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China’s crude consumption slumps under coronavirus crisis
POLICY
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 con- sider moving its next meeting forward from March to February, Algerian Energy Minister and OPEC president Mohamed Arkab said last week.
The move comes after a new marketing strategy 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), accord- ing to data from General Administration of Customs (GAC).
OCEANIA
Australia signs energy deal with NSW
POLICY
THE Australian government has agreed to pro- vide AUD2bn ($1.34bn) of funding for energy infrastructure projects in the state of New South Wales in return for local authorities promising to boost natural gas supply for domestic users.
The NSW government has committed to help deliver 70 petajoules (1.82bn cubic metres) per year of new gas supply for domestic con- sumption. In return, the federal government will provide funding for East Coast power grid upgrades, two new interstate transmission links and renewable energy projects.
Australian Prime Minister Scott Morrison said on January 31 that the deal would stabilise the state’s power grid, cut power prices and sup- port new wind, solar and hydropower projects.
“It is about getting electricity prices down, getting emissions down, getting more power into the system, and getting the gas to make that happen,” Morrison told reporters.
Industry body Australian Petroleum Produc- tion & Exploration Association (APPEA) wel- comed the agreement, saying that it underlined the importance of developing the state’s signi - cant gas resources. It said: “ e Narrabri gas pro- ject, which is still awaiting nal environmental
approval a er years of assessment, could deliver up to 50% of NSW’s gas needs. e operator of the project, Santos, has pledged to deliver all of the project’s gas supply to the domestic market.”
“If we can develop Narrabri gas, it will be the most competitively priced gas for NSW custom- ers,” Santos CEO Kevin Gallagher told Reuters. “It will always be cheaper than LNG imports, especially when gas prices are high in Asia.”
e deal is intended as the rst in a series of such agreements with state and territory governments around the country, with carbon reduction and renewable energy targets at the forefront of local agendas. For the central gov- ernment, however, ramping up domestic gas production remains a top priority.
Morrison said in a brie ng on January 29 that any successful energy transition plan for the coun- try would have to include a greater reliance on gas.
“We need to get the gas from under our feet,” the prime minister said. “Gas can help us bridge the gap while our investments in bat- teries, hydrogen and pumped hydro energy storage bring these technologies to parity to traditional energy sources ... so right now, we’ve got to get the gas.”
Week 05 05•February•2020 w w w. N E W S B A S E . c o m P9
