Page 11 - FSUOGM Week 49 2019

FSUOGM POLICY FSUOGM
Ukraine’s UGV halts gas processing after product auctions stop
UKRAINE
Staff changes at Ukraine’s economy ministry have disrupted state-organised auctions of gas products.
UKRAINE’S largest gas producer Ukrgazvy- dobuvannya (UGV) has temporarily suspended operations at its Timofeyevsky and Yablunevsky gas processing plants (GPPs), as it is unable to sell the facilities’ liquid by-products.
Under Ukrainian law, UGV and other state producers are required to sell their LPG, oil and gas condensate at competitive auctions, organ- ised by a special auction committee run by the economy ministry. In late November, how- ever, Economy Minister Timofey Milovanov dismissed around half of the ministry’s senior officials, leaving the committee without enough members to organise new auctions.
UGV was subsequently unable to auction off liquid products on November 28 and Decem- ber 5 as planned. It has run out of storage space, forcing it to halt processing at the two GPPs. The company produced 129,000 tonnes of liquid products between January and October, down 4% year on year. Around 60% of this volume was produced at the Timofeyevsky and Yablunevsky plants.
Ukraine’s top oil producer Ukrnafta has also warned it may have to suspend LPG production at the Kachanovsky GPP because of the disrup- tion to auctions. The company produced 92,500 tonnes of LPG in the first ten months of 2019, 70% of which came from the Kachanovsky facility.
“At present, the company is in danger of stop- ping the largest gas processing plant [in Ukraine] for a very simple reason: we have an overstock of liquefied gas,” Ukrnafta’s deputy board head Mauritius Kalugin complained in a video posted on Facebook. “Today, December 6, there will be no auction. An absurd situation – we are increas- ing production and the state does not allow us to sell this production.”
Ukrnafta and others have long criticised the way the auctions are managed. According to the company, 11 of the 19 auctions for its products this year have failed because of a lack of buyers. It claims the committee sets the starting price for bids too high, making its supplies uncompetitive compared with imports. ™
OPEC+ agrees to deepen cuts
GLOBAL
Russia had been opposed to the cuts.
DURING last week’s meeting in Vienna, OPEC members and their non-OPEC partners agreed to reduce combined output by an additional 500,000 barrels per day during the first quarter of 2020. This takes their collaborative cut to 1.7mn bpd, around 1.7% of worldwide production.
The market received a boost when the group announced a surprise voluntary addition to the cuts from “mainly Saudi Arabia”, bringing the total reduction to more than 2.1mn bpd.
The group did not agree to extend the cuts beyond March despite calls to lengthen until June or December amid fears of economic slow- down from member states, but Iraqi Oil Minister Thamer al-Ghadban said that an extraordinary meeting would be held in March.
Announcement of the agreement came from Russian Energy Minister Alexander Novak, who told gathered press: “We really do see some risks of oversupply in the first quarter due to lower seasonal demand for refined products and for crude oil.”
He added that the details of the deal and the distribution of cuts would still need to be ratified. The announcement came after six hours of talks on December 5, after which, Kuwait’s Oil Minister Khaled al-Fadhel would not provide
any details and his Saudi counterpart Prince Abdulaziz bin Salman said that no deal could be confirmed until the OPEC and non-OPEC groups OPEC could not say it had an agree- ment until it met with non-OPEC producers on Friday.
Reuters quoted sources as saying that the lat- est deal was a compromise between Russia and Saudi, with Moscow not having been keen to deepen the cuts and Riyadh supportive of cutting further and extending the agreement.
While Saudi has claimed to the contrary, Riyadh’s desire for deeper cuts is seen emanat- ing from intention to support the initial public offering of state oil firm Saudi Aramco, which last week raised $25.6bn, making it the largest ever listing ahead of trading beginning later in December. ™
Week 49 11•December•2019 w w w . N E W S B A S E . c o m P11