THE MONTH IN BRIEF: Output deal falls apart, Libyan deal survives and refinery deals galore

• Date: 01 November 2016
• Published date: 01 November 2016
• DOI: http://doi.org/10.1111/oet.12435

THE MONTH IN BRIEF

is section summarizes downstream developments of the previous month. Exploration & Production are covered in

“Upstream Review”.

Output deal falls apart, Libyan deal survives and renery deals galore

Crude oil prices uctuated in response to prognosti-

cationsofwhatanassortmentofoilministersmeeting

underOPEC’sauspicesinViennaonOctober28and29

mightormightnotdooveroilproductioninaneort

to raise oil prices. e main eect on oil prices came

from the anticipation of what might happen rather than

theeventitself.InthersttendaysofOctober,Brent

prompt futures climbed by $2.25-$53.14/bbl before

gradually easing as the expectations of signicant cuts

in output began to wane. In the end, ministers from

OPEC and non-OPEC countries, includi ng Russia, Mex-

ico,andOman,didreachagreement:toholdanother

meeting on the same subject in Vienna in November.

Brent futures duly continued their downward journey,

ending the month $4.84 below the month’s high, at

$48.30/bbl. Meanwhile, output from Libya, Nigeria,

and Iran increased, and Iraq rearmed its intention to

increase its production by 8% to 5 mn bpd by the end

of 2016.

A deal with various militant groups to return control

of oil export terminals they controlled to the National

Oil Corporation (NOC) continue d to hold during

October, allowing the reopening of the Zueitina and

al-Sidra oil terminals; although the third major terminal

at Ras Lanuf remained closed pending the repair of

facilities damaged during earlier ghting. Oil produc-

tion rose as a result to nearly 600,000 bpd, more than

twice its level before the agreement, and NOC forecast

a further increase of 300,000 bpd before the end of the

year. Nigerian output went up by nearly 0.4 mn bpd

compared with its August level, to 1.9 mn bpd, but

some 0.5 mn bpd remained shut-in because of attacks

on infrastructure, including one in October on the

Escravos oshore exp ort pipeline and another on a

line serving the Forcados terminal. e Nigerian gov-

ernment led a suit against Shell, alleging that it had

underdeclared oil shipments in 2013.

IransignedadealtosupplyHungarywith1mnbbl

ofcrudeoilandbegantalkstoselloiltoBosnia,aspart

of a continuing drive to exp ort more oil to Europe. e

National Iranian Oil Company said it wou ld increase

exportsby0.3mnbpdto2.5mnbpdbytheendofthe

year and that production wou ld soon reach 4.0 mn bpd:

just 0.1 mn bpd below its presanctions level. Kaza-

khstan’s Kashagan eld began producing at 90,000 bpd.

e intention is to export the crude via Russia’s Black

Sea terminal at Novorossiisk and Ust-Luga on the

Baltic. Production is due to rise to 370,000 bpd in 2017.

Belarus withdrew a threat to inc rease transit fees for

Russian oil that could have interrupted 1.3mn bpd of

Russian exports to Germany and Eastern Europe aer

the two countries settled a separate dispute over the

price Belarus pays for Russian gas.

e British government was accused of subsidiz-

ingwhatwasdescribedas“dirtydieselpower”[1]by

commissioning a large number of diesel generators

to help bridge the expected gap between supply and

demand resulting from the failure of su ccessive govern -

ments to agree on how to replace coal-red generating

capacitythatisduetoberetiredbecauseofEUemissions

directives.

Saudi Aramco said it wanted to double its rening

capacity over the nextten years. It also agreed to increase

the volume of storage leased in Okinawa in support of

itseortstosellmorecrudeoilinAsia.Japan’sTaiyoOil

agreed to buy the 100,000 bpd Nansei Seikyu renery in

Okinawa from Petrobras, with the aim of using it as a

storage operation. Rosne joined Tragura in purchas-

ing a 98% shareholding in Essar Oil, giving them access

to the 400,000 bpd Vadinar renery in Gujarat. Indian

Oil Corporation announced plans to rais e the capacity

of its Panipatrener y by200,000 bpd to 500,000 bpd e

Indian government approved plans by BP to establish a

chainofpetrolstationsinIndiaandalsoagreedtohelp

Sri Lanka build a 100,000 bpd oil renery in Trincoma-

lee and to expand its existing 50,000 bpd Sapugaskanda

renery. Qatargas commissioneda 146,000 bpd conden-

sate splitter at Ras Laan.

Reference

1. e Daily Telegraph, October 18, 2016.

© 2016 John Wiley& Sons Ltd