All posts tagged downstream


ExxonMobil to Sell CNG in its Fuel Stations in Egypt

Gastec and Cargas, two Egyptian government owned gas suppliers, have signed a cooperation protocol for adding facilities to supply natural gas inside ExxonMobil fuel stations in the country.

The three parties will start the first phase of establishing facilities for supplying cars with compressed natural gas (CNG) in an average of 50 stations, followed by another phase targeting ExxonMobil stations across Egypt, according to the agreement.

By getting ExxonMobil to include CNG supply, Egypt is involving a key fuel retailer in its plan to increase the usage of natural gas in the country.

ExxonMobil is one of the biggest fuel retailers in Egypt, with more than 350 service stations and more than 25 convenience stores, christened On the Run.

The company claims to be the market leader in petroleum product technology in North Africa’s largest eonomy, offering its clients “highly recognized lubricants, industrial greases and expert lubrication programmes and services”, and now, at the behest of the government, it has to include CNG.

In what it calls the natural gas transition, the government is setting up a financing programme through the country’s banks to extend $77Million (or EGP 1.2Billion) in low-interest loans for car owners to convert their vehicles to run on dual-fuel engines; see 150,000 cabs and minibuses outfitted with dual-fuel engines over the course of three years and set up infrastructure in seven governorates to accommodate engines running on natural gas in the first phase, with the remainder of the programme to be expanded to the rest of the country.

 

 


Kenyans Entitled to “Reverse Subsidy” on Petroleum Products

Diesel and gasoline prices have risen sharply in Kenya’s filling stations for the month of March 2021, despite the country having saved money to mitigate the spike in the cost of crude oil.

The Kenyan government increased the levy on petroleum products as pump prices dropped last year. The Petroleum Development Levy jumped from $.04 (Sh5.40) a litre in July from $.003 (Sh0.40), representing a 1,250% hike.

But the country’s plan to “pay back” in form of lower product prices, once crude oil prices reach $50 per barrel, has been scuttled by a lack of legislation.

The government collected over $91Million in the course of the levying over the last seven months.

But now that crude oil prices have soared way above $50, even breaching $70, a legal hitch is holding up the implementation of the fuel subsidy for which the levy was imposed.

Instead of product prices to remain flat, or even drop, despite the robust rise in crude oil prices, diesel prices in Nairobi rose by $.05 (Sh5.51) a litre to $0.92 (Sh101.91)—the highest since February 2020. Gasoline prices rose $.07 (Sh8.09) to $1.05 (Sh115.18) per litre, the highest mark since July 2019, putting pressure on transport costs and inflation.

The subsidy was excluded in the determination of gasoline and diesel prices for the month of March 2021, announced by Energy and Petroleum Regulatory Authority (EPRA) in late February after a monthly review based on the average price of crude oil in February.

Kenyans were not expected to bear costs of diesel prices above $50 a barrel because they had saved for the high cost in form of the levy.

The country’s motorists were to start enjoying a form of “reversed subsidy”, but EPRA says that “ the regulations to manage the subsidy were not yet in place”, so the agency simply raised pump prices based on the February 2021 crude oil average cost of $55.27.

Respite is expected to come in April. “The regulations to operationalise the levy are being developed in order to set up structures on how the fund will be managed,” EPRA says in a statement.

Kenyans use diesel extensively as transport fuel and for power generation.

The Attorney General’s office is expected to approve new regulations to use the fund accrued from the levy to rein in prices of petroleum products.

 


Siemens appoints Dalia Shoukry as CFO in Egypt, its Biggest African Market

Siemens has appointed Dalia Shoukry as CFO in Egypt, effective immediately.

Shoukry has more than two decades of experience in financial roles covering the Middle East, Europe, and Africa.

Egypt is Siemens’ largest market in Africa and one of its biggest in the world. Between 2016 and 2019, under contract by the government, the German engineering firm built three combined cycle gas to power plants with total capacity of 14,400MW in Egypt. In December 2020, Siemens was awarded, by the Egyptian Electricity Transmission Company (EETC), the contract to build the new national energy control centre, in the country’s New Administrative Capital (NAC), still under construction, in the middle of the desert, some 45 kilometres east of Cairo.

Siemens is currently in discussions, with the Egyptian Ministry of Power nd Renewable Energy,  for a 500MW capacity Wind Farm in the country, under a Build, Operate and Transfer system.

All of which means that Ms. Shoukry has her job cut out.

Prior to Siemens, she was the international finance director AstraZeneca, the pharmaceutical giant.

She earned a degree in accounting from Ain Shams University. “We are very happy to welcome Dalia to our team in Egypt. Financing is a crucial component of our business, as it not only defines, manages, and oversees all budgets, but it also monitors the performance and ensures the financial health and stability of Siemens Egypt,” said Mostafa El-Bagoury, CEOof  Siemens Egypt.

Siemens has been active in Egypt ever since its founder, Werner von Siemens, laid a communications cable through the Red Sea in 1859 to link Suez and Aden..


VFuels Wins the Contract to Build the Processing Units of the Cabinda Refinery

By Foluso Ogunsan

VFuels, the American refinery constructor, will be fabricating, constructing and installing the Inside Battery Limits (Processing Units) of the Cabinda Refinery in Angola.

The contract is in the making.

Construction is expected to take 18 months. The processing units include the Crude Distilation Unit (CDU) and Merox (acronym for Mercaptan Oxidation).

VFuels constructed the ISBL of the Waltersmith Refinery in Ibigwe, in the east of Nigeria.

United Shine EPC Consortium is the EPC contractor mandated by the Angolan government to Build, Own and Operate the Refinery, after it won a keenly contested bid to build the facility. It will hold 90% in the facility, in partnership with the state hydrocarbon company Sonangol, whose subsidiary -Sonangol Refinación – Sonaref SA holds 10% equity.

The Cabinda Refinery is planned to process 60,000Barrels of Oil Per Day in two phases, with 30,000BOPD in each phase. The first phase will output Diesel, Kerosene, Heavy Fuel Oil-HFO and Naphtha, without Gasoline. In the second phase, Gasoline production will be introduced, in addition to the entire product line of the first phase.


Nigeria Caves in, Returns to Subsidy of Gasoline Consumption

By the Editorial Board of Africa Oil+Gas Report

The Nigerian government has reneged on its decision to remove subsidy on gasoline consumption. Following from stringent complaints by the country’s organized labour, the government ruled that the pump price of the product, as of December 8, 2020, which was calculated based on market forces, be reviewed downwards.

The announcement effectively reversed a policy that was informally announced with fanfare by the NNPC in early April 2020, and confirmed the worst expectations of avid callers of petrol price deregulation. The declaration of Chris Ngige, Minister of Labour and Employment, that the Nigerian government had “reduced the pump price of premium motor spirit otherwise known as petrol from ₦168 per litre to 162.44 per litre effective from December 14, 2020”, is a major reversal of a victory that the proponents of reforms in the pricing of energy, thought they had won. The government’s statement, ordering a reduction in price, by fiat, undermines any goal of plugging the Two Trillion Naira annual revenue hole that gasoline subsidy had become.

It also increases the risk profile of, any investment in the gasoline part of the hydrocarbon value chain which had been based on the promise, last April, that “subsidy of gasoline prices was gone forever”.

The April 2020 announcement of subsidy removal had come at a time of abysmally low crude oil prices, so that market fundamentals simply led to a reduction in pump prices at the time. As crude oil price is directly correlatable to pump price of gasoline, it had always been a point of argument, that the government might not be able to sustain the subsidy removal whenever crude oil prices moved to higher grounds. This is what has been proven with Mr. Ngige’s declaration.

In the unfortunate case of Nigeria, at the moment, gasoline is imported, so the landing cost is partly determined by the Naira -Dollar exchange, which has, in the past one month, worsened for the Naira. That has meant that even if crude oil prices had not increased, the pump price of gasoline would have kept increasing-if subsidy removal was maintained-as a result of downward pressure on the local currency. But on top of the foreign exchange crisis, an upward movement of crude oil prices has now crept in, ensuring that market-determine gasoline price is moving skywards. With an artificial cap of pump price of gasoline at ₦162.44, and the government lacking courage to move away from price control, Nigeria is unlikely, any time soon, to adjust to whatever prices are dictated by the market, especially now that crude oil prices are likely to keep trending up, even if modestly.

This means that the chronically indebted petro state will open another file in its growing debt profile; it will have to find a way of paying the subsidy it has now introduced by this cap in price.

It is not the most optimal way for the country to manage its revenue at this point in time.


Cameroon Makes Steady Returns from Crude Export Pipeline

Cameroon received $57Million (or XAF30.71Billion) as transit fees from January 1 to October31, 2020 on the Chad –Cameroon oil pipeline.

The 1,070 kilometre evacuation facility, which pumps crude oil from three fields in the southwest of landlocked Chad to a floating facility 11 km off the Cameroon coast town of Kribi, has been delivering returns to Cameroon since first oil was achieved in 2003.

Cameroon’s Pipeline Steering and Monitoring Committee (PSMC), reports that the revenue is up by 2.5% year-on-year. Over the same period in 2019, the country collected $55Million (XAF29.97Billion) as transit fees.

PSMC reports that 39.91Million barrels of crude oil were transported from the Komé-Kribi terminal in southern Cameroon in the first 10 months of the 2020 fiscal year, compared with 38.79Million barrels during the same period in 2019. This represents an increase of 3%.  

“This improvement is the result of increased production from new shippers in Chad, namely PétroChad Mangara, China International Petroleum Company Inc. Chad and Overseas Private Investment Corporation.

The construction of the pipeline was led by ExxonMobil in the early 200s. But the American major has since exited Chad. 

 


South African Criminals Mimic Nigerian Oil Pipeline Vandals

South African criminal gangs have begun to do what Nigerian vandals have been doing for three decades.

They drill holes in pipelines and siphon fuels.

Organised syndicates stole 10Million litres of fuel in the past year in South Africa, according to a report by the Sunday Times of Johannesburg. They siphoned off fuel, in some cases into their own tankers – that are valued at around $60Million (or R1Billion) per year.

The gangs achieved this by targeting pieces of Transnet’s 3,800km underground pipelines, which transport petrol, diesel, gas, crude oil, and aviation fuel across the country.

Transnet is S.A’s state-owned logistics company. It runs the rail system; it operates the ports and builds and manages the petroleum pipeline system in Africa’s most industrialised economy.

For close watchers of the Nigerian oil industry, the petroleum theft story from elsewhere feels eerily familiar. Crude oil theft in Nigeria rose steadily in the ten years from 2007 and 2017 and peaked between 2011 and 2014; with some estimates indicating that up to $15.9Billion was lost in 2014 alone. It has grown from a localised, small scale activity into a multi-million-dollar illegal industry with many complicit stakeholders. But crude oil theft in Nigeria is different from petroleum product theft, which is just about everywhere along the state hydrocarbon company NNPC’s pipeline right of way. In Nigeria, petroleum product theft involves more than criminal gangs. It is routine.

South Africa’s Trasnet’s network of pipelines pumped 17,825 Million Metric Tonnes of products in 2019.

To put in context, Transnet’s pipeline revenue increased by 17.2% to $319Million (R5.3Billion) in 2019 (2018: $271Million (or R4,5Billion)), due mainly to the regulatory agency’s decision to increase the 2018/19 tariff for petroleum transportation. This means that the value of the theft is around 20% of the revenue accruing to the pipelines

The Sunday Times report notes, exasperatedly: “So brazen are the thieves, who have their own tanker trucks to transport the stolen product that in one case they reacted a shack on a farm where a pipeline passes and punched a hole into it to help themselves”

Transnet says it is working with the Directorate for Priority Crime Investigation (“Hawks”), National Crime Intelligence and SAPS and that the effort is “generating positive results with a number of breakthroughs in the form of arrests as well as the impounding of vehicles and fuel tankers, being recorded”.

The thefts are not good for branding for Transnet, which fancies itself as Positioning Pipelines as an international best-in-class pipeline operator and offering subject matter expertise in the pipeline arena

Its also bad at a time when Transnet is investing in more infrastructure to take advantage of the deliveries from the pipelines. The company says in its report that it invested $5.7Million (R95Million) last year in firefighting upgrades at Pipelines to ensure stringent compliance to safety standards and regulations; and $5.9Million (R99Million) IN the multi-product pipeline towards the construction of tanks.

Another reason to be worried about petroleum product theft: last year, the National Energy Regulator of South Africa (NERSA) increased the Pipelines’ allowable revenue (AR) by 7.69% for the

2020 financial year. This translates into an 11% increase in the Durban to Alrode tariff for the 2020 financial year.

 


Recovery of US Gasoline Demand Stalls..Will Affect Crude Prices – IHS Markit

Demand fell back during last full week of August resulting in volumes for the month down 18% compared to last year

The recovery in U.S. gasoline consumption has plateaued as the summer driving season comes to an end and the school year begins for wide swaths of the country.

Latest data by OPIS, an IHS Markit (NYSE: INFO) company shows that demand actually fell 1.9% during the last full week of August from the previous week. The four-week rolling average for the period ending August 29th now shows demand resting at 18.2% below prior year levels.

U.S. gasoline sales had improved rapidly from May to early July following the collapse in early April that came with the national shutdown, when sales were 50% below prior year levels. But the recovery had begun to sputter even before demand slipped backwards in that final week of August.

“The plateauing in demand is a symptom of the continuing aggressiveness of the coronavirus and is telling us that it will take longer to get back to normal,” said Daniel Yergin, vice chairman, IHS Markit and author of The New Map.

The most recent OPIS survey now suggests that the post-COVID peak for U.S. volumes occurred during the week ending August 15th at 7.844 million barrels per day—15.4% below prior year levels.

The coming months typically bring a seasonal reduction in demand from the high points of the summer driving season. For the years 2017-2019 the average drop in U.S. gasoline demand from August to October has been on the order of 5 to 10%.

“Aside from the potential for a short-lived bump in demand from the Labor Day weekend, history suggests that the end of the U.S. driving season inevitably brings lower demand for gasoline thanks to shorter days, less vacations and more inclement weather,” said Fred Rozell, president of OPIS. “Now that those prime driving days are behind us, we are likely to settle into a prolonged pause in the demand recovery.”

OPIS DemandPro tracks actual weekly same-store gasoline consumption volumes at over 15,000 stations, aggregated on a national, regional and state level. This allows users to track and benchmark industry trends for overall retail gasoline sales.

The OPIS survey—tracking actual gallons out of retail stations—shows greater demand losses than recent figures reported by the Energy Information Administration (EIA) on account of different methodology, that EIA measures movement of gasoline from primary stocks rather than actual consumption at stations.

The latest OPIS report for the week of August 29th shows demand losses in every portion of the country over the prior year period.

  • The Mid-Continent region posted the most moderate decline, down 17.44%
  • The Southeast registered the sharpest declines, down 27.1%, but that was due to big volumes last year due to pre-hurricane buying. Florida showed an even larger year-on-year differential of 35% for the same reason.
  • The Pacific Coast was off 24.4%. Year-on-year through-puts in the region never got better than 20% off from 2019 levels.
  • The Northeast had seen its year-on-year consumption differential whittle down to within 16% of 2019 levels, but the past two weeks were weaker, and the gap widened back to 20% this past week.

“The data points to a challenging environment for refiners and marketers in the remainder of 2020,” Rozell said. “Cheap gas prices relative to the past 16 years will help curb some of the demand destruction, but retailers will have to adjust to shifting habits as consumers likely make fewer visits to traditional stations for fill-ups in favor of more ‘aggregated trips’ to supermarkets and big boxes chains that also sell fuel.”

OPIS DemandPro updates gasoline retail sales every week.

 


NCDMB Invests in Energy Park, Oil Blending Plant

The Nigerian Content Development and Monitoring Board (NCDMB) has signed equity investment agreements with two companies-Duport Midstream Company for the establishment of an Energy Park in Egbokor, in the country’s midwest and Eraskon Nigeria Limited, for a lubricating oils blending plant in Gbarain, in Nigeria’s south central east.

The planned Energy Park comprises a 2,500BPD modular refinery, as well as a thirty million standard cubic feet of gas a day (30MMscf/d) gas processing facility, which will include a CNG facility and 2MW power plant.

The lubricating oils’ blending plant will have the capacity to produce 45,000litres per day and enhance the availability of engine oils, transmission fluids, grease and other products.

Simbi Wabote, Executive Secretary NCDMB, explained that the investments were part of the approvals granted recently by the Board’s Governing Council chaired by Timipre Sylva, Minister of State for Petroleum Resources, He clarified that the investments were coming under the Board’s commercial ventures programme and were in sync with the NCDMB’s vision to serve as a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors.

The Duport partnership, Wabote indicated, is in furtherance of the Board’s strategy to enhance in-country value addition by supporting the establishment of processing facilities close to marginal or stranded hydrocarbon fields.

NCDMB has already had partnered with the Waltersmith Group and Azikel Petroleum Company for the establishment of modular refineries in Imo State and Bayelsa State respectively.

 

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