Page 16 - FSUOGM Week 15

FSUOGM PROJECTS & COMPANIES FSUOGM
Sino-Kazakh venture to build pipe factory
KAZAKHSTAN
The project was quietly shelved two years ago.
CHINA and Kazakhstan are set to begin build- ing an oil and gas pipe factory in Almaty in the second quarter, after the project was quietly shelved two years ago.
Asia Steel Pipe – a 50:50 joint venture between state-owned KazMunayGas and China National Petroleum Corp. (CNPC) – will construct a plant capable of producing 100,000 tonnes per year (tpy) of large-diameter steel pipe, the Kazakh Ministry of Industry and Infrastructure Devel- opment said on April 8.
“The project will be launched in the second quarter of 2020 in the industrial zone of Alatau district of Almaty. The total area of the construc- tion site is 18.3 hectares [183,000 square metres]. The construction of a high-tech plant will make it possible to ensure import substitution of pipe productsimportedintoKazakhstanby70%,”the ministry was reported as saying.
The project is part of Beijing’s Belt and Road Initiative (BRI) – which aims to develop a global network of trade routes – and is expected to cost more than 33bn tenge ($75.8mn) to build. The ministry said the project could be expanded to
150,000 tpy in the future.
The proposed factory was first announced in
April 2018 and carried a price of tag of $100mn. At the time, the reports suggested the plant would make pipes of between 355mm and 1,420mm in diameter.
The announcement of this latest BRI project is a small piece of good news for China’s geopo- litical ambitions after a tough start to 2020. BRI had been expected to lead to hundreds of billions of dollars’ worth of infrastructure projects both in China and overseas. However, with the global economy heading for recession this year follow- ing the coronavirus (COVID-19) pandemic, it is unclear just how many new projects will make it off the drawing board.
The World Bank now anticipates that China’s GDPgrowthwillslowfrom6.1%in2019tojust 2.3% this year, its slowest rate since the country’s recession in 1976.
Kazakhstan is a major exporter of oil and gas to China via pipeline, delivering 10.88mn tonnes (218,000 barrels per day) of crude and 7.5bn cubic metres of gas to its neighbour last year.™
RUSSIA
Oil prices give up early
gains as analysts say new
OPEC+ production cuts not
big enough
Russia, Saudi Arabia and other major producers have agreed to collectively cut 10mn barrels in production for May and June during a video conference that will end the price war and better balance the supply and demand of oil for the moment. The price of oil initially soared on the news by 10%, but then slumped back as analysts said the production cut was not big enough to take up all the slack in the market caused by the coronavirus (COVID-19) pandemic stop-shock.
In the last few months the global slowdown has caused a 30% drop in worldwide fuel demand, so even a 10mn bpd reduction is not enough to take the surplus production out of the market. And the deal is temporary. Iran’s oil minister said a production cut of 10mn bpd is just for May and June 2020. From July until the end
NEWS IN BRIEF
of 2020 those cuts would fall to 8mn bpd, and then next year to 6mn bpd.
“The collapse in oil prices is a result of the reality that while OPEC is cutting as expected, there is simply too much crude in the physical space for sale, with too few pipelines to move it and too few buyers to take it,” said Scott Shelton, energy specialist at United ICAP, as cited by Reuters.
At the meeting the OPEC+ group had considered curbs as great as 15mn to 20mn bpd, or 15% to 20% of global supplies.
But even a cut of 10mn bpd is the biggest output cut ever agreed by OPEC. Russia has insisted it will only reduce output if the United States joins the deal.
The US has not said it will mandate output reductions. Instead, it has noted that market forces are already causing producers to pull back, as it expects its output to fall by nearly 2mn bpd by next year anyway as shale producers come under pressure. The number of US oil rigs in operation fell by 58 to 504 during the last week, the lowest level since December 2016.
Over the next few days the OPEC+ countries will reach out to the other independent oil producers and ask them to join the production cut regime. Energy
ministers from the Group of 20 (G20) major economies are set to meet on April 10..
Russia’s fuel prices not to top inflation in 2020: Novak
The rise in Russia’s fuel prices in 2020
will not exceed inflation, and may even stay at the current level, Energy Minister Alexander Novak said in a television show on the Rossiya 1 channel on April 12.
“Gasoline prices (in Russia) added an average of 2% on the year in 2019, and same for diesel fuel, below inflation. I am sure that this year we will have growth below inflation, too, or the prices may even stay at the current level,” he said.
Russia will weather the current situation on the crude market linked to the spread of coronavirus and will be able to restore its economy, Novak said.
“There is no doubt that we have a special situation today, a stress situation. Everybody is working in the government in a non-stop regime and with no days off. But I am sure that we will weather the period. In 2008–2009, we went through such crisis events with a
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Week 15 15•April•2020