Korea, Uzbekistan settle Surgil gas field payment issue

Spanish Market: LPG, Natural gas, Petrochemicals
08/09/23

South Korea and Uzbekistan have reached an agreement on an unpaid $1bn with regard to their joint Surgil gas field project. The countries plan to develop the project and produce petrochemicals and gas.

A consortium of South Korean companies, comprising Lotte Chemical, GS E&R and state-owned Kogas, and state-owned Uzbekneftegaz (UNG) established joint venture Uz-Kor in 2007 to promote the business, with the consortium and UNG each holding a 50pc stake.

Uz-Kor produces and sells gas through UNG's subsidiary UTG, with UTG buying the gas at a fixed price in US dollars but selling it to the Uzbek domestic market in local currency. But UTG has yet to pay Uz-Kor for the gas produced because of concerns over a large deficit arising from paying a fixed gas price in US dollars.

The repayment issue was also because of the depreciation of the Uzbek currency, according to the economy and finance ministry (Moef), although further details were not disclosed. But the two countries have recently agreed on a repayment plant for the Surgil project receivables, six years after the receivables were incurred in 2017.

South Korea and Uzbekistan plan to jointly develop the Surgil gas field, and are looking to build and operate gas and petrochemical plants. This is scheduled to take place over 2008-2041, with commercial production having started in 2016.

The Surgil field produces, pre-processes and transports over 115,000 t/yr of gas condensate, and transports over 3bn m3 of natural gas, according to Uz-Kor.

The Ustyurt Gas Chemical Complex (UGCC) was completed in September 2015, and consists of a gas separation plant, an ethylene plant, a 387,000 t/yr polyethylene plant, an 83,000 t/yr polypropylene plant and a power plant, Uz-Kor's website shows. The complex can also produce 102,000 t/yr of distillation product and 8,000 t/yr of pyrolysis oil, which is sent to Uzbekistan's 61,000 b/d Bukhara refinery.

The UGCC has currently already produced over 180,000t of PE and over 40,000t of PP, and export of polymer products began in December 2015 to central and east Asia, CIS and Europe.

By Tng Yong Li

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27/09/24

US port strikes threaten polymers trade

Houston, 27 September (Argus) — US traders and importers for various polymers are concerned that looming strikes at key US ports could upend trade flows and prices. Ports and railroads servicing the US east and Gulf coasts are making preparations for the potential strikes by the International Longshoreman's Association. Some operations could halt as soon as 30 September at ports in New York, New Jersey and Virginia, as well as in Houston, Texas, and New Orleans, Louisiana, if a new labor agreement is not reached. The strike is expected to cause the most challenges for products moved by container, including polyvinyl chloride (PVC), polyethylene (PE), and polypropylene (PP). The end of a given month is typically when producers and traders in the US agree to volume and pricing for PVC trade for the month ahead. But PVC exporters said this week that fewer traders are closing deals with producers for October shipments out of fear that lengthy strikes in Texas and Louisiana could leave volume trapped at ports or in warehouses. Some traders are even avoiding replenishing inventories that have gotten too low. Traders are also saying that the strike could produce higher logistical costs and prevent export prices from rising. Some container ship companies are warning customers that surcharges for port disruptions could be implemented after a strike begins. Surcharges could reach as high as $3,000 per forty-foot container unit. That is challenging efforts by PVC producers trying to secure higher prices for offers to traders in October. Export availability is being tightened by planned maintenance at Formosa's Point Comfort, Texas, plant and an unplanned outage reducing rates at Westlake's Plaquemine, Louisiana, facility. But weak demand overseas has made traders risk averse to holding more expensive volume for too long, especially after some were caught with higher priced volume during the summer when export prices fell on average by $145/t in just two months. Emulsion-grade PVC (E-PVC) buyers are worried about the impacts of a strike as flooring and automotive buyers in the eastern US have become more dependent on imports from Europe. Cheaper European imports of E-PVC have served US buyers as a check on domestic pricing and plentiful volume has compensated for a dwindling pool of domestic producers. But both those attributes could be made void by a lengthy strike, and buyers currently have little recourse to remedy the situation quickly or on a consistent basis. The threat of more expensive imports from Europe could disrupt what has otherwise been a stable price base for many E-PVC customers in recent months. PE producers reliant on exports With US polyethylene producers exporting 46pc of production in January-August this year, a potential port strike could leave US producers with few options to export their goods, and not enough demand in North America to absorb excess volume. Exports to Mexico and Canada would remain an option, as exports to those countries move by rail, but those countries can only absorb so much volume. Of the portion of US PE exports that move by container ship, 96pc of it moves through Gulf coast and east coast ports, with only around 3pc of it shipped from west coast ports, according to data from Global Trade Tracker. The most likely result of an extended port strike would be production cuts by US producers. "If it lasts more than a few days, we are going to have to adjust our operating rates to manage," said one US PE producer. Polypropylene market participants said the biggest impact is likely to be on logistics, as PP exports have been limited for much of the year due to high prices. "It makes sense that warehouses could get backed up really quickly if stuff is not going out and resin continues to come in," said one PP trader. "Maybe rail could be impacted too." In Mexico, PE and PP market participants are bracing for an influx of US resin, as US producers look for alternative ways to move product. If resin inventories grow in Mexico, it is likely that prices in the region will fall. By Aaron May and Michelle Klump Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan's Shigeru Ishiba to be PM after winning LDP vote

27/09/24

Japan's Shigeru Ishiba to be PM after winning LDP vote

Osaka, 27 September (Argus) — Former Japanese Defense Minister, Shigeru Ishiba, is set to replace Fumio Kishida as the country's new prime minister early next month. Ishiba's appointment is expected to restore public trust following a series of political scandals and continue the country's carbon-neutral policy, ensuring energy security and economic growth. Ishiba, 67, was elected as the new leader of the ruling Liberal Democratic Party (LDP) on 27 September, defeating economic security minister Sanae Takaichi by a narrow margin of 21 votes. He is expected to be confirmed as Japan's new prime minister on 1 October at a special session in parliament, where the LDP holds a majority. The new administration is likely to maintain the policies of the Kishida's administration, including those on diplomatic and energy issues. Kishida has updated the country's energy policies under his green transformation (GX) strategy, which aims to achieve the country's net-zero emissions goal by 2050, since he took office in October 2021. The GX approach has gained momentum, particularly after Russia's invasion of Ukraine in February 2022, which altered global commodity trade flows and prompted advanced economies to reevaluate their energy priorities. Kishida has focused on maximising nuclear and renewable energy while enhancing conventional fuel security. Industry groups, including the Japan Business Federation, have supported the GX strategy, hoping the new administration will maintain this energy policy. To further advance Kishida's GX policy, Ishiba has pledged to increase the development of the country's "rich" maritime resources in its vast territorial waters, aiming to make Japan more energy independent. This aligns with the country's push in March to explore national maritime resources to strengthen economic security. Ishiba also has a special focus on lesser-utilised renewable energies in Japan, such as geothermal and hydroelectric power. The country has not fully utilised their high potential, he told Argus during the presidential campaign on 6 September. Japan's power generation averaged 94GW in the April 2023-March 2024 fiscal year, of which hydroelectric and geothermal output accounted for 10pc and 0.3pc respectively, according to data from the country's trade and industry ministry Meti. Ishiba's energy policy, which focuses on domestic resources, stems from his concern about the country's low energy self-sufficiency rate, which is just above 12pc. The rate is even lower than that of 1941 when the country entered World War II, Ishiba said, stressing that the country must make more efforts to raise the number. As a defense expert, Ishiba is advocating to establish an Asian version of Nato to enhance collective security within the region. But his long-standing policy is facing opposition because the idea requires the country to amend the constitution that prohibits collective security measures. By Motoko Hasegawa, Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US Gulf oil shut-ins drop as Helene nears landfall

26/09/24

US Gulf oil shut-ins drop as Helene nears landfall

New York, 26 September (Argus) — US Gulf of Mexico oil production shut-in levels fell today as Hurricane Helene bore down on Florida's west coast as a category 3 storm, bringing the threat of dangerous storm surge and winds. Around 441,923 b/d of US offshore oil output, or 25pc, was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE). That is down from 29pc on Wednesday as the eastern Gulf path of the storm took it farther away from most offshore production facilities. About 363.39mn cf/d of natural gas production, or 20pc of the region's output, was also off line today, up from 17pc on Wednesday. Operators have evacuated workers from 27 offshore platforms. Helene was last about 145 miles west-southwest of Tampa, Florida, packing maximum winds of 120mph, according to a 4pm ET advisory from the US National Hurricane Center. Further intensification is likely and Helene could approach the coast at category 4 strength, with winds of at least 130mph. Landfall is expected near Port Leon on Apalachee Bay Thursday evening before Helene is forecast to turn northwestward and slow down over the Tennessee Valley on Friday and into the weekend. Earlier this week, offshore operators including BP, Equinor and Chevron took the precaution of suspending some operations and evacuating workers from offshore facilities in advance of the hurricane. Some facilities have since started back up as the hurricane's track shifted away from the main oil and gas hub in the region. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Hurricane Helene shuts in 29pc of US Gulf oil

25/09/24

Hurricane Helene shuts in 29pc of US Gulf oil

New York, 25 September (Argus) — Hurricane Helene, which is forecast to intensify as it heads for a late Thursday landfall in Florida, has shut in about 29pc of US Gulf of Mexico oil output. Around 511,000 b/d of US offshore oil output was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE), while 313mn cf/d of natural gas production, or 17pc of the region's output, was also off line. Operators have so far evacuated workers from 17 offshore platforms. Helene was last about 110 miles north-northeast of Cozumel, Mexico, according to a 2pm ET advisory from the US National Hurricane Center, with maximum sustained winds of 80 mph. Helene is expected to be a major hurricane, with winds of at least 111mph, when it reaches the eastern Florida coast on Thursday evening. "A turn toward the north and north-northeast with an increase in forward speed is expected later today through Thursday, bringing the center of Helene across the eastern Gulf of Mexico and to the Florida Big Bend coast by Thursday evening," the center said. Shell restarting some production Although the hurricane will largely pass to the east of most offshore oil and gas production areas, companies have taken precautionary measures. Given a shift in the forecast track, Shell said late Tuesday that it had started to ramp up production at the Appomattox platform to normal levels, and was in the process of restoring output at the Stones facility, both off the coast of Louisiana. It paused some drilling operations. Chevron said earlier it was shutting in production at company-operated facilities in the Gulf of Mexico, and evacuating all workers. Equinor said it was shutting down the Titan oil platform. BP had earlier this week started to shut in production at its Na Kika and Thunder Horse platforms, southeast of New Orleans, and was curtailing output from its Argos and Atlantis facilities, as well as removing non-essential staff. US offshore production was disrupted earlier this month when Hurricane Francine made landfall, with up to 42pc of production was offline at one point. The offshore Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LNG glut coming and may catch many by surprise: Orsted

25/09/24

LNG glut coming and may catch many by surprise: Orsted

London, 25 September (Argus) — There will be an oversupply of LNG on the global market in the coming years, which may contribute further to "the decade of turmoil", Danish utility Orsted senior vice-president Rune Sonne Bundgaard-Jorgensen told Argus . "The [energy] crisis is absolutely not over. To me, an energy crisis is one of uncertainty and volatility," Bundgaard-Jorgensen said on the sidelines of the Energy Trading Week conference in London. "We are going to see an LNG glut which we all in this [conference] room see is coming but the rest of the world does not necessarily. That is going to catch a lot of people by surprise," he said, adding that "surprises are never good when it comes to energy". According to Bundgaard-Jorgensen, "we are going to see an ongoing decade of turmoil. Who knows where the war in the Middle East with the latest attacks on Hezbollah and Israel is going to take us," he said. Among other concerns, he mentioned "uncertainties in the Far East, around the South China Sea". "So, though the current energy crisis of decoupling from Russian pipe gas is over, the continued crisis of where we are going to get sustainable, long-term energy from is far from over," Bundgaard-Jorgensen said. Commenting on Orsted's long-term gas plans, Bundgaard-Jorgensen stressed that Orsted is "constantly evaluating" its gas portfolio. He refused to say whether Orsted is negotiating another long-term deal with Norwegian state-controlled Equinor after their previous contract expired in April. Orsted entered an agreement with Equinor at the end of 2022, after Russian state-controlled Gazprom halted deliveries to the firm from June 2022 following Orsted's refusal to pay for its supply in roubles . "We are quite happy that we are out of our long-term contract with Gazprom," Bundgaard-Jorgensen said. "As a company we believe in decarbonisation — but I also need to believe in a resilient portfolio. So, we are constantly looking to optimise. Gas is not a strategic core of Orsted but it is a very important tool of securing our portfolio," he said. Bundgaard-Jorgensen refused to comment on whether the firm is planning to appeal a decision made by the Danish Supply Authority in July that the tariff levied by Orsted on the Tyra-Nybro pipeline to Denmark from 2011 to October 2012 was too high. The authority reduced the tariff in the period by almost 30pc to 7.20 Danish kroner/m³ from DKr10/m³. By Alexandra Vladimirova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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