Page 7 - FSUOGM Week 28 2020

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market. Deliveries to gas- red thermal power plants (TPPs) accounted for slightly more than 63% of domestic sales.
If you’d like to read more about the key events shaping Africa’s oil and gas sector then please click here for NewsBase’s AfrOil Monitor.
Margins pressing China’s independent re- ners
China’s independent re ners are reportedly set to wind down run rates during the third quar- ter owing to depressed gross re ning margins (GRMs).
Margins have come under pressure from extensive fuel stockpiles and rising feedstock costs, Bloomberg quoted analysts and unnamed traders as saying last week. Brent is currently trading in a $40-45 per barrel range, a signi cant improvement from the more than 20-year low recorded a er prices collapsed in early-March. Brent slipped below $16 in April, while West Texas Intermediate (WTI) even managed to trade – albeit brie y – at negative prices.
Bloomberg noted that China’s independent re neries, or teapots, also had a backlog of crude imports waiting to be processed by Qingdao Port in Shandong Province, which is home to the majority of the country’s teapots.
Shandong independents will cut runs from May highs of 2.3mn barrels per day to 1.9-2mn bpd in July and August, industry consultant FGE said. Traders told the newswire that some plants in the cities of Dongying and Weifang were likely to lead the charge in ramping down operations.
Energy Aspects analyst Yuntao Liu warned that stronger oil prices had wipe out the bene ts re ners received from the central government’s oil price oor, which was set at $40 in January 2016. e policy was implemented to protect domestic production a er a similar
e central government introduced an oil price oor at $40 in January 2016, following a similar oil price collapse 2014 that sent Brent into a tailspin.
Liu added: “[S]ince majors are looking to raise runs a er seasonal maintenance, teapots are facing big challenges.”
While Energy Aspects and FGE use di er- ent methods of calculating the teapots’ GRMs, both sets of numbers show the independent sector to be under enormous pressure. Energy Aspects said margins had fallen from CNY1,243 yuan ($177) per tonne in late April to negative CNY383 at the end of June, while FGE said mar- gins had dropped from $20 in April to less than $5 per barrel.
If you’d like to read more about the key events shaping Asia’s oil and gas sector then please click here for NewsBase’s AsianOil Monitor.
Downstream deal-making
ere has been some deal-making in the Africa and Middle East downstream sector recently.
International contractor TechnipFMC has won a contract worth over $1bn to build a new hydrocracking complex near Egypt’s Assiut oil re nery. e award comes a er TechnipFMC carried out front-end engineering and design (FEED) for the project back last year.
e $2.8bn complex will convert low-value fuel oil into around 2.8mn tonnes per year (tpy) of Euro-5 diesel and other products. Egyptian authorities say the investment will help the coun- try add value to its resources and meet more fuel demand with its own supply. Egypt is developing a ra of other new re ning and petrochemicals projects, but how many of these ventures stick to schedule is another matter, given the economic fallout from the coronavirus pandemic. e new hydrocracking facility is due on stream in 2022.
In Oman, a Canadian public-private partner- ship called Canada Business Holdings (CBH) has announced plans to invest in a 300,000 barrel per day (bpd) re nery to produce low-sulphur fuel oil (LSFO) for ships in the area. LSFO is in higher demand since IMO regulations were imposed, reducing the cap for sulphur content in marine fuel to 0.5% from 3.5% previously.
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