Page 10 - FSUOGM Week 20

FSUOGM
N R G FSUOGM
Gazprom suffered a setback last week when German regulators denied its Nord Stream 2 project a waiver from EU energy rules.
downs over the past decade, but current con- ditions could spark a wave of closures without ample state support.
Fuel demand in Italy, one of the hardest hit by the pandemic, plunged 45% year on year in April, according to new data, with a 35% decline expected in May. The country was the first in Europe to impose a nationwide lockdown in early March, but restrictions are now being grad- ually eased.
Italian refiners have responded by cutting runs, with Eni maintaining its plants at only 60% of capacity.
Elsewhere, Scotland-based refiner Ineos is reportedly seeking an emergency loan from the UK government for its joint venture with PetroChina. It may turn out to be a contentious issue in the public’s eye, as Ineos’ owner Sir Jim Ratcliffe is one of several UK billionaires to seek state support, despite having moved overseas for tax purposes.
Greece’s Hellenic Petroleum has bucked the trend, reporting a slight increase in core earnings for the first quarter. Rather than cutting runs, it boosted production in the quarter and sold more products overseas.
In Norway, state-owned Equinor has taken a final investment decision (FID) on a landmark project to capture, transport and store carbon in the North Sea. Pending approval from Norwe- gian authorities, Equinor and its partners Royal Dutch Shell and France’s Total are set to invest $670mn in the scheme’s first phase.
If you’d like to read more about the key events shaping Europe’s oil and gas sector then please click here for NewsBase’s EurOil Monitor.
Positive signs in LNG
Some positive signs for the LNG market are emerging, though the overall picture remains bleak. A growing number of US LNG cargoes are thought to be reaching China as the Asian country cautiously restarts its economy, having been the first to lock down earlier this year in response to the outbreak of the new coronavirus.
According to ClipperData, seven vessels delivered US LNG cargoes to China between April 20 and May 14. This marks the first time in over a year that US LNG has been shipped to China, and more cargoes will be on the way.
However, relations between the two countries remain fragile after they reached a preliminary Phase 1 trade deal in January that has already been severely undermined by COVID-19. Under the deal, China agreed to buy an addi- tional $52.4bn worth of energy products from the US, including crude oil and LNG. However, lockdown put the brakes on the country’s energy demand, and initially there were also tariff issues to resolve. Beijing recently started granting tar- iff waivers to some LNG importers as China emerged from lockdown, prompting shipments of the fuel from the US to resume.
However, China is still set to fall far short of its target for purchases of US energy. And US President Donald Trump recently threatened to pull out of the Phase 1 deal if China fails to meet its purchasing obligations.
This has led US industry groups to call for long-term contracts with US LNG terminals to be counted towards the Phase 1 targets.
Separately, China is continuing to expand its LNG import infrastructure. China’s National Petroleum and Natural Gas Pipeline Network
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