Page 9 - AsiaElec Week 05

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China’s crude consumption slumps under coronavirus crisis
CHINA
CHINA’S oil demand has fallen by 3mn barrels per day (bpd) in the wake of the ongoing corona- virus crisis, Bloomberg reported on February 3.
e rising death toll, which has surpassed 350 as of the start of this week, has seen the coun- try quarantine upwards of 35mn people in their homes, close roads and cancel ights. Beijing has ordered almost at least 16 cities to be quaran- tined, with the eastern city of Wenzhou becom- ing the latest addition at the end of last week.
Bloomberg quoted unnamed Chinese and international oil executives as saying that the decline in oil demand had been measured against historic levels for this time of year and was indicative. Re neries’ stockpiles of unsold oil products, such as gasoline and jet-fuel, are growing on a daily basis, the newswire said.
It added that some re ners were on the verge of running out of storage and quoted one exec- utive as saying that once companies ran out of space, they could reduce their crude processing volumes by as much as 15-20%. Since the crisis began weighing on nancial markets on January
20, the price of international benchmark crude Brent has shrunk by 14%. Bloomberg noted that contracts for April delivery dropped 1.3% to $55.88 per barrel in London on February 3.
Local stock and commodity markets reo- pened weaker on February 3, the rst day back following China’s Lunar New Year break – which had been extended to serve as a so quarantine.
e Shanghai Composite index opened down 8% – its lowest level since February 2019, while Shanghai crude oil, Dalian iron ore and Shang- hai copper all fell by their daily down limits.
e oil price slump has prompted OPEC to consider moving its next meeting forward from March to February, Algerian Energy Minister and OPEC president Mohamed Arkab said last week.
e move comes a er a new marketing strat- egy by OPEC’s most powerful member, Saudi Arabia, saw the kingdom expand its sales to China by 47% year on year in 2019 to 83.32mn tonnes (1.67mn bpd), according to data from General Administration of Customs (GAC).™
GAS-FIRED GENERATION
Thailand looking at LNG spot market
THAILAND
THAILAND’S Ministry of Energy has ordered state-owned oil and gas company PTT to assess the feasibility of buying LNG on the spot market in order to take advantage of lower prices.
Thai Minister of Energy Sontirat Son- tijirawong noted that spot LNG prices had declined to an average of US$4-5 per million British thermal units ($110.64-138.30 per 1,000 cubic metres), making them potentially more attractive than domestic production or imports from Myanmar.
“If PTT can import LNG at these lower prices, the ministry will reduce o shore gas production temporarily,” Sontijirawong was reported by the Bangkok Post as saying. “ is plan would extend the life cycle of gas resources in the Gulf of ailand.”
PTT already imports roughly 5mn tonnes per year (tpy) of LNG, but all these shipments are handled under long-term contracts. Son- tijirawong’s comments come as a growing number of LNG buyers are turning to the spot market, where they can currently obtain lower pricing. Meanwhile, PTT is building its
second LNG receiving terminal with a capac- ity of 7.5mn tonnes, scheduled for start-up in 2022. A ramp-up in ai LNG imports is thus expected, so it would not be surprising, given current trends, if the country opts to buy on the spot market.
Sontirat said the government would carefully consider PTT’s ndings, looking at them within the context of integration with the country’s gas supply.
“It will bring the possibility of a regional LNG trading hub, which the ministry plans to pro- mote in the third quarter of 2020,” he said.
PTT’s ndings stand to a ect existing con- tracts that it has with the Electricity Generating Authority of ailand (EGAT), which is the larg- est gas purchaser in terms of global daily con- tracted volumes.
EGAT announced in October 2019 that it intended to import its rst cargoes through the spot market in November. The utility is also developing ailand’s rst oating storage and regasi cation unit (FSRU) as it seeks to step up LNG purchases.™
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