Saudi Arabia, Russia to continue voluntary oil cuts

Saudi Arabia and Russia said they were continuing voluntary oil cuts to year end as tightening supply and rising demand support oil prices, said Reuters.

The Saudi and Russian statements come hours before a ministerial monitoring panel of the OPEC+ group of leading oil producers convenes online later on Wednesday. The panel, called the Joint Ministerial Monitoring Committee, can call for a full OPEC+ meeting if warranted but sources have told Reuters it is unlikely to tweak current oil output policy.

Oil prices continued a downward trend directly following the news with Brent futures falling $1 to $89.92 a barrel but they were trading at $90.40 a barrel by 0854 GMT. OPEC+, which comprises the countries of the Organization of the Petroleum Exporting Countries (OPEC) and leading allies including Russia, has been cutting output since last year in what it says is preemptive action to maintain market stability.

The U.S. and Western allies have argued that the world needs lower prices to support economic growth and the global economy. Saudi Arabia, the OPEC de facto leader, said it would continue with its voluntary oil output cut of one million barrels per day (bpd) for the month of November and until the end of the year and that it would review the decision again next month.

The kingdom's production for November and December will be approximately 9 million bpd, the energy ministry said in a statement. "This voluntary cut decision will be reviewed next month to consider deepening the cut or increasing production," the statement said.

Saudi Arabia first implemented the additional voluntary cut in July and has been renewing it monthly. It said in September the cut would last until year end but would be reviewed on a monthly basis. Russia in August said it would reduce exports by 300,000 bpd until the end of this year. The Saudi and Russian additional voluntary cuts come on top of April cuts agreed by them and several OPEC+ producers, which extend to the end of 2024.

We remind, Private Russian oil producer Lukoil will lend Azeri state oil firm Socar $1.5 B as part of a broader deal that will allow Socar's 200,000-barrel-per-day Turkish STAR refinery to process Russian crude again. The deal will give Lukoil another customer in close proximity to Russian ports after most European refiners stopped importing its crude to comply with European Union sanctions imposed after Moscow launched what it calls a "special military operation" in Ukraine in 2022.

mrchub.com

Canadian midstream energy company Keyera said on Wednesday that its "Key Access Pipeline System" (KAPS) natural gas liquids (NGL) and condensate pipeline in Alberta province has been completed, said Ogj.

Service on the 575km KAPS has already begun. It will transport 350,000 bbl/day of NGLs and condensate from the liquids-rich Montney and Duvernay basins in northwest Alberta to Keyera's liquids processing hub at the Fort Saskatchewan petrochemicals production hub near Edmonton. Keyera has fractionation and storage facilities at Fort Saskatchewan.

"Now in service, KAPS plays a key role in positioning Alberta as an integral conduit for petrochemical and upgrading feedstock in the region and a competitive world class destination for growth and investment today and tomorrow," Keyera said.

Keyera is operating the KAPS pipeline system, which is 50% owned by infrastructure investment firm Stonepeak. Analysts at credit watchdog S&P Global said that Keyera’s ability to generate consistent cash flow would strengthen as KAPS becomes fully operational.

Given the high level of activity in the Montney and limited egress out of that area, the pipeline's contracts each have a 75% take-or-pay component, the S&P analysts said. “This has increased the company's level of contractedness, thereby continuing to improve the stability of Keyera's cash flow,” they said.

S&P Global Ratings has raised its issuer credit rating (ICR) on Keyera and its issue-level rating on the company's senior unsecured debt to “BBB” from “BBB-". In addition, it raised its rating on Keyera’s subordinated notes to “BB+” from “BB”. Meanwhile, in Canada's chemical industry Dow is due to make a final investment decision on its net-zero cracker project at Fort Saskatchewan by the end of the year.

We remind, Private Russian oil producer Lukoil will lend Azeri state oil firm Socar $1.5 B as part of a broader deal that will allow Socar's 200,000-barrel-per-day Turkish STAR refinery to process Russian crude again, three industry sources familiar with the deal said on Thursday. The deal will give Lukoil another customer in close proximity to Russian ports after most European refiners stopped importing its crude to comply with European Union sanctions imposed after Moscow launched what it calls a "special military operation" in Ukraine in 2022.

mrchub.com

Private Russian oil producer Lukoil will lend Azeri state oil firm Socar $1.5 B as part of a broader deal that will allow Socar's 200,000-barrel-per-day Turkish STAR refinery to process Russian crude again, said Reuters.

The deal will give Lukoil another customer in close proximity to Russian ports after most European refiners stopped importing its crude to comply with European Union sanctions imposed after Moscow launched what it calls a "special military operation" in Ukraine in 2022.

Turkey has not imposed sanctions on Russia and continues to import Russian oil and gas. The STAR refinery, however, had to cut Russian crude imports this summer due to complications arising from international financial restrictions on business with Moscow.

The refinery decreased imports of Urals oil earlier this year before completely suspending purchases in August-September, replacing it with Kazakhstan's KEBCO oil which is of a similar quality and still loaded from Russian ports, according to LSEG Eikon data.

STAR purchased an average of 100,000 barrels per day (bpd) of Urals in 2022 but below 50,000 bpd so far this year, LSEG data shows. Lukoil will start delivering Urals to STAR from October and is expected to supply some 100,000 bpd, equivalent to half of the plant's capacity, the sources said.

Three tankers sourced by Lukoil - Azure Celeste, Ocean Faye and Sea Fidelity - are heading to Turkey from Primorsk after each loading 100,000 tons of Urals at the end of September and early in October, LSEG data shows. The tankers are the first shipments under the new supply deal, one of the sources said.

Lukoil will also provide Socar with a $1.5 billion loan, the sources said. Socar has borrowed heavily to build STAR over the past decade. Neither Lukoil, Socar nor STAR responded to requests for comment. The sources did not know the duration of the supply deal or the loan terms.

Lukoil has been subject to some U.S. sanctions on the Russian energy sector since 2014 but has avoided the harsher measures imposed on its peers since 2022. The company's trading arm Litasco still supplies oil to its EU refineries in Bulgaria and Romania and has offices in Dubai and Geneva.

STAR, commissioned in 2018, was designed to primarily refine sour oil like Urals or Kirkuk. Since cutting imports of Russian oil, it has relied on Kazakh, West African and Iraqi oil grades, according to LSEG data.

mrchub.com

ADNOC announced it has awarded a contract, valued at more than $400 MM, to Baker Hughes, through its Nuovo Pignone International S.R.L. legal entity, for the supply of all-electric compression systems for the liquefaction of natural gas, to be powered by clean energy, for its low-carbon LNG asset in the Al Ruwais Industrial City, Al Dhafrah, Abu Dhabi, said Hydrocarbonprocessing.

The LNG trains will comprise energy efficient Baker Hughes technology, including compressors, driven by 75 MW electric motors. The Ruwais LNG plant will be the first LNG project in the Middle East and North Africa region to run on clean power, making it one of the lowest carbon intensity LNG facilities in the world.

Fatema Al Nuaimi, Executive Vice President, Downstream Business Management at ADNOC, said: “As the first clean electricity powered LNG facility in the Middle East, the Ruwais LNG project reinforces ADNOC’s leadership within the LNG industry and underscores our commitment to decarbonization, sustainability and innovation. The project aligns with ADNOC’s objectives to grow our energy portfolio with lower-carbon solutions, reinforcing our position as a reliable global supplier of natural gas and contributing to enhancing global energy security.”

The Ruwais LNG project consists of two 4.8 mtpa natural gas liquefaction trains with a total capacity of 9.6 mtpa of LNG. When completed, it will more than double ADNOC’s LNG production target capacity to meet increased global demand for natural gas.

The award of the contract underscores ADNOC’s commitment to accelerate its net zero ambition and decarbonization plans. It is an important milestone as the company builds on its legacy as a responsible global energy pioneer and doubles down on its decarbonization efforts, backed by an initial allocation of $15 billion (AED55 billion) to low-carbon solutions.

We remind, Abu Dhabi National Oil Co has increased its buyout offer for Covestro AG to around 11 billion euros (USD12.3 billion). ADNOC's latest bid values Covestro at about 57 euros per share, the person said, up from a mid-50 euro per share range. Covestro had rejected ADNOC's initial takeover proposal last month, saying the offer was too low. A Covestro spokesperson declined to comment, while ADNOC did not immediately respond to a Reuters request for comment.

mrchub.com

India's share of Russian Urals oil shipments in September declined from August amid refinery maintenance, while Turkey increased purchases due to a shortage of sour barrels in the Mediterranean, according to traders, LSEG data and Reuters calculations.

Urals, KEBCO and Siberian Light grade loadings from the ports of Primorsk, Ust-Luga and Novorossiysk in September rose to 2.1 million barrels per day (bpd) from 1.8 million bpd in August. India accounted for about 50% of September-loading Urals cargoes, down from nearly 65% in August, according to LSEG data and Reuters calculations. Most of those cargoes will arrive to Indian ports in October.

India's refiners complained about a rise in Urals prices in August and said they planned to cut buying of September-loading volumes. Autumn refinery maintenance in India also contributed to the reduction in demand. Indian purchases of September-loading Russian Urals are seen slightly above 1 million bpd compared with 1.1 million bpd in August, according to LSEG data.

The decline in Indian imports allowed Turkey to increase its purchases. Turkey's share in September-loading Urals cargoes rose to nearly 20% of the total from 12% for August-loading cargoes, according to the data. Turkey purchased about 400,000 bpd of September-loading Urals oil compared with about 200,000 bpd in August, according to LSEG data.

Turkey hasn't impose sanctions on Russia and its refineries have continued to be leading buyers of Urals oil since spring 2022. A shortage of sour barrels in the Mediterranean region due to a European Union embargo on Russian oil and a Kurdistan oil exports outage encouraged Turkish refiners to buy Urals oil, two traders in the Mediterranean market said.

Bulgaria, which is allowed to continue Russian oil imports under EU embargo terms, accounted for 8% of September supplies, little changed from its share in August, Reuters calculations showed. China's share was slightly up in September to 7% of supplies, or about 150,000 bpd, from about 5%, or just below 100,000 bpd, in August, the data showed.

The final destination of about a quarter of September-loading Urals cargoes is yet to be determined, traders said.

We remind, Private Russian oil producer Lukoil will lend Azeri state oil firm Socar $1.5 B as part of a broader deal that will allow Socar's 200,000-barrel-per-day Turkish STAR refinery to process Russian crude again, three industry sources familiar with the deal said on Thursday. The deal will give Lukoil another customer in close proximity to Russian ports after most European refiners stopped importing its crude to comply with European Union sanctions imposed after Moscow launched what it calls a "special military operation" in Ukraine in 2022.

mrchub.com