Page 15 - FSUOGM Week 13

FSUOGM
FSUOGM
EASTERN EUROPE
Russian companies to supply oil to Belarus without premium, Minsk says
Russian companies will supply oil to Belarus without a premium, which Minsk has refused to pay in January-March, according to Prime Minister of Belarus Sergei Rumas.
“Since late 2019 Belarus has been negotiating the acquisition of Russian oil for our oil refineries without a premium,” news agency BELTA quoted Rumas as saying on March 24. “All the Russian companies will be able to supply oil without a premium.”
Premiums paid to Russian companies were as high as $11.7. Russian companies will reduce this premium by $7. In other words, the companies will supply oil with a premium of $4.7. It will be settled by interbudget transactions, according to Rumas.
In Janaury-March, Belarus was hit by
a severe shortage of Russian oil for its two refineries – major money-spinners for the economy – as Moscow halted crude supplies to Belarus on January 1 after a contract expired, and the two countries are still in negotiations over a new agreement.
Minsk said later in January that it had secured a temporary limited solution on shipments from companies of Russian oligarch Mikhail Gutseriev, without paying a premium. In previous years Belarus bought oil on terms similar to those for Russian independent refineries, which involved a small premium.
On January 24, Belarusian President Alexander Lukashenko pledged to purchase crude oil “in America, Saudi Arabia and the UAE” following Moscow’s refusal to deliver oil to the post-Soviet nation in 2020 on Minsk’s terms.
In February, Lukashenko pledged to siphon off Russia’s transit oil from the Russia- EU Druzhba oil pipeline, if Moscow failed
to supply the “necessary volume” of oil in February. The pipeline splits into two routes in Belarus - a northern leg runs to Poland and Germany, and a southern leg to Ukraine, the Czech Republic, Hungary and Slovakia.
Rumas added that just like other Russian companies, Rosneft had been against selling oil without a premium and had insisted on a full price instead.
“Belarus is going to choose the oil companies that will offer the best terms [for] oil deliveries. For instance, a long deferral
of payment. This is why we are not certain Belarus will buy oil from Rosneft. We will primarily prioritise the companies which sold us oil without a premium at a difficult time (the first quarter of the year). Those are Gutseriev’s companies and small companies. All other things being equal, these companies will be prioritised,” he said.
CENTRAL ASIA & SOUTH CAUCASUS
Socar’s STAR refinery ‘cut
Turkey’s current account
deficit by $800mn in 2019’
Oil production activities at Socar’s STAR refinery last year cut Turkey’s current account deficit by around $800mn, the facility’s general manager Mesut Ilter has told Turkish state news service Anadolu Agency (AA).
Opened in October 2018 by Azerbaijan’s national oil company Socar as Turkey’s first new refinery since 1975, STAR’s [Socar Turkey Aegean Refinery’s] production units reached full capacity last September Ilter reportedly said in an interview at the end of last week.
Socar is the largest private-sector investor in Turkey. Its plan to build the refinery in Aliaga near Izmir on the Aegean coast got the go-ahead with officials keen
to reduce Turkey’s need to import refined oil products including diesel. STAR also makes feedstock for Socar-controlled major Turkish petrochemical producer Petkim, located adjacent to the refinery. Petkim
is also regarded as important in lowering Turkey’s current account deficit. Its ongoing expansions are gradually reducing the country’s need for imported plastics.
Ilter was cited as saying that STAR processed 7.1mn tonnes of crude oil last year versus its total capacity of 10mn tonnes/yr, as well as 3.5mn tonnes of diesel—seen as the most important item in the refinery’s contribution to the current account—and 1.2mn tonnes of jet fuel, as well as a significant amount of naphtha,
a key raw material in petrochemical production.
The refinery is working to a plan under
which since February nearly all of Petkim’s feedstock needs would be met by it.
Socar, meanwhile, hopes traffic at Turkey’s one-year-old mega airport, Istanbul Airport, will continue to expand for many years, thereby raising the need for the refinery’s jet fuel product.
Around 5.3mn tonnes of jet fuel consumption was recorded in Turkey last year, Ilter said.
Nostrum Oil & Gas ends search for buyer
Nostrum Oil & Gas said on March 31 that due to no firm proposals being received, the company has ended its formal sales process, and is no longer under offer for a potential sale.
The oil & gas firm first conducted a strategic review in June, where it first
said that it was considering the sale of the company itself. However, due to the lack of interest, Nostrum will now engage with its bondholders and seek a restructuring of the company’s outstanding bonds.
Operationally, as at December 31, Nostrum had 46 wells in production, comprising 20 oil wells and 26 gas condensate wells. For 2019 as a whole, average daily production was 28,587 barrels of oil equivalent per day, down from 31,254 barrels for 2018.
Daily sales volumes for 2019 were also lower at 36,671 barrels per day from 29,516 barrels the year before.
As at March 25, average daily production is above 23,000 barrels.
As at December 31, however, proved and probable reserves from the Chinarevskoye Field has declined by 66% to 138.1mn barrels of oil equivalent, from 410.0mn barrels in 2018.
Financially, Nostrum has a cash balance of USD65 million as at March 25, while its third quarter coupon payment has been covered at current oil prices.
“The reduction in reserves follows a significant amount of work carried out both internally and by third parties during 2019 to better understand the productivity of
our reservoirs. We will continue to try to recover as many hydrocarbons as possible from Chinarevskoye field but the focus
for filling our infrastructure has moved to obtaining more third-party volumes. This reserve downgrade will lead to a significant impairment being taken when we release our full year results,” CEO Kaat Van Hecke.
Week 13 01•April•2020
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