MARKETS: Consumer nations to pay record US$2 trillion in oil imports this year, says IEA

(EnergyAsia, March 30 2012, Friday) — The tab for world oil imports will reach a record US$2 trillion this year at current prices, with the European Union contributing a quarter of that sum, according to a Reuters report citing the International Energy Agency (IEA).“For the first time, the world will pay US$2 trillion of oil…

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PHILIPPINES: IMF notes economy’s “positive signs” amid global gloom

(EnergyAsia, March 30 2012, Friday)  — The International Monetary Fund (IMF) has given the Philippines economy a positive assessment, noting that it has grown amid the gloom in the West while keeping inflation and the deficit low. In its annual Article IV review of the economy, the IMF said that while the Philippines has been…

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CONFERENCE: 17th Asia Oil Week Exploration, Development, New Ventures Strategy in Singapore on June 25-27

(EnergyAsia, March 30 2012, Friday) — Global Pacific & Partners has released its programme for the 17th Asia Oil Week , which includes the 21st Asia Petroleum Strategy Briefing and the 17th Asia Upstream Conference to be held at the Goodwood Park Hotel in Singapore on June 25 to 27 2012.

The event begins with the 21st Asia Petroleum Strategy Briefing on Monday, June 25, the longest running strategy briefing held in and on Asia within the global upstream industry. It provides an in-depth examination of the competitive upstream oil and gas-LNG strategies in Asian exploration and development, with diagnosis of portfolios held by corporate oil, governments and national oil companies, whilst tracking competitors and state players across Southeast Asia, Australia and the Pacific area, China, India, Nepal, Pakistan, Bangladesh, Japan, South Korea, Taiwan and in frontier areas like Timor Leste and Sri Lanka.

The Strategy Briefing is presented by Duncan Clarke, chairman and CEO of Global Pacific & Partners, a leading global strategist, speaker and author on the fast-changing world of the oil and gas industry.

The 17th Asia Upstream 2012 conference is a landmark event for Asia’s exploration industry, featuring more than 30 top-level presentations by speakers from across Asia and the world, for delegates from the oil majors, independents, government and national oil companies.

Participants take this opportunity to interface, network and negotiate deals.

This year’s event will discuss Asia’s emerging frontiers and upstream potential over an intensive three-day programme. It will feature presentations by Talisman Energy, Premier Oil, Roc Oil, Mubadala Oil & Gas, Japex, Cairn India, KrisEnergy, Oil Search and Petromin PNG Holdings as well government representatives from the Philippines, New Zealand, Timor Leste, Sri Lanka, Indonesia and Bangladesh.

Dr Clarke said: “Asia’s oil and gas game is moving into new territories, with established producer countries and corporate players eyeing new strategies, and re-discovered frontiers across vast regions, from Pakistan to New Zealand.

“New frontiers and oil/gas potential beckon in Asia’s hydrocarbons game, while independents have opened new plays and state oil companies have global strategies, while licensing agencies and ministries seek exploration dollars.”

CHINA: CNOOC reports record net profit of 70.26 billion yuan for 2011

(EnergyAsia, March 30 2012, Friday) — Helped by high crude prices last year, China’s leading offshore oil producer CNOOC Limited said it earned a record 70.26 billion yuan in net profit for a 29.1% increase over 2010. (US$1=6.3 yuan).

Its revenue rose 29.5% to 189.28 billion yuan, boosted by the record average realised oil price of US$109.75 per barrel and natural gas at US$5.15 per thousand cubic feet, representing an increase of 40.8% and 14.7% over 2010 respectively.

With basic earnings of 1.57 yuan per share (EPS), the company said it board has proposed paying shareholders an after-tax year-end dividend of HK$0.28 per share. (US$1=HK$7.76).

CNOOC said its net production edged up 0.7% to 331.8 million barrels of oil equivalent (BOE), despite losses suffered when production was briefly suspended after an oil spill at its offshore Penglai 19-3 field.

For the year, CNOOC said it made 13 discoveries and successfully appraised 18 oil and gas structures including three discoveries abroad that contributed to its 158% reserve replacement ratio.

Justifying the 26.7% rise in last year’s capital expenditure of US$6.42 billion, the company started production at two offshore fields and development work on another 16 projects. CNOOC said it invested US$1.46 billion on exploration, US$3.66 billion on development, and US$1.18 billion on production.

The company said its cost of production rose 25% to US$30.58 per BOE, due to a combination of increased tax payment and “the large increase in raw materials price and service fee.”

CNOOC’s CEO, Li Fanrong, said the Penglai oil spill’s “unprecedented difficulties” has led the company to undertake “thorough safety inspection on offshore production operations” and enhanced “HSE management and emergency response capabilities”

THAILAND: UK’s ITF signs up Thai state upstream company PTTEP

(EnergyAsia, March 30 2012, Friday) — ITF, a UK-based oil and gas industry technology facilitator, said it has signed up Thai state oil company PTT Exploration & Production Public Company Limited (PTTEP) as a member.

PTTEP is the latest ITF member in Southeast Asia and the second after Malaysia’s state Petronas to support oil and gas technology development and address technology challenges in the region.

ITF plans to secure A$9 million investment from its members across the Asia-Pacific region to launch ground breaking technologies. The organisation will also bolster its team by creating a business development position, which will be based at its Kuala Lumpur office to further strengthen its presence across the region. (US$1=A$0.95)

ITF will now work with PTTEP to fund innovative solutions to key technology challenges which have been identified in South East Asia, including unconventional reservoir characterisation, sub-basalt imaging and nanotechnology.

Headquartered in Bangkok, PTTEP has more than 3,500 employees and is dedicated to providing a sustainable petroleum supply to Thailand and the countries it operates in.

Chumpol Rojanachan, vice president, Corporate Knowledge Management from PTTEP, said:

“Membership with ITF allows PTTEP to tackle the issues associated with unconventional reservoirs and operational technology challenges in a joined up approach with other oil and gas operators.  Our existing operations in domestic and international areas as well as growth initiatives in deepwater Myanmar and Indonesia can be efficiently supported through ITF joint industry projects.”

ITF members share funding and risk on bringing forward new solutions through joint industry projects (JIPs). Developers are offered up to 100% funding and innovators retain full intellectual property rights.

Ryan McPherson, ITF’s regional director in the Middle East and Asia Pacific, said:

“Southeast Asia is an important market for the energy industry and PTTEP’s membership is central to our growth strategy for the area. We are dedicated to finding novel technologies that will help to boost production in the region.”

ITF has launched more than 180 JIPs from early stage through to field trials and commercialisation. The organisation aims to secure a further £50 million for projects by 2015.

MARKETS: Canadian crude discount to US WTI to grow, to average US$27 in 2014, predicts BENTEK Energy

(EnergyAsia, March 29 2012, Thursday) — Western Canadian Select (WCS) crude prices will continue to weaken against West Texas Intermediate (WTI) and will sell for an average discount of US$27 below the US benchmark in 2014, predicts BENTEK Energy, a US-based energy markets information and analytics company.

Earlier this week, the Canadian discount surged above $30 a barrel, pushing the WCS to a bargain price of around US$75 a barrel at a time when Brent is holding around US$125 on the world markets and WTI remains supported at US$106.

In its latest report, “Crude Awakening: Shale Boom Hits Oil”, BENTEK attributed the declining value of the WCS blend to growing Canadian oil supply, flat demand from refiners and limited pipeline takeaway capacity.

The report said the health of Canada’s oil industry will largely depend on transportation capacity to the US over the next few years as its crude supply grow 31% to nearly four million b/d between 2011 and 2016 but demand from domestic refineries will remain flat.

BENTEK projects that western Canadian crude oil production will grow nearly one million b/d, mostly from the oil sands in Athabasca, Peace River and Cold Lake. A number of emerging unconventional oil plays also will add to this growth, including the Alberta Bakken, Cardium and Viking plays.

All these new flows will compete for pipeline space for delivery to the US Midwest and Gulf Coast for refining. This will lead to a 42% or 917,000 b/d increase in Canadian crude exports to the US, impacting the already constrained refinery and transportation markets.

“Currently, five of the six major pipeline systems that move crude across the Canadian-US border are full or constrained by downstream markets and export pipeline capacity will be limited until new pipeline expansions come online starting mid-year 2015. Until then, average annual crude prices for WCS could fall to as much as US$27 below the WTI benchmark. Light Syncrude prices also will face extreme pressure,” said BENTEK.

The sharply deteriorating value of the WCS blend underlines the urgency of Canada to diversify its crude oil exports from the US to Asia. Prime Minister Stephen Harper has made two trips to Asia in February and March to speed up Canada’s slow trade ties with the world’s fastest growing region, energy being a focus of bilateral discussions with the leaders of China, Japan, South Korea and Thailand.

ASIA: Rising LNG demand to drive region’s offshore marine growth

(EnergyAsia, March 29 2012, Thursday) — The following is an edited version of an article written by Alex Bailey on behalf of Seatrade, a producer of maritime and cruise publications, conferences and exhibitions.

Soaring demand for liquefied natural gas (LNG) across Asia is driving major new investments into exploration and infrastructure capabilities.

This will stimulate growth in the region’s rapidly expanding offshore and marine sector as new developments will require additional offshore assets and support services from regional players.

Furthermore, due to the synergies between Asia’s gas reserves and ship-design capabilities, the region could pioneer a long-term move towards more LNG utilisation to reduce vessel emissions and fuel bills of the offshore support vessels supporting these projects.

However, seizing these growth opportunities and moving towards gas-powered vessels of the future, will require multi-party collaboration between energy companies, vessel operators, shipyards, technology providers, marine fuel suppliers and governments to realise the mutual benefits.

This was the consensus reached at a recent industry roundtable in Singapore, comprising experts from across Asia’s offshore marine industry, to identify the major growth drivers and opportunities of the sector in Singapore and around the region.

Hosted by Seatrade, the event was a curtain-raiser to the first Seatrade Offshore Marine Asia conference and exhibition that will take place in Singapore between April 25 and 27 2012 to complement Maritime Week.

In 2010, two of the three largest countries based on total liquefaction capacity came from within the region, in the form of Indonesia and Malaysia.

Globally, Japan leads with way with the most LNG receiving terminals in the world, 28 in operation at the end of 2010.

There are several terminals currently being built within the region. Singapore is looking to position itself as a regional LNG trading hub and is on course to start up its a multi-user terminal on Jurong Island worth S$1.7 billion next year while state-run Indian Oil Corporation (IOC) has signed an agreement with the Dhamra Port Corporation (DPCL) to develop a LNG terminal on the east coast of India.

There are other LNG terminals proposed for Indonesia, Malaysia and Thailand while Vietnam expects to complete its first import terminal by 2015, demonstrating the region’s desire to adopt this fuel source in its energy mix. LNG’s rising role will generate demand for more marine assets, such as FPSOs, rigs, offshore support vessels and supporting technology which the region, with its capability to provide high standards of support services such as innovation into research and development, shipbuilding and design as well as the manufacture of drilling rigs and support vessels, is well positioned to meet.

Simultaneously, the increasing numbers of offshore support vessels servicing these projects are facing a major fuel challenge. Incoming global International Maritime Organisation (IMO) legislation will require vessels to cut sulphur (SOx) emissions to 0.1% and reduce nitrogen oxide (NOx) on new vessels by 80% by 2015.

This poses a complex and unresolved issue for the international marine industry and will require major changes for vessel operators working on offshore projects in the likes of China and Malaysia as these countries will be required to implement increasingly stringent emissions control areas.

In addition, vessel operators, including those in the offshore sector, are facing continued high and volatile marine fuel prices in excess of $700 per tonne. Prices are set to rise further as requirements to use cleaner marine fuels are introduced within the Asia Pacific region.

Michael Meade, CEO of M3 Marine Group Pte Ltd, said: “Replacing conventional shipping fuel with LNG could hold the key to a cost effective and environmentally efficient industry and Asian operators are looking to lead the way. LNG offers significant benefits over traditional fossil fuels – it is cost-efficient to transport over long distances by seas and is a clean-burning fuel so contributes to reducing emissions.

“The marine industry has been engrained at the heart of the region’s economy for decades, and by increasing its ability to produce and to utilise LNG in vessels being built, South East Asia could lead the way in terms of innovation in this sector.”

Research and fuel spot price dynamics show that LNG could present a more financially and environmentally favourable solution compared to using scarce distillate fuels or emissions-cleaning technologies, providing the supply and infrastructure can be established.

This is already being seen in Norway where many offshore support vessels are effectively using LNG as a fuel source.

However, with fuel volumes likely to soar across Asia, energy providers are well-placed to expand their product portfolio and ability to supply and potentially produce LNG-based marine fuel. Collectively this creates a symbiotic relationship of mutual demand between LNG suppliers and the vessels that are contracted to support exploration.

Increasing LNG capabilities and usage on board offshore vessels requires overcoming a myriad of challenges which requires cross-party collaboration across the energy and marine sectors.

Denys Hickey, Head of Energy and Offshore Group, Asia Pacific Region at law firm Ince & Co, said:

“For Southeast Asia to innovate in the use of LNG as a fuel, there needs to be a collaborative effort. Ship owners, yards and engine builders need to invest in the technology required and bunkering facilities need to be constructed to allow LNG to become viable as a fuel source.”

Southeast Asia faces certain challenges in terms of its capacity to produce and store LNG. Existing terminal and storage facilities are still small in size and number and distribution networks are limited.

Also, the majority of vessels are not designed to store or use LNG which could mean major capital expenditure to convert. The cost to retrofit existing vessels to use LNG is high which means that storage is likely to only be incorporated into new builds.

However, the group flagged that a more viable alternative option would be to introduce LNG-diesel hybrid vessels, which could enable greater flexibility to use alternative fuel sources in ports around the region that currently do supply LNG. Similarly the sentiment of the discussion highlighted a greater need for government tax incentives and investment to stimulate the growth of LNG production and use in vessels in the region.

Chris Grieveson, a partner at law firm, Wikborg Rein, said:

“Southeast Asia is rich in gas reserves and has the technical knowledge to build vessels designed to utilise LNG. If, as an industry, we work together there is a real opportunity for the region to convert to 100% LNG within the next five years.”

Southeast Asia is well positioned to lead in the field of LNG production and to spur the growth of a lucrative commercial ecosystem for the supporting offshore and marine assets.  This will require mutual commitment and investment but the signs are positive that it can be achieved.

Furthermore, significant investment, further research and collaboration would enable offshore vessels built and used in the region to utilise LNG as a superior fuel source.

MARKETS: OPEC sees 2012 world oil demand growth at 860,000 b/d, up from 800,000 b/d last year

(EnergyAsia, March 29 2012, Thursday) — OPEC expects world oil demand to grow by 860,000 b/d, or 0.98%, to 87.84 million in 2012, unchanged from its previous month’s forecast, but still above last year’s increase of 800,000 b/d.The Organisation of Petroleum Exporting Countries issued this forecast in its latest monthly report based on its expectations…

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MARKETS: High oil prices supported by slow supply growth, production loss, declining spare capacity

(EnergyAsia, March 29 2012, Thursday) — Despite weak global demand, oil prices are being supported at current high levels by below-expectations supply growth from non-OPEC countries, continuous production outages and declining spare inventory, said the International Energy Agency (IEA) said on Wednesday.The agency said oil supply from producers outside the Organisation of Petroleum Exporting Countries…

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CHINA: Gasoline, diesel prices at record high after 6-7% increases

(EnergyAsia, March 29 2012, Thursday) — Chinese motorists are paying record pump prices after the government allowed refiners and marketing companies to raise gasoline and diesel by six to seven percent last week.Following intense lobbying by the oil companies, the National Development and Reform Commission allowed gasoline and diesel prices to rise by 600 yuan…

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INDIA: Import tax waived on LNG and natural gas for power generation

(EnergyAsia, March 28 2012, Wednesday) — Indian companies will no longer have to pay tax on imported natural gas and liquefied natural gas (LNG) cargoes for power generation in the current financial year to March 31 2013 as the government looks to encourage increased use of the fuel.In his budget speech, Finance Minister Pranab Mukherjee…

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INDIA: LNG import capacity, gas pipeline network to be expanded

(EnergyAsia, March 28 2012, Wednesday) — India is targeting to more than triple its liquefied natural gas (LNG) import capacity to 50 million tonnes a year by the second half of this decade from around 13.6 million tonnes in 2010.Petronet LNG Ltd, Indian Oil Corp and Gujarat State Petroleum Corp (GSPC) are at various stages…

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INDIA: State firms interested to acquire ADB’s 5.2% stake in LNG importer Petronet

(EnergyAsia, March 28 2012, Wednesday) — Four of India’s state oil and gas companies have told the Petroleum Ministry they are interested to acquire the Asian Development Bank’s 5.2% stake in state gas firm Petronet LNG Ltd.Indian Oil Corp, Oil and Natural Gas Corp (ONGC), Bharat Petroleum Corp Ltd and GAIL, which each already own…

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INDIA: Refiners aims to export oil products to Pakistan

(EnergyAsia, March 28 2012, Wednesday) — Indian refiners are targeting to export oil products to energy-deficit Pakistan as the South Asian neighbours look to improve trade ties despite their often tense political relations.Muslim Pakistan is expected to soon confer Most Favoured Nation (MFN) status on largely Hindu India, opening up the possibility for Hindustan Petroleum…

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INDONESIA: Foster Wheeler awarded project management consultancy contract for Cilacap refinery upgrade

(EnergyAsia, March 28 2012, Wednesday) — Foster Wheeler AG said a subsidiary of its Global Engineering and Construction Group has been awarded a contract by PT Pertamina, Indonesia’s state oil company, to provide project management consultancy services for the residue fluid catalytic cracker (RFCC) project at the Cilacap refinery on Java Island.

Foster Wheeler will manage the engineering, procurement and construction contractor on behalf of Pertamina which is building a 62,000 b/d RCC complex. When completed in 2014, the complex will include a RFCC, a new LPG MeroxTM unit, and propylene recovery and gasoline hydrotreating units. Merox is a trademark of US technology company UOP LLC.

The addition of an RFCC unit will enable the refinery to increase fuel production, especially high-octane fuels intended to meet European Union EURO IV quality specifications. The unit will increase the production of liquid petroleum gases by 350,000 tons per year and more than 140,000 t/y of propylene.

Umberto della Sala, Foster Wheeler’s chief operating officer, said:

“Key to winning this contract was our ability to manage the project from our newly-established operations in Jakarta, Indonesia, as well as our proven project management capability and our leading technical expertise in all areas of refining.”

Foster Wheeler AG is a global engineering and construction company and power equipment supplier delivering technically advanced, reliable facilities and equipment.

CHINA: Sinopec blames refining losses for slow growth in 2011 net profit

(EnergyAsia, March 27 2012, Tuesday) — China Petroleum and Chemical Corp (Sinopec Corp), the country’s second largest integrated oil company, said its 2011 net profits grew by just 1.3% as downstream losses from its refining and marketing operations offset upstream gains.

With its net profit at 71.7 billion yuan, the company reported basic earnings of 0.827 yuan per share, also up 1.4% from 2010.

Its refining operations, Asia’s largest, reported a loss of 37.6 billion yuan in 2011 reversing an operating profit of 14.9 billion yuan from the previous year. Chinese refiners and retailers have to sell their fuel to domestic consumers at government-set prices that are below international levels.
 
Rising crude oil prices boosted the operating profit of its upstream division by 51.9% to 71.6 billion yuan last year over 2010. (US$1=6.3 yuan).

The company’s board has approved paying a final dividend of 0.20 yuan per share which brings the total for 2011 to 0.3 yuan for a 42.8% increase over the previous year. Based on the stock price on December 31 2011, the stock’s yield was 4.5%.

Sinopec said it raised oil and gas production by 1.6% to 408 million barrels of oil equivalent while its refinery throughput rose 3% to 217 million tonnes.

The company’s sales of refined oil products grew 8.8% to a record 162 million tonnes while its sales volume of chemical products reached 50.8 million tonnes.

Sinopec’s Exploration and Production performance

2011

2010

2009

Change from 2010 to 2011 (%)

Oil and gas production (mmboe)

407.91

401.42

377.45

1.6

Crude oil production (million barrels)

321.73

327.85

327.62

(1.9)

Including:China

303.37

302.18

301.15

0.4

Overseas

18.36

25.67

26.47

(28.5)

Natural gas production (bcf)

517.07

441.39

299.01

17.1


Sinopec’s financial performance for 2010 and 2011

Years ended 31 December

Change

2011

2010

Million yuan

%

Exploration and Production Segment

Operating revenues

241,838

187,145

29.2

Operating expenses

170,207

139,996

21.6

Operating profit

71,631

47,149

51.9

Refining Segment

Operating revenues

1,212,072

971,577

24.8

Operating expenses

1,247,852

955,726

30.6

Operating (loss)/profit

(35,780)

15,851

Marketing and Distribution Segment

Operating revenues

1,347,626

1,040,698

29.5

Operating expenses

1,302,930

1,009,938

29.0

Operating profit

44,696

30,760

45.3

Chemicals Segment

Operating revenues

420,490

327,622

28.3

Operating expenses

393,758

312,611

26.0

Operating profit

26,732

15,011

78.1

Corporate and others

Operating revenues

1,134,182

796,789

42.3

Operating expenses

1,136,822

799,131

42.3

Operating loss

(2,640)

(2,342)

12.7

Elimination of inter-segment profit

891

(1,455)

INDONESIA: Classification society RINA appointed to work on world’s first marine CNG project

(EnergyAsia, March 27 2012, Tuesday) — International classification society and verification group RINA said it has been appointed by Indonesia’s electricity utility PT PLN to help develop the world’s first marine compressed natural gas (CNG) project.

PLN expects to begin delivering between 3,000 and 6,000 standard cubic feet (mscf) per day of CNG from the island of Gresik to Lombok from 2013, where it will feed the Peaking power plant.
 
Having already delivered the feasibility study, RINA said it is now developing the front end engineering design (FEED), and will provide support during tendering and project management at the engineering procurement and construction (epc) phase. Tendering will begin in May 2012 with a number of different technologies to be considered.

According to RINA, this is a pilot project to use cheaper natural gas in place of liquid fuel for power production. If it succeeds, the marine CNG technology will be applied to other power plants across the country with similar or larger capacity.

PLN has mapped out potential utilisation of CNG in Indonesia. CNG will come from low-capacity gas wells, marginal gas wells, gas flare and surplus of gas supply as a result of a fluctuating gas absorption pattern.
 
RINA said it will advise on the most appropriate type of vehicle, logistical pattern, design of the compression and decompression terminals, and documents for EPC tender for construction of the marine CNG facilities. RINA has developed rules for the classification of CNG ships, which are based on new technological guidelines and which take into account experience gained so far in the field.

Italy-based RINA Group is an international company that helps enterprises and communities to achieve greater competitiveness and effective risk management through the conception, creation, management and assessment of projects.

ASIA: Canada’s oil and gas industry cheers government’s free trade talks with Japan, South Korea and Thailand

(EnergyAsia, March 27 2012, Tuesday) — Canada’s upstream oil and natural gas industry said it welcomes and encourages federal initiatives to negotiate trade-related agreements with Asian countries given their strong and growing need for oil and natural gas and growing importance in global energy markets.

Prime Minister Stephen Harper, presently on his second visit to the region this year, announced the launch of free trade talks with Japan to add to on-going efforts to pursue trade agreements with Thailand and South Korea.

Dave Collyer, President of Canadian Association of Petroleum Producers, said:

“Demand for Canadian products like crude oil and natural gas is strong in Asia and growing. Oil and natural gas exports, primarily to the US, currently contribute some C$80 billion to the Canadian economy annually. Diversifying markets for Canadian oil and natural gas products is vital to ensuring Canada continues to grow its oil and gas production and receives full value for its natural resources.” (US$1=C$0.99).

In addition to developing new export markets, CAPP said the industry is exploring cost-competitive ways of providing Canadian crude oil and natural gas to domestic markets and the US, reducing North American dependence on foreign imports.

According to the International Energy Agency, Asia, especially China, will drive the development of the world’s energy markets. Over the next 25 years, the IEA expects China alone to account for more than 30% of the projected growth in global energy demand, consolidating its position as the world’s largest energy consumer.

“While developing new markets for Canadian trade is very important, our industry understands that increasing domestic oil and natural gas production depends on continuing environmental and social performance improvement and delivering tangible economic benefits for all Canadians,” said Mr Collyer.

The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, involving in the exploration, development and production of natural gas and crude oil in the country. Its member companies produce more than 90% of Canada’s natural gas and crude oil while its associate members provide a wide range of services that support the upstream crude oil and natural gas industry. Together, they produce revenues of about C$100 billion a year.

AUSTRALIA: Caltex’s new bunker tanker to support Sydney shipping boom

(EnergyAsia, March 27 2012, Tuesday) — As a boost to its national marine fuel supply network, Caltex Australia has added a new 65-metre bunker tanker, Anatoma, to its Sydney operations.

The company’s leading downstream oil company said it has signed a service agreement with SVITZER to operate the double-hulled bunker tanker, which will begin delivering fuel oil and marine gasoil (diesel) within Port Botany and Port Jackson in coming months.

With the to carry 1.6 million litres of fuel, Anatoma replaces the single-hulled Esar Sydney, which has been in operation since the mid 1970s and was limited to operating within Port Botany.

Caltex also owns and the 50-metre, double-hulled Bunker V operating at the port of Brisbane and last year acquired Graham Bailey Pty Ltd to support its national marine fuel operations.

Phil Amos, Caltex’s national manager for lubricants and direct sales said the new tanker will play a “significant role” in refuelling coastal traders and international cargo vessels visiting Port Botany and the booming cruise market in Sydney Harbour.

Caltex would also have access to Sydney Harbour’s White Bay 6 berth, which opened last April in response to growing demand.

Mr Amos said: “Sydney’s cruise market has been growing at an extraordinary rate for the past six years. According to cruise industry figures, visits to Sydney in 2011/12 are expected to increase 43%, and this has caused a marked increase in the sector’s demand for bunker fuel.

“Anatoma will have an important role in meeting much of this cruise industry growth as well as continuing to provide reliable supply to the city’s diverse range of marine fuel customers, including cargo ships visiting Port Botany.”

SVITZER managing director Mark Malone said:

“We are delighted and honoured to continue our long running business relationship and partnership with Caltex and look forward to the smooth introduction of the Anatoma into the Sydney bunkering market.”

Caltex’s senior marine adviser Captain Phil Hickey said the bunker tanker would be phased into full service over the next few months.

He said: “Since the Anatoma has a greater length, beam and moulded depth than Esar Sydney, several modifications have been required at the bunker berth including changes to the fenders, gangways and marine loading arms.”

AUSTRALIA: Woodside starts up Pluto LNG project in Western Australia

(EnergyAsia, March 27 2012, Tuesday) — Australia’s third liquefied natural gas (LNG) project started up last week when operator Woodside announced that its Pluto project in Western Australia began processing gas from offshore fields last week.

The A$14.9 billion project has been plagued by cost over-run of up to A$1 billion, and weather problems and design flaws that have led to start-up delays by a year.

Peter Coleman, CEO of Woodside, which has a 90% stake in the project, said:
  
“This milestone is a credit to all those involved in the construction of Pluto, which proudly takes its place as Australia’s third LNG project. Woodside operates two of these projects.”

The first LNG cargo will be produced in a matter of weeks for delivery to Pluto’s Japanese foundation customers and project participants Kansai Electric and Tokyo Gas.

Woodside said Pluto is expected to contribute between 17 and 21 million barrels of oil equivalent to its 2012 production, in line with previous guidance, and about 37 million boe to the company’s long-term average production.

The Greater Pluto fields are estimated to contain 5.5 trillion cubic feet of proved plus possible dry gas reserves and an additional 680 billion cubic feet of contingent resources. The project’s initial phase comprises an offshore platform in 85m of water that is connected to five subsea wells on the Pluto gas field.

Approved for development in July 2007, the onshore complex will process gas piped through a 180 km trunkline from the Pluto and Xena gas fields located in the Carnarvon Basin about 190 km north-west of Karratha, Western Australia. The complex, located between the North West Shelf Project and Dampier Port on the Burrup Peninsula includes a single processing train with a production capacity of 4.3 million tonnes of LNG a year.

Storage and loading facilities at the plant include two LNG tanks with a combined capacity of 240,000 cubic metres, three smaller condensate tanks and an LNG and condensate export jetty.

The Pluto LNG project is underpinned by 15-year sales agreements with Kansai Electric and Tokyo Gas. Both companies became project participants in January 2008, each acquiring a 5% interest in the foundation project.

With the start-up of Pluto, Australia now has seven LNG projects under development. The country’s LNG boom started in 2009 when Chevron began developing its 15 million mt/year Gorgon project on Western Australia’s Barrow Island and took off in late 2010 with BG Group’s approval for the world’s first coalseam gas (CSG)-to-LNG project on Curtis Island in Queensland state.

The other projects include another two CSG-LNG plants also on Curtis Island by undertaken separately by Santos and Australia Pacific LNG  JV, Shell’s floating LNG terminal to tap the Prelude gas field in the Timor Sea, Chevron’s plan to develop the Wheatstone field, and Japan’s Inpex plan to build a A$34 billion Ichthys complex in Darwin city.

CHINA: Strategic oil stockpiling at Lanzhou, new terminal planned for Luoyang

(EnergyAsia, March 26 2012, Monday) — China has started stockpiling crude oil at a new emergency storage reserve in Gansu province and is planning another in nearby Henan province, both in the country’s northwest.The Lanzhou depot in Gansu, which can hold 18.9 million barrels of crude, is part of China’s second-phase programme to stockpile 168…

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CHINA: Government targets shale-gas production to reach 6.5 bcm a year by 2015

(EnergyAsia, March 26 2012, Monday) — Announcing a five-year programme to tap China’s vast unconventional gas reserves, the country’s energy regulator has set a target for shale gas production to reach 6.5 billion cubic metres (bcm) a year by end-2015.Zhang Yuqing, head of the National Energy Administration (NEA)’s oil and gas department, said production could…

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FUJAIRAH: Plans to double oil storage capacity, set up LNG terminal by 2015

(EnergyAsia, March 26 2012, Monday) — Fujairah is expected to nearly double the capacity of its oil storage terminal as well as set up liquefied natural gas (LNG) trading terminals over the next three years.According to Salem Kelil, a government technical adviser, Fujairah will nearly double its oil storage capacity of 6.8 million cubic metres…

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MARKETS: Rising oil prices threaten survival of some airlines

(EnergyAsia, March 26 2012, Monday) — More airlines could fold up this year as the industry faces the bleak prospect of losing more than US$5 billion if fuel prices continue to rise beyond the present level with Brent crude hovering around US$125 a barrel, said the International Air Transport Association (IATA) and members.

Last December, IATA said the industry had forecast Brent oil prices to hold at US$99 a barrel for 2012. Instead, for the year-to-date, Brent has averaged nearly US$120, forcing the industry to raise consensus forecast for the year to US$115.

“This will push fuel to 34% of average operating costs and see the overall industry fuel bill rise to US$213 billion. Political tensions in the Gulf region increase the risk of significantly higher oil prices, the implications of which could put the industry into losses,” said IATA.

For now, citing rising oil prices in its latest forecast, the association downgraded the industry’s 2012 profit outlook by US$500 million from last December’s to US$3 billion based on a 0.5% margin that could be further eroded if oil prices rise further on supply disruptions or fear of military conflict in the Middle East.

IATA said the latest US$500 million downgrade from its last forecast just three months ago has been “primarily driven by a rise in the expected average price of oil to US$115 per barrel, up from the previously forecast US$99.”

IATA said it could have been forced to make a bigger downgrade if the Eurozone crisis had worsened and the US economy not improved in recent weeks.

Airline performance is closely tied to global GDP growth. Historically, when GDP growth drops below 2%, the global airline industry returns a collective loss.

“2012 continues to be a challenging year for airlines. The risk of a worsening Eurozone crisis has been replaced by an equally toxic risk—rising oil prices. Already the damage is being felt with a downgrade in industry profits to US$3 billion,’’ said Tony Tyler, IATA’s director general and CEO.

“With GDP growth projections now at 2% and an anaemic margin of 0.5%, it will not take much of a shock to push the industry into the red for 2012.”

IATA said an escalation of the crisis in Iran leading to a closure of the Strait of Hormuz and oil supply disruption could send Brent prices spiking to US$150 a barrel by mid-year, for a full year average of $135. In such a scenario, global GDP growth would fall to 1.7%, plunging the entire industry towards losses of over $5 billion.

“While we have seen some improvements in economic prospects any further significant rise in the fuel price will almost certainly turn weak profits into losses,” said Mr Tyler.

Earlier, IATA had revised upwards its estimated profits for 2011 to US$7.9 billion from the previously forecast US$6.9 billion. This was primarily owing to the much better than expected performance of Chinese carriers.

IATA expects the industry’s overall capacity (passenger and cargo combined) to grow by 3.2% in 2012 (based on announced schedules) which is behind the 3.6% expected expansion in demand. This is a reversal of the expectation in December of capacity expansion (3.1%) outstripping demand (2.9%).

Both passenger load factors and aircraft utilization have returned to or above pre-recession levels.

Passenger demand is expected to grow by 4.2% for 2012, which is 0.2 percentage points ahead of the December forecast.

IATA represents some 240 airlines which account for 84% of global air traffic.

INDIA: Oil Minister says crude imports from Iran will continue despite US threats

(EnergyAsia, March 26 2012, Monday) — In defiance of US threats against countries trading with Iran, India’s Oil Minister Jaipal Reddy said it will continue to import crude oil from the Islamic regime as it does not violate international law.

India, which imports around 400,000 b/d of crude oil from Iran to meet about 12% of its domestic consumption, insists the trade embargo is not sanctioned by the UN and is therefore not valid. Its position is also adopted by China, the biggest buyer of Iranian crude.

Mr Reddy told reporters at an energy conference in New Delhi last week:

“Our companies need oil from Iran and we will continue to import without violation of international law in letter and spirit. We are expecting no cut in Iranian supplies.”

The two countries have taken their trade ties one step further by recently agreeing to partly settle payments in Indian rupee in place of the dollar in an attempt to side-step international sanctions against trade involving Iran imposed by the West over Tehran’s controversial nuclear energy programme.

The US will have to move delicately if it plans to punish India which is regarded as an important ally of the West to counter China and the Muslim world.

Mr Reddy appears to have been emboldened in his position after the US announced that it would exempt Japan and the European Union, both substantial buyers of Iranian crude, from the sanctions for six months from June 28.

Secretary of State Hillary Clinton said China and India were not granted the exemptions as Japan and the EU had given sufficient assurances that they would stop buying Iranian crude after the end of their exemption period.

India has not commented on the latest US position while China has criticised it as an act of “hypocrisy” and “double standards”.

With global oil supplies remaining tight and Brent crude holding firm at over US$120 a barrel, it is unlikely that the two Asian countries will yield much to the US campaign for an all-out trade embargo against Iran, setting the stage for further confrontations.