Page 12 - FSU OGM Week 26

FSUOGM PERFORMANCE FSUOGM

Russia’s Urals oil grade trades at

record premium to Brent

RUSSIA THE price of Russia’s flagship Urals grade oil in discount has swung to a premium. Some refin-
Northwestern Europe soared to a record pre- ers favour higher-sulphur crude if their plants
Urals has traditionally mium to North Sea Brent on June 25. are designed specifically to process it.
traded at a discount to Urals was selling at $43.25 per barrel for Rot- This unusual situation has led to some unu-
Brent. terdam delivery that day, which was $2.35 more sual buying habits. France’s Total, Europe’s big-
than Brent. The premium was up $0.40 from gest oil refiner, has reportedly started buying
June 24 and represented the largest recorded North Sea oil, as fewer volumes are available
since September 1994, the Argus pricing agency from its two main suppliers, Russia and Nigeria.
estimated. OPEC+ has agreed to keep 9.7mn bpd of
Urals traditionally trades at a discount to supply offline until the end of July, after which
Brent because of its high sulphur content, which point the cut will be eased to 7.7mn bpd. Restric-
adds costs at refineries. This discount widened tions will remain in force, albeit gradually being
in March and early April as refiners in Europe, loosened, until April 2022. Assuming the deal
the main market in which Urals is sold, cut back on cuts is not terminated early, Urals trading at
production as the coronavirus (COVID-19) a premium to Brent could be the norm for the
pandemic took hold, causing fuel demand to next few years.
plummet. According to Argus, sea-bound exports of
However, since Russia and its OPEC+ part- Urals are expected to fall by 534,000 bpd month
ners reached a landmark deal in early April to on month in July to 770,000 bpd – their lowest
take 9.7mn barrels per day (bpd) of supply off level since 2002. Total oil exports from Russian
the market, Urals has become scarcer and the ports will drop by 524,000 bpd to 1.52mn bpd. ™

SOCAR profits slide on weaker

revenues in 2019

AZERBAIJAN AZERBAIJAN’S national oil company (NOC) weaker. The company has had to contend with
SOCAR posted a near-46% decline in net profits the oil price collapse and a sharp drop in fuel
Results in 2020 will be in 2019 to AZN651mn ($383mn) last year, from demand. It has also had to cut production as part
significantly weaker. AZN1.2bn a year earlier. of Azerbaijan’s commitments under a deal with
This result came despite the company post- other OPEC+ members.
ing higher operating income of AZN5.8bn, Ratings agency Fitch downgraded SOCAR’s
versus AZN3.6bn a year earlier. Revenues fell to outlook in April from Stable to Negative in light
AZN83.8bn, from AZN107.8bn, the company of these factors. The company, Fitch said, will
stated in a report audited by EY. struggle with higher leverage over the next few
The value of the company’s current assets years, and its oil production will contract by
declined to AZN19.2bn, from AZN19.3bn, 11% in 2020, only recovering to the 2018 level of
while total assets climbed to AZN65.4bn 256,000 barrels per day (bpd) in 2022. ™
from AZN62.1bn. Current liabilities fell to
AZN17.3bn from AZN17.4bn, but total liabili-
ties increased to AZN41.1bn from AZN38.2bn.
SOCAR’s total equity grew to AZN24.3bn
from AZN23.9bn.
The company’s main source of revenue is oil
sales, primarily from the BP-run Azeri-Chi-
rag-Gunashli (ACG) project in the Caspian Sea.
But it also sells gas domestically and in Turkey
via the Southern Gas Corridor (SGC), and pro-
duces fuels and petrochemicals in Azerbaijan
and Turkey.
SOCAR’s results in 2020 will be significantly

P12 www. NEWSBASE .com Week 26 01•July•2020