Saudi Arabia Energy Minister Warns About Misusing Oil Stockpiles
Saudi Arabia’s Energy Minister has warned countries against misusing their crude oil stockpiles to manipulate the oil markets. According to the Kingdom’s Energy Minister, Prince Abdulaziz bin Salman, who has been sparring with U.S. President Joe Biden in recent weeks, strategic crude oil stockpiles are designed to be used to manage supply shortages, not to bring down prices. “It is my profound duty to make clear to the world that losing (releasing) emergency stocks may be painful in the months to come,” the Energy Minister said at the Future Initiative Investment conference in Riyadh. The comment was quickly interpreted as a barb aimed specifically at President Biden, who lashed out at OPEC+ over its recent decision to lower its crude oil production targets by 2 million barrels per day after the United States spent months releasing more than a hundred million barrels of crude oil from its Strategic Petroleum Reserves to alleviate high prices at the pump ahead of midterm elections. The warning is just the latest in the tiff between Saudi Arabia and President Biden, after the U.S. President said there would be consequences for Saudi Arabia’s decision—with Russia—to lower crude oil production. “I am in the process, when the House and Senate gets back, they’re going to have to – there’s going to be some consequences for what they’ve done with Russia,” President Biden said last week, without getting into specifics. The United States has released 192 million barrels of crude oil from its emergency stockpiles so far this year, according to EIA data, with plans to release even more next year. Other IEA countries have released oil from their crude oil stockpiles this year as well “to address significant market and supply disruptions related to President Putin’s war on Ukraine,” the IEA said in a March press release.
ExxonMobil exits Russia after ‘expropriation’ of Sakhalin-1
EXXONMOBIL has safely exited Russia following the Government’s “expropriation” of Sakhalin-1, a major oil and gas project in Russia’s Far East. The 250,000 bbl/d Sakhalin-1 project was owned (30%) and operated by Exxon, with partners including Russia’s Rosneft and companies from India and Japan. ExxonMobil announced that it would exit the project in March, following Russia’s invasion of Ukraine. Reuters reports that Exxon had been attempting since then to transfer its role in Sakhalin-1 to a partner. Exxon said the Russian Government had “unilaterally terminated” its interest in Sakhalin-1, which has been transferred to a Russian operator. According to press, Russian President Vladimir Putin signed a decree earlier this month to create a new operator managed by state-owned Rosneft to take over the project. Reuters says that the decree also gave Russia authority to decide whether foreign shareholders could retain stakes in the project, and foreign partners were given a month to apply to retain ownership stakes. This is, reportedly, similar to the approach that Russia used to seize control of Sakhalin-2, another major oil and gas project in Russia’s Far East. The move to take control of Sakhalin-1 is the latest cause for clash between Exxon and Russia, where the project is concerned. Prior to the decree this month, Bloomberg reported a Russian decree which Exxon said “inhibits our rights and impedes our ability to exit operations safely”. Reuters reports that the company filed a “note of difference”, adding that this was a legal step prior to arbitration. Highlighting Exxon’s previous legal action against Venezuela after its assets were seized by late leader Hugo Chávez in 2007, the Financial Timessaid Exxon’s accusations that it had been forced out of Sakhalin-1 could hint at a push to recoup its losses in international arbitration. Exxon told The Chemical Engineer: “We’re reserving our legal rights under the production-sharing agreement and international law.” While Exxon exited Russia on 14 October, the Financial Timeshighlighted that India and Japan have sought to maintain energy ties with Russia. The news company speculated that project partners, Indian state-backed ONGC Videsh and Japan’s Sodeco, may seek to remain part of Sakhalin-1 as they have at other oil and gas fields. Reuters reported that Sodeco was not immediately available for comment, but an official of the industry ministry – which owns a 50% stake in the company – said it was gathering information and talking with partners. Sakhalin-1 was designed to produce 250,000 bbl/d of oil; press states that it was producing about 220,000 bbl/d prior to Russia’s invasion of Ukraine, falling to just 10,000 bbl/d following the conflict. Exxon said it was keeping minimal amounts of oil and gas flowing to maintain fuel supplies for local market, to avoid blackouts and shortages, the Financial Times reports. According to Reuters, the company has also moved staff out of the country.
China Imports Record Levels Of LNG And Coking Coal From Russia
China ramped up its imports of coking coal and liquefied natural gas from Russia to record levels last month despite a decline in overall LNG imports, Chinese customs data showed on Tuesday. Chinese imports of LNG from Russia rose by one-third in September compared to the same month of 2021, the data cited by Bloomberg showed. All imports of LNG into China were down by 12% last month. Amid tepid demand and high spot prices, China is expected to see an unprecedented slump in its liquefied natural gas imports this year, ceding the world’s top LNG importer status back to Japan, analysts say. China, however, is importing more LNG from Russia while Europe shuns Russian cargoes. Chinese imports of Russian coking coal, used in steelmaking, nearly tripled to 2.5 million tons last month from 900,000 tons in September last year. Coking coal imports this past month were also higher than the 1.9 million tons of imports in the previous month of August, according to the customs data. Combined imports of thermal coal and coking coal from Russia jumped by 20% year over year in Sept to nearly 7 million tons. In recent months, China has been taking advantage of discounted cargoes of Russian energy products, including oil, LNG, and coal. China also imports natural gas via a pipeline from Russia, the Power of Siberia, but Beijing hasn’t disclosed its pipeline import volumes this year. China and India have become Russia’s key energy buyers after the Russian invasion of Ukraine, as most Western countries shun, ban, or are about to embargo imports of Russian energy products. The EU implemented a ban on coal imports in August and is set to introduce an embargo on seaborne imports of Russian crude oil starting December 5 and Russian refined oil products beginning on February 5, 2023.
Petronet LNG in talks with Vitol and Trafigura to rent out storage tanks at Kochi LNG terminal
Petronet LNG Ltd is said to be in talks with global oil traders such as Vitol Group and Trafigura Group to rent out storage tanks at its grossly underutilised 5 million tonne capacity LNG regasification terminal at Kochi as India’s biggest gas importer looks at ways to raise utilisation levels by tapping into the energy crisis in Europe that has sent LNG prices soaring. Petronet LNG is in talks with many entities including Vitol Group – the world’s largest independent oil trading company – and Trafigura Group, the world’s second largest oil trader, for renting its storage tanks for re-export purposes, an official said. The capacity utilisation of the Kochi LNGterminal, built with an investment of some Rs4,500 crores and opened in 2013, is only about 16-17 percent, as a lack of pipeline connectivity to Bengaluru, crimped sales. Unless the terminal is connected to the national grid, there is no way it can raise capacity utilisation, the official said. Work on the Kochi-Bengaluru pipeline has languished for years due to resistance from people in areas through which it passes. The terminal is currently supplying natural gas to Bharat Petroleum Corporation Ltd and FACT Ltd in Kochi besides a few small customers in Mangaluru through a pipeline. The terminal has two storage tanks, each with a capacity to store about 1,60,000 cubic metres of LNG. The Kochi terminal is capable of re-exporting LNG unlike other terminals in India that can only import the cargo and re-gasify it ahead of selling to customers within the country. Petronet LNG is also weighing plans to offer gassing up and cooling down (GUCD) services to LNG ships. LNG carriers that are newly built, fresh out of dry-dock or completely emptied at their previous discharge port need to have their cargo tanks cooled from ambient to cryogenic temperatures (minus 160 degrees Celsius) before loading their next LNG cargo. In this exercise, a ship will require some 600 to 3,000 metric million British thermal units (mmbtu) of LNG. By offering re-exporting services to oil traders, Petronet LNG reckons that it can boost the capacity utilisation of the Kochi terminal by at least 10-15 percent to 30-35 percent. “That is why we are putting efforts in this direction,” the official said, noting that the company has built the infrastructure to undertake re-gasification, re-loading, gassing up and cooling down as well as LNG bunkering services. Petronet LNG has formed a subsidiary – Petronet Energy Ltd – to carry out these activities. “Nowadays the LNG price is high in the spot market and global oil traders are keen on renting storage capacity at LNG terminals for arbitrage activities,” said the official. To be sure, Petronet LNG rented out storage capacity at its Kochi terminal for a brief period to Singapore-based Trafigura Group, after it started operations in 2013. “We stopped that business because the LNG price was not conducive for renting out storage tanks as rates dipped to about $ 2.5-3 per metric million British thermal unit (mmbtu),” the official said. LNG is currently trading at around $27-28 per mmbtu in the spot market after soaring to about $80 per mmbtu two months ago as Europe battled an energy crisis in the backdrop of the Russia-Ukraine conflict. “Now, the situation is completely different, and many parties are showing interest. That’s why we are thinking of renting out storage tanks again for better utilisation of the terminal facilities,” he added. The re-export of LNG and gassing up and cooling down services to LNG carriers are expected to bring more ship calls to Cochin Port, where the LNG regasification terminal is located, fetching extra revenue to Cochin Port Authority.