Saudi Arabia may raise July oil prices to Asia: survey
Top oil exporter Saudi Arabia is expected to raise its official selling price (OSP) for all grades it sells to Asia in July, to track a jump in Middle East benchmarks although overall weak refining margins could cap price gains, industry sources said. Saudi Arabia is expected to increase the July OSP for Arab Light crude by $3.80 a barrel on average, a survey of five refinery sources showed. Forecasts ranged from an increase of $2-$3 a barrel to as much as $5 a barrel, as refiners’ margins weakened in May while a stronger DME Oman crude price, one of two underlying benchmarks for Saudi crude in Asia, has increased refiners’ feedstock costs, they said. “Refining margins actually worsened” by close to $1 a barrel in May, one of the respondents said. The DME Oman crude price was on average about $3 a barrel more expensive than cash Dubai and Oman prices set by S&P Global Platts last month, according to Reuters calculations, pushing up costs for Asian buyers of Saudi Arabian and Kuwaiti oil. Production from the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, fell to their lowest in two decades in May and has strengthened Middle East crude prices. OPEC and its allies including Russia are considering bringing forward a meeting to this week to discuss an extension of production cuts beyond June. Tight Middle East crude supply has narrowed cash Dubai’s prompt contango price spread by $6.60 a barrel in May from April. Spot prices are lower than those in future months in a contango market. In addition, light crude, such as Arab Extra Light, are expected to rise more than heavier grades as gasoline and naphtha cracks have improved, two of them said. Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia. State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices. Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs
Threat to national park, wetlands after India gas well blowout
About 2,000 people have been evacuated from their homes as authorities struggle to control gas pouring from an exploded well near a popular ecotourism spot in northeastern India. The gas well in an oil field managed by state-owned Oil India Ltd blew out last Wednesday in Tinsukia district of Assam state, and “started releasing natural gas in an uncontrolled manner”, the company said. Authorities have established an exclusion zone of 1.5 kilometres (0.9 miles) around the oil and gas field, Tinsukia deputy commissioner Bhaskar Pegu said. Some locals complained of eye irritation and headaches, while one person was taken to hospital, officials said. The carcass of a river dolphin and an unknown number of fish were found in a lake close to the area, environmentalists said. Officials were examining the dolphin to determine the cause of death. Locals told AFP that nearby grasslands were affected by the leak. Dead snakes were found in the area and they were afraid condensate from the blowout would lead to the death of other wildlife. Officials told AFP on Monday that the forest department was still assessing the impact on local wildlife. Just one kilometre from the field is Maguri-Motapung wetlands, an ecotourism site. State-owned sanctuary Dibru Saikhowa National Park — a biodiverse area renowned for migratory birds — is about 2.5 kilometres away. Oil India said in a statement Friday that the “well-being, health and safety” of locals was its top priority, and that it was “closely monitoring and… minimising” the environmental impact of the blowout. The firm has yet to disclose how much has leaked from the well. Chairman and managing Director Sushil Chandra Mishra said Oil India was “in discussion with foreign experts and will bring them to the site if necessary”, the Press Trust of India reported.
Iraq crude sales slump in May, but revenues inch up
Iraq sold fewer than 100 million barrels of crude in May, its oil ministry announced Monday, but recovering prices saw it rake in more revenues than the previous month. The OPEC cartel’s second-biggest crude producer has been left reeling by the recent worldwide crash in oil prices and a flood of cheap crude from Saudi Arabia. In May, Iraq sold 99.5 million barrels of crude oil at an average price of $21, earning $2.09 billion for the month. In April, it had sold more barrels — 103.1 million — but the record-low average price of $13.80 per barrel earned it just $1.4 billion. Experts had warned that even if prices recovered, buyers had been stocking up on inexpensive oil in recent months and would not need to buy as much crude as summer began. OPEC agreed in April to introduce production cuts in May and June to try to revive prices, and Iraq will have to cut around one million barrels a day for both months. Low revenues have been catastrophic for Iraq, which relies on oil sales to fund more than 90 percent of its budget. Each month, it needs about $4.5 billion to pay salaries, pensions, welfare handouts and other government expenses. The government is the country’s biggest employer, with at least four million people on its payroll and another four million who receive pensions or social benefits. As part of its efforts to slash expenses, the cabinet announced this week that it was exploring cuts to the gross incomes of senior-grade public employees. It had already decided to borrow internally to cover salaries for the month of April, senior officials told AFP. They said the government was considering taking on more internal and external debt, printing currency, drawing down foreign reserves and requesting budget support from the International Monetary Fund and the World Bank. Iraq had already asked the international oil companies which produce its oil to cut down on their expenses, which are reimbursed quarterly by the Iraqi government.
CNG price in Delhi hiked by Re 1 per kg
CNG price in the national capital and adjoining cities on Monday was hiked by Re 1 per kg to make up for the additional cost incurred to keep stations coronavirus ready. Indraprastha Gas Ltd (IGL), the firm that retails CNG to automobiles and piped natural gas to household kitchens, revised CNG price in the national capital “from Rs 42/ kg to Rs 43/ kg, w.e.f. 6 am on 2nd June 2020,” the firm tweeted. There will, however, be no change in piped cooking gas prices. The company had last cut CNG price by Rs 3.2 per kg and piped natural gas rate by Rs 1.55 per unit from April 3. The nationwide lockdown imposed from March 25 saw fuel sales drop by as much as 90 per cent but relaxations thereafter have not helped demand recover to pre-COVID levels. Despite the drop in sales, the company continued to incur expenditure on paying salaries, fixed charges for power connections, maintenance of equipment and rent, sources said. To recover these charges, the firm has raised CNG prices, they said. “CNG retail price in Noida, Greater Noida & Ghaziabad being revised from Rs 47.75/ kg to Rs 48.75/ kg, w.e.f. 6 am on 2nd June 2020,” IGL said in another tweet. CNG rate in Karnal district of Haryana was hiked to Rs 50.85 per kg and that in Rewari to Rs 55 a kg from Rs 54.15.
Qatar Petroleum signs $19 billion shipbuilding agreements with Korean companies
Qatar Petroleum (QP) said on Monday it has signed agreements with South Korea’s “Big 3” shipyards to secure more than 100 ships costing more than 70 billion Qatari riyals ($19.23 billion). The agreements signed with Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries and Samsung Heavy Industries will occupy much of the three companies’ liquefied natural gas (LNG) ship construction capacity through 2027. Under the deal, described by QP chief executive as the largest LNG shipbuilding program in history, the three companies will reserve a major portion of their LNG ship construction capacity for Qatar Petroleum through the year 2027. “We have secured approximately 60% of the global LNG shipbuilding capacity through 2027 to cater for our LNG carrier fleet requirements in the next 7-8 years, which could reach 100+ new vessels with a program value in excess of 70 billion Qatari Riyals,” said Saad al-Kaabi, QP’s chief executive and Qatar’s energy minister. QP, the state-run LNG producer in the world’s top supplier of the fuel, wants to lift output to around 126 million tonnes per annum by 2027 from today’s 77 mtpa. Exploration work in the expanded North Field mega project showed confirmed gas reserves there exceed 1,760 trillion cubic feet, Kaabi said in November. “We are moving full steam ahead with the North Field expansion projects,” he said in Monday’s statement. “The agreements will ensure our ability to meet our future LNG fleet requirements to support our expanding LNG production capacity and long-term fleet replacement requirements.” Though plans to start production from its new gas facilities were postponed to 2025, due to a delay in the bidding process and the impact of the coronavirus, Kaabi had told Reuters in April his company will not scale back a plan to build six new LNG production trains. The three South Korean companies’ CEOs were cited in the QP release, but did not issue statements of their own on the deals.