Asian LNG prices drop on wary buyers and lacklustre Egyptian demand

MOSCOW (MRC) -- Asian spot LNG prices fell this week as reluctant buyers submitted lower bids, more supply emerged and Egypt's call for 12 shipments in 1Q 2018 undershot expectations by traders, said Reuters.

Spot prices for December delivery fell to USD8.70/MMBtu, 20 cents below last week levels. However, at least two traders pegged December prices at around the USD8.50/MMbtu-8.60/MMBtu level, arguing that buyers were unlikely to pay up. Bid-offer spreads remained somewhat wide with bids submitted at around the mid-USD5/MMBtu and offers in the high-USD5/MMBtu range, two traders said.

Egypt's tender for deliveries between January and March - including three shipments which are to be imported via Jordan - was seen as a bearish signal for global gas markets as traders had expected Egypt to seek five cargoes per month, not four.

Petroleum Minister Terek El Molla said in September the country was on track to cease importing LNG by the end of 2018, a goal seen as unrealistic by some analysts. Egypt's mega purchase tenders of the past several years turned the country into one of the world's fastest-growing LNG importers, absorbing hundreds of shipments and propping up global prices for the fuel.

Weaker spot Asian prices come after weeks of gains which saw the contract rally more than 40 percent since the end of August. "The market has really overshot, driven by a variety of factors from the extent of Chinese demand, which was completely unexpected, to rising NBP [British gas] prices and other factors such as Hurricane Harvey," one trade source said.

Another source said added that prices are set for a further correction. "There is downside risk for December prices and upside risk for the first quarter." Given rapidly growing imports by Chinese companies this year, traders believe stocks there to be healthy and demand covered for November and December so long as temperatures stay within normal bounds.

But Chinese and other buyers are expected to seek more supply for delivery from January onwards. Weather will be a driving factor for demand and traders are waiting for a clearer sense of temperature forecasts for the period. Russia's Sakhalin II LNG export plant on Friday launched a tender offering a late-December loading cargo, traders said.

Nigeria's NLNG export plant put a Nov. 5-7 loading cargo up for tender, with bids due by Oct. 24. The first cargo from Chevron's latest LNG export facility Wheatstone, in Australia, is due to be shipped using the Asia Venture tankers which is currently moored just outside the facility, according to ship-tracking data.

With wide spreads between European gas markets and Asia, British utility Centrica is expected to export a cargo from the Isle of Grain terminal using the Cool Voyager tanker. One source said the cargo may be headed to India.
MRC

MOSCOW (MRC) -- London brought in a new levy on the oldest and most polluting cars entering the city centre from Monday, almost doubling how much motorists have to pay in the latest blow to diesel, said Hydrocarbonprocessing.

Drivers are already charged 11.50 pounds ($15) to enter the financial district and parts of west London under a congestion charge. But those driving petrol and diesel vehicles typically registered before 2006 will need to pay an additional 10 pounds.

Since the 2015 Volkswagen emissions cheating scandal, a number of major cities including Madrid, Paris and Athens have announced plans particularly focused on cutting diesel emissions including bans, fines and restrictions. The new charge could further encourage motorists to switch to greener models in one of Europe's biggest cities as Mayor Sadiq Khan hopes the new levy to reduce toxicity, known as the T-Charge, will help save thousands of lives each year.

"The air is bad, but it's also a killer," he told Reuters. "There are children in London whose lungs are underdeveloped. There are adults who suffer a whole host of conditions caused by the poor quality air from asthma to dementia to suffering strokes."

The tax will apply to up to 34,000 vehicles every month, according to Khan's office, a small proportion of the 535,000 vehicles which come into the area. But it sets the tone for future policies including an ultra low emission zone due by the end of 2020.

Although the T-Charge will also affect older petrol cars, diesel has been particularly maligned over the last few years, with sales down 14 percent this year in Europe's second-biggest car market as petrol demand continues to rise.

"There's a budget coming up and the government's got to step up and announce the diesel scrappage scheme to help families and businesses," said Khan, a politician from Britain's main opposition Labour Party. Britain's Conservative government said this year that sales of new diesel and petrol cars would be banned from 2040 but has stopped short of an immediate programme to incentivise drivers to trade in their old models.

Whether 40,000 Uber drivers, one in three of all private hire vehicles working in the British capital, continue to operate will also have a major impact on London's streets in the years ahead. The city's transport regulator shocked the Silicon Valley taxi app last month by stripping it of its licence. But the company can continue to operate until an appeals process is exhausted, which could take several years.

After discussions between Uber's global Chief Executive Dara Khosrowshahi and Transport for London (TfL) Commissioner Mike Brown this month, Khan said further talks could take place.

"If it's possible for the global CEO to continue discussions with the TfL commissioner of course that's a sensible course of action," he told Reuters. "Whenever you can avoid litigation, you should avoid litigation but I appreciate Uber are appealing the TfL decision. We'll have to wait and see how that pans out."
MRC

MOSCOW (MRC) -- ExxonMobil Chemical Company has announced that it has commenced production on the first of two new 650,000 tons-per-year high-performance polyethylene (PE) lines at its plastics plant in Mont Belvieu, Texas, said the producer on its site.

The full project, part of the company’s multi-billion dollar expansion project in the Baytown area and ExxonMobil’s broader Growing the Gulf expansion initiative, will increase the plant’s polyethylene capacity by approximately 1.3 million tons per year.

The Mont Belvieu plant capacity will total more than 2.5 million tons per year, making it one of the largest polyethylene plants in the world. These performance polyethylene products will deliver significant sustainability benefits enabling lighter weight higher performance packaging, lower energy consumption and reduced emissions.

A significant portion of Mont Belvieu polyethylene will be exported from the Port of Houston later this month. At peak, the site will ship more than 200 containers a day.

"The expansion of our Mont Belvieu facility further enhances our ability to meet growing global demand for high-performance polyethylene products around the world," said Neil Chapman, president of ExxonMobil Chemical Company. "The investments we’re making through our Growing the Gulf initiative will not only expand our existing manufacturing and export capacity, but will further stimulate local economic growth and create thousands of full-time jobs."

ExxonMobil is planning to invest more than USD20 billion over 10 years to build and expand manufacturing facilities in the U.S. Gulf region. These projects are expected to create more than 45,000 jobs, including more than 12,000 full-time jobs. The expansion covers 11 major chemical, refining, lubricant and liquefied natural gas projects along the Texas and Louisiana coasts.

As MRC reported earlier, in November 2016, Jacobs Engineering Group Inc. announced it received a contract from ExxonMobil Chemical Company to provide engineering, design and construction management services as part of a new 650 kTa polyethylene facility to be located at ExxonMobil’s Beaumont polyethylene plant.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

MOSCOW (MRC) - Oil prices were flat on Friday in see-saw trade, under pressure from weak US demand but drawing support from a sharp decline in Iraqi crude exports due to tensions in the Kurdistan region, said Hydrocarbonprocessing.

US light crude was 10 cents higher at $51.39. Brent crude was up 24 cents at USD57.47/bbl by 11:44 a.m. EST (1544 GMT). "We've continued to see signs that the market needs a steady drumbeat of positive information," said Gene McGillian, director of market research for Tradition Energy. "This week's DOE report where gasoline demand dropped to its lowest since March gave a little pause to that."

Oil exports from Iraq's Kurdistan via the Turkish port of Ceyhan were flowing at average rates of 216,000 barrels per day (bpd), down from the usual flows of around 600 Mbpd, a shipping source said. Iraqi troops regained control of two major oilfields northwest of Kirkuk from Kurdish Peshmerga forces this week, and the oil ministry in Baghdad expects to bring the fields back on stream on Sunday.

Russia's biggest oil company, Rosneft, has agreed to take control of Iraqi Kurdistan's main oil pipeline in a USD1.8 billion investment. Olivier Jakob, chief strategist at consultancy Petromatrix, said the deal with Rosneft "makes it a bit harder for Baghdad to do anything against those flows".

Analysts said the market was on a path toward rebalancing. "The oil market has moved into modest undersupply and we expect this will persist at least through the end of the year," US investment bank Jefferies said. U.S. commercial stocks of crude oil have dropped 15 percent from their March records, to 456.5 MMbbl, below levels seen last year.

Part of this drawdown has been due to rising exports as a result of the steep discount of US crude to Brent, which makes it attractive for American producers to export their oil. Crude oil for immediate use now carries a premium over forward futures, making it profitable to sell oil produced now rather than storing it for sale later.

Shipping data in Thomson Reuters Eikon shows that overseas U.S. crude oil shipments have soared from virtually zero before the government loosened export restrictions in late 2015 to around 2.6 MMbpd in October. "While outbound shipments recently approached 2 MMbpd, our math suggests that physical bottlenecks are unlikely to kick in until waterborne exports approach 3.2 MMbpd," RBC Capital Markets said.

MRC

MOSCOW (MRC) -- JG Summit has awarded Fluor an engineering, procurement and construction management (EPCM) contract for a petrochemical complex expansion in Batangas City, the Philippines, as per Apic-online.

The project will increase JG Summit's ethylene production by 160,000 t/y and propylene production by 50,000 t/y. Also included in the project are new and expanded downstream units. Completion is expected by the end of 2020.

Under the contract, for which a value was not disclosed, Fluor will be responsible for the utilities, offsites and infrastructure scope of work.

"JG Summit is the sole cracker operator in the Philippines and we are pleased to support their expansion program," noted Ken Choudhary, president of Fluor's Energy & Chemicals business for the Asia-Pacific region.

JG Summit announced earlier this year, as MRC informed before, that it was planning to invest USD700-million in five new petrochemical projects in the Philippines, which includes a new butadiene extraction plant, an aromatics unit, an expansion of its existing naphtha cracker and polypropylene facility, and a new bimodal polyethylene unit. Operations are scheduled to start by 2021.
MRC