2-Russia Was China's Top Crude Oil Supplier in 2016
Russia overtook Saudi Arabia in 2016 to become China's biggest crude oil supplier for the first year ever, customs data showed, boosted by robust demand from independent Chinese "teapot" refineries.
Russian shipments surged nearly a quarter over 2015 to about 1.05 mb/d, the data showed, with Saudi Arabia coming in a close second with 1.02 mb/d, up 0.9 percent in 2016 versus the previous year. China is the world's second-largest oil buyer and the fastest-growing major importer.
While Saudi Arabia counts on China's state oil firms as backbone clients through long-term supply contracts, China's independent refineries - nicknamed "teapots" due to their smaller processing capacity - saw Russia as a more flexible supplier.
For the teapot plants, authorized to import crude oil for the first time in late 2015, shipments from Russia's eastern ports are easier to process, coming in smaller cargo sizes at a closer proximity.
Russia may be able to maintain the top spot in 2017 as it expands exports of its East Siberian-Pacific Ocean (ESPO) pipeline blend crude. Saudi Arabia, meanwhile, is set to shoulder the lion's share of supply cuts agreed to last year by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers.
"OPEC cuts means Persian Gulf producers take a hit in terms of market share, even though most of their cuts are to Europe and US ...Russia has an ESPO expansion coming up as well as supplies via Kazakhstan earmarked for China," said Michal Meidan of consultancy Energy Aspects.
State-run Saudi Aramco is expected to look to a new refinery under state-run CNOOC to lift sales.
For December, Russia also held the top spot with supplies up 4.8 percent from the same month a year earlier at 1.19 mb/d. Meanwhile, Saudi sales dropped nearly 20 percent from a year earlier to 841,820 b/d, data from the Chinese General Administration of Customs showed.
Total crude oil imports in December hit a record as refiners stepped up purchases ahead of a deal by oil-producing countries to reduce supply and bolster prices.
For the whole of 2016, imports gained nearly 910 tb/d over 2015, the strongest annual growth on record and mostly driven by teapot buying.
Angola shipped 13 percent more crude last year versus 2015, while Iraq recorded similar growth.
China also boosted imports from South American producers last year, with growth of 37.6 percent from Brazil and 26 percent from Venezuela, the data showed.
Imports from Iran expanded nearly 18 percent last year to a record 624,260 b/d, as Chinese state oil firms started to lift barrels from their investments in Iranian oilfields in addition to term supply agreements.
-Iraq to Triple South Gas Liquids Exports
Iraq expects to more than triple exports of liquefied petroleum gas, and to double exports of gas condensates in 2017 as it collects more of these fuels at its southern oilfields, the head of the state-run South Gas Company said.
LPG exports are set to increase to 100,000 tons this year, from 30,000 tons in 2016, South Gas director general Ihsan Abdul Jabbar said in an interview with Reuters.
Gas condensate exports are set to rise to 400,000 cubic meters this year, from 200,000 cubic meters in 2016, he said, speaking at the company's headquarters in Basra, southern Iraq.
He gave no figures for the value of the exports.
Iraq started exporting gas liquids, processed by the Basrah Gas Company, a joint venture between South Gas, Shell and Mitsubishi, last year. Abdul Jabbar is also chairman of Basrah Gas.
The company collects gas associated with oil produced from fields in southern Iraq, processing it into fuel for power plants, cooking gas and liquids for exports.
Basrah Gas will be able to capture more associated gas as the government has resumed payments to the company for the fuel purchased to supply the local market, Abdul Jabbar said.
The government payments will allow the company to invest in expanding its gas capture and processing capacity, using more of the gas that is currently being flared.
The Iraqi government, which relies almost exclusively on oil income, has struggled to pay its bills since crude prices dropped in 2014, the same year ISIS militants seized a third of the country’s territory.
Total gas production from southern Iraq should exceed 900 million cubic feet per day by the end of the year, from 700,000 million cubic feet per day at the end of 2016, Abdul Jabbar said.
Canada Oil Spill on Aboriginal Land
A pipeline in the western Canadian province of Saskatchewan has leaked 200,000 liters (52,834 gallons) of oil in an aboriginal community, the provincial government said.
The government was notified and 170,000 liters have since been recovered, said Doug McKnight, assistant deputy minister in the Ministry of the Economy, which regulates pipelines in Saskatchewan.
Oil pipelines are viewed by the oil-rich provinces of Alberta and Saskatchewan as a critical lifeline to move crude to the coast, but they have drawn fierce opposition from environmental and indigenous groups.
The spill came seven months after another major incident in Saskatchewan, in which a Husky Energy Inc pipeline leaked 225,000 liters into a major river and cut off the drinking water supply for two cities.
It was not immediately clear how the current incident happened or which company owns the underground pipeline that leaked the oil.
McKnight said Tundra Energy Marketing Inc, which has a line adjacent to the spill, is leading cleanup efforts.
"There are a number of pipes in the area," he told reporters in Regina. "Until we excavate it, we won't know with 100-percent certainty which pipe."
Tundra, a privately held unit of Canadian grain trading and energy conglomerate James Richardson and Sons Ltd, released a statement saying it is cooperating with all levels of government and will ensure "the affected land is restored appropriately."
The incident happened in the lands of the Ocean Man First Nation 140 km (87 miles) southeast of the provincial capital of Regina, according to the province.
McKnight said the spill has been contained in the low-lying area in which it was discovered. Ocean Man Chief Connie Big Eagle said the spill was 15 meters (50 feet) in diameter.
Ocean Man has 540 residents, one-third of whom live on the reserve, Big Eagle said.
She said an area resident who had smelled the scent of oil for a week located the spill and alerted her. The chief said there are no homes near the spill but it is about 400 meters (1,320 feet) from the local cemetery.
"We have got to make sure that Tundra has done everything that they can to get our land back to the way it was. That can take years," she said. "They have assured me that they follow up and they don't leave ... until we are satisfied."
SABIC to Acquire Shell Venture for $820mn
Saudi Basic Industries Corp (SABIC) has signed an agreement to acquire the 50 percent that it does not already own in its petrochemical venture with Shell Arabia, a unit of Royal Dutch Shell, for $820 million, SABIC said.
"As per the partnership agreement between the two companies that stipulates the right of SABIC to renew or end the partnership by the end of 2020...SABIC decided to acquire the full stake of Shell, which is 50 percent," it said.
SABIC, one of the world's largest petrochemical firms, said the $820 million figure was based on the net value of the venture's assets. It said the acquisition was in line with a strategy to develop its successful investments.
The venture, known as SADAF, was established in 1980 and operates six petrochemical plants with total annual output of over 4 million tones year of chemicals. It makes products including ethylene, crude industrial ethanol and styrene at a complex in Jubail, on the Persian Gulf coast of Saudi Arabia.
The acquisition agreement is expected to be carried out before the end of this year, SABIC said, adding that it signed another memorandum of understanding with Shell Arabia to boost the companies' cooperation in unspecified international and local investments.
"We will continue to explore potential future opportunities with SABIC," Graham van't Hoff, executive vice-president of chemicals at Shell, said in an emailed statement to Reuters.
In 2014, SABIC and Shell shelved plans to expand SADAF as the results of feasibility studies were not encouraging. The expansion was to have added production of polyols, propylene oxide and styrene monomer.
Shell is involved in other downstream activities in Saudi Arabia; it has a crude oil refinery with Saudi Aramco in Jubail.
OPEC Output Cut on Track
Iraq's oil minister said most oil majors working on its territory were participating in oil output reductions agreed as part of the deal between OPEC and non-OPEC producers to help balance the market.
OPEC and several independent producers agreed last year to cut supply, the first such deal in 15 years, as of Jan. 1, 2017 to remove a glut. The effort has helped oil prices LCOc1 to rise to $55 a barrel, from a 12-year low near $27 a year ago.
Iraqi oil minister Jabar al-Luaibi said that to deliver Iraq's share of the reduction, the country had cut output from its "national fields" and those of international oil companies (IOCs) working in Iraq were also participating.
"We are in collaboration with IOCs to cut from their part," he told Reuters on the sidelines of a conference. "We are in agreement with most IOCs, not all of them, that they will be in line with us. This is going well."
Iraq agreed to lower its production by 210 tb/d under the deal and Luaibi said earlier Iraq was abiding by the accord.
The Iraqi minister also told Reuters he was "very happy" with the progress of the output cutting agreement, and expressed hope that oil prices would increase further.
"It is heading toward $60 now. We hope it will get to the level of $60 and $60-$65 will be reachable."
He said it was too early to say if the supply-limiting deal needed to be extended beyond the first half of 2017.
"We'll see. We think the market will balance."
Iraq is now OPEC's second-largest oil producer having rapidly boosted output in recent years, and is aiming to increase supply further in future once the OPEC deal has ended.
"So far, we are on the level of 6-7 mb/d," the minister said, asked where he saw the ideal level for Iraqi production in the longer term.