Energy and commodities highlights: China upstream, OPEC’s output discipline and Chevron in Kazakhstan
- 05 июля, 16:48
- The Barrel. Platts oil blog
China announced landmark reforms in upstream oil and gas policy this week, lifting restrictions on foreign investment in conventional oil and gas projects.
The city gas distribution sector is also being opened up, in a move that could attract oil majors and energy companies eager to tap into China’s growing appetite for LNG.
Chinese LNG imports were up 20% year on year in the first half of 2019, according to S&P Global Platts Analytics data. The country’s Blue Sky policy targeting air pollution is expected to continue to drive gas consumption higher.
Meanwhile, Australia is challenging Qatar for the top spot among LNG exporters, with the Australian Department of Industry, Innovation and Science projecting exports of 74.8 million mt in fiscal year 2018-19 (July to June). But the Australian LNG sector is facing political challenges, after a minor party reached a deal with the government that could lead to stricter export controls for Queensland.
In oil markets, the latest meeting of OPEC and its partners confirmed an extension of its 1.2 million b/d supply cut agreement. Oil prices dipped following the announcement, however, and later in the week growth concerns and US stock data also provided a bearish inflection.
To keep its finger on the pulse of the market, the coalition said its delegate-level Joint Technical Committee would begin meeting monthly, instead of every other month.
Separately, political tensions centered around the Middle East continued to play out when the Gibraltar authorities and the Royal Marines seized a VLCC carrying crude oil from Iran to Syria in breach of EU sanctions.
GRAPHIC OF THE WEEK
LISTEN: ASIAN NAPHTHA CRACK SPREAD REBOUNDS FROM 11-YEAR LOW
Refineries worldwide have been consuming more light sweet crude oil, resulting in an oversupply of light distillates products. In the second quarter, naphtha was the worst performer across the barrel in Asia. Editors Sue Koh and Wendy Cheong examine why the market expects naphtha cracks to remain bleak and what factors might affect prices in the second half of 2019.
Senior Kazakh officials have had exchanges with a senior Chevron executive following unrest at the giant Tengiz oil field, operated by the company’s Kazakh joint venture Tengizchevroil (TCO), although the company denied any snub by the country’s leadership.
China’s central government has battled for years to consolidate the country’s fragmented steel sector by establishing a handful of giant high-quality producers. Beijing wants the top 10 steelmakers to account for 60% of China’s steel output, before consolidating further into perhaps three or four steel groups producing more than 80 million mt/year each by 2025.
The development of a more transparent market for growing US crude exports into Europe took a further step forward this week, with the first ever trade of a delivered WTI Midland cargo in the S&P Global Platts Market on Close assessment process.
THE LAST WORD
“Thinking in terms of the next nine months, you are going to see the fundamentals moving solidly in the right direction. What I can predict is that we can see [oil] inventories going down.”
– Khalid al-Falih, Saudi Arabia’s energy minister, addressing journalists following the OPEC meeting held in Vienna July 1-2.
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