Daily Digest: March 11th, 2020

SAUDI ARABIA UPS THE ANTI IN SUPPLY WAR (UPDATE)

Saudi Arabia's national oil company Saudi Aramco announced it would ramp up oil production to 13mn barrels/day after the Opec+ pact expires at the end of this month.

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The Big Picture:

• Talks between Saudi Arabia, Russia and other producers in the Opec+ alliance on agreeing a co-ordinated response to the coronavirus (Covid-19) crisis broke down on March 6, after Moscow said it would no longer participate in output cuts aimed at rebalancing the market.

• Saudi Arabia has responded by initiating a supply war against Russia and US shale producers, in a bid to force the former back to the negotiating table and the latter out of business.

• In a statement March 11, Aramco said it had been ordered by the Saudi energy ministry to raise output further to 13mn barrels/day.

   

CHINA ISSUES FM ON CENTRAL ASIAN PIPELINE GAS

Two former Soviet central Asian republics Kazakhstan and Uzbekistan say their exports to China have shrunk owing to a claim of force majeure (FM) issued by state PetroChina. It blamed the arrival of warmer weather and the impact of Covid-19 on its demand, although the first of these at least is not covered by usual FM clauses.

The Big Picture:

• Last year, over 47.9bn m3 of central Asian gas went to China via the Central Asia-China (CAC) gas pipeline, about 0.9% more than in 2018, according to the PetroChina West Pipeline Company.

• Last year China imported 7.5bn m3 of Kazakh gas and 4bn m3 of Uzbek gas, the rest coming from Turkmenistan. China started central Asian gas imports in December 2009.

 INDIA'S WELSPUN WINS BAROSSA PIPE CONTRACT

India’s Welspun Corp. has secured an offshore pipes supply contract in Australia for the Barossa offshore development project from Allseas Marine Contractors Australia, the company said in a statement.

The Big Picture:

• Under the contract, Welspun will manufacture and supply 270 km of pipes for offshore application. The project will be executed from India.

• The Barossa project is owned by a joint venture comprising ConocoPhillips, SK E&S and Santos. 

• Earlier this month, the partners awarded the contracts for the supply and installation of subsea infrastructure for the Barossa project.

APLNG, ARMOUR JV GETS QUEENSLAND LICENCE

A joint venture comprising Australia Pacific LNG (APLNG) and Armour Energy has been awarded a petroleum production licence 1084 (PL1084) by Queensland’s department of natural resources, mines and energy, Armour said in a statement.

The Big Picture:

• APLNG is a joint venture comprising ConocoPhillips Australia (37.5%), Origin Energy (37.5%) and Sinopec (25%).

• “PL1084 has been granted with the specific conditions that the gas produced from the production licence is to be sold exclusively for local manufacturing,” Armour said.

• The block was part of the first national tender where gas has been designated to be supplied exclusively to Australian domestic manufacturers, an initiative by the Queensland government.

UK BUDGET OFFERS CCS CASH

UK finance minister Rishi Sunak has promised government spending on at least two carbon capture and storage (CCS) projects, cleaner heating and a push towards electric vehicle ownership in his first Budget, which he presented to parliament. However he has not raised the duty on red diesel, which is used in off-road industries such as farming and construction.

The Big Picture:

• The government is aiming to make the UK a net-zero carbon country by 2050, which some estimates say will cost £30bn ($38.7bn)/yr over the next three decades.

• The Budget announces a CCS fund for "at least two UK sites, one by the mid-2020s, a second by 2030. Using consumer subsidies, the government will also support the construction of the UK’s first CCS power plant."

BULGARIA TO BOOK CAPACITY AT GREEK LNG TERMINAL

Bulgaria's state-owned gas supplier Bulgargaz intends to book around 500mn m3 of annual regasification capacity over a ten-year period at a new LNG terminal being built in Alexandroupolis, Greece, the Bulgarian government said on March 10.

The Big Picture:

• The project's developer Gastrade held a market test in late 2018, in which companies submitted non-binding expressions of interest to book 12.2bn m3/yr of import capacity - more than twice the terminal's design capacity of 5.5bn m3/yr.

• The deadline for these offers had been set at February 24, but was extended to March 10 and again to March 20.