South Korea to cut fuel tax by 15% to ease oil price burden

MOSCOW (MRC) -- South Korea will cut domestic transport fuel taxes by 15 percent for six months from Nov. 6 to ease the burden of rising global oil prices on households and small businesses, the finance ministry said on Wednesday, as per Hydrocarbonprocessing.

The gasoline fuel tax will drop by 111 won per litre to 635 won (USD0.5589) per litre. The diesel fuel tax will fall to 450 won a litre from the current 529 won per litre, the ministry said in a statement.

The government will also lower fuel taxes on liquefied petroleum gas (LPG) and butane by 28 won to 157 won per litre. The temporary tax cut will amount to a 2 trillion won (USD1.76 billion) reduction in tax revenue for the government over the next six months, the statement said.

Retail prices for gasoline and diesel have been rising for 16 straight weeks, according to data from the state-run Korea National Oil Corp, reflecting high global oil prices which now stand at just below USD80 per barrel.

As of Tuesday, the average retail price for gasoline and diesel was 1,690 won a litre and 1,495 won a litre respectively, according to KNOC data.

In the first nine months of 2018, demand for diesel eased 0.7 percent to 124.7 million barrels from the same period a year ago, while gasoline demand rose 1 percent to 60.2 million barrels, KNOC data showed
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Small Canadian LNG project set to go ahead in early 2019

MOSCOW (MRC) -- A small liquefied natural gas project north of Vancouver is poised to move to construction in the first quarter of 2019, adding momentum to Canada's efforts to become a significant exporter of the supercooled fuel, as per Hydrocarbonprocessing.

The C$1.6 billion (USD1.2 billion) Woodfibre LNG project, backed by Indonesian billionaire Sukanto Tanoto's RGE Group, would be Canada's second LNG project to go ahead, following the approval of the massive LNG Canada project earlier this month.

"We're hoping to move to a notice to proceed to construction in Q1 (of 2019)," Woodfibre LNG President David Keane told Reuters on Tuesday. "It will be sometime in February or March." Woodfibre LNG is a relatively small project at 2.1 million tonnes per annum (mtpa), but was long touted as the front runner to get Canadian natural gas to Asian markets, where demand for the fuel is booming. It was given the go-ahead in 2016, but then delayed as the company worked through a number of issues.

Keane said the project is nearly there - the company is just working with engineering contractor KBR Inc on reducing costs and awaiting a November decision on import tariffs on fabricated steel components, used for LNG liquefaction units.

"We've been very clear as an industry that there is no capability in Canada to build these large, complex modules," Keane said. "We feel that the federal government will be fair." Woodfibre also needs to finalize its benefit agreement with the local Squamish Nation, which Keane said has been initialed, but needs to be formally signed by council. He hopes that will be done by year end.

Once a construction decision is made, the project will be completed in roughly four years, ensuring first shipments of the supercooled fuel by 2023.

LNG Canada, which will produce some 14 mtpa further north in the town of Kitimat, British Columbia, has said it expects to be shipping fuel before 2025.
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U.N. shipping agency pushes ahead with tougher marine fuel rules

MOSCOW (MRC) -- The United Nations shipping agency pushed back this week on any phased entry for tougher marine fuel rules and further tightened regulations that will come into force in 2020, as per Reuters.

The International Maritime Organization will prohibit ships from using fuels with sulphur content above 0.5 percent from Jan. 1, 2020, compared with 3.5 percent today, unless they are equipped with so-called scrubbers to clean up sulphur emissions.

Ships found in breach of the new rules will face fines or the risk of impoundment by IMO member states. The shipping and oil-refining industries are scrambling to prepare for the shift and have made large investments to comply with the new standards since they were set in 2016.

Oil companies expect a jump in demand for cleaner distillates, mainly diesel, at the expense of fuel oil that would become largely redundant.

Last week, Washington said it backed a phase-in of the 2020 rules to protect consumers from any price spikes in heating and trucking fuels, although it did not seek a delay.

Some shipping associations together with the Bahamas, Liberia, Panama and the Marshall Islands had proposed an "experience-building phase", which gained support from Washington, leading to widespread market speculation in recent days about a possible review of the regulatory timeframe.

A discussion of their proposal in London this week at the IMO's Marine Environment Protection Committee, MEPC 73, failed to advance after the chair of the session said it was too vague. The paper's backers were told they could submit more concrete proposals at the next MEPC in May 2019 - especially focused on data collection and fuel oil quality.

That timeframe would, however, leave little time realistically before the regulations kick in for any potential review. The IMO has reiterated that there will be no delay in implementing the rules.

A U.S. Coast Guard official said on Thursday that Washington sought a "pragmatic" approach and would seek to develop proposals with like-minded countries for the May 2019 meeting. Some analysts including Rapidan Energy Group have suggested that major stakeholders including flag carriers were working to push back the global sulphur ban.

They also suggested that U.S. President Donald Trump's administration was likely to oppose the 2020 start date as it would cause a significant diesel, distillate and heating oil price spike in the winter of a U.S. presidential election year.
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LNG tankers stranded off Singapore, Malaysia as demand outlook weakens

MOSCOW (MRC) - A fleet of half a dozen tankers carrying unsold liquefied natural gas (LNG) has been floating in Singapore and Malaysian waters for up to two weeks as winter demand in Asia looks weaker than initially expected, as per Hydrocarbonprocessing.

The ships together carry around a million cubic metres of LNG, worth more than USD200 million at current spot market prices. One of them, Adam LNG, is carrying 164,000 cubic metres of LNG that originated from the Arctic Yamal project in Russia, with Refinitiv Eikon ship tracking data showing the cargo to be open "for orders".

The LNG cargoes were purchased ahead of the northern hemisphere winter season, said several traders with knowledge of the matter, declining to be named as they were not allowed to speak publicly about commercial operations. "Everyone floated cargoes last month, with a steep contango over October to November, and they now can't find homes for these floating cargoes," an LNG broker said.

Contango means prices for future delivery are higher than those for immediate dispatch, making it attractive for traders to hold on to cargoes for later sale.

Many traders were also hoping for a repeat of last winter, when LNG <LNG-AS> spiked to 2014 highs of USD11.50 per million British thermal units (mmBtu) as the top three importers, Japan, China and South Korea, scrambled to meet demand amid China's gasification programme, unusually cold weather and widespread nuclear power outages.

"Some merchants were hoping for another price bull-run this year, and hoped importers would stock up more to prevent being caught short," said one trader in Singapore.

"That's not happened - at least yet - as weather outlooks suggest a relatively mild winter, and because a lot of nuclear reactors, especially in Japan, have returned to service," he said.

Japan is expected to experience warmer-than-average weather between November and January, the country's official forecaster said this week, implying low demand for heating.
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S-Oil sees Q4 refining margins rise on seasonal demand, tight supply

MOSCOW (MRC) -- South Korea's S-Oil Corp said on Friday it expected fourth quarter refining margins to rise on higher seasonal demand and tight regional supply and with the start of its new refining and petrochemical plants supporting earnings, as per Hydrocarbonprocesing.

Singapore refining margins, the benchmark profits for Asian oil processors, rose to USD7.99 a barrel on Aug. 15, the highest since margins rebounded in July, supported by rising demand for gasoline and jet fuel. The profits from refining a barrel of benchmark Dubai crude into fuel currently stands at USd5.23 a barrel.

Asian gasoil margins hit their highest in more than three years on Wednesday, pushed higher by lower supplies in region and expectations for increased gasoil demand as consumers move to meet stricter marine fuel regulations.

"The seasonal demand growth and limited capacity expansions in Asia Pacific will further boost the refining margin," the refiner, whose top shareholder is Saudi Aramco, said in an earnings statement. The company said heating oil demand will increase refining margins as winter approaches.

S-Oil posted a 42.9 percent decline in operating profit to 316 billion won (USD277.67 million) for the July-September period, due to reduced inventory-related gains and despite improved refining margins. Operating profit was down from 553 billion won in the same period a year earlier.

The company also said its new residue fuel oil and olefin plants, known as the residue upgrading complex and olefin downstream complex (ODC), are expected to begin commercial operations in November.

The new units will churn out 405,000 tonnes per annum (TPA) of polypropylene, 300,000 TPA of propylene oxide, and 21,000 barrels per day of gasoline.

"Commercial operations of the RUC-ODC project are expected to contribute to Q4 earnings .... (their) stable operations are secured at maximum designed capacity," company treasurer Shin Kwan-bae said in a call with analysts.
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