Delays at Abu Dhabi refinery expansionViewPlans to double capacity at Abu Dhabi’s Ruwais refinery have been subject to construction delays, holding up the complex’s start-up until late 2014, almost a year later than originally planned. The project is expected to add 417,000 bpd of refining capacity to the site, which already processes 400,000 bpd 250km west of the capital of the UAE. New products from the Ruwais refinery are not expected to hit the market until 2015 according to reports.
Infrastructure projects in Mozambique to lift coal export capacity the following yearsViewCoal export development in Mozambique has been growing the past years, since coal exports from the country stood at 1, 3.3 and 6.3 million tonnes respectively in 2011, 2012 and 2013. Export capacity is set to grow this year according to the Transport and Communications Minister of Mozambique to over 22 million tonnes of coal, of which 18 million tonnes will be coal mined in Tete province. The Minister also added that until mid 2015 the Sena railroad will be operational and able to carry 30 million tonnes. Furthermore, this week Vale announced new plans for projects in Mozambique. Vale owns coal mines at Moatize in Tete province, with a current production capacity of 11 million tonnes. Vale plans to lift capacity to 22 million tonnes per year by the second half of 2015. Vale on the other hand is also working to build a new railway line and a port, namely the Nacala Corridor that should be completed around the second half of 2014. Additionally, earlier in April an Indian company, Essar Ports, announced that it plans to invest into a coal terminal in Mozambique with initial capacity of 10 million tonnes per annum. What we would expect with all these developments and projects taking place in the country would be to see Mozambique lifting coal exports also this year.
Libya loads first Al-Hariga crudeViewAccording to Reuters, one million barrels of Libyan crude are scheduled to be loaded onto a tanker at the Al-Hariga terminal to be discharged in Italy, following an eight month occupation of the port by protesters. The Libyan National Oil Corporation lifted “force majeure” on the port last week after a deal between the government and federalist rebels was reached. The country’s pre-2011 export capacity was near 1.3 million bpd, however disruptions and blockades reduced exports by 700,000 bpd.
The market remains confidentViewDespite the recent depressed freight rates and the lower economic growth figure of China (7.4% YoY GDP growth in Q1 this year), some market players have shown their solid confidence on the outlook of the dry market. On the cargo side, BHP has lifted its full year iron ore production guidance by 5 million tonnes to 217 million this year, while Rio Tinto is hoping to increase its annual production from 266 million tonnes last year to 295 million this year. Regarding the vessel chartering side, the Baltic Exchange said that one Owner hired one Capesize vessel for short term period at $24,000 per day while one Supramax got chartered out for 4-6 months at $14,000 per day. All of the above can show that the current bearish conditions on the demand side of the dry market will be short-lived.
Canadian crude production to hit 3.9 million bpd in 2015ViewAccording to the Canadian Association of Petroleum Producers, Canada’s total crude oil output is expected to increase by over 500,000 bpd to 3.9 million bpd by 2015, mostly on the back of new in-situ oil sands developments. Oil sands in Alberta alone will account for approximately 2.3 million bpd of next year’s production, and conventional light from Alberta should follow with close to 1.4 million bpd. The bulk of increased production should go towards the U.S. by rail as does the majority of current output, however producers are targeting more efficient access to eastern Canadian refineries and west Canadian export terminals by 2018, to gain exposure to Asian and European markets.
Soybean demand to slow during the second half of the current marketing yearViewSoybean exports are likely to slow for the second half of the current marketing year (April to September 2014), given the higher export number that was achieved during the first half of the marketing year. Combined exports from the US, Brazil and Argentina from October 2013 to March 2014 stood at around 50 million tonnes compared to 36.8 million tonnes the same period the previous marketing year. The USDA has estimated that soybean exports during the MY 2013/14 for the above mentioned countries will be around 96.2 million tonnes, making remaining soybean exports from those three countries to be almost at 46 million tonnes. However, the market expects those exports to stand around 45 million tonnes, mainly due to the higher import rate of soybeans that China exhibited the past months that will actually drive soybean demand during the next months.
Japan’s record coal consumption in MarchViewJapan consumed 5.35 million tonnes of coal last month, which is the highest level for month of March. In total, the top 10 utilities in Japan burned 59.93 million tonnes of coal during 2013/14 (Apr-Mar), which is 19% higher than 2012/13. Due to the closure of its nuclear reactors, Japan has been heavily increasing its dependence on the fossil fuels. It is said that currently around 90% of this country’s energy is generated by fossil fuels and this level is likely to remain unchanged in long term. A new energy plan approved by Japan’s cabinet last Friday said that coal and nuclear are important long term electricity sources for Japan, without setting clear targets for renewable energy. Japan is likely to move back to its traditional sources for energy generation.
U.S. Oil Reserves at highest since 1976ViewAccording to the Energy Information Administration, proven U.S. oil reserves increased 15.4% in 2012 to 33 billion barrels, their highest level in over thirty years. The largest discoveries in recent years have come from Texas, North Dakota and Oklahoma, although Texas led by a considerable margin with 3.0 billion barrels in discoveries. Even though U.S. oil reserves are at their highest in decades stimulating hopes of energy independence, the nation still stands outside of the world’s top 10 reserve holders. The five largest reserve holders in the world combined hold over 1 trillion barrels, and Russia at the 8th spot currently holds approximately 87 billion barrels.
Weekly Oil Price ReviewViewThis week saw a tightening of the Brent-WTI spread, starting on Monday with decreases in both Brent and WTI of $0.90/bbl and $0.70/bbl following the largest three-day drop in the S&P500 in two months and the end of blockades in Libyan export terminals. Both Brent and WTI crude futures rose on Tuesday on decreased inventories forecasts and a weak US dollar to $107.67/bbl and $102.71/bbl respectively, Brent’s premium narrowed to $5.11/bbl. Wednesday brought new momentum to the market with negative news from Eastern Europe and a decrease in gasoline inventories, WTI crude rose by $1.04/bbl and brought the discount to Brent to $4.38/bbl. Finally, weak economic data from China and a lifted “Force Majeure” in Libya triggered losses for both Brent and WTI on Thursday to $107.45/bbl and $103.40/bbl respectively. Between Monday and Thursday, Brent rose from $106.72/bbl to $107.46/bbl, WTI rose from $101.14/bbl to $103.40/bbl, and the spread between both dropped from $5.58/bbl to $4.06/bbl, the lowest since September 2013.
China shows growth of crude importsViewAccording to the Chinese General Administration of Customs, the nation’s imports increased by just under 1% year-on-year in March to 5.5 million bpd, although the figures do also show an 8.8% decrease from February’s average intake of 6.03 million bpd. Nevertheless, China’s crude imports did rise 8.35% year-on-year during the first quarter of the year to an average of 6.09 million bpd. On oil products, China has typically been a net importer, however the trend reversed in March and the country became a net exporter for the first month since January 2011.