Page 7 - AfrOil Week 21 2020

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President and CEO Wan Zulkiflee Wan Ariffin warned of a “very challenging” year ahead and said the company would focus on preserving its liquidity and cutting costs. “We anticipate a very challenging outlook for the rest of 2020, with economic activities expected to only gradually recover in the second half of the year. Industry players, including Petronas, will be adversely impacted if the current market situation persists and oil prices remain low.”
Petronas did report an uptick in production in the first three months, thanks to stronger performance from its Brazilian assets. Never- theless, it said it would trim its output in order to account for both its OPEC+ commitments as well as weakening demand following prolonged international and domestic lockdowns.
If you’d like to read more about the key events shaping Asia’s oil and gas sector, then please click here for NewsBase’s AsianOil Monitor.
Downstream cost-cutting and fuel quality
Qatar Petroleum (QP), the world’s biggest LNG producer, says it is cutting costs by 30% in response to the market slump. But it is still mov- ing “full steam ahead” and has a $50bn plan to expand its liquefaction capacity by two thirds by 2027. QP has also ruled out cutting production in response to prices, on the grounds that its low costs make such a step unnecessary.
Meanwhile, a new report suggests that the petroleum products imported legally into Nige- ria are more polluting and of worse quality than supplies produced at illegal refineries in the Niger Delta. A study by the Stakeholder Democ- racy Network (SDN) concluded that official samples of gasoline and diesel contained more sulphur than unofficial volumes.
Fuel quality is difficult to control in Nigeria, and SDN’s research suggests that the practice of
blaming illegal fuel for air pollution is merely a convenient way to defer responsibility.
In North Africa, Morocco is looking to take advantage of the drop in fuel prices to stock on supplies, using its closed refinery as a storage facility. Meanwhile, Bahrain has reached the halfway point in a $6bn refining upgrade pro- gramme, and the embattled Turkish refiner Tupras has swung to a $353mn loss.
If you’d like to read more about the key events shaping the downstream sector of Africa and the Middle East, then please click here for NewsBase’s DMEA Monitor.
European asset sales at risk
North Sea producers are struggling to close deals since oil prices tanked.
France’s Total is working to save its $635mn deal to sell its non-core UK assets after one of its prospective buyers, Oman’s Petrogas, dropped out. The entire portfolio is now expected to go to Norwegian private equity fund HitecVision, which will secure vendor financing from Total to pay for the acquisition.
London-listed Energean Oil & Gas has been less fortunate. It reported on May 19 that the sale of $280mn worth of North Sea assets to regional producer Neptune Energy had collapsed. This could crush Energean’s hopes of completing its $750mn takeover of Italy’s Edison E&P, since the assets due to be sold to Neptune were part of that deal.
UK’s Premier Oil, meanwhile, seems to be having second thoughts about acquiring $871mn of offshore UK field interests from BP and South Korea’s Dana Petroleum. The com- pany announced those deals in January, when the market outlook was far rosier.
Low prices are also creating opportunities, though, as Poland is looking to boost the role of gas in its energy mix now that it is much cheaper.
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