gradually increase China's downstream margins," which will provide incentives to produce more petroleum products.

Ting expects Chinese oil demand to grow by about 775,000 barrels a day, to 9.1 million barrels a day, which is still less than half of world-leading U.S. oil demand.

"The currency strength actually serves to increase downstream [refining] margins, and as such, will relieve the pressure for China to increase domestic prices," Ting said. "Directionally, this should help China to depress inflation." But, he said, if this results in higher domestic demand--or an oil market perception of a higher demand--it could lead to upward pressure on global oil prices, and renewed inflation worries.

"One should not expect a massive oil-price increase, but the currency-inflation-price-demand loop is bullish for oil prices," he said.

Source: Downstream Today

Formosa: Scope of Planned China Trade Pact Too Limited

Mon, 21 Jun 2010 00:00:00 +0200

Formosa Petrochemical Corp. (6505.TW) said it is concerned about rising competition from Asean countries for oil products exports to China, because only a fraction of oil products requested by the Taiwanese oil industry will benefit from the planned wide-ranging trade pact with China, Formosa Petrochemical Chairman Wilfred Wang said Thursday.

"Of course, we are disappointed. We hope we still have a chance to revise the outcome," Wang said at the annual general meeting of Taiwan's only privately run oil refiner.

There is increasing competition from oil products exports from Singapore and Thailand to China, as China removed import tariffs on oil products from these Asean countries earlier this year, Wang said.

Taiwan and China are set to sign an extensive trade agreement in next few weeks covering trade, investment, services and a list of industrial items, including oil products, that will be the first benefit from lower or zero tariffs.

Taiwan government officials said Monday China has agreed to lower or remove tariffs on around 500 Taiwanese items, and Taiwan has decided to lower or remove tariffs on more than 200 items from China.

Source: Downstream Today

Although both sides haven't disclosed details of the lists, Taiwan's petrochemical industry has started expressing its frustrations, because much fewer than the 100 products requested by the industry will likely be on the final list, local media reported.

Taiwan's exports to China totaled US$83.7 billion last year, accounting for 41.1% of the island's exports. Petrochemicals exported to China totaled US$7.88 billion, or 9.4% of the island's exports to China in 2009.

Formosa Petrochemical is the largest member of Taiwan's Formosa Plastics Group, which operates an integrated refining and petrochemical complex in Mailiao in western Taiwan.

WTI oil price at $72, US oil production in 2011 to drop

Thu, 10 Jun 2010 00:00:00 +0200

WTI oil prices are trading back over the $72 mark on Wednesday as US crude oil production in the United States is expected to fall to 5.38 million barrels, produced daily in 2011.

US Light crude oil futures for July rose 55 cents to $72.22 midday Singapore time on the NYMEX.

The US slashed its oil production forecast from federal leases in the Gulf of Mexico by 6.1 percent for 2010, citing a ban on deepwater offshore oil drilling.

Crude oil output will average about 26,000 barrels a day lower than previously forecast in the fourth quarter, based on preliminary estimates following the announcement of the six month ban on May 27th, the US Energy Department said in its Short Term Energy Outlook.

The US government also estimated that 2011 oil production would drop by 70,000 barrels a day because of the deepwater oil drilling ban. Gulf of Mexico oil output will be 1.55 million barrels a day in 2011, down from 1.76 million in the May 2010 forecast.

Overall US crude oil production for 2011 is expected to drop by an estimated 2 percent, which may have an upward effect on WTI oil prices.

Source: Live Oil Prices

HPCL Plans $6.4B Refinery on India's West Coast

Thu, 03 Jun 2010 00:00:00 +0200

Indian state-run Hindustan Petroleum Corp (HPCL) plans to invest Rs 30,000 crore (US$6.4 billion) to set up a 15-16 million tonnes-a-year refinery on the west coast.

The new refinery, which may be in the Raigad district of Maharashtra, would compensate for the current space constraints of HPCL's Mumbai refinery.

"We have been shown three pieces of land by Maharashtra government... We should be able to finalize the location in next few weeks," HPCL Chairman and Managing Director Arun Balakrishnan told reporters in New Delhi.

HPCL has obtained a cost estimate for the 15-16 million tonnes refinery, which would cost Rs 30,000 crore, and is currently extrapolating that for a 20 million tonnes-a-year unit.

"We should be able to finalize location and size of the refinery in 3-4 months," Balakrishnan said. "A consultant for doing detailed feasibility report (DFR) will be appointed in one month."

The land offered for the refinery is located between Ratnagiri and Raigad. The unit, called Maharashtra Refinery, would be completed in 48 months from the date of receiving all approvals, he said.

"We face tremendous space constraint at our 6.5 million tonnes-a-year Mumbai refinery. A refinery of this size is spread over 2,000 acres of land but our refinery is spaced in just 350 acres. We feel in 5-10 years, the space constraint will make the unit inefficient," the official said.

Balakrishnan said the Mumbai refinery may eventually be shutdown once the new refinery is built. "That decision we need to take in 6-7 years."

HPCL, which has a 7.5 million tonnes-a-year unit at Vizag in Andhra Pradesh and is also building a 9 million tonnes plant at Bhatinda in Punjab in joint venture with steel czar Lakshmi Mittal, is contemplating a refinery of the size of 15 or 20 million tonnes-a-year.

"We are commissioning a feasibility study which we expect will be completed in six months. Investment decision will be made based on the feasibility study," he said.

"We have sounded Maharashtra government for 2,500-3,000 acres of land for the project," he said.

The project may be funded in a debt-equity ratio of 2:1 or 2.5:1.

The new refinery project comes on the heels of HPCL being forced to put on back-burner a US$10 billion refinery-cum-petrochemical project at Vizag after Mittal and French oil major Total SA pulled out.

The export-only 14 million tonnes-a-year refinery was being planned to target South East Asia and the Middle East.

Source: Downstream Today

Crude Price Declines on EIA Supply Report

Fri, 14 May 2010 00:00:00 +0200

Oil prices fell 72 cents Wednesday as the market contends with an oversupply of crude in storage. The settlement price for a barrel of light sweet crude oil on Wednesday was $75.65, marking the second consecutive decline this week. A key contributor to the price drop was a U.S. Department of Energy report showing abundant stockpiles at the Cushing oil trading hub. In fact ,the Energy Information Administration reported that inventories hit a record last week.

The performance of the natural gas futures contract was a bit rosier Wednesday. The settlement price for gas was $4.28 per thousand cubic feet, edging out Tuesday's price of $4.13. Prices have been buoyed by encouraging economic news as well as recent colder-than-normal weather.

Gasoline prices were ended the day virtually unchanged, settling at $2.21 per gallon. The previous day's settlement price was $2.20.

Source: Downstream Today

Crude Oil Rebounds as Widening Differential Prompts Purchases

Fri, 14 May 2010 00:00:00 +0200

Oil rebounded as a widening discount for front-month crude against futures for later delivery prompted purchases of the contract.

The price of oil on the Nymex for June delivery is $3.66 a barrel lower than for July, narrowing for the first time since April 29. Yesterday, the spread between the contracts rose to $4.50, the widest divergence between front month contracts since Feb. 12, 2009. This contango has encouraged investors to hold supply for future delivery.

“The spread just got too wide,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut-based procurement adviser. “It got so wide that speculators saw value in the front contract and jumped in.”

Crude oil for June delivery rose 12 cents to $75.77 a barrel at 1:29 p.m. on the New York Mercantile Exchange. Futures touched $73.62, the lowest level since Feb. 12. Prices are down 4.5 percent this year.

Brent crude oil for June settlement declined $1.01, or 1.2 percent, to $80.19 on the London-based ICE Futures Europe exchange. Brent, usually cheaper than Nymex futures, is trading at a $4.42-a-barrel premium.

“It’s like someone just switched a switch,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “The June contract was the weakest thing on the board against everything. There were a lot of shorts out there. We started to rally, got above $75, and the shorts had to run.”

Source: Bloomberg Businessweek

Petrobras To Sell Refinery, Distribution Assets In Argentina

Thu, 06 May 2010 00:00:00 +0200

Petrobras announced Wednesday that its subsidiary Petrobras Energia S.A. has approved the terms and conditions of the sale of the refining and distribution assets in Argentina to Oil Combustibles S.A. The deal includes a refinery located in San Lorenzo, Santa Fe province; a river unit; and a fuel marketing network linked to the refinery, consisting of 360 service stations and their associated wholesale customers.
The offer for the mentioned assets was approximately $36 million. In addition, inventories of oil and of the different products will be sold to Oil Combustibles, on the closing date, for approximately $74 million. The total amount of the transaction is estimated at some $110 million.

The deadline for the completion of the sale was estimated at 90 days and is subject to the governmental approvals required by Argentina legislation.

The operation does not include the sale of the reformer unit that Petrobras Energia has in its Puerto General San Martín Petrochemical Complex.

Source: Downstream Today

Gas prices

Mon, 03 May 2010 00:00:00 +0200

Oil Finds Resistance above $84; Bulls Still in Charge

Thu, 15 Apr 2010 00:00:00 +0200

Continuing a negative movement on the New York Mercantile Exchange, crude futures closed just above $84 a barrel Tuesday as oil traders remained cautious ahead of this week's inventory data, which is expected to spotlight still-bearish crude supplies.

Today, the price of light, sweet crude oil for May delivery traded lower for a fifth consecutive session on the NYMEX, ultimately settling to $84.05 a barrel.

Moving in opposition to crude, both NYMEX gasoline futures and natural gas spot prices at the Henry Hub gained on the session to $2.31 a gallon and $4.16 Mcf, respectively.

"Oil prices have fallen in recent sessions, and rightly so," said Phil Flynn, senior market analyst at Chicago-based PFG Best.

Oil Bulls Still in Charge
But even with prices beginning to wind down from recent highs, oil bulls haven't lost their grip on the energy market.

In fact, oil and gasoline futures maintained bullish price tags for Tuesday's sessions despite MasterCard's SpendingPulse report underscoring a drop in retail gasoline demand by 3.6% for the previous week.

However, emphasis on this fundamental demand has stymied oil prices from reaching a new threshold of $90 a barrel.

Highlighting demand concerns in the market, Flynn pointed to the International Energy Agency's comments as a primary impetus for today's lower crude price.

Specifically, the IEA has warned that oil prices could potentially bottleneck demand growth if prices rise too far unmitigated.

"Last week, oil broke above $85, but it did so on light volumes, and I think the [market] was fueled by a bit of irrational exuberance after the price reached that level," Flynn said.

"Since that point, the market is focusing more on the supply and demand situation and the fact that the summer driving season is just around the corner, but supplies are still going to be more than ample," the analyst contended.

Source: Downstream Today

Oil price continues to fall; bargain buying boosts gas price

Thu, 15 Apr 2010 00:00:00 +0200

HOUSTON- Crude prices fell for the fifth consecutive session amid a record trading volume in the New York market on Apr. 13 and concerns of a world oversupply of oil.

However, the front-month natural gas contract jumped by 3.8%, “mainly motivated by bargain hunting, as prices have dropped 18% year-to-date on the continuing supply glut and moderate spring temperatures,” said analysts in the Houston office of Raymond James & Associates Inc.

In New Orleans, analysts at Pritchard Capital Partners LLC reported “speculation that producers are finally feeling the brunt of continued low prices and may start to cut back output and drilling activity.” However, they said, “Prices have been seeing support around $4[/MMbtu] as consumers of the fuel step in to take advantage of low prices.”

Adding to market anxiety was a report from the International Energy Agency in Paris again raised its forecast for crude production outside of the Organization of Petroleum Exporting Countries to 600,000 b/d of annual growth (from its previous forecast of a 220,000 b/d non-OPEC increase) to 52 million b/d production for 2010, a 1.2% year-over-year increase (OGJ Online, Apr. 13, 2010).

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “At the current price of West Texas Intermediate and on a continued roll of the prompt contango, a long-and-hold position on the front month WTI will not make money over the next 12 months unless WTI moves above $97/bbl. Given that such a price would be met by a double-dipping of the economy and by Saudi Arabia opening the spigots, the risk-reward of a long-and-hold position in WTI related instruments is asymmetric to the downside. In the current market structure, passive investors need to move to the back of the curve, but given that one can hide but not run away from the contango, buying the back of the curve ($89.50/bbl May 2011) offers as well limited upside vs. the economy and OPEC.”

Oil and gas prices were up in early trading on the New York futures market Apr. 14.

US inventories
The Department of Energy’s Energy Information Administration said Apr. 14 commercial US crude inventories fell 2.2 million bbl to 354 million bbl in the week ended Apr. 9 when Wall Street analysts expected an increase of 1.3 million bbl. Such an increase would have been “the eleventh in a row and the longest such streak since 2004,” said Raymond James analysts.

Gasoline stocks dropped 1.1 million bbl to 221.3 million bbl in the same period, slightly beyond Wall Street’s consensus for a 1 million bbl decrease. EIA reported distillate fuel inventories increased by 1.1 million bbl to 146.8 million bbl, slightly above Wall Street expectations of a 1 million bbl build.

The American Petroleum Institute earlier reported crude stocks were up 1.4 million bbl to 354.4 million bbl, gasoline inventories increased 1.6 million bbl to 221.8 million bbl, and distillates gained 1.7 million bbl to 150 million bbl in the same week.

“As expected, the API revised last week’s estimate of crude oil in Cushing, Okla., [up] by 2 million bbl but with a further build during the week of 1 million bbl,” Jakob said. “API is still much below the levels of the DOE on the US Gulf [Coast] stocks. In distillates, there is still a very significant divergence between the API and the DOE, with the API higher by more than 4 million bbl. In gasoline, the API-DOE divergence is, however, minimal.”

According to the latest MasterCard Spending Pulse report, gasoline sales at the pump were down 3.6% last week and down 1.1% from the comparable period a year ago. However, Jakob said, “Comparing with the week of last year is distorted by the fact that last year the Easter break was 1 week later; and it is better to look at the 4-week average, which is [up] 1.1% vs. last year. That amounts to an increase of 107,000 b/d, which is the amount of additional ethanol blending required by the Environmental Protection Agency; hence the current growth of US gasoline consumption does not translate [into] an increase for petroleum gasoline, i.e. crude oil.”

Imports of crude into the US last week were down 681,000 b/d to 8.9 million b/d, EIA reported. In the 4 weeks through Apr. 9, US imports of crude averaged 9.2 million b/d, 10,000 b/d less than in the comparable period in 2009.

The input of crude into US refineries increased by 209,000 b/d to 14.8 million b/d last week, with units operating at 85.6% of capacity, said EIA officials. API earlier reported operating capacity up slightly to 84.8%.

EIA said gasoline production increased to 9.2 million b/d while distillate fuel production decreased slightly to 4 million b/d last week.

Energy prices
The May contract for benchmark US light, sweet crudes fell as low as $82.51/bbl in intraday trading Apr. 13 on the New York Mercantile Exchange before closing at $84.05/bbl, down 29¢ for the day. “The short-term momentum has turned from positive to negative, but there was enough buying on the dip to regain the important support level of $83.95/bbl on WTI. That level will likely remain the point of focus for today but given the current market structure (contango) and the across-the-board stock builds previewed by the API it will take deeper and deeper pockets to seek additional momentum buying on a new high ($87.09/bbl),” said Jakob.

“When we take in consideration the extraordinary volume that was traded on WTI yesterday, we have to be concerned (frightened might be a better word) about the deepness of the pockets that do not want to let WTI drop below the support levels,” he said. “Daily volume on WTI as been on the high side for the last few days, but the preliminary numbers for yesterday are just phenomenal and at 1.4 million WTI contracts exchanged it is a new record high…by very far. This is a new playing field.”

The June NYMEX crude contract lost 17¢ to $85.11/bbl. On the US spot market, WTI at Cushing was down 29¢ to $84.05/bbl, in lock-step with the front-month futures contract price. Heating oil for May delivery dipped by 0.47¢ to $2.21/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month continued to increase, however, up 1.35¢ to $2.31/gal.

The May natural gas contract rebounded by 15.2¢ to $4.16/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., dropped 3¢ to $4.01/MMbtu.

In London, the May IPE contract for North Sea Brent crude lost 5¢ to $84.72/bbl. Gas oil for May dropped $12.50 to $700/tonne.

The average price for OPEC’s basket of 12 reference crudes declined 68¢ to $81.52/bbl.

Source: Oil & Gas Journal

ConocoPhillips To Shed Refining Capacity

Thu, 25 Mar 2010 00:00:00 +0100

ConocoPhillips (COP) said Wednesday it will curb its oil and gas output in the short term and shed some refining capacity as it restructures to become a nimbler, more profitable oil giant.

At its annual analyst meeting in New York, the company said it expects production in 2012 to be 1.7 million barrels of oil equivalent a day, about 8% lower than its 2009 production levels, after it sells $10 billion in assets to shore up its finances. However, the oil giant expects to increase its output about 2% to 3% in the long term, with a special focus on producing energy in North America.

The Houston company also said it plans to reduce its refining capacity by 19% to 26%, to a range of 2 million to 2.2 million barrels a day in 2012. Chief Executive Jim Mulva said the company intends to eventually generate 80% to 85% of its revenue from the sale of oil and gas, up from 70% to 75% now.

The shift underscores deep transformations in the energy business unveiled by the recession. The refining business, extremely profitable only two years ago, now is in the doldrums as demand for fuel in the developed world has peaked and stricter environmental regulations increase costs. At the same time, state oil firms are keeping the best energy resources for themselves, shutting international oil companies out. Many companies are focusing instead on North America, blessed with abundant gas resources and a more predictable fiscal regime.

ConocoPhillips, the third-largest U.S. oil company after Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), is also the one that suffered the most from the recession, from the ongoing changes in the business, and from the massive debt resulting from the takeover of Burlington Resources in 2005. In addition to reinventing itself for the new energy picture, the company is now seeking to boost its lagging share price by buying back shares and increasing its dividend 10%. Conoco shares traded at $52.57, up 0.1%.

"It's a good strategy," Oppenheimer & Co. analyst Fadel Gheit said. "Now the question is execution."

The company said it would halve its 20% stake in Russian oil giant OAO Lukoil Holdings (LUKOY, LKOH.RS) in order to buy back shares. Conoco expects to receive about $5 billion based on recent share prices, currently at levels seen five years ago.

"We just felt it was [better] for us to take half of our ownership and invest in our own shares, rather than Lukoil's," Mulva said.

However, Mulva said Conoco intends to maintain a foothold in its Russian partner. "It's important for us to be in Russia," he said, noting that ConocoPhillips "can still have a relationship with Lukoil."

The partial sale of the Lukoil stake "is the right move," because Conoco can cash out of its investment while maintaining a close link to the Russian company, said Phil Weiss, an analyst with Argus Research. Right now "they're not getting a great return."

This year, Conoco said, it plans to complete half of its $10 billion asset sales program, disposing of its 9% stake in Canadian oil sands consortium Syncrude, its share of the Rockies Express natural gas pipeline, 10% of its portfolio in the lower-48 states and western Canada, and what's left of its U.S. gasoline and diesel marketing operations. Most of these sales are expected in the second half of the year, the company said.

In addition, Conoco plans to divest itself of other exploration and production assets, as well as refining and marketing units, by year-end 2011.

Conoco plans to maintain a capital expenditure budget of $11 billion to $12 billion for this year and 2011. Capital spending will rise to a range of $12 billion to $13 billion from 2012 to 2014, the company said.

Source: Downstream Today

Oil Sands Exporters Set Sights On Gulf Coast

Thu, 25 Mar 2010 00:00:00 +0100

Canadian producers of crude from oil sands are making a big push into the U.S. Gulf Coast market, where refiners are paying the highest prices in decades for low quality, high-sulfur oil.

Historically, Canadian high-sulfur, or "heavy," crude, shipped by long-distance pipeline, has struggled to compete against cheaper, seaborne shipments of oil from Mexico, Saudi Arabia and Venezuela. But Mexico's heavy-crude output is declining and Venezuelan exports of the stuff to the U.S. have dropped amid a rocky political relationship between the two nations. Saudi Arabia, meanwhile, has also cut exports of high-sulfur crude, which is less profitable than lighter varieties, as part of broader cuts by the Organization of Petroleum Exporting Countries.

Reduced competition and higher prices for Canadian crude come at a good time for Alberta's oil-sands industry, which is expected to double within the next 10 years to 3.1 million barrels a day and requires new markets to soak up the growing output. While Canada supplies a quarter of U.S. oil imports, only 2.2% of the crude refined in the Gulf Coast region--which has the lion's share of U.S. heavy-crude refining capacity--came from north of the border last year.

"We think there's an opportunity for Canadian companies to gain more market share in the Gulf market," said Alberta Energy Department Assistant Deputy Minister Mike Ekelund, who is in charge of the province's resource strategy. "We're a supplier that's right next door, we're relatively politically stable, and we think there's a great deal of benefit for Americans in terms of having a secure access to supply."

Mexico's heavy crude oil is in decline due to waning production from its giant Cantarell offshore field in the Gulf of Mexico, and U.S. exports declined to 1.24 million barrels per day last year, down 28% from their peak in 2006.

In Venezuela, production has been in decline due to political instability and lack of new investment. President Hugo Chavez has also begun to send a fraction of his country's crude exports away from the U.S. to the Chinese market, and has cut exports in recent months to meet OPEC mandates. Imports from Venezuela have dropped to under 900,000 barrels a day in recent months, cut in half from peak rates during the 1990s and down a quarter from 2008.

Meanwhile, other OPEC exporters, mandated to cut production to keep prices high amid lower world demand, have cut production of less-profitable heavy crude first. Saudi Arabia reduced imports to the U.S. to under 1 million barrels per day, down a third from 2008, with most of the reduction in heavy crude.

As the Gulf Coast's regular supplies of heavy crude oil have declined, the price for it has shot up, as Gulf refiners--heavily invested in the heavy-oil cokers used to break the stuff into lighter grades--are willing to pay more to keep their facilities running.

Canadian Natural Resources Inc. (CNQ), a large Canadian oil and gas company with significant production of heavy crude from the oil sands region, said the Canadian heavy oil discount to West Texas Intermediate crude dropped to an average of 16% during the fourth quarter.

"Historically the heavy oil differentials have been in that 30% to 45% range, averaging about 32%," Canadian Natural President Steve Laut said during the company's fourth-quarter conference call earlier this month. "We think that has structurally changed and right now, as you know, Canadian heavy crude differentials are probably in that 10% range, very low."

Laut said high heavy crude prices were likely to drop a bit, but Canadian heavy crude would likely trade at a discount of 22% to 24% for the foreseeable future.

As a result, Wall Street analysts have begun rewarding Canadian companies that are slanted toward heavy-crude production. Analysts at Goldman Sachs, Morgan Stanley, Credit Suisse, Raymond James, Scotia Capital, BMO Capital Markets, and Canaccord Adams have all upgraded Canadian Natural to buy-equivalent ratings this year.

Canada's government is aiming to help heavy-oil producers expand in the U.S. Gulf market, too. Earlier this month, Canada's national energy regulator approved the construction of TransCanada Corp.'s (TRP) Keystone XL pipeline, which is designed to eventually bring 900,000 barrels of oil a day from Alberta to the Gulf, and is the first of several major pipeline projects aimed at taking Canadian crude further south.

Source: Downstream Today

Shell To Trim Refining Capacity, Exit Retail Markets

Thu, 18 Mar 2010 00:00:00 +0100

Royal Dutch Shell plc on Tuesday announced updates to its strategy, including plans to reduce its worldwide refining capacity by 15% and exit 35% of its current retail markets.
"Our 2009 earnings were sharply reduced by the recession, despite Shell's self-help programs and $2 billion of cost savings," said Shell CEO Peter Voser in a written statement. "Although oil companies have been cushioned from the recession by OPEC's action on quotas and oil prices, Shell has been disadvantaged recently, due to our higher exposure to refining and natural gas, where margins are hard-wired to the economy. This has come in a period where our spending is at historically-high levels, as we invest for medium-term growth."

Voser said that near-term pressures on downstream and gas margins remain. In contrast, he described medium-term upstream fundamentals as "robust" and stated the company expects oil to trade typically in the $50-$90 range. "In natural gas, cleanest of all fossil fuels, the medium-term fundamentals are also attractive for Shell," Voser continued. "However, the global refining industry may be in over-supply for some time."

The Shell CEO stated that the company's strategy focuses on strong operating performance and sustained investment for organic growth. "That strategy is robust, despite the difficult economic environment," he said. "But the company had become too complicated and slower to respond than we'd like. So we are sharpening up."

In terms of narrowing its near-term performance focus, Shell plans $1 billion of cost savings this year as well as the reduction of some 2,000 positions by the end of 2011. Also, it intends to exit from non-core positions companywide via $1-3 billion of asset sales. Finally, the company is pursuing new initiatives designed to improve its downstream business by focusing on its most profitable positions and growth potential. This will translate into an exit from 15% of its worldwide refining capacity, from 35% of its current retail markets, and various steps to further improve its chemical assets.

Despite its pending actions to reduce its downstream business, Shell is adding chemicals capacity in Singapore and refining capacity in the U.S. Moreover, the company states that it is advancing "selective growth investment" in marketing. "Downstream, we are making substantial investments in new refining and petrochemicals capacity," said Voser. "Once these projects are on stream, I expect the downstream growth emphasis will switch to further strengthening our marketing for the next several years."

Source: DownstreamToday

Oil Climbs Back above $81 on Low Rates, Weak Dollar

Thu, 18 Mar 2010 00:00:00 +0100

Riding a fresh wave of good economic sentiments, NYMEX crude oil futures scaled higher after a two consecutive sessions on the downside as the dollar weakened and the U.S. Federal Reserve kept interest rates low.

Erasing recent losses, the price of light, sweet crude oil for April delivery gained by more than 2% on the session to settle back in positive territory at $81.70 a barrel. NYMEX gasoline futures also closed on the upside Tuesday at $2.28 a gallon.

On the opposite side of the energy coin, natural gas spot prices at the Henry Hub settled down to $4.35 Mcf. This year's uptick in demand for land rigs is driving expectations for an influx in natural gas supplies, which may push the energy commodity's prices even lower.

Oil's Arrow Aims High on Low Rates
"Crude is continuing to show its attachment to the broader financial markets," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. The analyst noted that oil prices have been underpinned by financial movements "for the last half-year."

Specifically, McGillian pointed to a sell-off in the U.S. currency and rally in equities as the main impetuses for today's rebound in oil prices.

Today, markets rallied as the Fed chose to keep rates down near zero for an extended period while the recovering domestic economy continues to make strides. Additionally, the Japanese yen triumphed over the U.S. greenback, renewing risk appetite for dollar-denominated commodities.

"Whether or not there is sufficient strength in the oil market to really push on through [these highs] remains to be seen," McGillian warned. "Now we're going to take a look at this week's inventory reports to see if there's any sign that fuel demand is starting to get better."

Source: Downstream Today

Infineum introduces ILSAC GF-5 and dexos 1 qualified product

Tue, 16 Mar 2010 00:00:00 +0100

Infineum, a major worldwide formulator, manufacturer and marketer of lubricant additives, announced the launch of Infineum P5711, which meets ILSAC GF-5, the new passenger car engine oil performance category and the new dexos™ 1 specification from General Motors (GM). “We are pleased to deliver Infineum P5711, our top tier full synthetic product well before the ILSAC GF-5 first allowable use date of October 1, 2010,” said Florence Thauvin, segment manager for passenger car engine oil. GM will stipulate the new dexos™ 1 specification globally in factory fill and service fill applications for its 2011 model year and later vehicles. Formulating to meet dexos™ 1, a unique combination of the most demanding API, ACEA and GM power train tests, represents a significant investment by Infineum in a collaborative effort with GM. The specification will ensure gasoline engine protection for worldwide GM fleets. (Friday, February 26, 2010)

Shell plans to grow its investments in Asia

Tue, 16 Mar 2010 00:00:00 +0100

Oil giant Shell is planning to grow its investments in Asia to catch a bigger slice of the market for lubricants in the region. According to Andrew Foulds, Shell’s vice president for lubricants technology, China is a key market for the company and its one-million-metric ton Zhuhai lube blending plant was built so that its capacity can be easily doubled, he told the 16th Annual Fuels & Lubes Asia Conference in Singapore. The Chinese auto market is the fastest growing in the world. Annual sales last year jumped by some 46% from 2008 to 13.6 million vehicles. Shell said it expects to see the market expanding even further. (Friday, March 05, 2010)

Oil ends above $82

Tue, 16 Mar 2010 00:00:00 +0100

NEW YORK -- Crude-oil futures rose to finish above $82 a barrel on Wednesday, lifted by better-than-expected U.S. supplies data, a strong economic report from China and forecasts of higher global demand.

Crude oil for April delivery finished up 60 cents, or 0.7%, at $82.09 a barrel at the New York Mercantile Exchange.
In early trade, oil first benefited from strong imports data from China as well as higher forecasts for oil demand from both the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration.

Crude then jumped to $83.12 a barrel, its highest level since it reached a 2010 high of $83.25 barrel on Jan. 8, after data from the EIA showed a smaller-than-expected increase in U.S. crude supplies and a big drop in gasoline supplies.

But the data also suggested U.S. demand remains weak. Refinery usage fell 1.2% to 80.7% of capacity, the lowest rate since Feb. 12. And crude supplies remain at a 5-year high right as winter, normally a heavy season for energy consumption, comes to an end.

"Market participants have been reticent to push prices to new highs and will continue to be so until a compelling rationale appears," said Mike Fitzpatrick, energy analyst at MFGlobal, in a note. "OPEC and stockpile reports will not be enough."

Crude-oil supplies were up 1.4 million barrels in the week ended March 5, the EIA said. Analysts polled by Platts expected an increase of 2.1 million barrels.

The EIA also reported a drop of 2.9 million barrels in gasoline stocks. Analysts polled by Platts expected a decline of 338,000 barrels.
Below the surface, however, the EIA data didn't reveal an improving picture for U.S. demand, according to Tariq Zahir, managing member of Tyche Capital Advisors.

"While the fundamentals of the energy complex are bearish the energy markets have taken an outlook of improving demand and global recovery," Zahir said in emailed comments. "This was highlighted by recent numbers out of China from imports and the upward increases in outlook for demand by OPEC and the EIA."

While crude inventories are still rising, the drop in gasoline stocks was due to refiners doing maintenance to switch from heating oil to unleaded gas, Zahir said.

The analyst says that speculative money into the energy market has increased recently, as shown by the latest figures from the U.S. Commodity Futures Trading Commission.

The EIA also reported a drop of 2.2 million barrels in supplies of distillates, which include heating oil. Platts' average forecast of analysts was for a drop of 950,000 in distillate stocks.

Elsewhere in the energy complex, gasoline for April delivery finished up 3 cents at $2.29 a gallon, while heating oil for the same month rose 3.1 cents to $2.12 a gallon.

April natural gas rose 4.4 cents to $4.56 per million British thermal units.

Source: MarketWatch

Valero: Still Considering Options for Aruba Refinery

Tue, 16 Mar 2010 00:00:00 +0100

HOUSTON (Dow Jones) --Valero Energy Corp. (VLO) Chief Executive Bill Klesse said Tuesday that he is considering selling the Aruba refinery or taking on a partner in the money-losing operation that has been shut down since last year.

Valero could also decide to keep and restart the 235,000 barrel-a-day plant, Klesse told reporters on the sidelines of the IHS Cambridge Energy Research Associates energy conference in Houston.

Valero has been able to improve the future of the plant by settling a tax dispute with the Aruba government, the chief of the San Antonio-based company said. The agreement spans 20 years and is subject to approval by the country's parliament.

The negotiations were eased by new leadership in Aruba, Klesse said. Prime Minister Mike Eman's, People's Party, took over power last fall.

"The government has been much more open-minded," Klesse said.

In January, Klesse said the Aruba refinery would not be profitable if it had been restarted and running then. The refinery has been idle since last year.

Source: Downstream Today

Petral Buys February Gasoil

Mon, 22 Feb 2010 00:00:00 +0100

SINGAPORE (Dow Jones)--PT Pertamina's trading unit Petral has purchased 2.4 million barrels of 0.35%-sulfur gasoil from Hin Leong Trading Ltd., PetroChina Co. (PTR), Royal Dutch Shell PLC (RDSB.LN) and Vitol Holding B.V. for early February delivery, according to a trader familiar with the matter.

Petral bought the gasoil, or diesel, at an average premium of below $1 a barrel to Singapore quotes on a cost-and-freight basis, the trader said.

Petral initially sought three 600,000-barrel cargoes of gasoil to Balongan and Situbondo for Jan. 31-Feb. 2 and Feb. 1-3 delivery, two 200,000-barrel cargoes to Kota Baru and one 200,000-barrel cargo to Manggis for Feb. 8-10 delivery.

Following private negotiations, PetroChina sold one 600,000-barrel cargo to Petral, while Hin Leong supplied the other two 600,000-barrel cargoes, the trader said. Vitol, Shell and PetroChina each supplied one 200,000-barrel cargo, the trader added.

Petral is now seeking another 400,000 barrels of gasoil following a recent fire at its refinery in Balikpapan, which would bring its gasoil purchases to 4 million barrels this month. It had already bought 1.2 million barrels via term contracts with SK Energy Co. (096770.SE) and Kuwait Petroleum Corp.

The same parties are in private negotiations for the additional imports, the trader said.

Pertamina, Indonesia's state-owned oil company, plans to reduce gasoil imports for March to 3 million barrels.

Source: Wall Street Journal

Global Oil Products Update February 2010

Mon, 22 Feb 2010 00:00:00 +0100

Refining The Argument

To date, 2010 has been a roller coaster ride for refiners, with extreme weather conditions helping margins widen in January, before rising temperatures undermined the recovery. More snow in February again helped products prices and margins but the underlying trend remains weak. Given poor downstream profitability for the oil majors in Q409, some may trim their portfolios - if they can find buyers.

Even though crude oil prices fell steadily in January, refiners curtailed purchases in line with lower global refinery throughputs and in preparation for heavy spring plant maintenance. Refinery utilisation rates in the US slid to just 79.1% in January from 80.3% in December, whereas typically they should be around 90%. European utilisation fell to 81.5% in January from 82.3% the previous month.

Product prices lagged the crude market trend, with margins in most major markets seeing month-on-month gains. Europe outperformed Asia and the US as demand from other regions for gasoline and naphtha drove up prices. Brent margins, barely above break-even in December, widened to more than US$2 per barrel (bbl) in January.

Strong Asian demand for petrochemical feedstock buoyed naphtha prices and margins, continuing the trend that began to develop in December 2009. In Northwest Europe, naphtha crack spreads more than doubled between January and December, reflecting increased exports to Asia.

In Asia, there are still mixed developments. Chinese refiners have been running at maximum capacity but most other countries are operating below seasonal norms. Japan experienced a slight improvement in January utilisation.

While severe winter weather in February may have spared refiners any further pain, the relief could prove short-lived as an end to winter is in sight and underlying demand trends have yet to improve. Refiners remain hampered by the generous global products stocks and the outlook for Q2 is not encouraging - particularly if crude prices begin to rise again.

According to the EIA, US distillates demand on average plunged by more than 9% in the four weeks to 29 January from the year-earlier level. Net selling by speculators of heating oil futures hardly helped, although Washington's February snowfall suggests that they got their timing wrong.

The European distillates market was relatively strong owing to fewer imports from the US and planned refinery maintenance. Middle distillate prices in the Mediterranean market rose on the back of strong demand and moves were expected to reduce floating stocks. Once recent cold weather clears, however, it is hard to see anything other than a fresh downturn in European distillates.

Asian distillate prices and margins were gaining ground in January, aided by European heating oil demand, upcoming fuel specification changes in India and some refinery outages. China's growing refining capability means more diesel and other distillate products on offer for the region, which may dampen market enthusiasm later in the quarter.

During January, the BMI-calculated global jet fuel price was US$86.71/bbl, with almost US$82.00/bbl predicted for February if the products price tracks crude. For the whole of 2010, we are currently assuming an average price of almost US$95.00/bbl, compared with an estimated US$70.66/bbl in 2009.

The January 2010 average global gasoil price, calculated by BMI, was US$83.59/bbl. In February, the price is expected to average around US$78.84/bbl. For the whole of 2010, the current estimate is for an average price of US$91.89/bbl, compared with an estimated US$68.96/bbl in 2009.

Naphtha Still Needed

While January European naphtha prices were slightly lower than in December as output rose, the market could remain strong amid persistent arbitrage opportunities to Asia and improving economic growth prospects. The Asian naphtha market was also strong in January amid flourishing regional demand, but arbitrage cargoes from Europe and the Mediterranean put pressure on the market.

Calculated global naphtha prices in January are put at US$79.23/bbl, closing the previously wide gap against the mainstream products thanks to strong demand. In February, we are assuming US$74.77/bbl and the 2010 average is estimated at US$81.26/bbl - up from US$59.30/bbl in 2009.

Gasoline In Low Gear

There has been some improvement in the gasoline market but the recovery appears fragile. Only reduced refinery utilisation has kept prices up, with futures market activity generally negative. By beginning US refinery maintenance early and switching gasoline production to summer grades in March, market sentiment could improve somewhat.

In Europe, gasoline market strength reflected export opportunities to the US, Brazil, Nigeria and Iran. Early refinery maintenance could again help the near-term trend, with Europe potentially remaining the strongest market in the spring. Asian gasoline crack spreads rose sharply in January thanks to increasing demand from Indonesia and India, as India started to buy in the spot market prior to the launch of cleaner fuels. This helped offset the bearish impact of Chinese gasoline exports.

In January, the calculated BMI global premium unleaded gasoline price was US$86.65/bbl, with US$82.89 expected for February. For the whole of 2010, BMI is now forecasting gasoline at an average US$95.96, up from an estimated US$70.17/bbl in 2009.

The EIA predicts that US regular grade motor gasoline prices will average US$2.84 per gallon in 2010 and US$2.97/gallon in 2011. Average pump prices may top US$3/gallon at times during the upcoming spring and summer

Source: Allbusiness.com

Highlights of the latest OMR

Mon, 22 Feb 2010 00:00:00 +0100

Benchmark crude oil prices fell to six-week lows by early February, after warmer weather in the Northern Hemisphere, negative macroeconomic news and sudden strength in the dollar set in motion a $12/bbl slide. Prices regained some of their losses in recent days, with WTI last trading at $73.80/bbl and Brent at $72/bbl.

Forecast global oil demand is revised up 170 kb/d for 2010 as more robust IMF GDP projections are partly offset by a higher price assumption and persistently weak OECD oil demand. Global oil demand is estimated at 84.9 mb/d in 2009 (-1.5% or -1.3 mb/d year-on-year) and 86.5 mb/d in 2010 (+1.8% or +1.6 mb/d versus 2009), with growth entirely in non-OECD countries.

Global oil supply fell 45 kb/d to 85.8 mb/d in January, with higher total OPEC output (mostly NGLs) offset by lower non-OPEC production. Average 2009 non-OPEC production is revised 70 kb/d higher at 51.4 mb/d while 2010 supply is revised up by 120 kb/d to 51.6 mb/d on slightly improved US and North Sea crude prospects.

OPEC crude output was up 105 kb/d at 29.1 mb/d in January. OPEC NGL production is forecast to rise 0.8 mb/d to 5.5 mb/d in 2010, with just over half of the increase related to ramp-up from 2009 project start-ups. The call on OPEC crude and stock change for 2010 is revised up 300 kb/d to 29.4 mb/d.

OECD industry stocks fell 67.8 mb in December to 2 678 mb, around 0.8% below 2008’s level, on lower crude and middle distillate inventories. End-December forward demand cover fell to 58.1 days, now only 0.1 day higher than a year ago. Preliminary data point to a January OECD stockbuild of 11.4 mb, but with lower floating storage.

Global 4Q09 and 1Q10 refinery crude throughput forecasts remain unchanged at 72.3 mb/d and 72.6 mb/d respectively, though in the latter’s case, higher Canadian, Mexican and OECD Pacific runs offset lower non-OECD throughputs. Despite some signs of improvement for the refining industry, the sector’s short-term outlook remains fundamentally bearish.

Source: IEA

4th Asia-Pacific Base Oil Conference

Fri, 11 Dec 2009 00:00:00 +0100

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4th Asia-Pacific Base Oil Conference
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16th Annual Fuels & Lubes Asia Conference
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Exploring Beyond Today's Limitations"

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The 14th World Base Oils Conference

Fri, 11 Dec 2009 00:00:00 +0100

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Economic crisis keeps money flowing into gold

Thu, 10 Dec 2009 00:00:00 +0100

However, Hiroyuki Kikukawa, general manager at the Tokyo-based firm's market research department, explained that the economic crisis will keep money flowing into gold. "Even when gold succumbs to cashing out, it faces renewed demand on the dips becau.A senior figure at Nihon Unicom says that gold prices should be able to resist even a major sell-off. With the yellow metal smashing records in recent weeks, some observers have predicted that the price could take a hit in the near future as investors look to cash in their profits.

However, Hiroyuki Kikukawa, general manager at the Tokyo-based firm's market research department, explained that the economic crisis will keep money flowing into gold.

"Even when gold succumbs to cashing out, it faces renewed demand on the dips because of its safe-haven appeal against financial jitters," he told the news provider.

Mr. Kikukawa added that any drop in Gold Prices is likely to be short-term because strong support has emerged at roughly the $1,100-per-ounce level.

A similar view was outlined last week by Anderson Cheung, director of precious metals at Hong Kong-based company Mitsui Bussan, in an interview with Dow Jones Newswires.

He noted that gold's ability to provide a store of value in tough economic times is leading to an increase in the number of people choosing long-term investments in the metal.

"People are talking about buying gold for long-term exposure, as a safe haven," he told the news provider.

Courtesy: bullionvault.com

Renewables to supply one-third of China's energy by 2050

Thu, 10 Dec 2009 00:00:00 +0100

China's renewable energy strategy through 2050 envisions renewable energy making up one-third of its energy consumption by then, the China Daily said, as the Copenhagen conference on climate change highlights the world's dependence on fossil fuels.

Source: Fuelsandlubes.com

Oil Prices, Enviro Regs Dictate Refinery Energy

Thu, 12 Nov 2009 00:00:00 +0100

Fluctuating oil prices during 2008 greatly impacted the dynamics of energy management in the oil refineries market. The energy management strategies of oil refineries are subject to frequent revisions in an effort to maintain profit margins. On one hand, there are oil refineries that are prepared to invest millions of dollars on energy management initiatives to establish a strong sense of corporate social responsibility. On the other hand, there are those that are not ready to accept the financial feasibility of investments in energy management solutions.
New analysis from Frost & Sullivan, Energy Management in Oil Refineries Market, finds that market earned revenues of over $6.4 million in 2008 and estimates this to reach $18.5 million in 2015.

"Depleting oil resources and technological challenges associated with tapping into crude oil sources pose bottlenecks for oil companies," said Frost & Sullivan Consultant Priyanshu Kumbhare. "These oil companies face a ruthless competitive business environment and have to deploy energy management strategies to lower production costs without compromising on product quality."

To complicate matters, environment protection measures are being tightened all over the world and oil companies have to incur significant capital expenditure to meet the higher compliance standards of these regulations. Petroleum companies worldwide are scaling up investments in state-of-the art energy management practices that involve numerous measures at every stage of the value chain.

Energy management in the form of process optimization, technology upgradation, energy efficient practices, corporate planning and control and merger of quality management systems (QMS) with environmental management systems (EMS) enables firms to raise the bar on productivity and optimize service quality at the same time. In the oil refineries market, the green approach is a surefire way to support business growth.

However, energy managers in the oil refineries sector neither possess the requisite knowledge nor do they have the resources to identify areas that have energy-saving potential. Some energy managers refrain from implementing energy efficiency improvement projects due to preoccupation with other activities, while others perceive it as a marketing gimmick.

In this situation, energy service companies (ESCOs) can help prevent energy wastage and ensure high levels of production. Professional ESCOs are certified by the government for providing energy auditing services, and their teams consist of qualified and knowledgeable professionals who develop superior quality products and solutions.

"Bridging the gap between ESCOs and oil refineries is essential to create a win-win situation for both parties involved," says Kumbhare. "The current situation requires firms to focus on outsourcing the energy management solutions to professional ESCOs that have vast experience in implementing these solutions."

This also reduces the cost of ownership, increases return on investment, and furthers the green cause. To implement energy management projects, it is imperative to keep in step with the ever evolving technological developments across various processes. Under such circumstances, professional ESCOs are more reliable as they have more time to devote to various issues across diverse processes.

Energy Management in Oil Refineries Market is part of the Energy & Power Growth Partnership Service program, which also includes research in the following markets: North American Oil and Gas Field Services Market, Strategic Analysis of Oil and Gas Sector in India, Peak Oil in Latin America - Present and Future Perspectives for the Oil and Gas Markets, EMEA Oil and Gas Prime Mover Maintenance Repair and Overhaul (MRO) Markets, and Oil Refining Technologies - New Developments and Growth Opportunities. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 35 offices on six continents.

Source: DownstreamToday.com

Indias crude output

Wed, 11 Nov 2009 00:00:00 +0100

Indias crude output in the year to March 2010 is likely to rise 11 percent to 36.71 million tonnes, or about 734,000 barrels per day, Oil Minister Murli Deora told reporters on Wednesday.

Cairn Indias (CAIL.BO) (CNE.L) field in Rajasthan and Reliance Industries (RELI.BO) oilfield in the Krishna-Godavari Basin would help boost output, he said at the annual Economic Editors Conference.

Source: Reuters

WTI crude futures fall on NYMEX

Wed, 11 Nov 2009 00:00:00 +0100

West Texas Intermediate crude oil prices on the New York Mercantile Exchange fell 17 cents to $59.20 per barrel for July deliveries in early afternoon trading on Tuesday, while August WTI contracts fell 43 cents to $59.45 per barrel and contracts for delivery in September through April were trading around the $60 per barrel level.

In late day London trading, meanwhile, IPE Brent August contracts had lost 43 cents to $57.90 per barrel. Both had reached record highs on Monday.

The declines in prices came ahead of Wednesday’s US inventory figures.

Some analysts predict a decline in stockpiles for the third week in a row, which would add to worries that an expected increase in demand next winter could not be met.

Price decreases were also in spite of a continuing threat that Norwegian oil workers might strike, hindering production from the third-largest oil exporter in the world. As talks continued, neither the union or the Norwegian Oil Industry Association would say whether the strike would proceed or not.

In other commodities, UK prices for winter 2005 natural gas rose 0.5p to 68.60p per therm due to unplanned pipeline closures by BP.

The rise in natural gas prices in turn pushed carbon dioxide allowances to €23 per tonne, a record amount.

Source: Finance Markets

Korean proposal to cut emissions sends jitters to oil industry

Wed, 11 Nov 2009 00:00:00 +0100

The Presidential Committee on Green Growth sent ripples throughout Korea's business world when it proposed that the country should choose either to freeze greenhouse gas emissions at 2005 levels or to reduce them to 96% of that figure by 2020.

The emissions numbers for 2005 are about 27% lower than current estimates for 2020, while 96% of 2005 levels would be 30% lower. Representatives at local oil refineries said their companies are now building heavy oil upgrading facilities, which produce high-priced gasoline or light oil from dense, low-quality materials.

Though these facilities actually save energy in the long run, the officials said, they cause increased emissions in the short term, so refiners investing in them could be unfairly targeted by the reduction plan. (Friday, November 06, 2009)

Source: F+ L Int.

FG Stipulates New Rule on Base Oil Import

Wed, 23 Sep 2009 00:00:00 +0200

Abuja — From October 1, only licensed blenders would be allowed to import base oil into the country, while all bulk sale of lubricants at undesignated retail outlets across the country is to cease from January 1, 2010.

Minister of Petroleum Resources, Dr. Rilwanu Lukman, said this at a meeting with stakeholders in production and marketing of lubricants, in line with the Federal Government's objective of sanitising operations of the downstream sector of the oil and gas industry.

Lukman directed owners of lubricant blending plants to commence upgrade of their facilities, to improve product quality and capacity utilisation.

Pursuant to this directive, the Petroleum Product Pricing and Regulatory Agency (PPPRA), Department of Petroleum Resources(DPR) and the Standard Organisation of Nigeria (SON) have been mandated to collaborate with all other relevant stakeholders involved in the lubricant market and distribution, to design a model kiosk and put in place a programme of action for relocation of sellers of lubricants to authorised locations.

A statement from Deputy Director, Press, in the ministry, Florence Bolokor-Mohammed, said in making this policy, government was guided by the need to protect its citizens and the environment, because of the health and safety hazards caused by the unwholesome disposing of used lubricants in open spaces.

This, it said, is in addition to the need to check the sharp practices of adulteration of vegetable oil with base oil and general use of substandard lubricant with its attendant challenges to human, plants and machinery.

Nigeria has an installed production capacity of 104,915,990 litres shared among 20 functional plants between the major oil marketers and independent marketers with a market turn-over in excess of N900billion as at 2008, and a profit margin of between N30 and N40billion.

The country's lubricant combined production capacity can effectively satisfy the domestic market and meet the lubricant requirement for the West Africa sub region. Despite this, the country remains the world's largest importer of base oil, because Kaduna Refinery, which is the only plant that produces base oil for production of lubricant had been out of production since 1995.

Source: AllAfrica.com

Industry overview

Tue, 01 Sep 2009 00:00:00 +0200

The location of Pakistan at the crossroads of Central Asia and the Arabian Sea has brought into spotlight its significance as an attractive market and a regional transit route for energy. Oil and Gas are the two major components of the energy mix which contribute 79% to the 63 million TOE of energy requirement in the country. The Government is formulating investor-friendly policies to increase the share of indigenous resources in the country. As a result of these policies, the Oil & Gas sector has attracted foreign direct investment of over US$ 700 million in 2008-09.
Pakistan is one of the largest consumers of gas in the region. It has a well developed and integrated infrastructure of transportation, distribution and utilisation of natural gas with 10,285 km of transmission and 93,961 km of distribution network. The two gas distribution companies plan to invest about US$ 400 million to increase the capacity of existing distribution network.
Up till now 725 wells have been drilled by various local and international exploration and production companies with 219 Oil & Gas discoveries, bringing the gas reserves to 30 TCF. An investment of US$ 1 billion was spent in drilling activities with 60 new wells drilled in 2008-09. At the same time, the crude oil recoverable reserves are estimated at 313 million barrels. The current production of oil is 66,532 barrels per day, whereas gas production is at 4 billion cubic feet per day.

Currently seven refineries are operating in the country with a refining capacity of 13 million tonnes per year.

Pakistan is now the largest CNG user in the world. Currently, 2700 CNG stations are operating with an investment of over US$ 1 billion, serving 2 million vehicles in the country.

LPG
LPG is environment-friendly and an economical fossil fuel available in the country. It is mainly used by the people living in remote areas, having no access to natural gas. Annual LPG consumption is 600,000 tonnes out of which 20% is met through imports. Total investment of US$ 200 million has already been made to develop the LPG supply infrastructure.

COAL
Pakistan has the 7th largest coal reserves in the world, estimated at over 185 billion tonnes of Coal. The country is producing 2.4 million tonnes of coal to meet the current coal consumption of 6.4 million tonnes while 4 million tonnes is imported to fulfill the energy requirement of the country. The Government has allocated an annual budget of US$ 25 million for the development of Thar Coal Infrastructure. Thar Coal project has the potential to cater to the increasing national energy requirement for decades with a relatively low unit cost.

KEY INDICATORS
Oil
Total Resource Potential                   27 Billion Barrels
Crude Oil Refining Capacity             13 Million Tonnes/year
Consumption   19 Million Tonnes/year
Imports            17.5 Million Tonnes/year

Gas
Total Resource Potential                   282 TCF
Production       4 BCF/day
Transmission Network                       10,285 km
Distribution Network                          93,961 km
Domestic Consumers                        5.25 Million
Commercial Consumers                   71,789
Industrial Consumers 9,149

Coal
Total Proven Reserves                      185 Billion Tonnes
Consumption   6.4 Million Tonnes
Production       2.4 Million Tonnes
Imports            4 Million Tonnes

Composition of Energy Mix
Oil                    30.5%
Gas                 47.5%
Hydro-electricity                                10.9%
Coal                 9.2%
Nuclear           1.3%
LPG     0.7%

THE SHOW
Since its inception seven years ago, POGEE has established itself as the premier event catering to the Oil, Gas & Energy sector. It serves as a convergence point for national and international companies to explore business opportunities in Pakistan.
With unprecedented experience and reach, POGEE is the ideal venue to interact with key decision-makers and Government officials, discuss areas of mutual cooperation, implement Government plans and fulfill the future requirements of this industry in Pakistan. It is a well established platform to display the latest state-of-the-art technology, equipment and machinery.

POGEE 2009 – SHOW HIGHLIGHTS
•     243 leading players from the Oil, Gas & Energy sectors with dedicated pavilions for Chinese and Iranian companies
•     Representation of 28 countries with participation of more than 10,000 trade professionals visiting the show
•     The show was actively supported by the Ministry of Petroleum and Natural Resources, Mines and Minerals Development Department (Government of Sindh), Board of Investment, Engineering Development Board, Pakistan Petroleum Dealers Association and CNG Dealers Association of Pakistan
•     Special Buyer Program in order to ensure and facilitate the participation of key decision makers at the event
•     The 5th Pakistan Oil, Gas & Energy Conference was held in concurrence with POGEE 2009 to address “Pakistan’s Energy Security: Prospects & Challenges”
•     Spread across two days, the conference comprised of three sessions dealing with the topics “Energy & Sustainable Development,” “Reforming Oil & Gas Industry” and “Coal & Indigenous Renewable Resources”
•     Speakers of high repute came from several countries including U.S.A., Russia, Germany, Turkey, India and Saudi Arabia,
•     A Technical Session covered various technical advancements like multiphase boosting,viability of harnessing tidal energy in Pakistan and production of oil from shale
•     Extensive coverage by print and electronic media
•     13 international and local publications supported the event

6th POGEE CONFERENCE
The 6th Pakistan Oil, Gas & Energy Conference, POGEE Conference 2010, is scheduled to take place in concurrence with the exhibition. The conference brings together the most renowned international and local experts from the world’s Oil, Gas and Energy sector. These professionals share their experiences and ideas in order to cope with challenges and paving the way for mutual progress. The conference will be an exclusive networking platform for the participants.

CONCURRENT EVENT
Oil & Gas Pakistan will be held with the Energy Pakistan 2010.
Energy Pakistan is an ideal showcase of energy related technologies in the power sector of the region. Being an interactive platform, it provides a high profile business-to-business environment for the local and international industry players to explore future investment prospects.

SK energy to spin off lubes business

Tue, 01 Sep 2009 00:00:00 +0200

SK energy Co.’s board has approved a plan to spin off its lubricants business as of October 1, making it a wholly owned company subsidiary. A shareholders’ meeting scheduled for September 11 will finalize the plan. The Seoul-based company will still control the business in terms of management, but will sell a portion of it. SK energy's lubricant operations posted sales of 1.88 trillion won (US$1.48 billion) and an operating profit of 254 billion won (US$203.29 million) in 2008. According to company officers, the spin off will be to raise funds to invest in the renewable energy sector and to focus on its core businesses, which include oil exploration and refining.

Source: Oiltrends.asia

Oil below $70 on economic worries

Tue, 01 Sep 2009 00:00:00 +0200

Oil prices fell this evening as economic concerns sent investors into safer havens, outweighing positive US manufacturing data. US crude fell $1.03 to $68.93 a barrel, while London Brent crude dropped 90 cents to $68.75.

Oil had risen earlier in the day as the market focused on a report showing a jump in US manufacturing and pending home sales.

Oil has risen from a low of $32.40 in December, helped by economic recovery optimism that lifted global stocks to 10-month highs last month. Oil traders will look for fresh direction from US weekly crude stockpiles data due tomorrow. Analysts expect the data to show a 400,000-barrel fall in US crude stocks.

Source: RTÉ Business

European Base Oils and Lubricants

Tue, 01 Sep 2009 00:00:00 +0200

European Base Oils and Lubricants
24th & 25th November 2009 - London, UK

Uncovering Trends, Discovering Opportunities and Meeting Challenges

Join ACI’s European Base Oils and Lubricants Summit 2009 in London, UK, to meet your industry peers and leading experts from oil majors, base oil and lubricant manufacturers, additive companies and technology providers as well as leading academics.

Hear the latest challenges and developments, discover the current economic trends and discuss the key challenges and opportunities in order to facilitate success and growth for the European base oil and lubricant industry.

Click here to download: FULL AGENDA

Speakers Include:

Alan Outhwaite, Chevron Global Lubricants
Paul Whitehead, Castrol Industrial Lubricants and Services
Dr. Suhair Abdelhalim, Ford Motor Company
Valentina Serra-Holm, Nynas
Apu Gosalia, FUCHS PETROLUB
Dr. Lou Honary, University of Iowa – National Ag-Based Lubricants Centre
Terry Dicken, European Lubricating Grease Institute
Graham Gow, Axel Christernsson
Jean-Claude Dufour, EUROLUB
Luca Raffellini, Kline & Company
Hans Thomassen, CEC
and many more…

The two day agenda includes:

·         European lubricant Industry trends
·         Supply base oils from Eastern Europe and Russia
·         Automotive lubricant specifications
·         The growth of bio-lubricants
·         Exploring the metal working lubricant market
·         Additive industry update
·         Forming successful relationships between base oil & lubricant manufacturers
·         The impact of REACH on the base oils & lubricants markets
and many more....

For the event website: CLICK HERE

TAKE ADVANTAGE OF OUR 15% EARLY BIRD DISCOUNT NOW!

For more information or to register
contact ACI by,

Calling Marisa Magtultol
On +44 (0)20 7981 2503
Emailing mmagtultol@acieu.net

We look forward to welcoming you on board!

GET YOUR EARLY BIRD DISCOUNT NOW:

Take advantage of the 15% Early bird discount, by booking before Friday 4th September 2009
OR
10% discount before Friday 18th September 2009

To claim your discount
Contact:
Marisa Magtultol
+44 (0)20 7981 2503
mmagtultol@acieu.net

With thanks to our supporting partners:

www.acius.net

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16th Annual Fuels & Lubes Asia Conference

Tue, 04 Aug 2009 00:00:00 +0200

March 3-5, 2010, Singapore

Conference theme:
"Fuel Economy and Emissions: Exploring Beyond Today's Limitations"

In today's environment, standard answers no longer apply. The International Energy Agency predicts that there will be another oil crisis in 2014. Fuel economy and emissions reductions will remain relevant more than ever. The 16th Annual Fuels & Lubes Asia Conference which will be held in Singapore from March 3-5, 2010 will step out and explore fuel economy and emissions issues beyond today's limitations.

If you would like to participate in the oral or poster session, you may submit a 500-word abstract. Please include the bio-data of each author, no later than September 30, 2009.

In addition to fuel economy and emissions, we are also interested in the following topics related to fuel economy and emissions: lubricant standards (OEM, local, regional and global); hybrid/electric vehicles; alternative fuels and lubricants.

Deadline for submission of abstract: September 30, 2009

pls check: http://www.fuelsandlubes.asia/conferences/callforpapers.asp

Nigeria loses 1 mln barrels of crude oil daily to crisis

Thu, 30 Jul 2009 00:00:00 +0200

Nigerian Minister of Petroleum Resources Rilwanu Lukman has said the country is losing an average of 1 million barrels of crude oil per day because of the crisis in the oil-rich Niger Delta, the Lagos-based This Day newspaper reported Wednesday.

The minister disclosed this at the meeting of the ruling Peoples Democratic Party National Working Committee in Abuja on Tuesday, noting that the country is still counting the losses inflicted by militancy in the oil-rich region.

Lukman said owing to the Niger Delta crisis which is a major challenge to his ministry, oil production has dropped to between 1.4 million barrels and 1.5 million barrels per day, against the budget benchmark of 2.2 million barrels per day.

He said the crisis has made mincemeat of budget projections as a fall in revenue has affected the implementation of budgets, with many states opting to cut down spending and sourcing extra funds from the capital market.

The minister added the Atlas Cove jetty bombed by militants nearly two weeks ago had resumed operation since last Sunday, noting that adequate security had been put in place to forestall are-occurrence.

According to him, the Nigerian federal government is planning to regain the loss incurred in the sector by ensuring an increase in production to a target of 4 million barrels per day.

"We have production capacity of 2.3 million barrels per day but because of problems in the Niger Delta, we cannot meet our target, "he added. "This year's budget is based on having 2.2 million barrels per day, so, we are in short of a million barrels."

Lukman said the policy of the Nigerian federal government to embark on the deregulation of the downstream sector was inevitable as the budget for subsidy of petroleum products was far above the budget for capital projects every year.

He said the government would not back down on the policy of deregulation, even as the National Assembly, National Union of Petroleum and Natural Gas Workers and Petroleum and Natural Gas Senior Staff Association of Nigeria had accepted the deregulation policy in principle.

Source: Xinhua

Shell to boost lube market share in India

Thu, 02 Jul 2009 00:00:00 +0200

Royal Dutch Shell P.L.C. has scaled up its operations in India, in an attempt to grab a bigger piece of the lubricant market. It said it will introduce technologically advanced products in the country and will invest heavily in the expansion of the capacity of its lubricants production operations in Taloja, near Mumbai, to strengthen its relationship with oil marketing firms and to try to bump up its 7% market share to match its global ratio of 13%. Shell’s main competitors in the country are Castrol Ltd.’s local subsidiary Castrol India, which has a market share of 22% and state-owned Indian Oil Corp., which has 40%. (May 11, 2009).

Source: Oiltrends (www.oiltrends.asia)

Saudi Aramco and Total award EPC contracts for Jubail Export Refinery

Thu, 18 Jun 2009 00:00:00 +0200

Saudi Aramco Total Refining and Petrochemical Company (SATORP) finalized the awarding plan for Engineering, Procurement and Construction (EPC) contracts that constitute the thirteen different process packages of their Jubail joint venture refinery, following a meeting of the SATORP Board of Directors. The awarding of these contracts marks an important step in the execution of this 400,000 barrel per day world-class, full-conversion refinery in Jubail, Saudi Arabia, which plans to be fully operational by the second half of 2013.

When completed, the export refinery will be one of the most advanced refineries in the world and will process Arabian Heavy crude to products fulfilling the most stringent specifications, to meet rising demand for environmentally-friendly fuels. A portion of Jubail refinery’s production will be consumed locally to meet spikes in domestic demand. In-Kingdom refineries, such as the Jubail joint venture, have the location advantage to effectively and efficiently supply both international and domestic demand.

The full-conversion refinery will maximize production of diesel and jet fuels, and will also produce 700,000 tons per year (t/y) of paraxylene, 140,000 t/y of benzene and 200,000 t/y of polymer-grade propylene.

“Today we are marking a major milestone in our partnership with Total, which has been strong historically but is now stronger than ever,” said Khalid Al-Falih, President and CEO of Saudi Aramco. “The Jubail Export Refinery is a strategic project for Saudi Aramco and the Kingdom of Saudi Arabia, and its timely implementation will ensure that global and regional markets will be well supplied with high quality products in the next decade. Our commitment to fund a project of this scale demonstrates our confidence that energy markets will grow in the years to come, and our confidence that the Kingdom is the ideal location for energy investments by global investors.”

“I am delighted that we have decided to launch the development of the Jubail refinery project with Saudi Aramco,” said Christophe de Margerie, Chief Executive Officer of Total. “Today, we have passed an important milestone, which shows the quality of the strategic partnership between our two companies and their determination to bring off such a far-reaching project, even in a weaker economic environment. As a result, we will be able to meet, from 2013, the increasing demand for high-quality refined products from Asia and the Middle East.”

The synergies between Saudi Aramco and Total lie in the fact that both companies bring knowledge and expertise to the joint venture company. Saudi Aramco’s crude oil supply is located near Jubail, a world-class industrial area, while Total is an international oil company with a fully integrated value chain and a global presence.

The project adds value to the local economy through job creation and opportunities for further downstream investments by local businessmen. It is estimated that the refinery will create approximately 1,200 direct employment opportunities in the Kingdom, each of which typically creates five to six indirect job opportunities.

On May 6 and May 8, 2008, respectively, the Executive Committee of Total and the Board of Directors of Saudi Aramco decided to launch the project, and on June 22, 2008, a ‘Shareholder Agreement’ was signed in Jiddah, Saudi Arabia, by Saudi Aramco and Total S.A.

Following the signing of the agreement, SATORP was formed during the third quarter of 2008, and the project remains on schedule. Saudi Aramco and Total will ultimately own 37.5 percent of the company each. Subject to required regulatory approvals, Saudi Aramco plans to offer 25 percent of the company to the Saudi public in an Initial Public Offer (IPO) during the last quarter of 2010.

Source: Fuel & Lubes

Executive briefing to address critical industry developments

Thu, 18 Jun 2009 00:00:00 +0200

The “Asia-Pacific Base Oil Executive Briefing” is the fourth in a series of base oil conferences organized by F+L Asia since 2005. This year, it will be held at the Four Seasons Hotel in Singapore from September 14 to 16.

The format has been developed to reflect the feedback we have received from senior industry executives, so this year will be different. The Executive Briefing will be more issues oriented and have a greater degree of participant interaction. Delegates will also enjoy extensive social networking, starting with a welcoming cocktail and dinner on September 14, an off-site dinner on September 15, and optional golf and banquet on September 16. The welcoming dinner will include an economic briefing and discussion on the current status of the transport industry.

The Executive Briefing will bring together industry leaders to discuss and evaluate key issues facing the base oil industry today. The quality program over three days will focus on addressing the following:

• Critical regional economic and industry developments
• Shifting industry demands
• Regional strategic supply issues
• Emerging commercial opportunities
• Quality challenges, manufacturing and technology issues
• Future paradigms and strategies

Industry has been hit hard, as the global economy continues to reel in the aftermath of the financial crisis. However the lube business retains a key role and Asia, and in particular China and India, is expected to be the key region for sustaining growth and economic recovery. The Executive Briefing will take a measured look at the issues facing the industry and take a view of the forward path beyond the current downturn.

For more information about the Asia-Pacific Base Oil Executive Briefing, please contact Vicky Villena-Denton at editor@fuelsandlubes.asia. You may also call us at (632) 772-4731 or fax us at (632) 772-4735.

China Biofuels and Ethanol Outlook 2009

Wed, 17 Jun 2009 00:00:00 +0200

What is in store at China Biofuels & Ethanol Outlook 2009?

Gain in depth knowledge on the impact
of China’s stimulus plan on renewable energy as well as the biofuel industry

Understand the advantages and pitfalls of
various feedstocks and drive your postion and strategy in the sector

Learn about the latest technology
updates that play a crucial role in commercial viability and profitability

Hear from experts on how the biodiesel industry is set to develop and the
commercial impact that can have on your business

Network with industry experts and market players and take away pointers
on how your organization can maximize potential in such turbulent times

For info contact:

Singapore Office:
20 Havelock Road, #03-04 Central Square, Singapore 059765
Tel : +65-6223-2436
Fax : +65-6223-2735
E-mail : sg-info@gii.co.jp

Chevron Sells Fuels Marketing Businesses in Haiti

Wed, 03 Jun 2009 00:00:00 +0200

Chevron has entered into a securities purchase agreement to sell its fuels marketing businesses in Haiti to Medley Capital Limited, a company owned by GB Group, a Haiti-based industrial group with core holdings in energy, steel and food products.

Under the terms of the agreement, which are subject to various closing conditions, Medley Capital Limited would acquire 58 service stations, a portfolio of approximately 120 commercial and industrial customers, and other lines of business. Other terms of the agreement were not disclosed.

"The proposed sale of our fuels marketing businesses in Haiti is consistent with our ongoing effort to concentrate resources and capital on strategic, global assets," said Shariq Yosufzai, president, Global Marketing, Chevron.

Source: DownstreamToday.com

Sunoco Completes Sale of Tulsa Refinery

Tue, 02 Jun 2009 00:00:00 +0200

Sunoco, Inc. SUN announced today that it has completed the sale of its 85,000 barrel-per-day refinery in Tulsa, Okla., to Holly Corporation HOC for $65 million.

Speaking on the transaction, Sunoco Chairman and Chief Executive Officer Lynn Elsenhans said: “We are grateful to the many talented and hard-working employees who made the facility successful for so many years. We wish them well as they join Holly. By completing this sale, we are taking another step in our efforts to realign our portfolio of assets and improve our competitiveness.”

The Tulsa refinery, which began production in 1913, had been a part of Sunoco’s refining system since 1968.

Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer and marketer of petroleum and petrochemical products. With 825,000 barrels per day of refining capacity, approximately 4,700 retail sites selling gasoline and convenience items, approximately 6,000 miles of crude oil and refined product owned and operated pipelines and 43 product terminals, Sunoco is one of the largest independent refiner-marketers in the United States. Sunoco is a significant manufacturer of petrochemicals with an annual production capacity of approximately five billion pounds, largely chemical intermediates used to make fibers, plastics, film and resins. Utilizing a unique, patented technology, Sunoco's cokemaking facilities in the United States have the capacity to manufacture approximately 3.0 million tons annually of high-quality metallurgical-grade coke for use in the steel industry. Sunoco also is the operator of, and has an equity interest in, a 1.7 million tons-per-year cokemaking facility in Vitória, Brazil.

Source: BusinessWire

Saudi Aramco to Award $10B Refinery Deals by June

Tue, 02 Jun 2009 00:00:00 +0200

Saudi Arabian Oil Co. plans to award by the end of June $10 billion worth of contracts for the construction of the planned Jubail export refinery to be implemented jointly with Total S.A. (TOT), London-based business weekly MEED reported in its May 29 issue.
Saudi Aramco is negotiating with seven international firms that submitted the lowest bids for six separate project packages covering construction of the refinery, located at Jubail on the Persian Gulf coast, MEED reported without saying where it got the information.

South Korean, European and U.S. companies held talks with Aramco and joint venture partner Total on the 400,000 barrel-a-day refinery project between May 25-29, according to MEED.

Source: Downstreamtoday.com

GE Oil & Gas To Supply Pumps for South Africa Pipeline Project

Fri, 08 May 2009 00:00:00 +0200

Transnet Limited of Johannesburg, the owner and operator of South Africa's strategic petroleum and gas pipeline infrastructure, has selected GE Oil & Gas to supply electric motor-driven pump packages for a new, multi-product pipeline that will play a key role in supporting the country's economic growth.
The new pipeline will stretch from Durban harbor to Johannesburg and will supply diesel, petrol and jet fuel for inland markets that currently have limited refining capacity. To meet the country's immediate and future demands, this will be a fast-track project; commissioning of the first sections of the pipeline is scheduled to begin in mid 2010.

“The new multi-product pipeline project will increase both the capacity and flexibility of Transnet's existing pipeline network to the Gauteng Province. By investing in this asset, Transnet will fulfill its strategic role of ensuring the security of critical energy supplies (in the form of refined petroleum products) to the Gauteng Province,” said Carlos Galego, NMPP project director of Transnet.

Marking its largest project in South Africa to date, GE Oil & Gas will supply 19 pumps with variable frequency drives, chillers and lube oil systems to be installed at five stations along the route of the pipeline. GE will utilize a consolidated high efficiency pump design to maximize reliability. In addition, only two types of hydraulic systems will be used for the 19 pumps, for greater interchangeability of spare parts.

“This is a significant project for both Transnet and the government of South Africa, supporting Transnet's strategy to revitalize and extend the country's infrastructure,” said Joe Mastrangelo, vice president -- turbomachinery for GE Oil & Gas."GE's experience with pipeline projects around the world and strong synergies with key sub-vendors has enabled us to build a proven track record when it comes to supplying complete pump package solutions for some of the world's largest pipelines."

“We were able to secure this contract by committing to meet the project's key challenges: tight delivery deadlines, energy efficiency and cost constraints,” said Daniele Scenarelli, GE Oil & Gas region sales executive for Sub Saharan Africa, based in Cape Town.

The pumps for the Transnet project will be centrifugal pumps designed for high efficiency and a high degree of fluid dynamic optimization. They will be capable of meeting a broad range of operating requirements for the pipeline over the estimated next 20- to 30-year operating life of the pipeline.

More than 17,000 GE centrifugal pumps are installed around the world for process, refinery, water injection, oil pipeline, boiler feed and water cooling applications. These pumps are fully compliant with API 610-ISO 13709 industry standards and meet the most severe service requirements, including continuous service with high mean time before failure (MTBF).

GE Oil & Gas high efficiency pumps are produced in Bari, Italy, using advanced design criteria and manufacturing technologies. They have been installed with virtually every type of industrial driver including electric motors, gas and steam turbines and diesel and gas engines; and have reached significant performance milestones such as 14,500 KW/stage and 7,500 rpm.

Transnet Pipelines, the pipeline operating division of Transnet Limited, owns and operates 3,000 kilometers of strategic petroleum and gas pipelines in South Africa, traversing five provinces. Pipelines play an important role in ensuring the secure supply of refined petroleum products to the inland industrial hub of South Africa, which has limited refining capacity.

GE Oil & Gas is a world leader in advanced technology equipment and services for all segments of the oil and gas industry, offering complete solutions for production, LNG, pipelines, storage, industrial power generation, refineries, and petrochemicals. It also provides pipeline integrity solutions including software and asset management. With its acquisition of VetcoGray and Hydril Pressure Control, GE Oil & Gas now offers additional products, systems and services for drilling, completion and production within onshore, offshore and subsea applications.

Source: DownstreamToday.com

Petrobras, Mitsui To Study Ceara Refinery Project

Fri, 08 May 2009 00:00:00 +0200

Petrobras announced Thursday that it has reached a memorandum of understanding (MOU) with Mitsui Corp. regarding the joint study for the Premium 2 Refinery Project in the Brazilian state of Ceara.
The MOU is based on Mitsui's interest to act as potential partner of the project and aims to execute a joint study to analyze the implementation of the project with the participation of Mitsui. It does not create any additional obligation to the parties or any financial obligation to Petrobras.

Source: Petrobras

ICIS Pricing

Thu, 23 Apr 2009 00:00:00 +0200

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Do you need accurate Base Oils price assessments?

The global base oils industry has recently seen turbulent fluctuations in price factors, especially in the US markets, with sharp drops in feedstock prices raising unrealistic expectations among consumers. The downward trend in price values has largely been attributed to the slow recovery in the automotive sectors, a key mover for the base oils industry. The need for reliable market analysis and pricing information is now more critical than ever in order to anticipate future changes.

ICIS pricing Base Oils reports have been widely recognised as the industry's benchmark for price assessments, providing our customers with reliable commentary on price drivers and market sentiment. ICIS pricing's reputation as an independent and unbiased market reference ensures you can feel confident in making informed business decisions.

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Oil rises to near $50 on 2nd half recovery hopes

Thu, 16 Apr 2009 00:00:00 +0200

Investors brushed off poor U.S. economic news and focused on a possible second half recovery in global crude demand on Thursday, pushing oil prices up to near $50 a barrel.

Even an unexpectedly high growth of U.S. reserves failed to stem bullish sentiment.

Benchmark crude for May delivery rose 53 cents to $49.78 a barrel by noon in European electronic trading on the New York Mercantile Exchange. The contract on Wednesday dropped 16 cents to settle at $49.25.

Oil prices have hovered around $50 this month as traders parsed recent economic data for signs global crude demand could recover soon.

Investors have looked past the current dismal signals that demand remains weak, instead eyeing a possible rebound in the second half.

The Organization of Petroleum Exporting Countries said Wednesday it expects global demand to fall to 84.2 million barrels a day this year, 1.6 percent less than last year.

OPEC's forecast follows a similar U.S. government forecast that said global oil demand will fall in 2009 to 84.1 million barrels a day.

"Demand hasn't come back yet, but the market is expecting it to turn around in the second half and grow next year," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore.

U.S. crude inventories continue to rise, suggesting American consumers and companies remain mired in a severe recession.

The Energy Information Administration said crude oil inventories rose by 5.6 million barrels last week, more than twice what analysts expected. The total of 366.7 million barrels now in storage is the most held since Sept. 7, 1990, according to the EIA.

Meanwhile, the Federal Reserve reported a slowdown in activity at U.S. factories and mines. Total industrial capacity utilization rate fell to 69.3 percent from 70.3 percent, the lowest on records dating to 1967.

In March, industrial production declined for the fifth straight month, the Federal Reserve said. Production at U.S. factories, mines and utilities dropped a seasonally adjusted 1.5 percent last month.

Part of the underlying bullishness over the past week appears tied to rising stock markets. World markets were mixed but generally up Thursday after the Dow gained 1.4 percent on Wednesday.

"Once again energy traders ignored a stark reminder of the flagging U.S. economy (see yesterday's industrial production numbers) and instead hitched their wagon to a rising stock market," wrote trader and analyst Stephen Schork in his daily Schork Report.

In other Nymex trading, gasoline for May delivery rose by more than a penny to $1.46 a gallon and heating oil gained almost 2 cents to $1.42 a gallon. Natural gas for May delivery slipped by almost 3 cents to $3.67 per 1,000 cubic feet.

In London, Brent prices increased by 52 cents to $52.96 a barrel on the ICE Futures exchange.

Source: Businessweek.com

Lubricants demand is increasing

Thu, 16 Apr 2009 00:00:00 +0200

Global lubricant demand to reach 41.7 million metric tons in 2010
World demand for lubricants is forecast to advance 2.3 percent per year to 41.7 million metric tons in 2010. Gains will be driven by increasing rates of motor vehicle ownership worldwide, as well as a rising number of kilometers traveled per vehicle. Additionally, growth in worldwide manufacturing activity will boost the demand for industrial lubricants such as process oils and hydraulic fluids. However, the prevailing global trend is toward reducing the amount of lubricant consumption, both for environmental reasons as well as cost-effectiveness purposes. In developed regions such as North America and Western Europe, increasing standards for lubricants will result in significantly improved quality, decreasing the volume of lubricant needed for a particular application. Lubricant quality will also improve in developing regions, as outdated motor vehicles and machinery are replaced with products that require smaller amounts of better-performing lubricants.

World lubricant demand will increase 1.6 percent per year to 40.5 million metric tons in 2012. Growth will be aided by the ongoing expansion of the world motor vehicle park, as well as by a rebound in manufacturing and other industrial activity from the global economic slowdown of 2008 and 2009. Advances will be strongest in the Asia/Pacific region due to ongoing rapid industrialization as well as rising car ownership rates. Both of these trends will also favor healthy growth in the Africa/Mideast region and Latin America. Meanwhile, the greater availability of advanced, high performance lubricants, greater global competition and increasingly stringent environmental rules will result in reduced or negative growth in lubricant demand in the more developed countries of North America and Western Europe, as well as in Eastern Europe and Japan.

Despite the downturn in the global motor vehicle market in late 2008 and early 2009, motor vehicle lubricant demand will continue to expand throughout the forecast period. Increases in lubricant demand will be led by strong gains in the Asia/Pacific region due to rapid expansion of the motor vehicle park in developing countries such as China and India. Healthy growth will also occur in Latin America and the Africa/Mideast region, while advances in Eastern Europe will be below average. However, a trend toward increased drain intervals, influenced in part by the growing availability of superior, high performance synthetic lubricants, will result in declining demand in Western Europe as well as below average growth in North America. While the fastest growth will be in manufacturing and other markets, it will still represent a slowdown from the 2002 to 2007 period as the global economic slowdown of 2008 and 2009 restrains upward advances in lubricant demand through 2012. The Asia/Pacific region, led by China, will continue to be the primary driver of growth in these markets due to companies worldwide pursuing the region’s key advantages of relatively low labor costs and political stability. Latin America and the Africa/Mideast region will also achieve near or above average growth, respectively, in manufacturing as significant countries in both regions continue to develop their industrial bases.

Engine oils will remain dominant, process oils to exhibit fastest growth

In terms of product types, engine oils will continue to account for the greatest share of lubricant demand going forward. This will primarily reflect the importance of transportation in an increasingly global economy, both from a consumer and commercial perspective. The fastest gains will be achieved in process oils due to the greater difficulty of boosting consumption efficiency of these lubricants relative to hydraulic and metalworking fluids, both of which will experience below average gains as companies everywhere work to reduce unit consumption in an effort to maintain competitiveness. Despite the slow growth in hydraulic and metalworking fluids, significant value opportunities will still exist for the introduction of new, higher performance oils, and/or more environmentally friendly fluids that meet the increasingly strict regulations found in developed countries. This will be reflected in the above average advances in nonconventional lubricant demand going forward, even as traditional petroleum-based lubricant demand continues to expand as well.

Suncor To Snag Petro-Canada

Thu, 16 Apr 2009 00:00:00 +0200

Suncor Energy is picking up Petro-Canada as it continues to expand its position in Canada's sandy oil fields.

In Toronto, Petro-Canada shares rose 15.5%, or $4.60, to $34.25, while Suncor was flat on the Toronto Stock Exchange, trading down a cent at $30.89.

In New York, shares of Petro-Canada rose 17.3%, or $4.17, to $28.18, in early-morning trading. Shares of Suncor meanwhile fell 3.3%, or 83 cents, to $24.46.

Petro-Canada common shareholders will effectively receive 1.28 common shares of the merged company for each common share of Petro-Canada they own, and each Suncor common shareholder will receive one common share of the merged company for each common share of Suncor they own. The exchange ratio represents about a 25.0% premium for the Petro-Canada shares to the 30-day weighted-average trading price of such shares.

"The combined portfolio boasts the largest oil sands resource position, a strong Canadian downstream brand, solid conventional exploration and production assets, and low-cost production from Canada's east coast and internationally," said Rick George, chief executive of Suncor.

The companies said their combination would save about $300.0 million in operating expenditures, and $1.0 billion in capital efficiencies.

The new company would have crude oil and natural gas production of approximately 680,000 barrels of oil equivalent per day. The deal would also place a resource base with approximately 7.5 billion barrels of oil equivalent of proved and probable reserves, on top of an estimated contingent resource base of approximately 19 billion barrels of oil equivalent, under one name.

Suncor specializes in removing petroleum from oil sands, and a year ago it announced it would invest 20.6 billion Canadian dollars ($20.5 billion) to boost crude oil production in the company’s operation north of Fort McMurray in Alberta. (See "Suncor Puts Its Money In The Sand.")

Source: Forbes.com

7th Pakistan Oil, Gas & Energy Exhibition and Conference

Tue, 14 Apr 2009 00:00:00 +0200

	*7^th Pakistan Oil, Gas & Energy Exhibition and Conference*
	18 – 21 May 2009
	Karachi Expo Centre www.pogeepakistan.com

Show Overview
Over the last six years, POGEE has become an important industry event showcasing the state-of-the-art machinery and technology. It brings together leaders and industry professionals from across the globe and provides them with top level networking opportunities.

The 5th Pakistan Oil, Gas & Energy Conference is also being organised from 19th to 20th May, 2009. It is aimed to establish an internationally recognised Energy Forum for all the stakeholders to reach a well-defined industry group. For more Conference details, please contact us at sabashaikh@pegasus.com.pk

2009 Hosting Preview
• The exhibition will be playing host to the leading names from China, Germany, Iran, Italy, Malaysia, UAE, Turkey, USA, UK, Russia, Singapore, France, Argentina, Switzerland, Canada, The Netherlands, Australia, Sweden, Japan, Belgium and Lebanon
• GE Oil & Gas, Sichuan Honghua, Bornmann, Siemens, Cummins, Areva, PEL, Iran Transfo, Inpro, Interequipment, Total, Al Kamal Group, Noon International, IDEA and many more have confirmed their participation
• Moreover, Akbar Associates Group (ADOS, CAMERON & PETROLOG), Petrosin Engineering, Salaria & Shaikh, SafeTech, Caltrols Pakistan, Asif Azim Associates, UEC, Kana Controls, Siemens, SSGC, PSO, Mines & Mineral Development Department, PEL, Areva T&D, Star Corporation & many more leading companies will be participating
• More than 200 companies are expected to participate
• The exhibition is spread on more than 9500 sqm with more than 75% already booked.
• More than 10,000 trade visitors from the oil marketing companies, exploration, production, refineries & energy producing companies will be attending the event
• POGEE Conference will bring eminent speaker from Saudi Arabia, India, Iran, Turkey, Russia, USA, Singapore & Australia
• Technical Session will also be conducted along with an exclusive session hosted by the Russian delegation on the second day of the Conference
• Co-locating with the 5th International Fire, Safety & Security Exhibition & Conference, Fire & Security Pakistan 2009

2^nd Floor Business Centre, Mumtaz Hassan Road Karachi

Tel: +9221 111 734 266 Fax: +9221 2410723

Email: info@pegasusconsultancy.com

Website: www.pegasus.com.pk

Base Oils and Lubricants in Russia and the CIS 2009

Sat, 28 Mar 2009 00:00:00 +0100

Ask your questions to Rosneft, Gazpromneft, Tatneft, and Lukoil refineries directors.

Over 160 key players and senior level experts involved within the lubricant sector in Russia and the CIS will convene on 21-23 April 2009 at Balchug Kempinski Hotel, Moscow to discuss the latest and most important issues concerning the base oil and lubricant market in the region.

The Second Annual Base Oils and Lubricants in Russia and the CIS Conference will provide you with a comprehensive update on all areas of the industry including the strategic outlook for the CIS's lubricant sector, additive market, quality assessment, technology solutions for upgrading base oil production and process innovations as well as opportunities existing within the sector and case studies from the key regional manufacturers.

For further information regarding this event please visit the event webpage at www.wraconferences.com/lubes09

As well as the formal conference sessions there will also be roundtable discussions lead by base oil and lubricant plant directors. The interactive open discussions will provide delegates with the opportunity to address the strategic issues they are dealing with and to take their questions and challenges directly to the people who have the answers they need.

Among the companies who participate in the event are:

ANGARSK REFINERY * AFTON CHEMICAL * CARGO OIL * CHEVRON LUMMUS GLOBAL * CHEVRON ORONITE * CHEMTURA * DELFIN GROUP * EXXONMOBIL * GAZPROM NEFT * LLK INTERNATIONAL * LLK NAFTAN * LUBRIZOL * NAFTAN OIL REFINERY * TATNEFT-NIZHNEKAMSKNEFTEKHIM-OIL * NOVOKUIBYSHEVSK REFINERY * NYNAS * ROSNEFT * ROSNEFT-NEFTEPRODUCT * QUALITET * PETRONAS MARKETING * SHELL * SHELL GLOBAL SOLUTIONS * SLAVNEFT YANOS * TANECO * TNK LUBRICANTS * TOTAL LUBRIFIANTS * UKRTATNAFTA * VIAL OIL * VNIPINEFT and many others.

For further information please contact:

Evnika Polovinkina, Director, Russia and CIS
Tel: +44 (0) 20 7067 1813 / Fax +44 (0)20 7430 0552
E-mail: e.polovinkina@theenergyexchange.co.uk

Oil dips in Asia on signs of building inventories

Wed, 25 Mar 2009 00:00:00 +0100

Oil prices dipped Wednesday in Asia in tandem with a pull back in global stock markets and on signs of building crude inventories.

Benchmark crude for May delivery fell 80 cents to $53.18 a barrel by midday in Asian electronic trading on the New York Mercantile Exchange. The contract staged a late rally Tuesday to close up 18 cents at $53.98 a barrel.

Oil prices haven't climbed much higher because the buying has been driven by stock market gains and not because of a real improvement in global oil demand.

A report Tuesday by the American Petroleum Institute showed a build up of crude stock, a day ahead of a U.S. government report on domestic crude inventories, said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

Analysts expect a build up of 1.4 million barrels in commercial crude oil stocks in the U.S, the world's largest energy consumer, a Platts survey showed.

"That is bearish news," Shum said. "Some caution has crept into the market and expectations that the U.S. government inventory report will show an increase will likely put downward pressure on oil pricing."

Oil prices rallied all last week and again on Monday amid gains in markets and optimism about a U.S. government plan to buy up toxic assets from banks to resolve to financial crisis. A weaker dollar has also caused investors to flee to commodities like oil, which have risen more than 30 percent this month.

Wall Street declined slightly Tuesday after big gains Monday, and Asian markets were narrowly mixed Wednesday. Analysts said if more good news emerges, stocks could keep climbing. But if they fall back in coming days, oil will likely follow.

"I am not convinced that oil (pricing) is turning around. It's a short spike on the back of the stock market rally but eventually I expect it to fall back below $50," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore.

With effects of the OPEC production cuts and a global economic recovery likely to kick in late in the year, Chu said he foresee oil demand and price to only bounce back by the second half.

Russian Finance Minister Alexei Kudrin also warned Tuesday that the recent rise in oil and stock prices may be "temporary."

But the oil rally led China on Tuesday to raise its benchmark retail price of gasoline and diesel fuel.

In other Nymex trading, gasoline for April delivery eased 1.16 cent to $1.4910 a gallon, while heating oil lost 1.46 cents to $1.4850 a gallon. But natural gas for April delivery climbed 0.3 cents at $4.35 per 1,000 cubic feet.

In London, Brent prices shed 82 cents to $52.68 on the ICE Futures exchange.

Source: Businessweek.com

Exxon Fuels Growth With Cash

Wed, 25 Mar 2009 00:00:00 +0100

Exxon Mobil is pumping up its spending to fuel growth. On Thursday, the company said it would increase its capital spending by double-digit percentages in 2009 with long-term growth opportunities to meet global demand.

Exxon Mobil said it will spend about $29.0 billion this year, up 11.1% from $26.1 billion in 2008, and at the high end of its annual target for $25.0 billion to $30.0 billion based on its five-year spending plan. The estimate for 2009 could rise even higher, said Exxon Mobil Chief Executive Rex Tillerson, if the company sees other opportunities, and are likely to remain in the $25.0 billion to $30.0 billion range through 2013.

Investors were skeptical of the news, pushing the stock down $2.27, or 3.5%, to $63.41, in afternoon trading in New York.

Exxon Mobil also said it could fuel growth through acquisitions, or via partnerships with some of the world's nationalized, state-run oil companies. At the end of 2008, Exxon had $31.0 billion in cash, and analysts have speculated that the industry leader may use that cash for these acquisitions.

"In a world where there's a credit squeeze, the idea of strategically aligning yourself with someone who has tremendous access to capital makes a lot of sense," said energy expert Amy Jaffe of Rice University's James A. Baker III Institute for Public Policy.

The Irving, Texas-based company could invest as much as $150.0 billion over the next five years while many of its rivals have scaled back spending as prices for a barrel of crude oil dropped from highs above $147.00 last summer. (See "Cheap Crude Sinks Energy Sector.")

According to Revere Research, Exxon Mobil competitors, such as Royal Dutch Shell, BP and Total, all lost share value on Thursday as well. American Depositary Receipts of Royal Dutch Shell were down $1.27, or 3.1%, to $39.85, in afternoon trading, while BP's ADRs lost $1.32, or 3,7%, to trade at $34.50. ADRs of Total traded down $2.68, or 5.7%, to $44.51.

The oil industry contracted toward the end of the year with demand falling in a weakening economy, a sell-off in oil and gas prices, and the global credit crunch. (See "Rebuilding Global Markets.") Crude oil futures settled at 43.61 on Thursday.

"Our capital spending plans are largely unaffected by the recent reduction in commodity prices," Tillerson said. "Our projects have always been evaluated using a range of prices to ensure robust returns across the business cycle."

Exxon Mobil said its spending would help add new production of about 485,000 barrels per day of oil equivalent from nine projects this year. Most of its exploration would go toward projects expected to come on line after 2010.

Last month, the company said it added 1.5 billion barrels of oil to its proved reserves in 2008, replacing more barrels than it produced. The added reserves, a key asset of oil companies, totaled 103.0% of its 2008 output. Reserve replacements represent the ratio of reserves found over production for a given period. Analysts typically say a company's reserves replacement should average more than 100.0% over a three- to five-year period to indicate growth. (See "Oil On Troubled Waters.")

Most proven reserves in the world are held by national, state-run companies like those in Venezuela and Saudi Arabia, while the more recognizable multinational oil companies control less than 10.0% of the world's proven oil reserves.

Source: Forbes.com

Oil Rises With Economic Hopes

Wed, 25 Mar 2009 00:00:00 +0100

The price of oil moved up Monday, in tandem with the rising optimism among investors who were buoyed by positive comments from Chairman Ben Bernanke of the Federal Reserve.

Crude futures on the New York Mercantile Exchange rose $1.10 to settle at $47.35. In London, Brent crude futures climbed by less than 1% to $46.18 per barrel.

"Oil moved up with a firmer stock market and more optimistic prospects for commodities going forward," said Edward Meir, energy analyst at MF Global. "Also, a failure to break lower lead to some short covering."

Bernanke said on television Sunday night that the U.S. recession could end this year. His comment lifted equity prices for most of the day, though the gains faded at the end of trading. (See "Street Sags Into Close." )

Crude prices fell in early trading Monday as markets digested news that the Organization of Petroleum Exporting Countries over the weekend decided not to cut production quotas, despite pressure from some members that would rather see oil prices in the region of $70-$80 per barrel than the current $40-$50 band.

Although OPEC's 12 members gave mixed signals ahead of the meeting, with Kuwaiti and Iranian delegates saying the market was “oversupplied” while Saudi sources reportedly took a more conservative line, analysts had expected the cartel to make a symbolic cut of around 500,000-1 million barrels per day. (See "OPEC Doesn't Need To Cut.")

The decision also kept major energy stocks Exxon Mobil, Chevron and Royal Dutch Shell trading flat.

But the iPath S&P GSCI Crude Oil Total Return exchange-traded fund, a way to trade oil itself, gained 2.1%, or 37 cents, to $18.31.

Saudi Arabia’s position "was probably integral to what OPEC decided,” said Catherine Hunter, an analyst with IHS Global Insight, referring to the kingdom’s reported view that sticking to already reduced quotas was better than additional supply cuts. “Other members are still overproducing to a certain extent, so the Saudis are in quite a morally strong position.”

OPEC cut 4.2 million barrels’ worth of production from its quotas last year, as the mini-boom in oil prices unraveled in the summer, in tandem with the global economy. A barrel of oil plunged to around $35.00 in February, from a peak of $147.50 in July. Although there had been fears the cartel would find it hard to stick to its production cuts when demand was in free fall, OPEC claimed on Sunday that compliance with the new quotas in the month of February was 79.0%.

That is why OPEC was able to avoid making any fresh cuts this time around: It said that “initial signs” of a reversal in oil stocks showed that its own measures had already proved successful and that a fresh emphasis on full compliance would contribute to market stability.

Source: Forbes.com

Oil under $47 after surge

Fri, 13 Mar 2009 00:00:00 +0100

Crude edged down below $47 a barrel today ahead of Opec's meeting this weekend which pushed prices up by more than 11% in the previous session helped by better-than-expected economic data.

Easing some demand worries and pushing equities up, the US Commerce Department said yesterday that sales slipped 0.1% in February after a hefty 1.8% rise a month earlier, an unexpectedly small drop and a rare dose of good news for an economy trapped in a 14-month recession.

US light crude for April delivery fell 33 cents a barrel to $46.70 a barrel, having jumped $4.70 yesterday to settle at $47.03, erasing the previous two sessions' losses.

London Brent crude was 33 cents down at $44.76.

"The market is sitting on the fence ahead of the meeting. Prices were strong yesterday on the back of equity markets and will hold to these gains today, except if equities fall," said Mark Pervan, ANZ's senior commodities analyst.

"The market is pricing another cut. It could rise $4to $5 if Opec cuts again but the upside will not last. The economy is going to be the main draw."

Asian stock markets opened higher today, tracking the rally in US stocks, with Japan's Nikkei jumping by more than 4%.

China's economic data yesterday had also lent some hope, as a continued surge in bank lending in February spurred optimism that the economy would soon rebound, even if the country's industrial growth ground to a record low at the start of the year.

The market is eyeing Opec's meeting on Sunday, waiting to see if ministers will decide further cuts or call for stricter compliance, which seems to be the preferred option for influential member Saudi Arabia.

Crude has hovered between $33 and $50 since the beginning of the year, halting its slide from last July's records above $147 a barrel, after Opec agreed successive cuts for a total of 4.2 million barrels per day since September.

"All told, the advice for Opecologists this weekend is watch the flows, not the rhetoric. Oil is never far from political intrigue, but in the end fundamentals will prevail," JP Morgan said in its Oil Markets Weekly report.

Opec seaborne crude exports, excluding Angola and Ecuador, will fall to a five-year low in the four weeks to 28 March, to 22.76 bpd, down 350,000 bpd, UK consultancy Oil Movements said in its latest weekly estimate yesterday.

Potentially capping prices today, both Paris-based consumer watchdog the International Energy Agency and Opec will release monthly reports today, expected to show yet more downward revisions for crude demand this year.

Opec will slash its forecast for 2009 crude demand by one million barrels per day in its monthly report, the group's secretary general Abdullah al-Badri said on Monday.

The US Energy Department's forecasting arm on Tuesday was the first to revise down its monthly forecast, saying it expected world crude consumption to average 84.27 million barrels per day in 2009, down 430,000 bpd from its previous monthly forecast and the lowest level since 2005, reported Reuters.

Source: Wire Services

Repsol to pump $174m in Ecuador

Fri, 13 Mar 2009 00:00:00 +0100

Spanish oil company Repsol plans to invest about $174 million over the next nine years in Ecuador after it signed a temporary deal with the Opec nation, a company spokesman said.

Yesterday Repsol signed a one-year deal with the leftist government that extends the maturity of its contract for six years to 2018. The deal paves the way for Ecuador to negotiate a new service contract that allows the state to keep all the oil the company produces in exchange for a set fee.

The company's two other partners in Ecuador will invest about $141 million during the same period, the spokesman said.

Repsol is the latest major oil company to ink the temporary production-sharing agreement as President Rafael Correa moves to tighten his grip over the key oil sector.

Repsol will also pay Ecuador an extra $245 million in late taxes in over five years, the spokesman told Reuters. The company's partners in Ecuador will pay the rest of the debt that totals about $445 million.

Source: Wire Services

Short-Term Energy Outlook

Fri, 13 Mar 2009 00:00:00 +0100

OPEC Supply. Press and industry reports indicate that OPEC countries have trimmed production significantly over the past several months. Estimated OPEC crude oil production fell by 1.1 million bbl/d during the fourth quarter of 2008, reaching 30.6 million bbl/d. OPEC crude oil production is expected to fall by an additional 2 million bbl/d in the first quarter of 2009 to 28.6 million bbl/d, the lowest level for the first quarter since 2003. OPEC crude oil production in 2009 is expected to average 28.9 million bbl/d, then rise to 29.8 million bbl/d in 2010. In addition, EIA expects that OPEC production of non-crude liquids will grow by 410,000 bbl/d in 2009 and by 740,000 bbl/d in 2010. This is lower than last month’s forecast due to a re-estimation of the impact of falling crude oil production upon the growth of production in associated non-crude liquids.

The combination of lower oil demand, rising natural gas liquids production, and increases in crude oil production capacity over the next 2 years will result in an OPEC surplus production capacity averaging 4 to 5 million bbl/d over the period. Higher surplus production capacity should mitigate the impacts of actual or perceived supply disruptions and reduce the likelihood of sharp price increases. There remains a risk, however, that financial constraints and prospects of weak demand could lead OPEC members to further delay expansion programs, reducing future surplus capacity and setting the stage for higher prices once the economic recovery is underway.

Inventories. Revised data indicate that OECD commercial inventories stood at 2.7 billion barrels at the end of 2008, equivalent to 52 days of forward cover, which is above recent end-of-year average levels (Days of Supply of OECD Commercial Stocks). Measured as days of forward cover, OECD commercial inventories are projected to remain in the upper end of the historic range through the end of 2010.

U.S. Crude Oil and Liquid Fuels

Consumption. Total consumption of liquid fuels in 2008 declined by almost 1.3 million bbl/d, or 6.1 percent, from that of 2007 (U.S. Liquid Fuels Consumption Growth). The major factors contributing to the fall in consumption were a rapid rise in retail prices to record levels during the first half of 2008 and a deteriorating economy in the second half of the year. Total liquid fuels consumption for 2009 is projected to fall by a further 420,000 bbl/d, or 2.2 percent, because of continued economic weakness. The expected economic recovery in 2010 is projected to boost total liquid fuels consumption by 210,000 bbl/d, or 1.1 percent, with all of the major fuels registering increases in consumption.

Production. Domestic crude oil production in 2009 is projected to increase by about 400,000 bbl/d from 2008 levels to an average of 5.36 million bbl/d (U.S. Crude Oil Production). This would be the first increase in production since 1991. Output is projected to rise by a further 150,000 bbl/d in 2010. Contributing to the increases in output are the Gulf of Mexico Thunder Horse platform, which is producing now, and the Tahiti platform, which is expected to come on stream later this year.

Prices. Under current economic and world crude oil supply assumptions, WTI prices are expected to average $42 per barrel in 2009 and $53 per barrel in 2010 (Crude Oil Prices). A stronger economic recovery, lower non-OPEC production because of the current low oil prices and financial market constraints, or more aggressive action to cut production by OPEC countries could lead to a faster and stronger rise in oil prices.

Regular-grade gasoline prices, which averaged $3.26 per gallon in 2008, are projected to average $1.96 per gallon in 2009 and $2.18 per gallon in 2010. The monthly average price is expected to peak slightly over $2 per gallon this year, although it remains possible that weekly prices could rise significantly higher at some point this spring or summer. Because of lower motor gasoline consumption, refining margins for gasoline are expected to remain depressed for much of 2009 but are expected to increase slightly in 2010 as consumption begins to recover.

On-highway diesel fuel retail prices are projected to average $2.19 per gallon in 2009 and $2.51 in 2010. The expected continuing decline in diesel fuel consumption in the United States this year as well as the growing weakness in distillate fuel usage outside the United States are projected to result in a narrowing of refining margins for distillate throughout the forecast period. Because of the global weakness in industrial output, it is possible that we will see diesel prices fall below gasoline prices this summer.

Natural Gas

Consumption. Total natural gas consumption is projected to decline by 1.3 percent in 2009 and then increase by 0.4 percent in 2010 (Total U.S. Natural Gas Consumption Growth). The outlook for continued economic weakness in 2009 is expected to take its greatest toll on industrial sector natural gas consumption, which is expected to decline by about 6 percent this year, more than offsetting the small projected increases in other end-use sectors. Lower natural gas delivered prices compared with coal in some markets, particularly in the Southeast, are expected to cause some electric power generators to switch some generation from coal to natural gas. Natural gas consumption by the electric power sector is projected to grow by 0.4 percent in 2009.

The pace and extent of economic recovery in 2010 are the primary factors influencing the natural gas consumption forecast next year, particularly for industrial users. Based on the current economic assumptions for 2010, slight growth in the industrial sector and 2-percent growth in the electric power sector are balanced by declines in the residential and commercial sectors because of projected milder winter temperatures.

Production and Imports. Total U.S. marketed natural gas production is expected to remain flat in 2009 and then fall by 0.8 percent in 2010. Baker-Hughes reports 916 natural gas rigs working in the United States as of March 6, 2009, a decline of 43 percent from August 2008. Consequently, the robust growth in natural gas production in the Lower-48 region (excluding the Gulf of Mexico) over the last few years is expected to end as production reaches about 53 billion cubic feet per day (Bcf/d) in early 2009, then declines during the second half of 2009. The extent of the production decline later this year is highly uncertain and subject to fluctuations in demand and prices over the period. Rig activity is expected to recover in 2010 as the economy improves and prices increase. However, annual average production is still projected to be lower next year because of the decline in new wells drilled this year.

U.S. imports of liquefied natural gas (LNG) are expected to increase slightly in 2009 to 380 Bcf. New LNG supply capacity in Qatar, Indonesia, and Yemen could supply a significantly greater volume of LNG imports this year. However, delays to this new supply capacity as well as uncertainty about the weakness of natural gas demand in other LNG-consuming countries contribute to doubts about much higher LNG imports might be this year. LNG imports in 2010 are projected to be about 460 billion cubic feet (Bcf) as global supply projects ramp up. Pipeline imports are expected to decline by 9.4 percent in 2009 as Canadian drilling activity subsides, fields age, and a growing portion of available supply is dedicated to oil sands development.

Inventories. On February 27, 2009, working natural gas in storage was 1,793 Bcf (U.S. Working Natural Gas in Storage). Current inventories are now 218 Bcf above the 5-year average (2003–2007) and 270 Bcf above the level during the corresponding week last year. Storage inventories at the end of March 2009 are expected at about 1.6 trillion cubic feet (Tcf), roughly 200 Bcf above the previous 5-year average for that time.

Prices. The Henry Hub spot price averaged $4.65 per Mcf in February, $0.75 per Mcf below the average spot price in January. Prices continue to reflect demand reductions brought about by the current economic downturn. As the year progresses, it is expected that average spot prices will remain near $4 per Mcf. If prices fall further than currently forecast, natural gas will become increasingly competitive with coal for base load power generation in some regions. On the supply side, the current drilling pullback could contribute to higher-than-expected prices if the economy begins to recover earlier than expected and production is slow to react. The Henry Hub spot price is expected to average $4.67 per Mcf in 2009 and $5.87 per Mcf in 2010.

Electricity

Consumption. An expected decline of 6.4 percent in industrial electricity sales during 2009 leads to a projected decline in total electricity consumption of 1.7 percent this year (U.S. Total Electricity Consumption). Total electricity consumption is expected to grow by 1.2 percent in 2010 as a slowly improving economic climate contributes to a recovery in the sales of electricity.

Prices. Despite the recent drop in generation fuel costs, some electric utilities have proposed slight rate increases in response to higher costs of securing credit for purchases of fuel and wholesale power, while other retail electricity distributors, especially in the West South Central region, have been able to pass the declining fuel costs on to customers through lower rates. Residential electricity prices are projected to rise at annual rates of about 1.1 percent in 2009 and 1.8 percent in 2010 (U.S. Residential Electricity Prices).

Generation. Below-average snowpack in the Pacific region is expected to contribute to a 4.3-percent decline in U.S. hydropower generation in the electric power sector during 2009. Some of the drop in hydropower and coal-fired generation is expected to be picked up by natural-gas-fired generation, which is expected to increase by 1.2 percent in 2009.

Coal

Consumption. The projected decline in electricity consumption and projected increases from some other generation sources is expected to lead to a 1.7-percent decline in coal consumption for electricity generation. An expected increase in electricity consumption of 1.2 percent in 2010 will lead to a 0.4-percent increase in coal consumption for electricity generation (U.S. Coal Consumption Growth).

Production. A significant increase in coal exports in 2008 contributed to a 2.1-percent increase in coal production. Production is expected to fall by 4.9 percent in 2009 as lower total domestic coal consumption is combined with declines in exports and an increase in imports. Production is projected to increase by 1.8 percent in 2010 as domestic consumption and exports increase with an improving economy (U.S. Annual Coal Production).

Exports. Reductions in global coal demand, coupled with the return to normal supply conditions in other major coal-producing and exporting countries, are expected to reduce U.S. coal exports by about 10 million short tons, an 11.8-percent decrease, in 2009. The improving global economy is expected to spur global coal demand in 2010, leading to a projected 12-percent increase in exports.

Prices. The average delivered coal price to the electric power sector is estimated to have increased by about 17 percent in 2008. Declines in electricity demand and lower transportation costs should see the average delivered coal price fall by 1 percent in 2009 and remain flat in 2010. Delivered coal prices tend to move more slowly than spot prices because of the nature of existing long-term coal supply contracts.

Source: EIA

New Crude Benchmark in the Works?

Thu, 05 Mar 2009 00:00:00 +0100

Oil industry information leader Platts has proposed establishing a new assessment for sour crude produced in North and South America. The benchmark would be called the Americas Sour Marker (ASM), and includes four sour crudes that Platts already assesses. While ASM is not intended to replace West Texas Intermediate (WTI) as the benchmark price for Americas crude oil, Platts is clearly signaling its intention to minimize the influence of WTI in its assessment processes.

Platts offers two reasons for the proposed change. First, sour crude accounts for about two-thirds of the crude entering US refineries. Second, the company argues that the WTI price does not fully represent US Gulf Coast crude economics.

We noted last month the cost to Americans of having WTI priced lower than foreign crude. Platts is acknowledging that WTI is too rare and too landlocked to serve as the single marker for US crude. The ASM will begin to be quoted on March 16th.

15th Annual Fuels & Lubes Asia Conference

Fri, 20 Feb 2009 00:00:00 +0100

The 15th Annual Fuels & Lubes Asia Conference, Asia’s most prestigious industry event, is only three weeks away, but there’s still time to join our lucky draw! For our lucky draw at the conference, we are giving away gift vouchers for a traditional Vietnamese massage to help stimulate the local Vietnamese economy. Register now and get a chance to win this “stress-busting” experience!

Who are the major players supplying the world oil market?

Tue, 03 Feb 2009 00:00:00 +0100

Governments of oil-rich countries have a major influence on the world supply of oil through ownership of national oil companies and, for some governments, their membership in OPEC.

There are three simple ways of approaching this question. One is by comparing the basic differences between investor-owned companies and government-controlled companies. Another is to examine the role that governments play in general. The third is by comparing the differences between Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC member countries, specifically.

Although investor-owned oil companies are often thought of as those most responsible for world oil production, government-controlled companies actually control the majority of both current production (more than 52% in 2007) and proven reserves (88% in 2007), one indicator of future production potential.

Investor-owned and government-controlled oil companies often operate differently

Let's first examine the differences in the three types of companies that currently supply essentially all crude oil to the world. The distinction between these three types of companies is important because each has different general operational strategies and production-related goals.

1. Investor-owned oil companies, including ExxonMobil, Royal Dutch Shell, and BP (formerly known as British Petroleum), are primarily concerned with maximizing shareholder return. These companies, often referred to as international oil companies (IOCs), typically move quickly to develop and produce the oil resources to which they have obtained access and sell their output in competitive markets.

2. National oil companies with strategic and operational autonomy that function as corporate entities, including Petrobras (Brazil) and Statoil (Norway), often balance profit-oriented concerns and the objectives of their country into the development of their corporate strategy. While these companies may support their country’s goals, they are primarily commercially-driven entities.

3. National oil companies that operate as an extension of the government or a government agency, including Saudi Aramco (Saudi Arabia), Pemex (Mexico), and PDVSA (Venezuela), support their government’s programs either financially or strategically. They also provide fuels to domestic consumers at prices lower than world customers pay. These companies do not always have the incentive, means, or intention to develop their proven reserves at the same pace as commercial companies. Due to the diverse situations and objectives of the governments of their countries, these national oil companies pursue a wide variety of objectives that are not necessarily market-oriented, such as employing their citizens, furthering a government’s domestic or foreign policy objectives, generating long-term revenue, and supplying inexpensive domestic energy.

Countries are also major players in the world oil market

In addition to influencing the operation of national oil companies, governments of oil-rich countries can directly impact world oil supplies by changing financial regulations, e.g., tax structures. Such a change would force commercially-oriented companies to change production plans or form strategic alliances with other major producing nations, such as OPEC members. As the majority of reserves becomes increasingly concentrated in fewer countries, changes in leadership or strategic alliances of individual countries have more substantial effects on world oil supply and energy markets than in past years.

OPEC countries work together to influence world oil supplies

OPEC is a group of some of the world’s most oil-rich countries that coordinate their oil production policies. As of January 2009, there are twelve member countries in OPEC: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Together, they controlled approximately three-quarters of the world’s total oil proven reserves in 2007.

OPEC attempts to influence the amount of oil available to the world by assigning a production quota to each member except Iraq, for which no quota is presently set. The track record of compliance with OPEC quotas is mixed, as production decisions are ultimately in the hands of the individual member countries. All OPEC member countries have a national oil company and most also allow international oil companies to operate within their borders. An OPEC member country wishing to reduce output in response to a cut in its quota implements its decision by restricting the production of the oil companies operating within its borders. Taken together, the decisions made by OPEC members influence the overall oil market by determining how much of the gap between world demand and non-OPEC supply is filled by their production.

Oil reserves are increasingly concentrated in OPEC countries and national oil companies

OPEC countries and national oil companies already hold the majority of proven oil reserves, and the percentage of reserves they hold is increasing. This concentration further establishes their future importance as major players in the world oil market and could potentially increase market tension and upward pressure on prices as world oil demand rises.

Did You Know?

The United States has no national oil company. The largest three U.S.-based international oil companies (ExxonMobil, Chevron, and ConocoPhillips) are accountable to their shareholders, not the United States government.

Source: EIA

FACTBOX-State-regulated fuel prices across Asia

Tue, 03 Feb 2009 00:00:00 +0100

Jan 29 (Reuters) - World oil prices have fallen to a third
their value from a record-high above $147 hit last July CLc1,
prompting a series of fuel price reduction in some Asian
countries where pump rates are state-regulated.

India cut fuel prices by up to 11 percent on Wednesday, the
second time in nearly two months, as the government took
crude's retreat as an opportunity to woo voters ahead of
elections.





The following table shows retail fuel prices in various
Asian countries, compared with floating market prices in the
Asian oil trading hub Singapore.
 
Prices in US cents a litre - DIESEL PRICES
 Country                   Pct Change    Last date of change
 ===========================================================
 China              58       -17.0              Dec 19 2008
 India (Delhi)      63        -6.0              Jan 29 2009
 Indonesia          41        -6.3              Jan 15 2009
 Vietnam  0.25 pct  78        -7.2              Nov  8 2008
 Malaysia           47        -5.0              Dec 15 2008
 Bangladesh         64        -4.4              Jan 13 2009
 Sri Lanka          62       -12.5              Dec 31 2008
 Pakistan           61        -9.4              Dec  1 2008
 Singapore ULSD#    83                          Jan 29 2009
 Singapore fob*     35                          Jan 28 2009
 ===========================================================
 GASOLINE PRICES
 ===========================================================
 China     90-Ron   65       -13.0              Dec 19 2008
 India (Delhi)      83       -11.0              Jan 29 2009
 Indonesia          41       -10.0              Jan 15 2009
 Vietnam   92-Ron   67        -8.3              Dec 10 2008
 Malaysia           56        -5.6              Dec 15 2008
 Bangladesh        107        -5.5              Dec 23 2008
 Sri Lanka 90-oct  106        -1.6              Dec 31 2008
 Pakistan           73       -13.5              Dec  1 2008
 Singapore 92-Ron  106                          Jan 29 2009
 Singapore fob*     32                          Jan 28 2009
 ===========================================================
 # Ultra low sulphur diesel (0.005 percent sulphur content)
 * Price of benchmark 92 Ron gasoline and 0.5 percent sulphur
diesel in the Singapore cash market. This is not a retail price
and excludes any national/state taxes.
 (US$1=48.93 rupees as of Jan. 28)
 (US$1=S$1.50 as of Jan. 28)
 (Source: Reuters)
 (Reporting by Asia Energy Desk)

Oil, grains, most metals prices lower

Tue, 03 Feb 2009 00:00:00 +0100

The price of crude oil was lower Monday after the US commerce department said that US consumer spending dropped again in December and after refiners and the United Steelworkers union reopened negotiations, preventing the steelworkers from striking and closing down some US refineries.

March contracts for West Texas Intermediate crude was down $1.60 to $40.08 per barrel on the New York Mercantile Exchange while Brent crude for March delivery dropped $2.03 to $43.85 per barrel on the ICE Futures Europe exchange in Europe.

In afternoon trade in New York, Nymex March gasoline futures were six cents lower to $1.21 per gallon and March heating oil futures dropped 8 cents to $1.35 per gallon, but March natural gas added 22 cents to $4.64 per million British thermal units.

Copper prices were mixed Monday on new data from the US indicating that demand will likely continue to decline after construction spending dropped in the US in December and after copper inventories in London Metal Exchange warehouses fell on the session for the first time since early in December.

March copper dropped 4 cents to $1.42 per pound in afternoon trade in New York, but three-month copper in London added $51 to $3,206 per tonne after inventories in LME warehouses dropped 325 tonnes on the session.

Meanwhile, precious metals prices were lower in New York as April gold fell $21.20 to $907.20 per troy ounce, March silver was down 15 cents to $12.42 per troy ounce, and April platinum dropped $12.20 to $980.20 per troy ounce.

Grains prices were lower in afternoon trade on the Chicago Board of Trade, with CBOT March wheat down 4 cents to $5.63 per bushel as March corn fell 3 cents to $3.70 per bushel and March soybeans dropped 20 cents to $9.59 per bushel.

Source: Investments Markets

SK Energy Completes Its First Lube Base Oil Plant in Southeast Asia

Fri, 23 Jan 2009 00:00:00 +0100

The new production base in Dumai, Indonesia to produce 7,500 barrels of lubricant base oil per day

SK Energy to further expand cooperation with Pertamina in areas such as refinery, petrochemical and resources development

SK Energy, the largest refiner in South Korea, announced today that the company completed its third lubricant base oil (LBO) plant in Dumai, Indonesia. Over 400 guests and SK Energy’s executives, which include Heon Cheol Shin, Vice Chairman & CEO of SK Energy, Jeong Joon Yu, President of SK Energy’s Resource & Chemical Business, Sofyan Djalil, Minister of State Enterprise in Indonesia, and Ari Sumarno, President of Pertamina, attended the commercial operation celebration of the new plant in Dumai, Indonesia on July 15.

The new LBO plant will produce Group III base oil, the raw material of lubricant, with daily production capacity of 7,500 barrels.

SK Energy currently produces 21,000 barrels of base oil per day at its first and second LBO plants in Ulsan Complex, Korea. With the additional production at the new LBO plant, SK Energy will solidify its prominent leadership in high quality lubricant base oil market (Group III).
SK Energy initially signed a joint venture agreement to establish the new LBO plant with Pertamina in April, 2006, which was followed by commencement of construction in November, 2006. The new plant had its mechanical completion in March of this year, which was approximately two months ahead of its schedule.

Vice Chairman Heon Cheol Shin of SK Energy said, “The new LBO plant will serve as a strong foundation of more comprehensive cooperation between SK Energy and Pertamina in the future. We will strengthen our ties in various business areas such as joint projects in resource development, increase in trade, exchange of technology and technical information, engineer education, supply channel development, new business development.” He also added, “SK Energy will further strengthen its ‘Southeast Asian Triangle,’ which connects the logistics base in Singapore, the resource development project in Vietnam, and the new LBO plant in Indonesia, to stay ahead of competition.”

SK Energy initially made inroads into higher quality lubricant base oil market in 1995 by completing its first LBO plant in Korea. The company now exports its base oil products to over 200 companies in 50 countries, including major international petroleum companies.

Group III Lubricant Base Oil
Lubricant base oil is basic oil ingredient (raw material) of lubricant, which includes lubricant for engine and industrial purpose, and grease. Generally, Lubricant is made of lubricant base oil (80~99%) and the additives (1~20%).
Lubricant base oil is categorized into 5 groups - Group 1, 2, 3, 4 and 5. Comparing to Group 1 and 2 which accounts for the most of regular lubricant base oil, Group 3 lubricant base oil is a high quality product with high viscosity index level. Group 4 and 5 are chemical products such as polyalpha olefin.

Inquiries

SK energy Website: www.skenergy.com
SK energy Base Oil Website: www.yubase.com

SK Energy
Public Relations Team
Wookyung Kim
Phone: +82-2-2121-5955
E-mail: kwk911@skenergy.com

Fleishman-Hillard
Andy Chan
Tel. +852.2111 3175
Mobile. +852.6255 1600
E-mail. andy.chan@fleishman.com

Source: Fuel & Lubes Asia

Indian Oil Rings In 'Year of Commissioning'

Tue, 06 Jan 2009 00:00:00 +0100

The state-run Indian Oil Corp (IOC) on Friday has said it will expand the Panipat refinery and commission a naphtha cracker complex adjacent to the unit this year.

The year 2009 will be the "Year of Commissioning" for IOC, company Director (Refineries) B N Bankapur said in a statement in New Delhi.

The Panipat refinery will be expanded by three million tons to 15 million tons and naphtha cracker complex adjacent to the unit would be commissioned this year, he said.

The Once-Through Hydrocracker Project at Haldia would also be commissioned this year.

Stating that the IOC was committed to complying with the Auto Fuel Policy, he said that petrol and diesel quality for Delhi and the National Capital Region and 12 other major cities would be as per Euro-IV norms from April 1, 2010.

Currently, fuel of Euro-III grade is being supplied in these cities.

The rest of the country would switch to Euro-III quality from the present Euro-II, he said.

"In order to achieve these quality standards, a clutch of petrol and diesel quality upgradation projects are set to be commissioned by the end of 2009 at various IOC refinery locations."

During the calendar year 2008, IOC refineries achieved a capacity utilisation of 104 per cent besides achieving the best ever distillate yield.

IOC refineries processed a record 48.9 million tons of crude oil.

"The IOC is fully gearing up to implement the revised guidelines for effluent and emission set by the statutory bodies," Bankapur said.

He was referring to the revised parameters for treated effluent issued by the Ministry of Environment and Forests to be followed by refineries which have been made more stringent on the lines of European Union standards.

"We have drawn an action plan and our refineries will need to follow and implement it for incorporating the new parameters as part of our environment management," he added.

Source: Asia Pulse Pte Ltd.

Sunoco May Shut Down Refinery

Tue, 06 Jan 2009 00:00:00 +0100

Sunoco Inc. (SUN) said Monday it may shut down a refinery, a sign of how abruptly the fortunes of U.S. oil refiners have dimmed.

Sunoco Chief Executive Lynn Elsenhans said the company's Tulsa, Okla., refinery - which has been on the block for more than a year - would be converted to a terminal if a buyer isn't found by the end of 2009. The move, which would mark the first closure of a refinery of this size in the U.S. in at least a decade, comes as Elsenhans seeks to reinvent the Philadelphia-based refiner as it grapples with a downswing that has hit the sector broadly against a backdrop of falling gasoline demand.

While some refiners may be in a "cut-and-cope" mode, trying to reduce costs, but function normally, "we are trying to make meaningful cuts," said Elsenhans, who was appointed to lead Sunoco in August. She previously worked at Royal Dutch Shell PLC (RDSA).

Sunoco shares on Monday closed 3.3% lower at $34.75.

That Sunoco even raised the possibility of a refinery closure underscores how quickly the business environment has deteriorated amid weak global demand for refined products. Refinery valuations skyrocketed in the middle of the decade as demand ran up against capacity constraints, lifting profits.

Refiners, in the past, have shied away from closing plants for fear of a political backlash. With the average gasoline price less than half of the $4-a-gallon mark, Sunoco may be betting that the sale of its Tulsa, Okla., plant, which has a processing capacity of 85,000 barrels a day, wouldn't reverberate as widely. Such a move could also lead the way for other refiners looking to cut costs. The average price for regular gasoline in the U.S. is about $1.66 a gallon, the lowest since February 2004.

Elsenhans also said she planned to run cheaper grades of crude oil and produce a more flexible slate of products, while cutting Sunoco's overall costs.

Such changes are a radical shift for Sunoco, which in the past has held to a more conservative strategy. Some of the changes Elsenhans advocates - such as investing in large, waterfront refineries and processing low-quality crude blends - are already at work at rivals.

Scaling Back

In Tulsa, environmental regulations are forcing Sunoco's hand. The company would need to make a major investment in the plant in order to continue operating it.

This wouldn't gel with Sunoco's new strategy, which focuses on operating a narrow set of assets with a great deal of control over the crude they process and products they make.

Sunoco is likely to cut costs by more than 10%, Elsenhans said in an interview following the meeting.

To reduce spending, Sunoco will cut energy costs, services and "people costs," Elsenhans said. She didn't specify how many employees might potentially be laid off. She stressed that some "lifestyle" items would also be cut.

"The corporate jets are going to go," she said.

Refining is a cyclical business, subject to price shifts in the oil it must buy and changing demand for the products it produces. Even if profit margins were to improve dramatically, Elsenhans said she expects her cuts to remain.

Sunoco previously announced it had retained consultancy McKinsey & Co. to analyze its operations and create a plan for operating more efficiently.

Closing Refineries

If Sunoco's Tulsa plant closes, other refiners may follow suit.

"If current refinery margins remain where they're at, you can't rule that out," said Neil Earnest, vice president of Muse Stancil, a Dallas-based consultancy.

This year, refiners have been hit with surging crude oil prices, which set record highs above $145 a barrel in July, on top of weakening demand for products such as gasoline and diesel. This has squeezed their margins.

During the 1980s and 1990s there were widespread refinery closures in the U.S. as more stringent environmental regulations forced inefficient plants that couldn't afford to invest to shut.

The number of refineries in the U.S. fell from about 300 in 1980 to just 145 today. The cutback in refineries left primarily efficient, larger refineries in operation, said Earnest.

"The refining portfolio of North America has been highgraded," he said.

While Sunoco's Tulsa refinery is mid-size relative to the other U.S. refineries, it's one of the smallest operated by a large, publicly traded company.

The refinery makes a small quantity of fuel, but primarily produces lubricants, Earnest said.

In 2004, Shell attempted to close a refinery in Bakersfield, Calif. That effort was stopped by the state's attorney general, who said it could run economically, and the facility was subsequently sold. Sunoco's Elsenhans was responsible for Shell's U.S. refining operations at the time the company tried to shutter the Bakersfield plant.

Source: Dow Jones & Company, Inc.

Looking back...........

Sun, 28 Dec 2008 00:00:00 +0100

Dear visitor,

The waning year of 2008 is sure to be remembered as one of the most turbulent in the history of the oil industry. It was the realisation, with declining stock markets and the onset of recession, that demand for oil would inevitably fall as economies around the globe re-trenched.

The year was also a "perfect storm" for the highly competitive aviation industry as oil prices skyrocketed to a high of US$147 a barrel in July.

The global base oil market was likewise exhilarating, with many highs and many lows. in March 2008, SN500 increased by US$100 per metric ton within a month in Europe and by the end of October 2008, CFR India prices for Group I dropped by US$210 per metric ton to US$1,020, the largest drop within a week. You can see that the world base oil market had been shaken by record prices seen earlier this year, followed almost instantly by a slow down in the global economy.

Merrill Lynch & Co. cut its 2009 oil price forecast to $50 a barrel from $90 as the global economic slump cuts fuel demand and said OPEC production cuts will likely fail to revive the market, but are they right as the egos already have been brought crashing down to earth. Not so long ago, the world was full of strutting analysts confidently predicting the booming future to anyone who would listen. Now anyone wanting proof of just how far beleaguered analysts have fallen.

In the beginning, BaseOilMarket.com was often viewed with scepticism, something that was difficult to set up, due to the conservitive way of doing business in the base oil business.

We have proven in the past 6 months already that these perceptions are wrong and that a platform with relevant information about offers and requirements is beneficial for your business.

The rapidly growing memberslist is a response to the need for a platform where buyers and sellers can post their availabilities and requirements. We are proud to have the support and participation of many major base oil refiniers, traders and blenders worldwide. BaseOilMarket.com has already more than 600 registered members worldwide!

In 2009 we will therefore not only continue to develop and improve our web site, but we will also start providing more base oil market info on a weekly basis.

We wish you and your family a very happy holiday and a prosperous new year. We look forward to continuing to work with you for many years to come.

Best regards,

Jeroen Looye
Director

Fuel DMe promotion plant is ready to make its first delivery in January 2009

Fri, 26 Dec 2008 00:00:00 +0100

Fuel DME Production Co., Ltd. (“FDME”), a joint venture of ITOCHU Corporation, Mitsubishi Gas Chemical Company, Inc., Japan Petroleum Exploration Co., Ltd., Taiyo Oil Co., Ltd., TOTAL Di-Methyl Ether Japan Ltd., Toyota Tsusho Corporation, JGC Corporation, Mitsubishi Heavy Industries, Ltd., and Mitsubishi Chemical Corporation, is pleased to announce that it has become ready at all stages from production to distribution of the fuel Di-Methyl Ether (“DME”) to its customers. In June 2008, FDME successfully completed a trial operation of the Fuel DME Promotion Plant (Niigata City, Japan) with a capacity of 80,000 tons per annum. In addition, two specialized bulk lorries were acquired in December 2008 for timely DME distribution to customers.

In January 2009, FDME is scheduled to make its first delivery to a customer, who introduced a new DME boiler facility partly subsidized by the Ministry of Economic, Trade and Industries. The delivery of DME will be made immediately after the regulatory permission issued by the local authority for the facility.

FDME is committed to promotional activities by introducing the fuel DME in the applications of boilers, furnaces, power plants (including fuel cells), automobiles (as diesel substitute) as well as chemical feedstock, etc. Furthermore, entire partners of FDME are committed to the utilization of DME as an essential energy in terms of Japan’s energy strategy represented by three “E”s (Energy Security, Environmental Protection & Economic Growth).

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About Fuel DME Bulk Lorry
Fuel DME bulk lorry is designed and manufactured for the purpose of fuel DME distribution from the Fuel DME Promotion Plant to DME users. The lorries are designed to meet various technical conditions in order to supply the fuel to respective users, as one is equipped with a submerged pump while the other with a compressor. Each of the lorries has a loading capacity of eleven tons, and will be operated by one of the leading fuel logistics companies in Japan, Niyac Corporation.

Fuel DME and Japan’s Policy
The Japanese Government clearly stated in its National Energy Strategy that the promotion of fuel DME is an important task, and a various supports have already been provided by the government to encourage technical development of its production and application. Starting from this fiscal year, the main focus of such monetary support is shifted from research programs to promotion programs. The Ministry of Economy, Trade and Industries launched a support program to encourage introduction of facility using fuel DME, and an industrial DME boiler is being installed at present by taking advantage of such support program. Simultaneously, the Ministry of Land, Infrastructure and Transportation is considering a model program starting next year to conduct a verification test of DME-fuelled vehicle. Being strongly supported by the government, FDME will further extend our effort to accelerate our promotional activities.

Source: F&L Asia

Sunoco likely to make Tulsa refinery a terminal-analysts

Fri, 26 Dec 2008 00:00:00 +0100

U.S. refiner Sunoco Inc (SUN.N: Quote, Profile, Research) will probably convert its refinery in Tulsa, Oklahoma, into an oil terminal as the necessary investment needed to make the refinery environmentally compliant is too great, analysts said on Tuesday.

"We believe terminal conversion is the most likely outcome," Michael LaMotte, oil analyst at J.P. Morgan, said after Sunoco's analyst meeting on Monday, where the options for the refinery were discussed, including a sale or upgrading.

Sunoco, like other refiners, has seen its margins suffer as the U.S. economic recession has crimped demand for gasoline and other products, making it uneconomical for many refiners to upgrade facilities.

The 85,000 barrel per day refinery is currently operating under waivers as it is unable to make products that meet current environmental standards, such as low sulfur fuels, market sources said.

Last December, Sunoco said it had received unsolicited bids from parties interested in buying the refinery and said it would make a decision by the third quarter of 2008.

A Sunoco spokesman said Tuesday the company was pursuing a number of different alternatives, including a sale.

"We continue to pursue a sale," said Thomas Golembeski, a spokesman for the company. Citing confidentiality, he said he was unable to divulge names but there were interested parties.

Based on the $333 million price that Alon paid for Valero's 80,000 bpd refinery in Krotz Springs, Louisiana, in May 2008, J.P. Morgan's LaMotte put a $500 million price tag on Sunoco's Tulsa plant.

However, a possible sale of the refinery would face competition as Valero's Midwestern refineries are also on the block and the current economic uncertainty could prevent Sunoco from getting a good price, analysts said.

"This is an extremely bad business environment to sell anything. It's a buyer's market," said Fadel Gheit, analyst with Oppenheimer.

"Sunoco will look at ways of possibly reconfiguring the units at Tulsa into something more sensibly matched to the expected weak refining market in 2009," said Mark Flannery, an analyst with Credit Suisse.

"But, if this cannot be made to work, the plant will be converted into a terminal and the refining units permanently mothballed," he added.

Flannery said the company's cancellation of its capital program in the third quarter had forced the issue. (Reporting by Janet McGurty; Editing by Walter Bagley).

Source: Reuters India

Oil rises as market anticipates Saudi cut

Mon, 15 Dec 2008 00:00:00 +0100

Oil prices rose nearly 12 percent Thursday as the dollar continued to lose value, making commodities like crude more attractive.

The falling dollar outweighed a new report from the International Energy Agency, which said energy demand is sliding sharply.

Crude prices have begun to rise before next week’s meeting of OPEC, which is expected to slash production.

Congress also appeared closer to approving $14 billion in loans to Detroit’s automakers, lending further support to crude prices.

“Probably the biggest factor right now is financials,” said Phil Flynn, an analyst with Alaron Trading Corp. “The market is worried that all these bailouts ... means we’re going to be printing a lot more money, which makes the dollar weaker. That’s really supporting the price.”

The U.S. dollar lost ground against other major currencies, making commodities like oil more attractive to investors as a hedge against inflation and dollar weakness.

The euro rose to $1.3227 on Thursday from $1.2988 late Wednesday in New York, while the dollar fell to 91.18 Japanese yen from 92.63 yen in the previous session.

Light, sweet crude for January delivery rose $5.08 to $48.60 a barrel in trading on the New York Mercantile Exchange.

Prices at the pump continued to slide, falling 1.9 cents overnight to a national average of $1.664 per gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That’s 55.6 cents a gallon below what it was a month ago and $1.326 below where it was a year ago.

The Paris-based IEA said Thursday that global oil demand will shrink this year for the first time since 1983. The IEA cut its forecast for global oil demand in 2008 by 350,000 barrels a day to 85.8 million barrels a day, down 0.2 percent from 2007.

The IEA also cut its forecast for global oil demand in 2009, saying it would increase by just 0.5 percent next year, to 86.3 million barrels a day. That was 200,000 barrels a day less than its estimate last month.

But Flynn said the report wasn’t totally bearish.

“It kind of kept China demand fairly steady, so I think in a weird way the report was kind of bullish,” he said.

Focus has remained on comments coming from the Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global crude supply. The group has signaled it plans to slash output quotas at a meeting Dec. 17 in Algeria.

Many analysts expect production cuts of as much as 2 million barrels a day, which would match the combined reductions of two previous output cuts earlier this year.

Victor Shum, energy analyst at consultancy Purvin & Gertz in Singapore, said indications from Saudi Arabia — the biggest oil producer in OPEC — that it would cut production going into January boosted hopes of a significant output reduction.

Russia’s plan to coordinate production levels with other non-OPEC producers also supported prices. Energy Minister Sergey Shmatko said Russia would soon make an announcement of its intentions with OPEC.

On Thursday, Russian President Dmitry Medvedev suggested that Russia is ready to work with OPEC.

“I’d like to say that we are ready to defend, our revenue base — oil, gas. Moreover, such defensive measures could be connected with a reduction in oil output, and with the participation in the existing organization of producers,” he was quoted as saying by RIA-Novosti and Interfax.

Shum said OPEC production cuts, which had failed in the past to curb plummeting oil prices, would not result in a rally but would stabilize the market and prevent any further downward spiral.

“There is a lot of bad economic news and if there is no meaningful cut by OPEC, oil pricing will come under a lot of downward pressure,” he said.

What’s more, he added, the success of any output cut in stabilizing the oil price will depend on how closely OPEC members comply with it.

In two separate announcements, OPEC said it would cut production by 2 million barrels a day.

OPEC’s November production was well above quotas agreed to by member states, according to Platts, the energy information arm of McGraw-Hill Cos.

OPEC’s 13 members pumped an average of 31.38 million barrels a day last month, a decline of only 880,000 barrels from the October level.

Oil prices have fallen 70 percent since peaking at $147.27 in July. After hitting $40.50 a barrel last week, some oil traders believe that if the market has not bottomed out, it is close to doing so.

“While we maintain our bearish bias, we are of the opinion the market has found a range in between the low $40s on the bottom and the mid $50s on the high end,” oil trader and analyst Stephen Schork said in a report Thursday.

In other Nymex trading, gasoline futures jumped 13.2 cents to $1.1008 a gallon. Heating oil gained 13.7 cents to $1.5403 a gallon and natural gas for January delivery rose 1.2 cents to $5.674 per 1,000 cubic feet.

In London, January Brent crude soared 12.5 percent, or $5.31, to $47.71 on the ICE Futures exchange.

Source: MSNBC

Lukoil third-quarter profit up 40 percent

Mon, 15 Dec 2008 00:00:00 +0100

MOSCOW (AP) - Lukoil, Russia's largest privately owned oil company, said Thursday that third-quarter profit rose by 40 percent as the company benefited from soaring oil prices and high refining margins.

Lukoil, which is 20-percent owned by U.S. oil major ConocoPhillips, said net profit for the quarter reached $3.5 billion, up from $2.5 billion for the same period last year.

But the company warned that a worsening economic environment, which has seen oil prices plummet by 70 percent since July, signals a difficult period ahead for oil companies.

"Crude oil prices are now close to the level at which development of many oilfields becomes unprofitable," said Lukoil in a statement. "If the trend lasts, a concern over a shortage of hydrocarbon supply may appear."

Russia is expected to report a small decline in oil production this year, its first annual decline in a decade.

Petro-Canada Lowers 2009 Capex Plan

Mon, 15 Dec 2008 00:00:00 +0100

Petro-Canada's Board of Directors has approved a capital and exploration expenditure program of up to $4.0 billion for 2009, down significantly compared with the program in 2008. Within this program, there is considerable flexibility to reduce and defer spending if commodity prices remain weak for an extended period of time. The Company intends to monitor commodity and financial markets closely and adjust the program accordingly.
"Petro-Canada is in an excellent position because we are financially conservative, we have diverse operations to generate cash and we can pace our growth projects," said Ron Brenneman, president and chief executive officer.

The 2009 capital program includes $2.1 billion directed to growth projects, exploration and new venture developments and $1.3 billion to replace reserves in core areas. In addition, Petro-Canada expects to invest $360 million to enhance existing assets and to improve profitability in the base business, and $130 million to comply with new regulations. The 2009 capital expenditure program will be adjusted on an ongoing basis so that it can be funded from cash flow and, if necessary, from available credit facilities.

"We believe we've set a prudent level of capital spending for next year, given current market conditions," said Brenneman. "But we'll evaluate the business environment and financial markets as the year progresses and adjust our plans accordingly."

Production for the full year of 2008 is expected to be at the high end of the range of 400,000 boe/d to 420,000 boe/d, in line with previous guidance. In 2009, Petro-Canada's upstream production is expected to be in the range of 360,000 boe/d to 395,000 boe/d. The expected decrease in production is due to natural declines in Western Canada, East Coast Canada and International, as well as large facility turnarounds in East Coast Canada and International. These turnarounds are being undertaken to enhance production growth in the future and maintain reliable operations. Partially offsetting these decreases are additional volumes from Oil Sands and base business investments, which moderate the natural declines.

"Deferred production from the turnarounds will be back on-stream at year end, giving us an exit rate closer to the high end of our range," said Brenneman. "The bottom line effect of lower production in 2009 will be offset by cash flow from the Edmonton refinery conversion project, which is just now starting up."

The Company's financial capacity and flexibility remain strong despite the recent turmoil in the financial markets. This is due to the Company being able to generate strong cash flow, having access to existing cash balances and significant credit facility capacity, and requiring no near-term refinancing.

"We have always managed our financing conservatively, and it's paying off in these markets," said Harry Roberts, executive vice-president and chief financial officer. "We have a very strong cash and liquidity position. Together with our capital flexibility, we're in very good shape to weather the downturn and come out strong on the other side."

Petro-Canada is one of Canada's largest oil and gas companies, operating in both the upstream and downstream sectors of the industry in Canada and internationally. The Company creates value by responsibly developing energy resources and providing world class petroleum products and services.

Source: Petro-Canada

Oil rises as market anticipates Saudi cut

Fri, 12 Dec 2008 00:00:00 +0100