Page 9 - AsianOil Week 27

AsianOil EAST ASIA AsianOil
Report: China’s refiners curb fuel production
PERFORMANCE
CHINA’S re ners are reportedly slashing their third-quarter fuel production a er the start-up of new capacity in the second quarter worsened the country’s existing supply glut.
Reuters quoted industry sources and ana- lysts on July 8 as saying the commissioning of two privately owned 400,000 barrel per day (bpd) integrated refinery and petrochemical projects,coupledwithslowingfueldemand,had prompted re ners to cut their run rates.
Privately owned Hengli Petrochemical’s plant near the northeastern port city of Dalian reached full capacity in May, while Zhejiang Petrochemi- cal’s facility in Zhoushan began trial operations.
e newswire reported that small-scale re n- ers, mainly located in Shandong Province, were under the most pressure to extend production cuts that were made in May and June.
An unnamed company source from Dong- ming Petrochemical said the company would close its 240,000 bpd plant this week for a two- month maintenance programme following “poor margins”.
Analysts from JLC and Sublime China Information said independent plants had lost RMB300-350 ($43.58-50.81) per tonne of crude
oil processed in June. JLC estimates that seven Shandong plants, with a total capacity of 470,000 bpd, will be offline in July. This will remove 14mn barrels of crude oil demand for the month and could hit international oil prices.
“For markets that are already consumed with fears about a global recession ... headline num- bers of oil demand growth slowing alongside talk ofruncutsseemtoreinforceabearishnarrative,” Energy Aspects analyst Michal Meidan said.
e market glut caused by the Hengli and Zhejiang start-ups are also a ecting state-run refiners, though not necessarily to the same degree.
Two Sinopec plants are reportedly intending to trim throughput by around 10,400 bpd in the quarter, while PetroChina is understood to have started o ering to subsidise its subsidiaries’ gas- oline exports.
Reuters quoted unnamed sources as say- ing that Hengli had sold its rst gasoline cargo, which amounted to 80,000 tonnes, to Sinopec in early June at a 12% discount to rates o ered by Shandong’s independents. In total, Hengli dis- counted more than 500,000 tonnes of gasoline in June by RMB300-500 ($43.56-72.6) per tonne.™
AUSTRALASIA
APLNG signs domestic supply agreements
PROJECTS & COMPANIES
THE Australia Paci c LNG (APLNG) project has signed natural gas supply agreements with explosives manufacturer Orica and packaging manufacturer Orora.
Under the deals, Orica will receive 10.2 petajoules(265.69mncubicmetres)ofgasover four years starting from 2021, while Orora will receive 6 PJ (156.29 mcm) over three years start- ing from 2023.
e agreements come in the wake of federal and state government policy decisions that are putting mounting pressure on Queensland’s gas export sector.
South Australia’s Centre Alliance Party has traded its support for the Australian govern- ment’s proposed tax reforms for a seat at the table during the gas export reform process.
“The full package of reforms will be announced by government in the coming weeks, but will include changes to the Australian Domestic Gas Security Mech- anism [ADGSM] to deal with current pricing, market transparency measures, measures to deal with the monopoly nature of East Coast gas pipelines and longer-term measures to ensure future gas projects deliver surplus supply to the
Australian market,” Centre Alliance said on July 4.
“ e ADGSM has worked to ensure there is enough supply, but has not dealt with price,” it added. “ ere has been a market failure and governmentmustintervene.”
The Queensland government, meanwhile, increased its natural gas royalties by 2.5 percent- age points on July 1 to 12.5%. e state said the sector had enjoyed “incredibly competitive roy- alty rates” and it was now time to give back.
The energy sector has naturally pushed backed at both these moves. Queensland Resources Council (QRC) EO Ian Macfarlane said APLNG’s supply agreements with Orica and Orora demonstrated the bene ts of a stable regulatory environment.
“The Queensland gas industry is leading the nation with a proactive approach to eas- ing the East Coast gas squeeze. Queensland’s neighbours must take a leaf out of our book, instead of relying on our state to meet the gap caused by their failure to develop their own gas industries. Gas exploration has stalled in New South Wales and Victoria, despite the fact all jurisdictions have their own reserves in the ground.”™
Week 27 10•July•2019 w w w . N E W S B A S E . c o m P9