BASF Q3 operating profit down on lower petrochemical margins

MOSCOW (MRC) -- BASF saw adjusted operating profit decline 14 percent in the third quarter on lower margins of basic petrochemicals that go into products such as insulation foams, as per Reuters.

Third-quarter earnings before interest and tax (EBIT), adjusted for one-offs, fell to 1.5 billion euros (USD1.70 billion), the German chemicals giant said on Friday, below average market estimates of 1.56 billion euros.

The company reiterated its guidance for a slight decline in EBIT before special items from the 2017 figure of 7.6 billion euros.

In October 2018, BASF and LetterOne signed a definitive transaction agreement to merge their respective oil and gas businesses in a joint venture, which will operate under the name Wintershall DEA.

Australia LNG Ltd delays Magnolia FID

MOSCOW (MRC) -- LNG Ltd said on Monday it is delaying a final decision on whether to build its U.S.-based Magnolia liquefied natural gas plant, citing problems lining up Chinese customers due to the U.S.-China trade war, as per Reuters.

The Australian-listed company is now targeting final approval for Magnolia, located in Louisiana, in the first part of 2019. "We remain confident in our ability to reach (final investment decision) on Magnolia whether or not China participates," LNG Ltd Chief Executive Officer Greg Vesey said in a tweet, noting "multiple opportunities with customers in Europe and Asia exist, and our discussions with them are proceeding well."

Development of liquefied natural gas terminals to ship the super-cooled fuel around the world has soared due to rising demand, particularly out of Asia, as countries seek more cleaner-burning energy sources as a substitute for dirtier coal.

U.S. President Donald Trump has promoted the growth of U.S. LNG exports around the world as part of his efforts for global energy dominance, but the escalating trade dispute with China has harmed those plans. LNG Ltd had planned to make a final investment decision by the end of 2018 about Magnolia, which is designed to produce 8 million tonnes of LNG per year. "We made that statement prior to the trade tensions that have manifested over the past months, which have caused headwinds for LNG transactions," Vesey said in a quarterly report.

China purchased about 103 bcf of LNG from the United States in 2017, or about 15 percent of all U.S. LNG shipped that year, but is on track to fall short of that level in 2018, according to Thomson Reuters vessel tracking and U.S. Department of Energy data.

LNG Ltd's delay underscored how China, the world's fastest-growing LNG market, has shifted its long-term LNG procurement strategies away from the United States in the last few months due in part to the trade dispute. That has had repercussions for the scale and pace for the next wave of U.S. projects, said Saul Kavonic, oil and gas researcher for Credit Suisse in Sydney. "Regardless of how long the trade dispute lasts, the overall risk profile of U.S. LNG will remain heightened in Chinese LNG buyers' eyes for some time to come," Kavonic said.

LNG Ltd shares hit a one-year low on the day, before closing down 23 percent at 41.5 Australian cents. The company is developing two plants: Magnolia, where it planned to begin exports in 2022, and Bear Head in Nova Scotia in Canada. Vesey told Reuters in May that the plans have "strictly been about marketing to China."

But that was before Beijing imposed a 10 percent tariff on U.S. LNG as the trade war escalated. Washington has imposed tariffs across the spectrum on imported Chinese goods. There are varying views on how and when the trade issues with China will be resolved, Vesey said on Monday.

"Considering that, our communications with potential Chinese offtakers remain robust with the intent to complete agreements if trade tensions abate before Magnolia is fully sold out," he said.

The United States is on track to export over 1 trillion cubic feet of gas as LNG in 2018, making the country one of the world's biggest exporters of the fuel. In 2017, the United States exported 706.4 billion cubic feet worth about USD3.3 billion.

One billion cubic feet is enough to fuel about 5 million U.S. homes for a day.

High oil prices hurt consumers, dent fuel demand

MOSCOW (MRC) -- High oil prices are hurting consumers and could also have adverse implications for producers, the executive director of the International Energy Agency (IEA) said on Tuesday, as per Hydrocarbonprocessing.

Major emerging Asian economies such as India and Indonesia have been hit hard this year by rising crude oil prices, which despite declining this month are still up by about 15 percent since the start of 2018.

Fuel import costs have been pushed up further by a slide in emerging market currencies against the dollar, denting growth and even triggering protests and government fuel price controls in India.

"Many countries' current account deficits have been affected by high oil prices," IEA chief Fatih Birol said at an energy conference in Singapore.

"There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries they're directly related to consumer prices. The second one is global economic growth momentum slowing down."

The effect of high oil prices will be compounded in Southeast Asia as demand is rising fast but production is falling, resulting in the region becoming a net importer of oil, gas and coal, Birol said.

Despite the possibility of a slowdown, Birol said the general outlook for fuel consumption was for continued growth.

While the rise of electric vehicles is expected to result in peak demand for products like diesel and gasoline within coming years, a consumption boom in products such as plastic as well as fuel demand growth from aviation have triggered large-scale refinery investment into petrochemical products and high quality products like jet fuel.

"Global oil demand will continue to grow even amid the rise of electric vehicles as they are governed by petrochemicals, aviation, among others," he said.

BHP Billiton, the world's biggest miner , which has oil and gas assets but also hopes to benefit from the demand for raw materials coming from batteries for electric vehicles (EV), also said oil demand would still grow despite the rise of EVs.

Fluor awarded EPC contract at Valero's Pembroke refinery

MOSCOW (MRC) – Fluor Corporation announced that it was awarded the engineering, procurement and construction of Valero Energy Corporation’s combined heat and power cogeneration project at its Pembroke Refinery in Wales, UK, as per Hydrocarbonprocessing.

Fluor booked the undisclosed contract value in the third quarter of 2018. "We are pleased to assist Valero with this notable project that will enhance energy efficiency and sustainability at the refinery, which is of significant importance for the economy of Wales and, more particularly, to Pembroke,” said Al Collins, president of Fluor’s Energy & Chemicals business in Europe, Africa and Middle East. “Fluor will utilize its in-depth cogeneration expertise together with previous experience of working at the Pembroke Refinery to deliver a capital-efficient project."

Fluor’s scope includes design, procurement, construction and commissioning support for the new 45 Mega Volt Amps natural gas-fired combustion turbine generator system that will supply power and steam to enhance the refinery’s energy efficiency and operations. The scope also includes substations, transformers, electrical and piping tie-ins and a fuel gas pipeline system.

The project, the first to receive planning permission as a Development of National Significance process under the Planning (Wales) Act 2015, will be executed on a cost reimbursable basis by an integrated engineering team located at Fluor’s office in Farnborough and at the Pembroke Refinery.

Fluor’s UK office is in Farnborough, Hampshire from where the company serves a wide range of industries including energy, chemicals, government, life sciences, advanced manufacturing, infrastructure, mining and power.

Philippines short-lists three company groups for LNG terminal project

MOSCOW (MRC) -- The Philippines has short-listed three different groups to build and operate its first liquefied natural gas (LNG) import terminal and hopes to nominate one by November, as per Reuters.

Short-listed companies were chosen from 18 groups that submitted proposals for the project, Alfonso Cusi told Reuters on the sidelines of the Singapore International Energy Week.

They include state-owned Philippines National Oil Company (PNOC), which is seeking a partner for the project, Cusi said, while Tokyo Gas has partnered with the Philippines' First Gen Corp.

China National Offshore Oil Corp (CNOOC) is also in the running, although it has yet to firm up a local partner, Cusi said. CNOOC has been in talks with the Philippines' Phoenix Petroleum as a partner, he added.

"Hopefully we can have a conclusion on which proposal to accept by the end of November," Cusi said. The Philippines is expected to start importing LNG to feed gas-fired power plants in Batangas province, south of the capital Manila, as domestic gas supplies from its Malampaya field are set to run out in 2024.

Besides meeting local demand, the Philippines also hopes the terminal would become an LNG trading hub for the region, Cusi said. "We are already the de-facto transhipment port for LNG to China," Cusi said, adding that large cargoes are often broken up into smaller parcels for deliveries to China via ship-to-ship transfers off the Philippines.

"We should institutionalize this before someone else does." PNOC last week formally announced it was seeking a joint-venture partner to design, build, finance, operate and maintain an LNG hub in Batangas Bay, near the gas-fired power plants supplying electricity to the country's main Luzon island.

Bidders have until Dec. 21 to submit eligibility documents to PNOC. A First Gen spokeswoman said the company has been open to taking in a partner for the LNG project, but she was not aware of any joint venture agreement or talks between First Gen and Tokyo Gas. First Gen operates four of the country's five gas-fired power plants.

Tokyo Gas declined to comment.