Russia fully enforces its oil output cuts

Russian is fulfilling its oil output cut obligations, Russian Deputy Prime Minister Alexander Novak told Rossiya-24 TV channel on Sunday following a meeting of the OPEC+ group of leading oil producers, said Hydrocarbonprocessing.

OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, on Sunday after seven hours of talks decided to reduce overall production targets from 2024 by a further total of 1.4 million barrels per day (bpd).

"The result of the discussions was the extension of the deal until the end of 2024," Novak said. He said that total production cuts, which OPEC+ has undertaken since October 2022, reached 3.66 million bpd to ensure stability on the global oil market.

However, many of these reductions will not be real as the group lowered the targets for Russia, Nigeria and Angola to bring them into line with their actual current production levels. Separately, Novak's office said that Russia will tweak its crude oil production level to 9.828 million bpd from Jan.1 and taking into account earlier announced additional voluntary reduction of 500,000 bpd, its output target will stand at around 9.3 million bpd.

Novak also said the market is more or less balanced, and demand is rising, although the group would monitor interest rate decisions by global central banks, including the U.S. Federal Reserve, for clues on the economy that could influence fuel consumption.

"That's the indicator (interest rate decisions), which is having an impact on investments, on demand for oil and oil products," he said. Novak also said that OPEC+ could adjust its decisions if necessary.

He said the data from secondary sources related to the OPEC+ voluntary cuts starting from May will emerge in the middle of this month.

We remind, Russia agreed to extend its existing 0.5 million bpd curbs into 2024, Angola and Nigeria agreed to give up their unused quotas. The United Arab Emirates was allowed to boost its production quota by 0.2 million bpd to 3.2 million from 2024.

mrchub.com

Ports in China's Shandong province are demanding more detailed information about oil tankers that are more than 15 years old that call at their terminals, sources with knowledge of the matter said, potentially delaying the unloading of crude shipments in the world's biggest oil importer, said Hydrocarbonprocessing.

Last week, the maritime safety administrations at Qingdao and Rizhao, which covers the oil terminals at the port of Lanshan, notified shipping agencies to submit details on their ships' age, where a ship is flagged, insurance coverage, and any instances where the ship changed its name and ownership in the past 36 months as well as past inspection records, said a shipping agent and two traders who handle Chinese oil imports.

The sources declined to be named due to the sensitivity of the matter. The shipping agent said the details are all new requirements that the safety administrations did not ask for before. The new documentation must be submitted five days before a vessel arrives, the sources said.

Qingdao and Lanshan are two of the top five biggest Chinese oil importing ports, according to data from Kpler. Delays at these terminals may cause disruptions to Chinese refineries that are expected to ramp up fuel output as the country recovers from the COVID restrictions of 2022. Shandong is home to numerous independent refineries known as teapots that account for up to one-fifth of China's processing capacity.

The Shandong Maritime Safety Administration told Reuters that it had not set any special inspection requirements for tankers beyond current regulations and international conventions. The ports of Qingdao and Rizhao did not respond to requests for comment sent on Friday.

Port authorities could detain ships for days to rectify any issues, prompting shippers to divert cargoes to other Chinese ports, the sources said.

We remind, Russia agreed to extend its existing 0.5 million bpd curbs into 2024, Angola and Nigeria agreed to give up their unused quotas. The United Arab Emirates was allowed to boost its production quota by 0.2 million bpd to 3.2 million from 2024.

mrchub.com

Saudi Arabia has crafted a complex OPEC+ deal with a view to punishing investors that have bet on falling oil prices but could inadvertently lend long-term support to the rival U.S. energy industry, OPEC+ insiders and market watchers said, said Hydrocarbonprocessing.

On Sunday, Saudi Arabia pledged to cut its oil output by 1 million barrels per day (bpd), or 10%, in July on top of existing output cuts from OPEC and its allies. With the new Saudi reduction, the group has agreed to take some 4.6 million bpd off the market in July, equivalent to 4.6% of global demand of 100 million bpd.

OPEC+ also agreed on Sunday to extend the group's existing supply cuts of 3.66 million bpd into 2024.

In response, oil prices rose nearly USD2 a barrel early on Monday to USD78 per barrel . Analysts said the gains are only the beginning and the cuts will steadily deepen a global supply shortfall that could push prices towards USD100 a barrel.

"This market needs stabilization," Saudi Energy Minister Prince Abdulaziz bin Salman said on Sunday, calling his surprise decision to deepen Saudi production cuts "the icing on the cake" for the deal.

Prince Abdulaziz has repeatedly expressed anger and pledged to punish short-sellers of oil that bet on price falls. Prices had fallen in recent weeks to close to USD70 per barrel from over USD130 a year ago when Russia invaded Ukraine.

"The Saudi move was driven by the desire to deter short-sellers from pushing the price any lower," a source familiar with OPEC+ strategy said on condition of anonymity.

"The size of (the Saudi) reduction is credible and should at minimum limit the downside pressure on prices for the rest of the year," Natasha Kaneva at JP Morgan said. Unexpected price rises force short-sellers to close positions at a loss.

OPEC says it does not have any oil price target and its policy decisions are to prevent volatility by balancing supply and demand.

We remind, Russia agreed to extend its existing 0.5 million bpd curbs into 2024, Angola and Nigeria agreed to give up their unused quotas. The United Arab Emirates was allowed to boost its production quota by 0.2 million bpd to 3.2 million from 2024.

mrchub.com

Kazakhstan cut its oil production (excluding gas condensate) by 3% on a daily basis in May compared to April to 1.55 million barrels per day (bpd), Reuters calculations based on data from two sources familiar with preliminary data showed on Monday, said Hydrocarbonprocessing.

Oil production in Kazakhstan in May was in line with the country's quota under the OPEC+ agreement, also taking into account a voluntary reduction of 78,000 bpd. The country’s energy ministry did not immediately reply to a Reuters request for comment.

The decline in Kazakhstan’s oil production in May compared to April was mainly due to output reduction at large oil fields: at Kashagan, by 8% due to the accumulation of hydrogen sulfide in two wells; at Karachaganak, by 6%; at Tengiz, by 1%; and at the fields of Kazmunaigaz, by 4%, according to sources familiar with the data.

Scheduled maintenances at large oil and gas fields in Kazakhstan will be held this year in August, at Tengiz, and in October, at Karachaganak.

We remind, Sinopec and Kazakh state-owned oil and gas company KazMunayGaz have agreed key terms for a potential investment in a polyethylene plant in Kazakhstan's western Atyrau region. A final decision on the proposed investment will be made in 2024, the statement said. The agreement was signed on the sidelines of the ongoing China-Central Asia Summit in Xian in China's Shaanxi province, where China's president Xi Jinping is meeting with the leaders of five ex-Soviet countries to discuss enhanced cooperation in a range of fields, including energy.

mrchub.com

Polymer Resources Ltd., a U.S. compounder of high-quality engineering resins, announced the completion of the expansion and enhancement of its compounding facility in Rochester, New York, said Manufacturing.

To meet customers’ growing needs for engineering resins, the company upgraded an existing building on its campus to support a 40% increase in overall compounding capacity. The updated facility also features increased grinding and shredding capacity for recycling plastic waste to support circularity and sustainability.

Furthermore, its floorplan, new safety features and amenities are designed to provide a comfortable and efficient work environment for employees, whose numbers are expected to increase by double digits in the coming years.

“The updated facility will help us advance sustainability through plastic waste collection and recycling," Polymer Resources President and COO Scott Anderson said. "We are committed to helping our customers reach their production and sustainability goals, as well as meeting our own sustainability goals, and this new facility positions us to achieve those objectives.”

The project, which was completed in just over a year, expanded the footprint of the compounding facility from a total of 35,000 square feet, previously divided between two buildings, to 60,000 square feet in one building.

This change offers more space for compounding and grinding operations, storage, a laboratory and offices, and it improves process efficiency and streamlines workflow. Further, the Rochester site offers Polymer Resources an opportunity to add up to a total of 100,000 square feet on to the building.

We remind, PureCycle Technologies Inc.'s flagship polypropylene recycling facility in Ironton, Ohio, is "days away" from beginning the start-up phase of commercial pellet production. Orlando, Fla.-based PureCycle experienced a series of delays on the much-anticipated Ironton plant, which is expected to create 80-100 jobs and could end up costing as much as $361 million. Now, the first delivery of solvent needed for the firm's recycling process has been received. PureCycle next will make pellets from virgin PP resin and then will add post-industrial and post-consumer PP into the purification process to make recycled resin pellets for sale and distribution to customers.

mrchub.com