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NewsBase Downstream Asia Monitor

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News, commentary and analysis of the Asian downstream sectors from NewsBase

News, commentary and analysis of the Asian downstream sectors from NewsBase

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    NewsBase Downstream Asia Monitor NewsBase Downstream Asia Monitor Document Transcript

    • 08 February 2012 NewsBase Pilot Issue Downstream Monitor News Analysis Intelligence –– ASIA –– NewsBase Published byCOMMENTARY 2 NEWS THIS WEEK… ExxonMobil downsizes downstream footprint in Japan Eastern Promise: Asia emerges as global 2 Downstream downsize downstream powerhouse 3 ExxonMobil’s decision to downsize itsPOLICY 4 downstream business in Japan is indicative of the Indonesia abandons plans to cut fuel tough conditions in the fuel market and refining subsidies 4 sector in the country. PTT drops fuel prices 5REFINING 5 Exxon is to reduce its stake in TonenGeneral Sekiyu from 50.5% to 22%, which could spur a Kuwait closes in on China refinery deal 5 wider realignment among Japan’s oil refiners. (Page 2) Chinese plan Myanmar refinery 5 Sinopec rewards refineries for higher fuel The US super-major feels it cannot improve its production 6 Japanese oil refining and sales businesses Petrovietnam plans expansion 6 because of the weak market, hence its retreat. (Page 2)FUELS 7 Chinese petroleum product imports up 30% in December 7 Pricing paranoia Japanese petroleum product sales up in Southeast Asian countries such as Indonesia and December 8 Thailand remain wary of the political implications South Korean petroleum product exports of cutting fuel subsidies despite high oil prices. up in 2011 8PETROCHEMICALS 9 The Indonesian government has abandoned plans to cut fuel subsidies in April. (Page 4) Asian traders in determined mood on Iran petchem volumes 9 Thailand’s state-run PTT and other fuel retailers in Sabic signs MoU with Sinopec 9 the country have reduced pump prices for petrol,TERMINALS & STORAGE 10 diesel and gasohol. (Page 5) Pertamina to build US$450m crude terminal 10 Thailand has used its state oil fund to pay for theNEWS IN BRIEF 10 cuts. But the fund is in the red and the government is borrowing money to make the cuts,STATISTICS 15 which has been criticised as unsustainable. (Page 5)For analysis and commentary on these and other stories, plus the latest downstream developments, see inside… Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 2 COMMENTARYExxonMobil downsizesdownstream footprint in JapanExxonMobil’s retreat from Japan’s downstream is indicative of the tough conditions in thefuel market and refining sector in the countryBy Andrew Mollet ExxonMobil is to reduce its stake in TonenGeneral Sekiyu from 50.5% to 22% Exxon feels it cannot improve its Japanese oil refining and sales businesses because of the weak market The TonenGeneral move could encourage a wider realignment among Japan’s oil refinersExxonMobil is to reduce its stake in company will be able to execute more in the Japanese company, ShermanTonenGeneral Sekiyu, its Japanese effectively locally driven investments Glass, vice president of ExxonMobil,subsidiary and major oil refiner, from and other business decisions that will told a press conference that it might50.5% to about 22% on a voting rights help the company adapt to the restructure its oil refining operations orbasis. challenging operating environment.” even sell its stake in TonenGeneral. The announcement means the US ExxonMobil said: “This will result in a ExxonMobil is known for ruthlesslysuper-major will drastically reduce its single, integrated downstream business cutting off operations that yield lowJapanese business by scaling down better positioned to meet Japan’s energy investment returns. In recent years, thelocally based oil refining and sales needs.” US company has aggressively invested inoperations. oil and natural gas exploration projects, Under the deal reached between the Ruthless retreat while streamlining its refinery and salestwo parties, in June TonenGeneral will For ExxonMobil, the world’s largest operations in the US and Asia.acquire a 99% stake in ExxonMobil’s energy company, the transaction is theJapanese division, which currently holds biggest divestiture since the 1999 deal Realignment50.5% of TonenGeneral shares, for 302 with Mobil Corp. that created the The TonenGeneral move couldbillion yen (US$3.9 billion). ExxonMobil company. encourage realignment among Japan’s oilwill then acquire about 22% of The deal, which ExxonMobil called a refiners, which have been cuttingTonenGeneral voting shares, thus “restructuring” of its Japan business into capacity to cope with falling demandeffectively reducing its overall stake in a single asset, does not involve the US caused by a weak economy and a shift tothe Japanese firm. company’s liquefied natural gas (LNG) more efficient and environmentally TonenGeneral will continue its marketing and sales or its speciality friendly forms of energy.partnerships with three domestic petrol chemicals operations in the country. But This is because their oil manufacturingstation brands – Esso, General and Mobil the deal does mark a de facto retreat from capability reached excessive levels– and will also procure crude oil from the world’s third largest economy by owing to a decline in the demand forExxonMobil. ExxonMobil, which is focusing its petroleum products, partly caused by the resources on emerging markets and the economic slowdown, an ageingRationale development of natural resources. population and the increasing popularityThe rationale behind ExxonMobil’s Moreover, while the company said it of fuel-efficient cars. The 27 refineries indecision is that the company feels it would keep its 14.2% outstanding stake Japan owned by oil distributors werecannot improve its Japanese oil refining capable of processing about 4.5 millionand sales businesses owing to a softening barrels per day as of the end ofdomestic market. September. But the average daily amount “Oil demand in Japan has declined in of crude processed was about 3.6 millionrecent years and the domestic operating bpd in 2010, only 77% of the supplyenvironment has been characterised by capability. Furthermore, Japan’scontinuous pressure on both margins and petroleum product demand is expected tovolumes,” said TonenGeneral Sekiyu. decline at a rate of 3.5% per year until“Through this newly formed integrated March 2015, according to an estimate byproduction-distribution operation, the the Japanese Trade Ministry. Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 3 COMMENTARY According to the Natural Resources Ironically, spearheading the There is much talk about trying toand Energy Agency, demand in 2014 is streamlining has been ExxonMobil itself. boost margins through expanded serviceslikely to drop by more than 30% At the end of last year, there were 3,800 beyond traditional petrol pump sales by,compared to 2009. petrol stations affiliated with for example, installing chargers for All this has led to a drastic ExxonMobil, down 45% over the past 10 electric vehicles, tying up withstreamlining of refiners’ downstream years. By contrast, Japan’s biggest convenience stores or building cafe-styleoperations in the past decade in an refiner, JX Nippon Oil and Energy, has petrol stations. But ExxonMobil’sattempt to boost profitability, with the cut its petrol station network by just decision to downsize in Japan’snumber of petrol stations affiliated to the 31%, with Idemitsu Kosan, Cosmo Oil downstream would suggest it holds outfive major refiners falling by over 30% to and Showa Shell Sekiyu reducing their little hope for such moves.little over 27,000. retail chains by similar percentages.Eastern Promise: Asia emerges asglobal downstream powerhouseStrong economic growth in Asia has catalysed a revolution in the refining industry that hasseen the region emerge as the major force in the global downstream sectorBy Ashok Dutta The recession has dampened demand for petroleum products in the West, focusing attention on Asia Asian countries are building their own downstream infrastructure to avoid expensive fuel imports Middle East oil producers are investing in Asian refineries to guarantee a market for their crudeThe US and Europe used to bestride the economies in the region is phenomenal. moves towards creating their ownoil refining world but their dominance is refining infrastructure.on the wane as Asia’s growth skyrockets Eastern promise “The Asian states … desperately wantand traditional Western markets for With demand for petroleum products to reduce soaring import bills of refinedpetroleum products suffer the fallout growing significantly in Asia since 2002, products whilst also seeking investmentsfrom the economic meltdown. it was inevitable that the region would in their domestic refining sectors,” noted Europe’s downstream in particular has spawn several major refining hubs. Total’s Mosconi.seen immense change in recent years, Leading such development is China,which has shifted the centre of gravity in which is expected to boost its crude oil Chain reactionthe global downstream industry towards refining capacity by one-third to more Traditional suppliers of crude to AsiaAsia. than 12 million barrels per day by 2015 have had to react to the change in “Stringent efficiency measures and the to feed economic growth. (See: Chinese dynamic in the downstream market, andintroduction of biofuels into the energy petroleum product imports up 30% in the world’s largest crude oil producer,mix is putting pressure on consumption December, page 7) Saudi Aramco, was an early mover inlevels in Europe,” Jean-Jacques Mosconi, China’s growing demand for crude oil this respect.a senior vice president of strategic and petroleum products was highlighted In 2007, the Saudi giant put pen toplanning at Total, said recently at an in a recent report by the University of paper with Sinopec and ExxonMobil on aindustry conference in Abu Dhabi. Calgary, which concluded that over the deal to triple the crude processing“European refiners will also be suffering 10-year period beginning in 2000, the capacity of the Fujian refinery infrom Phase 3 of the CO2 [carbon country’s net growth in demand for crude southern China to 240,000 barrels perdioxide] emission trading system and by stood at 91%, while the US and Europe day and also to integrate it with a2013 they could end up paying for an registered negative growth rates of 3% petrochemical unit. Aramco hasaverage 20% of their total emissions.” and 4% respectively. subsequently sought to expand its Although there are pockets of malaise But with the price of oil also soaring, downstream footprint in Asia, both inin the downstream industry in Asia (such Asian countries became wary of China and elsewhere.as in Japan, see previous story), the importing vast amounts of petroleumpotential for growth in emerging products and instead started making Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 4 COMMENTARY Last year, it signed an agreement with Furthermore, KPC will soon award the including China, is a very strategic andPetroChina to build a 200,000 bpd crude engineering, procurement and important demand driver. Aramco isrefinery in Yunnan Province whilst construction (EPC) contract for a aware that China and Asia are thesimultaneously making a joint 200,000 bpd refinery it plans to build in markets that drive demand given theannouncement with South Korea’s S-Oil partnership with Petrovietnam around macro fundamentals.”that the Onsan refinery expansion project 180 km south of Hanoi in Vietnam. Yet Asian refiners are facing freshhad been completed. China has also signed a series of challenges this year. A pressing political Its success has been replicated by agreements with Qatar Petroleum that concern is the imposition of tighterKuwait Petroleum Corporation (KPC), will see the establishment of a 400,000 sanctions on crude supplies from Iran bywhich in March last year set up a joint bpd refinery in the eastern Zheijang the US and EU. The EU-imposed ban onventure with Sinopec to build a 300,000 province. Iranian exports that is due to come intobpd world-class refinery and The Chinese refinery projects all share effect on July 1 means many Asianpetrochemical complex in southern a common feature in that they will refiners will be forced to open up newChina. Located on Donghai Island in receive crude feedstock under long-term crude supply channels in order to avoidGuangdong Province, the new refinery is deals from Aramco, KPC and QP. fiscal issues with Washington andexpected to be operational from 2014-15 “Gulf producers are looking closely at Brussels.and will carry a price tag of US$9 billion. demand dynamics and participating in That said, the ongoing recession in thePetroleum products from the refinery are refinery projects in Asia to improve West means the paradigm shift witnessedto be marketed locally to meet the fast access to markets there amid the region’s in the global downstream over the pastgrowing demand in Guangdong Province increasing consumption of fuel and decade is unlikely to be reversed andand across the rest of China. (See: crude,” said John Sfakianakis, chief Asia will remain the fulcrum of refiningKuwait closes in on China refinery deal, economist at Banque Saudi Fransi in activity for years to come.page 5) Riyadh, in a research note. “Asia, POLICYIndonesia abandons plansto cut fuel subsidiesThe Indonesian government has Jakarta Globe. vehicles in Java and Bali would haveabandoned plans to cut fuel subsidies in A decision on a price rise for petrol been allowed to use subsidised fuel.April. and diesel and other fuels has not yet Premium pump fuels are currently being It said the scheme, which would have been made in a country that is notorious sold for just US$0.50 per litre.seen subsidies slashed for fuel sold to the for bureaucratic delays. A new report on energy by the Worldowners of larger vehicles, would have “We have to study it first and establish Bank published on February 6 criticisedbeen difficult to administer. The energy a decent price increase that will not Indonesia and other Southeast Asianministry has now proposed a subsidy shock the public,” Indonesian Energy countries like Thailand (see next story)decision that will apply to all vehicles, Minister Jero Wacik said in a statement for subsidising fuel for the poor, sayingbut said it would allow pump prices to to Parliament. There should be a decision the move actually benefited the richrise according to international crude before April, he said. That was originally more. The country and its peers in thecosts. In the past, the subsidy was the deadline when all car owners in Bali region must eliminate fuel subsidies toincreased if oil prices rose. In 2011, the and Java, two of the richest provinces, “ensure an efficient, sustainable, andsubsidy went 30% over budget and hit were to be excluded from subsidised fuel secure energy sector,” the report said.US$18.35 billion. rates. “The price of fuel is a sensitive issue The budget allocation for subsidies this Only motorcycles and public transport because it constitutes a large proportionyear has been set at US$13.75 billion; of household budgets,” The Jakartahowever, this will still be over 70% of all Globe commented. “Price hikes can leadgovernment subsidies and is the second “Price hikes can lead to to social unrest.”largest in ten years, according to The social unrest” Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 5 POLICYPTT drops fuel pricesThailand’s state-run PTT and other fuel Thai fuel prices are heavily subsidised Bangkok-based energy analyst, Collinretailers in the country have reduced by a state oil fund that is deeply in the Reynolds, told Downstream Asia. “Thepump prices for petrol, diesel and red. In an admission that the price cuts oil fund is over US$480 million in debtgasohol, bucking the general trend of are a political move, Thai Energy but in order to keep retail prices downprice hikes in other Asian countries. Minister Arak Chonlathanont said the last year the government suspended oil The reduction, which brings the cost of government was looking at securing levies that are normally paid to maintaindiesel to below US$1 per litre, is in line loans to support the fund. Subsidies on the fund’s health. It doesn’t look like awith election promises made by the LPG and CNG will also continue, the sustainable policy.”government last year. Petrol is now minister said. PTT operates one of Thailand’s biggestpriced at US$1.25 per litre and diesel “It’s fair to say that fuel pump prices in petrol station chains.only US$0.99, a drop of over US$0.01. Thailand are highly politicised,” REFININGKuwait closes in onChina refinery dealKuwait Petroleum Corp. (KPC) has said refinery and a 1 million tonne per year million bpd against a full capacity of justthat it is close to signing a contract that ethylene cracking unit, began in over 3 million bpd. Alongside thewould see France’s Total join its US$9 November 2011. Previously, Sinopec has Guangdong refinery, Kuwait also hasbillion refinery project in China’s said that it is expecting both facilities to plans to build a 200,000 bpd facility inGuangdong province. come on line in 2015. In addition, al- Vietnam as it looks to secure a market “They have accepted and we are Zanki said that KPC was looking to for its substantial heavy oil reserves.advancing on an [memorandum of expand its production and refining These are likely to form a key part of theunderstanding (MoU)] now,” KPC CEO capacity at home and abroad. Currently, country’s plans to raise output to 4Farouk al-Zanki said on January 31. “We he said Kuwait was pumping about 2.9 million bpd by 2020. However, al-Zankiare in the process of signing,” he added. said that in the shorter term, Kuwait was He went on to say that the French unlikely to be able to meet any demandsenergy giant would take part of KPC’s from its customers for additional crude50% share in the development. No supply. Neighbouring Saudi Arabia hasprecise figure was given, but industry indicated that it may step up productionsources have estimated that the stake is to meet any shortfall stemming from alikely to be in the region of 20%. Sinopec drop in exports from Iran. “It would beowns the remaining 50% interest. difficult to do that on a sustainable basis. Construction of the project, which We will remain where we are,” heincludes a 300,000 barrel per day said.Chinese plan Myanmar refineryA Chinese fuel trading company Guangdong Zhenrong Energy said it refining infrastructure and currentlyinvolved in the construction of new fuel had joined up with local partners to look imports most of its fuel, some of it in tax-storage capacity in Myanmar has for a site for a 5 million tonne per year dodging cross-border deals withrevealed it is also considering developing (100,000 barrel per day) refinery. neighbours,” China energy analyst Jeffa US$2.5 billion refinery in the country. “Myanmar has a rickety and inadequate Mead told Downstream Asia. Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 6 REFINING “A refinery such as that proposed by with close ties to the country’s army. electricity for the area.Zhenrong would certainly deliver more Xiong said one possible site for the Dawei is isolated from Myanmar’sthan half of Myanmar’s current and proposed refinery was the new special major cities and population centres,short-term domestic demand.” economic zone at Dawei on Myanmar’s which has led critics to say it would Guangdong Zhenrong is based just southeast coast on the Andaman Sea. primarily benefit Thailand by providing aacross the border from Hong Kong in Thai companies such as state-run oil new trading route and conduit for oil andGuangzhou, where it mainly operates as and gas giant PTT are gearing up to gas.an oil and fuel commodities importer and develop refining and petrochemical “If you look at the map, Dawei istrader. The Myanmar project would be plants in Dawei. However, the plans for a actually the middle of nowhere in termsthe Chinese firm’s first foray into major industrial complex at the site were of Myanmar,” said Mead. “If I wasrefining. The company’s CEO, Xiong recently dealt a blow when Myanmar’s Myanmar’s energy minister, I wouldShaohui, said that one of its partners in government objected to the construction want my first new refinery somewhereMyanmar was the Htoo Group of of a 4,000-MW coal fired thermal power around Yangon.”Companies, a construction conglomerate plant (TPP) that was supposed to provideSinopec rewards refineriesfor higher fuel productionSinopec, China’s largest refinery though, that these prices only applied to is declining in the area, it said.operator, has reportedly continued to output up to the target levels. By Specifically, C1 Energy quoted aprovide its oil-processing subsidiaries contrast, he said, ex-refinery prices for company source as saying that the ex-with incentives for exceeding their production in excess of the target were refinery price for 90-Ron petrol meetingproduction targets. set at 8,280 yuan (US$1,312.2) per tonne GB-3 specifications topped GB-2 rates According to a source inside the state- for 90-Ron petrol and at 7,380 yuan by 180 yuan (US$28.5) per tonne inowned company, Sinopec allowed its (US$1,169.5) per tonne. No word was Guangdong. Meanwhile, the source said,refineries to charge a higher price for the available as of press time as to whether ex-refinery prices for GB-3 zero-pour-extra volumes they produced in January. the pricing incentives would remain in point gasoil are 160 yuan (US$25.4) perThis served to encourage the firm’s place in February. C1 Energy noted that tonne above the GB-2 level.downstream subsidiaries to ensure January was the 11th month in a row that In Guangzhou, the provincial capital,supplies of refined fuels to the domestic Sinopec had followed this policy. Sinopec’s prices for GB-4 petrol are 380market, he said. yuan (US$60.2) per tonne above GB-2 The source told the C1 Energy Guangdong ex-refinery prices rates, the source added.research service that Sinopec had set ex- Separately, the research service reported China has yet to phase GB-2 standardsrefinery prices at 8,720 yuan that Sinopec refineries were charging out fully, but GB-3 fuels have been in(US$1,381.9) per tonne for 90-Ron petrol more for higher-quality motor fuels wide usage in Guangdong Province sinceand at 8,090 yuan (US$1,282.1) per meeting GB-3 and GB-4 standards in 2010.tonne for zero-pour-point gasoil in the Guangdong Province. They are doing sofirst month of 2011. He explained, even as use of lower-quality GB-2 gradesPetrovietnam plans expansionState-run Petrovietnam is in discussions The refinery, which is at Quang Nam has asked the government to expand thewith foreign partners on the possible on the central coast of Vietnam, is Dung Quat Economic Zone to 45,332expansion of Vietnam’s only refinery. currently only able to meet around 30% hectares – four times the current area – The company wants to boost crude of the country’s demand for petroleum and transform the zone into anprocessing at the Dung Quat refinery products. industrialised city complete with urbanfrom 6.5 million tonnes per year “To accommodate the increased areas and ports,” the government-backed(130,000 barrels per day) to 10 million production capacity, the People’s newspaper Nhan Dan reported lasttonnes per year (200,000 bpd). Committee of the Quang Ngai Province week. Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 7 REFINING Petrovietnam and its foreign partners diesel oil. Petroleum International and Japaneseare looking at the feasibility of ramping Two other refineries have been firms Idemitsu Kosan Company andup the refinery’s throughput to the proposed in Vietnam but their Mitsui Chemicals. The US$6.2 billion200,000 bpd of crude mark by 2016. construction has been held up repeatedly Nghi Son refinery is due for completion Dung Quat was built by French firm owing to a lack of funding. Foreign by late 2014.Technip, which still provides technical investors have been wary of pumping Negotiations for a third refinery atmaintenance, but the plant is operated by money into the projects because of Long Son in southern Ba Ria-Vung TauPetrovietnam subsidiary Binh Son concerns about their profitability, given province are continuing betweenCompany. the Vietnamese government’s strict Petrovietnam and Japan’s JX Holdings. Although Vietnam is a net exporter of control of fuel prices. Vietnam’s state-run fuel distributioncrude oil, the country still has to import The groundwork for a second refinery, company, Petrolimex, is also in talksthe bulk of the diesel, petrol and other also with a 10 million tonne per year with South Korean firm Daelimpetroleum products it consumes. (200,000 bpd) capacity, is almost Industrial about a possible fourth Dung Quat produces liquefied complete at Nghi Son in central Than refinery, at Nam Van Phong near Haipetroleum gas (LPG), propylene and Hoa Province. The project is a joint Phong on the country’s northern coast.kerosene, as well as unleaded petrol and venture between Petrovietnam, Kuwait FUELSChinese petroleum productimports up 30% in DecemberChina’s petroleum product imports grew forecast to grow by an average of 5.5% scale plants and closing down lessby 30% year-on-year in December as per year up to the end of 2015, according profitable smaller facilities – so-calleddomestic refiners struggled to meet to a statement issued by the Industry ‘tea-pot’ refineries – that are mostly rungrowing demand. The surge in demand Ministry last week. by private companies.was largely driven by increased car By 2015, annual fuel demand will have Domestic petroleum product demand isusage. reached to 320 million tonnes per year, likely to reach 320 million tonnes by the The country imported 2.64 million compared with 245 million tonnes in end of 2015, marking a compound annualtonnes of petroleum products in 2010, said the ministry. growth rate of 5.5% for the five years toDecember, according to statistics from 2015, the Industry Ministry said. This isthe General Administration of Customs. Capacity ramp-up slower than the 7.8% annual growth Singapore blended products were the Plans are being drawn up to increase witnessed in the five years to 2015.preferred fuels during the month owing China’s refining capacity to about 600 The anticipated slowdown is partlyto a shortage of domestically produced million tonnes per year (12.5 million because of weak demand for petrol, Lulow-sulphur, low-density fuel oil, said barrels per day) by 2015, although state- Ying, an oil analyst, told state-run ChinaShanghai-based market analysts C1 run refiners, led by Sinopec, continue to Daily.Energy. operate at a loss because of the China’s petrol demand is expected to The sharp rise in December was in part government’s tight grip on retail prices. stagnate at around 3% to 4% in thelinked to stockpiling ahead of the long By 2015, the average refinery’s period up to 2015, while diesel demandLunar New Year holiday, during which capacity will have grown to at least 6 will also probably experience slowingtens of millions of Chinese take to the million tonnes per year (120,000 bpd), growth, Lu said. “The major demandroad for family reunions. the ministry revealed. engine will be jet fuel,” he added. Imports in the first two months of this China is working to consolidate its Meanwhile, ethylene demand in Chinayear are likely to be driven by South refineries, focusing on building large- is rising at over 5% per year and willChina bunker traders, with 200,000 reach 38 million tonnes per year in 2015,tonnes booked for January, said C1 although domestic production capacity atEnergy. Almost 95% was drawn from “The major demand that time is forecast to be only 27 millionSingapore. engine will be jet fuel” tonnes. China’s demand for refined products is Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 8 FUELSJapanese petroleum productsales up in DecemberA cold weather snap helped lift Japan’s demand that was already slowing in 332,000 barrels per day.petroleum product sales by 2.7% year- Japan owing to preferences for cleaner Northern Japan experienced averageon-year in December, while petrol sales fuel plus a shift to more energy-efficient temperatures in December that were 1recorded their first increase since cars. degree Celsius lower than usual. CoastalFebruary, government data showed on Sales of petrol, which accounts for districts facing the Sea of Japan inJanuary 31. more than a fifth of total fuel use in western and northern areas meanwhile During the month, total petroleum Japan, rose 1.4% year-on-year in were hit by heavier than usual snowfall,product sales rose to 19.59 million December, while sales of kerosene for Japan’s national weather agency said.kilolitres, or 3.98 million barrels per day, heating increased 6.3%. For the whole of 2011, however,according to a release by the Ministry of Sales of B- and C-type oil, which are Japan’s total petroleum product salesEconomy, Trade and Industry (METI). mostly used for power generation, leaped were down 2.4% to 192.48 million The figures marked the fourth rise in 58.3% as utilities were forced to make up kilolitres, or 3.32 million bpd. This waspetroleum product sales over the past 11 for idled nuclear power capacity by the lowest level since 1987, when annualmonths, but could prove to be a bit of a making greater use of thermal power petroleum product sales stood at aroundblip amid a longer-term decline in plants (TPPs). 187 million kilolitres, according todemand, analysts said. Utilities also used seven times as much METI. Japan’s strong yen, combined with the crude oil for direct burning in December All types of products reported saleseconomic blow dealt by last March’s 2011 as in December 2010, getting declines last year, apart from B- and C-earthquake and tsunami, have hit oil through 1.64 million kilolitres, or type fuel oil.South Korean petroleumproduct exports up in 2011South Korea said its petroleum product Korea’s petroleum products last year, comes from soaring international crudeexports rose in value by 64% last year, with its imports storming ahead to prices that spiked up production costs ofwith those to Japan reaching a record US$7.39 billion –72.5% higher than the such products as petrol and diesel,” anhigh. previous high of US$4.08 billion in unnamed industry source told South Over the course of 2011, South Korea 2006, according to data from state-run Korea’s Yonhap news agency.exported 457 million barrels of oil, up Korea National Oil Corp. (KNOC). South Korea’s domestic sales of17% on the previous year. Overseas sales On top of high crude oil prices, Japan’s petroleum products were virtually flat inof bunker C-oil reported the biggest extra demand was triggered by the volume terms, edging up just 0.9%, theincrease, jumping 34%, while those of shutdown of some Japanese refining government said.petrol and diesel were up 33% and 22% capacity following March’s devastating The country’s shipments of petroleumrespectively, according to figures from earthquake and tsunami. products amounted to 49% of the crude itthe South Korean Ministry of Knowledge This made Japan South Korea’s second imported last year, ministry figuresEconomy. biggest market for petroleum products showed. South Korea imported 926.76 It was in terms of value that the growth after China. South Korea exported million barrels of crude oil last year,was really striking, however, with petroleum products to 48 countries last mostly from Saudi Arabia, Kuwait andexports of petroleum products hitting year. Qatar. Iran was the country’s sixthUS$51.6 billion in 2011, making fuel By volume, South Korea’s petroleum biggest petroleum products supplier.South Korea’s second largest export item product exports to Japan reached 64.9 Last year saw the average import priceafter ships. The main driver for the value million barrels, roughly equal to the paid by South Korean refineries for aincrease was high crude oil prices. volume in 2005. barrel of crude oil jump to US$106.30, Japan was a major buyer of South “The biggest reason for the increase up from US$78.70 in 2010. Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 9 PETROCHEMICALSAsian traders in determined moodon Iran petchem volumesDespite tightening sanctions and political traditional currencies, including the denominated [telegraphic transfer (TT)],”pressure making trade with Iran Japanese yen and the UAE dirham, for one Indian trader was quoted as saying.increasingly difficult, Asia-based traders letters of credits (LC) to pay for Iranian This is a more direct alternative withare finding creative ways of doing cargoes. trade finance increasingly difficult tobusiness with the Islamic Republic. “They prefer it this way as well, so obtain, but appealing only to those with Sources in Iran’s downstream sector they save on the interest charges of not healthy cash flow. The scramble forhave confirmed that alternative payment obtaining credit,” a source from an payment and trade solutions amongsolutions are being used to facilitate Iranian petrochemical producer was Asian buyers follows a tightening ofpetrochemical deals when necessary. quoted as saying. Western-backed sanctions early this year, These measures have seen Pakistan as “We accept any method of payment ultimately designed to unhinge Iran’swell as Iran’s Middle Eastern neighbours that works,” another producer said. controversial nuclear research.used as payment routes, with the The report added that most payments In November 2011, a UN report saidcurrencies used varying from deal to for benzene and styrene, base oils, there was good evidence to believe Irandeal. polyethylene (PE) and chemicals such as is seeking to develop a nuclear weapon, A report by ICIS news service said that methanol were now paid in dirhams. something Tehran has always denied.many buyers have started using non- “I have been paying through dirham-Sabic signs MoU with SinopecSaudi Basic Industries Corp. (Sabic) and utilised in the manufacture of car ethane that will make productsChina’s Sinopec recently signed a components, compact discs and various competitive to produce.”memorandum of understanding (MoU) other products. The price of feedstock gas in Saudion forming a strategic partnership that An unnamed Dhahran-based analyst Arabia is US$0.75 per million Britishbuilds on existing close ties between the told Downstream Asia: “Sabic and thermal unit, making it the mostcompanies. Sinopec have been working on setting up competitive globally. In March 2011, the firms signed an a strategic partnership for a long time … “Sabic has a strategic agreement withinitial agreement in which they For the former, the primary interest is to ExxonMobil for the US and Europeancommitted to invest around US$1 billion get a footing into a major consumer markets and now is keen onin the construction of a 260,000 tonne market like China, while for the latter it strengthening its ties with Asia-Pacificper year polycarbonate plant in Tianjin. is a case of accessing cheap feedstock using China as a gateway,” he added.The complex is due to be commissioned Saudi Kayan recently awarded ain 2015. US$131 million engineering, The facility is to be located in a procurement and construction (EPC)complex developed by Sinopec Sabic contract to Sinopec Engineering of ChinaTianjin Petrochemical Company for its distilled natural alcohol plant at(SSTPC), an existing joint venture the industrial city of Jubail.between both firms. The SSTPC The scope of works covers the detailedcomplex, which came onstream in 2010 EPC, testing and commissioning of theat an estimated cost of US$2.7 billion, plant, which will have a capacity ofhas a capacity of 3.2 million tonnes per 50,000 tonnes per year. The plant isyear and comprises a 1 million tonne per scheduled to enter commercialyear ethylene cracker and eight production in the second half of 2013 anddownstream units. will utilise natural gas as feedstock. Polycarbonate is a plastic that is Sabic has a 35% stake in Saudi Kayan. Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 10 TERMINALS & STORAGEPertamina to buildUS$450m crude terminalIndonesian state-run oil and gas firm support for the project by accelerating Pertamina currently operates sixPertamina is to begin constructing a the issuance of required permits to refineries, which have a combinedcentralised crude terminal (CCT) in execute it. processing capacity of about 1 millionLawe-Lawe, in East Kalimantan, at a “We’re going to start the tender barrels per day. But the firm suppliescost of US$450 million. process for the terminal. The Lawe-Lawe only 70% of the petroleum products that The CCT is to be built on an area CCT will provide a crude blending are consumed in Indonesia and importscovering 750 hectares in Lawe-Lawe, facility, including domestic crude with the remaining 30% from abroad.Penajam Paser Utara regency, and is high contaminant, so that it will allow Last December, the Indonesianscheduled to be completed in 2014, Pertamina to buy various types of crude government unveiled plans to build aPertamina said. oils at competitive prices,” Harun said. new oil refinery in Tuban, East Java, The Lawe-Lawe CCT will have 25 “By maximising the absorption of with a total capacity of 300,000 bpd tostorage tanks with a total capacity of 25 domestic crude, we can reduce imports, process oil from the giant Cepu block.million barrels of oil, which is equivalent which will allow us to cut high shipping The Indonesian Energy Ministry’sto a 25-day supply for the country’s costs,” he was quoted as saying by The director-general for oil and gas, Evitarefineries, local media reported last Jakarta Post. Herawati Legowo, said at the time thatweek, quoting a Pertamina spokesman. Indonesia is the largest crude oil and Pertamina was now seeking investors to Mochamad Harun said that Pertamina natural gas producer in Southeast Asia. fund the project. She also said that thehad already completed an environmental But the country pulled out of OPEC in development of the planned refineryimpact study for the CCT construction 2008 as ageing fields and declining could be started in 2013.project and that the regional output turned the nation into a net oiladministration had also expressed its importer. NEWS IN BRIEFPOLICY COMPANIES Goldman upgrades RILSaudi oil price cut for ONGC, OIL to pay Goldman Sachs has upgraded India’sAsia refiners higher subsidy Reliance Industries (RIL) to buy fromIt may be tempting to view the cut in the The Indian government has asked neutral, citing a potential lift in marginspremium Saudi Arabia charges Asian upstream oil companies to compensate on increased refining and recovering oilrefiners for oil as proof the world’s state-run oil refiners for 37.91% of demand, sending the refiner’s shares uplargest exporter is doing its best to show revenue losses on fuel sales during April in pre-open trade on Tuesday. “Weit can supply the biggest-consuming to December 2011, a government source believe that an upcycle in refining willregion as much crude as it needs. This is told reporters. “Together, upstream lift margins and is likely to drive anespecially the case when the currently companies’ subsidy share will be 368.94 earnings surprise for RIL over theheightened tension over the increasingly billion rupees,” said the source, who medium term, by offsetting lacklusterlikely disruption of shipments from Iran declined to be identified. For the first two E&P performance,” the bank said in ais making refiners in Asia nervous about quarters of the current fiscal year, report dated on Monday. Goldman raisedwhere they will get all the crude cargoes upstream companies had compensated its target prices for the oil and gas majorthey need. But that may be reading too 33.33% of the losses due to state-set fuel to 970 rupees (US$19.77) from 960much into the Saudi action and it’s prices. rupees previously.always a risk to assume geo-political ET, February 4, 2012 TNN, February 7, 2012motives are at work when talking aboutthe oil market. REUTERS, February 6, 2012 Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 11 NEWS IN BRIEF MW from one in Ayutthaya’s BangJapan’s JX looks to Pahan district. The third phase, to be HPCL to shut VizagAfrica located in the central region, will refinery unit comprise 48 MW and becomeJapan’s biggest refiner, JX Holdings, is Hindustan Petroleum Corp plans to shut operational in 2014.in talks with African nations in addition a 60,000 barrels per day (bpd) crude unit Mr Anusorn said the remaining 4.6to Saudi Arabia, the United Arab and fluid catalytic cracker at its Vizag billion baht will be slated either for newEmirates and other oil producers to refinery in southern India for development or mergers and acquisitionsreplace crude oil imports from Iran, a maintenance in April-May, a company involving ethanol and biodieselcompany executive said on Friday. Japan source said on Tuesday. The planned production.is under pressure from the United States maintenance shutdown will continue for Last year, renewable energy accountedto cut back on Iranian oil imports to about 45 days, said the source. HPCL for 6% of Bangchak’s EBITDA, with thesecure a waiver from a U.S. law earlier had planned to shut the two units proportion expected to enjoy strongimposing sanctions on financial at its 166,000 bpd Vizag refiner in growth, reaching 30% soon.institutions that trade with Iran’s central November. BCP shares closed yesterday on thebank. REUTERS, January 31, 2012 Stock Exchange of Thailand at 20.70 REUTERS, February 3, 2012 baht, down 10 satang, in trade worth 178 million baht. MRPL worried aboutBangchak’s green BANGKOK POST, February 8, crude supplypush 2012 disruptionBangchak Petroleum (BCP), the majority India’s biggest importer of Iranian crudestate-owned refinery and retailer, expects REFINING oil, Mangalore Refinery &its earnings before interest, tax, Petrochemicals Ltd (MRPL), isdepreciation and amortisation (EBITDA) Tianjin refinery to concerned about possible supplyfrom renewable energy will nearly triple process 1.1m tonnes disruption because of internationalto 30% in the next six years from 12%last year. of oil in January sanctions and is keeping all options open, Chairman Sudhir Vasudeva said onPresident Anusorn Sangnimnuan said The Tianjin refinery of China’s largest Wednesday.Bangchak plans a huge long-term refiner Sinopec Corp. is estimated to ET, January 25, 2012investment of 20 billion baht in process a total of 1.1 million tonnes ofrenewable energy from 2012-17 crude oil in January. The refinery’s MRPL buys firstincluding solar farms and product oil output is estimated at around Libyan cargoethanol/biodiesel production. 54,000 tonnes. Its output of chemicals isThe lion’s share, 15.4 billion baht, will also likely to hit a record high. Mangalore Refinery and Petrochemicalsbe used for solar farms, for which the XINHUA, January 30, 2012 bought its first cargo of Libyan Mellitahcompany holds licences from the Energy condensate in a tender as it seeks toMinistry for combined capacity of 118 Essar starts bitumen diversify oil sources to feed its growingmegawatts. production at refining capacity. Traders said thatSolar farm development will be divided MRPL bought 650,000 barrels of the Vadinar refinery super light oil from European traderinto three phases from 2011-14.The 4.5-billion-baht first phase Essar Oil announced starting production Totsa at a premium of USD 1 a barrel toencompasses 38 MW in Ayutthaya’s of viscosity grade (VG) bitumen from its dated Brent for March. MRPL’s refineryBang Pa-in district, with commercial Vadinar refinery in Gujarat. “Essar Oil has a capacity of 236,400 barrels per dayoperations slated by the middle of this has successfully produced superior which could be raised by 27% to 300,000year. performance VG grade bitumen (VG 30) bpd by March and to 360,000 bpd byThe first phase was originally expected by processing a judicious mix of crudes 2015/16. The refiner had said it may buyto be fully operational by the end of last and blending components,” the company less oil from Iran in 2011/12, citingyear but became delayed due to flooding said in a press statement. The 300,000 shutdowns, but crude processing dataat the project site in October. The second barrels per day refinery is equipped with showed the cutback may reflect paymentphase will cover a combined 32 MW a state-of-the-art laboratory, which is problems with sanctions hit Tehran.capacity worth 4.5 billion baht and is dedicated to developing superior grade ET, February 6, 2012scheduled to go online next year. petro products that find acceptance inOf that capacity, 16 MW will be from a both domestic and international markets.plant in Chaiyaphum province and 16 ET, January 27, 2012 Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 12 NEWS IN BRIEF of which would be poured into the the trend of import costs within theRefinery planned for expansion of its seaport capacity to review period,” said Ms. Anne Yu,Balochistan in enable transport of 50,000 tonnes per General Manager for Shell Gas (LPG) in year, up from the present 5,000 tonnes Hong Kong and Macau. The currentPakistan per year. It will also expand its pricing mechanism has been in placeAn investors group will establish an oil paraxylene production capacity by since January 1999. The price isrefinery at a cost of US$600 million in 100,000 tonnes per year from the present reviewed every quarter.Balochistan’s coastal Gaddani area, the 400,000 tonnes. The expansion is The adjustment reflects mainly thechief executive of Biko Oil and expected to be completed in the third difference between the forecast andPetroleum Group (Pakistan) said in a quarter. It will also invest in setting up actual import prices for the past quartermeeting with Chief Minister Nawab two small power plants, each with and the forecast price for the comingAslam Raisani on Friday. “Our group capacity of 120 megawatts, and costing quarter. Prudent adjustment is made forwill also invest Rs5.5 billion in another Bt10 billion per plant. They will sell every price review based on the latestproject in connection with movement of 90MW to the Electricity Generating import price figures. An annual review ofcooking oil through Balochistan,” Amir Authority of Thailand, starting in 2014 or operating cost is incorporated andAbbasi said. He emphasised the need to 2015. reflected every January. Shell willbuild road infrastructure in Lasbella THE NATION, February 3, 2012 continue to closely monitor the importdistrict so that the province attracted prices, and will certainly reduce LPGmore investment. Abbasi said his group FUELS prices through the pricing mechanismwould provide import and export facility should import costs decrease.of cooking oil at Gaddani under a “single CNPC raised oil CHINA BUSINESS NEWS,point” mooring project. January 29, 2012 DAWN, February 5, 2012 product sales in 2011 China National Petroleum Corporation Diesel fuel priceThai Oil scouting for (CNPC), China’s largest oil and gas loweredinvestment producer, said on Monday that it sold 115 million tonnes of petroleum products State-run oil refiner CPC Corp, TaiwanThai Oil (TOP), PTT’s flagship refinery yesterday said it would keep gasoline in 2011, 12.49 million tonnes more thanbusiness, is ready to expand to Asean prices unchanged, reflecting lower costs in 2010. The parent company of thecountries, chief executive officer Surong after global crude oil prices rose by a listed PetroChina sold 102.51 millionBulakul said. He said TOP and the PTT slight 0.77%. tonnes of products in 2010. Sinopecgroup had conducted a joint study on However, CPC will cut its diesel price by Group, China’s second largest oil and gaspossible investment destinations in NT$0.1 per liter, according to a producer and the parent company ofAsean, especially Burma, Indonesia, statement posted on its Web site. Sinopec Corp., sold 100.1 million tonnesVietnam and Cambodia. TOP will focus Global crude oil prices increased by of products in 2011, according to theits investment on the refinery business in US$0.84 per barrel to US$109.95 last company’s website.these countries. The study focuses on week, up from US$109.11 the week XINHUA, January 30, 2012upstream petroleum investment, natural- before, on the expectation that Greecegas and oil pipelines, gas-separation Shell Hong Kong was close to reaching an agreement withplants, refineries, and the petrochemical creditors to fix its debt problems, CPCbusiness. He added that there was bumps price of LPG said.potential for investment in Burma, which Shell Hong Kong Limited announces that In addition, the strong New Taiwanis opening up its economy. TOP is also there will be a price increase on Shell dollar also offset rises in importinginterested in investing in refinery-related domestic LPG of HK$1.99 per kg and crude, CPC said. The NT dollar rosebusinesses in Vietnam when there are HK$4.85 per cubic metre according to 1.73% last week to NT$29.525 againstfavourable opportunities. He forecast that the current pricing mechanism. Effective the US dollar.the Dubai crude oil price this year would from 0000 hours on January 28, 2012, Formosa Petrochemical Corp, yesterdaybe in the range of US$105-$106 per the new wholesale price for domestic also said it would keep gasoline pricesbarrel, almost the same as last year, cylinder LPG will be HK$13.66 per kg, stable, while lowering prices for its dieseldespite global economic problems. TOP and the listed price for domestic piped-in by NT$0.1 a liter, according to ahas devised a risk-management plan to LPG will be HK$40.23 per cubic metre. company statement.deal with the volatile global oil price. As “Same as before, we adjusted the TAIPEI TIMES, February 6, 2012part of its five-year investment plan, TOP domestic LPG price according to thewill spend $1 billion (Bt31 billion), part established pricing mechanism to reflect Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 13 NEWS IN BRIEF the Finance Ministry. The loans wouldIndian jet fuel prices make petrol stations in Java and Bali Group presses Thaislashed more prepared to implement the Energy Minister on government’s program on limitation ofState-owned oil companies today slashed ethanol subsidized fuels, she said. So far, onlyjet fuel prices by over 3% as an Thai Energy Minister Arak Chonlatanon petrol stations in and around Jakarta hadappreciating rupee made imports is being urged to speed the use of ethanol been ready to implement thecheaper. The price of aviation turbine to replace petrol, as capacity utilisation government’s program as of April 1,fuel (ATF), or jet fuel, in Delhi was cut remains low. Sirivuthi Siamphakdee, 2012, she said. “If all petrol stations inby Rs 1,974 per kilolitre (kl), or 3.02%, chairman of the Thai Ethanol Java and Bali are obliged to sellto Rs 62,908 per kl with effect from Manufacturers Association, said his pertamax petrol as of April 1, 2012,midnight tonight, an official of the group will soon call on the new minister Pertamina will not yet be ready. Theynation’s largest fuel retailer Indian Oil to discuss how seriously he takes phasing can do so in stages,” she said.Corporation said. out pure petrol by October to stimulate Yet the number of petrol stations selling PTI, January 31, 2012 demand for locally produced ethanol. pertamax petrol this year was higher than that of 2010, she said. Earlier, Pertamina “We want to know for sure that the planOil companies spokesman M Harun said the state oil to phase out pure petrol will be onresume jet fuel and gas company needed soft loans as schedule. Otherwise we’ll export thesupplies new investment to develop more petrol ethanol surplus,” Mr Sirivuthi said. stations selling pertamax petrol. He said Since the government cut levy collectionState-owned oil companies have resumed the investment need of 295 of from petrol last October, the spreadjet fuel supplies to Air India after the Pertamina’s petrol stations reached between petrol and gasohol has narrowednational carrier promised to pay Rs 2.68 Rp115.9 billion or Rp393 million each. to 1.20 a litre from 3 baht. The use ofbillion in dues. Oil company officials In Java and Bali, 2080 of 3,062 ethanol for blending in gasohol droppedsaid the supplies are being resumed after Pertamina petrol stations had sold accordingly, to 1 million litres a dayAir India promised to clear dues by pertamax petrol, 687 needed to replace from 1.3 million. The cut has also led thetomorrow evening. All the three oil their ground tanks and 295 others need existing 16 ethanol producers to cut theircompanies - Indian Oil, Bharat new investment to sell pertamax petrol, production in half from a full capacity ofPetroleum and Hindustan Petroleum - he said. 2.4 million litres per day. The Alternativehad jointly stopped Air Turbine fuel ANTARA, January 31, 2012 Energy Development and Efficiency(ATF) supplies to Air India at Delhi, Department earlier estimated use ofMumbai, Kolkata, Chennai, Trivandrumand Kochi from 1600 hours. Nepal’s fuel crisis ethanol would rise to 2 million litres per PTI, February 2, 2012 deepens day once pure petrol was removed from the domestic market. Anusorn Desperate times call for desperate Sangnimnuan, president of the stateIndonesia preparing measures. Residents of Sallaghari in majority-owned refiner and retailerfuel station loans Bhaktapur neighbouring Kathmandu did Bangchak Petroleum Plc, said theThe government will prepare Rp500 just that on Wednesday. Angered at company plans to shift crude oilbillion in soft loans for 295 petrol continuing scarcity of cooking gas, they purchases to new resources in Russia andstations to sell non-subsidized pertamax intercepted five vehicles carrying LPG Africa, which offer a better refiningpetrol as part of the government’s cylinders and distributed among quality to produce diesel and jet oilprogram to limit the use of subsidized themselves after paying for them and instead of petrol.fuels in Java and Bali starting April 1. handing over empty containers. Apart BANGKOK POST, January 28,The funds would be incorporated in the from daily power outage of 14 hours, 2012revised 2012 state budget, Director Nepal is at present going through anGeneral of Oil and Gas at the Energy and acute fuel and cooking gas crisis. PTTEP sets sights onMineral Resources Ministry Evita Wednesday’s incident was a reflection of fuel in LebanonLegowo said here on Tuesday. the grim situation. PM Baburam Bhattarai met petroleum and LPG dealers PTT Exploration and Production“We have got assurance from the on Thursday. News reports say he has yesterday confirmed reports that it plansFinance Ministry that there is Rp500 requested India to increase supplies to to explore for energy resources inbillion in funds for soft loans to petrol ease the problem. Lebanon.stations,” she said. But she added that shedid not know yet the scheme of the soft HT, February 6, 2012loans which was now being drawn up at Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 14 NEWS IN BRIEFPTTEP president and chief executive Petrochemical. The source said, “located by 25% year-on-year in the remainingofficer Anon Sirisaengtaksin said at Jingmen, Hubei province in China, the three quarters, with the companycountries on the Mediterranean EB-SM plant will have a production securing raw materials at very low cost.constituted one of the firm’s strategic capacity of 80,000 mt per year.” MEG spread is $550 per tonne in the USlocations for pursuing exploration and POLYMERUPDATE, January 30, or about $100 per tonne higher than inproduction (E&P) business. The 2012 Asia, as demand has outstripped supply.company is conducting a geological The industry utilisation rate is nearlystudy of Lebanon’s resources, Anon said. IVL in landmark 90%.It might ask the Lebanese government chemical buy The PTA spread, by contrast, is at afor permission to send a team to explore record low of $150 per tonne. Thai-listed Indorama Ventures (IVL) isthe country after the study is complete. “Restocking of PET is under way. PTA practising backward integration byAnon’s comments follow recent remarks producers are not achieving high acquiring two ethylene makers forby fugitive former prime minister utilisation due to tight paraxylene,” IVL US$795 million, a move that shouldThaksin Shinawatra that he had spoken said. boost its bottom line by 25% this year.with Lebanese officials to pave the way Mr Lohia said the competitiveness of The world’s No.1 integrated polyesterfor PTT to conduct exploration in that petrochemicals in the US has been chain producer yesterday announced itcountry and cooperate with the bolstered by favourable gas prices would buy Old World Industries I andgovernment there to promote growth in relative to oil due to the abundance of Old World Transportation, owners of thethe energy sector. Anon said the shale gas. largest ethylene oxide and ethylenecompany had conducted studies aimed at “By entering MEG now, IVL will be able glycol facilities in the US.promoting E&P businesses in many to capture the premium margins that are Monoethylene glycol (MEG) is a keycountries deemed to have high energy expected to remain firm for the next four component, together with purifiedpotential, including Lebanon and other or five years, when new capacity is likely terephthalic acid (PTA), in producingcountries in the eastern Mediterranean, as to enter the market,” he said. polyethylene terephthalate (PET), as wellwell as in East Africa. He said it was The deal is being financed partly by new as the polyester fibre and yarn that IVLnormal for the Thai government to credit facilities granted by Siam produces, the company said in asupport the company’s exploration Commercial Bank and cash available. statement to the Stock Exchange ofefforts and offshore business activities. IVL’s net debt-to-equity ratio now stands Thailand.PTTEP is willing to cooperate with the at 0.7 times, a figure expected to remain The Texas-based Old World has annualgovernment - or any person involved below one despite the acquisition. capacity of 435,000 tonnes of ethylenewith the government - who helps the The company reported liabilities totalling products, including 385,000 tonnes ofcompany in order to promote Thailand’s 78.2 billion baht as of last Sept 30, up MEG.energy industry, the CEO said. from 45.6 billion baht in 2010. Old World’s earnings before interest,Meanwhile PTTEP, in cooperation with Evercore Partners and HSBC are the taxes, depreciation and amortisationthe Meechai Virivaidya Foundation and financial advisers to IVL. Allen & Overy reached $150 million last year.Business for Rural Education and are acting as legal advisers. Aloke Lohia, IVL’s chief executive, saidDevelopment (BREAD), yesterday Shares of IVL closed yesterday on the the acquisition will be completed thisintroduced a new brand of packaged rice, SET at 34.75 baht, up 1.50 baht, in heavy quarter, subject to customary approvals.School Rice, designed to promote trade worth 2.47 billion baht. “The acquisition makes IVL the onlyfarmers’ incomes and benefit society. BANGKOK POST, February 6, global player in the polyester space with THE NATION, February 1, 2012 2012 integration in both PTA and MEG,” hePETROCHEMICALS said. PIPELINES “It represents a rare opportunity to integrate into MEG, the most competitiveSinopec Jingmen zone for feedstock availability.” IPI gas by 2014plans EB-SM plant PTA pricing is weak with oversupply, The National Assembly’s Standingstart-up while MEG is seeing demand outstrip Committee on Petroleum and Natural supply, allowing IVL to enter during the Resources was informed that the supplyAn industry source based in China upcycle and maximise value from the of natural gas through the Iran andinformed a polymerupdate team member PET chain to contribute to earnings. Pakistan pipeline would start byon the startup plans of a new An industry source said the acquisition of December 2014.ethylbenzene-styrene monomer (EB-SM) Old World will increase IVL’s net profit SG, February 5, 2012plant operated by Sinopec Jingmen Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue page 15 STATISTICS Asian refinery capacity 2000-2010 30000 25000 20000 Other Asia Thailand Taiwan South Korea 15000 Singapore Japan Indonesia 10000 India China Australia 5000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: BP Statistical Review of World Energy Copyright © 2012 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
    • Downstream Asia 08 February 2012, Pilot Issue Back Page NEWSBASE INFORMATION HEADLINES FROM A SELECTION OF NEWSBASE MONITORS THIS WEEK CUSTOMERS INCLUDEOil and Gas SectorAfrOilEni has begun drilling the Nunya-1X well on Ghanas Ketablock.AsianOilONGC plans to invest US$33 billion over the next fiveyears, with a heavy emphasis on the upstream.ChinaOilConocoPhillips and CNOOC have agreed to pay US$160million in compensation for the Bohai Bay oil spill.FSU OGMKazMunaiGaz now says it expects the Karachaganak gas-processing plant to cost US$3.7 billion.GLNGSinopec is confident of state approval for its Beihai LNGterminal, which is to take LNG from Queensland.LatAmOilPeru has pledged to invest US$3 billion in oil and gasprojects over the next four years.Downstream MENASabic and Sinopec have signed an MoU on forming astrategic partnership that builds on existing close ties.NorthAmOilGulf Coast LNG Export has applied to export LNG fromBrownsville, Texas.Unconventional OGMUkraine will hold a tender this month covering shale gasexploration and extraction in the country. For further details on the stories above and NewsBase’s entire product range: tel: +44 (0) 131 478 7000 e-mail: news@newsbase.com Copyright © 2012 NewsBase Ltd. www.newsbase.com