 Reliance Industries Ltd., building the world's biggest refinery, is increasing crude oil imports from Saudi Arabia as it seeks to secure supplies because of rising demand for fuels in India and the rest of Asia. Mumbai-based Reliance, India's biggest company, is boosting purchases by at least 90,000 barrels a day, accounting for 30 percent of Saudi Arabia's output increase of 300,000 barrels a day this month, P.M.S. Prasad, president of the company's oil and gas business, said in a telephone interview. The refiner stepped up imports after Saudi Arabia's Oil Minister Ali al-Naimi said last month the kingdom is raising output to meet demand from customers. Demand for fuels in the Middle East and Asia is forecast to rise 25 percent to 39 million barrels a day in 2015 from 2008, consultant FACTS Global Energy said today in a report.
``We have been assured of the additional barrels,'' Prasad said yesterday. Reliance exports gasoline, diesel and jet fuel to Asia, the Middle East, the U.S., Europe and Africa.
Reliance operates a 660,000 barrel-a-day refinery at Jamnagar in Gujarat, and would start operations at a 580,000 barrel-a-day plant under unit Reliance Petroleum Ltd. later this year. The combined facility will be the world's biggest refinery, according to Reliance.
Refiners in Japan and South Korea are poised to increase crude oil imports in the coming months after annual plant maintenance peaked this month.
``There's an abundant supply of heavy crude but the Saudis are more savvy than others in marketing their crude,'' said Harry Tchilinguirian, senior oil market analyst at BNP Paribas SA. ``There's also a seasonal element to this as refiners return from maintenance.''
Heavy Crudes
Saudi Arabia, the world's biggest oil producer, and the most influential member of the Organization of Petroleum Exporting Countries, pumps a variety of light and heavy crudes. OPEC, which supplies about 40 percent of the world's oil, hasn't been able to rein in prices, which doubled in the past year to reach a record $139.89 a barrel in New York yesterday.
Reliance Chairman Mukesh Ambani earns more compared with overseas rivals by processing cheaper, dirtier crude with high- sulfur content. His plant is located two days away by ship from the Middle East.
Reliance earned $15.50 from processing a barrel of oil into fuels in the quarter ended March 31, compared with $7 for a plant in Singapore, the company said April 21.
China, the world's biggest energy user after the U.S., has increased crude oil imports from Saudi Arabia 17 percent this year to almost 10 million tons as new refineries start operations, according to customs data.
Source: Bloomberg
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Tata Power in talks to buy six big ships for $600 mn
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 India's biggest private power utility, Tata Power Co. Ltd, is talking with shipbuilders in South Korea to construct six big ships, which it will use to carry coal from its mines in Indonesia to feed its ultra mega power plant at Mundra in Gujarat. The company will have to invest $550-600 million (Rs2,359-2,574 crore) to buy the ships. "TPC Energy Asia Pte. Ltd is talking to Hyundai Heavy Industries Co. Ltd and STX Shipbuilding Co. Ltd for building the Capesize bulk carriers," said a person familiar with the discussions. He did not want to be identified.
TPC Energy Asia is a special-purpose vehicle incorporated in Singapore by Tata Power, for owning ships and trading in fuels. Hyundai is the world's biggest shipbuilder and STX is ranked fifth, in terms of capacity and order size.
Based on today's prices, a Capesize ship will cost $95-100 million to build. Capesize ships can carry 175,000 tonnes and are the biggest vessels capable of carrying dry bulk commodities.
Tata Power estimates it would need 8-9 ships to haul coal for the Mundra power project. "This will be met through a combination of outright purchases (of ships) and hiring of ships on long-term contracts," Tata Power managing director Prasad R. Menon told analysts in March. Tata Power spokesperson Shalini Singh declined to comment.
Tata Power is in a hurry to place orders for new ships and hire more on long-term contracts as they have to be ready by 2012, when its Rs17,000 crore, 4,000MW power plant becomes operational.
"If Tata Power doesn't order ships now, it will land in serious problems for transporting coal to the Mundra plant," said a Mumbai-based executive with a South Korean shipbuilder. "Getting ships built by 2012 looks a tough task as most global yards are fully booked till 2010-11. Tata Power will have to shell out a premium on the current market price to get shipbuilding slots."
Source: Livemint
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Tokyo Electric, Korea Gas LNG Purchase May Fall on Lower Supply
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 Tokyo Electric Power Co. and Asian utilities including Korea Gas Corp. may obtain a lower amount of liquefied natural gas from the spot market in the coming months after suppliers in the Atlantic Ocean cut shipments. Japan, Taiwan and India may receive three spot cargoes from Nigeria, Equatorial Guinea and Algeria until June 30, according to transmissions from ships captured by AISLive on Bloomberg as of June 16. That compares with 640,894 metric tons, or at least 11 cargoes, purchased by Japan from the spot market in March and about 10 cargoes received by South Korea that month. Taiwan bought 31 percent of its LNG from the Atlantic Ocean in April.
``There's very little spot products around,'' Deborah Turner, director of LNG at London-based energy consultant BS Energy Services, said in an interview yesterday.
Delays in LNG projects are leading to shortages of the clean fuel as growth in demand outpaced plant expansions. The decline in spot volumes is because of a shortage of spot LNG in the Atlantic Ocean area, Turner said.
Japan received three spot cargoes earlier this month, the ship-tracking data showed. India and China didn't receive any. Royal Dutch Shell Plc is a partner in Nigeria's Bonny Island LNG terminal while BG Group Plc supplies LNG from Equatorial Guinea and Trinidad.
Japan, South Korea, Taiwan, India and China increased imports of LNG by 9.6 percent to 148 billion cubic meters of LNG, or about 108 million metric tons, last year, according to BP Plc's Statistical Review of World Energy June 2008. Spot LNG imports from the Atlantic Ocean area may have accounted for about 9 percent of purchases, based on calculations from official data released by buyers.
A spot LNG cargo typically weighs between 55,000 and 60,000 tons. LNG is natural gas chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 258 degrees Fahrenheit) for transportation by ships to destinations not connected by pipeline.
Source: Bloomberg
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Coast Guard Will Board Ships From Iran |
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 America's economic war against Iran is now targeting the Islamic Republic's trade routes and shipping. After a little-noticed order, the Coast Guard has begun searching any shipping vessel that has docked at an Iranian port within five port calls of coming to American shores. The new Department of Homeland Security regulation places Iran on a list with seven other nations singled out by the Coast Guard because of lax antiterrorism controls
The new measure against Iran is in keeping with President Bush's strategy of using financial pressure on the Islamic Republic to change its behavior on nuclear and terrorism issues. The Treasury Department has pressed the international body that monitors money laundering to issue circulars warning the world's banks against doing business with Iranian ones. Also, major Iranian banks have been designated as supporters of terrorism and rogue proliferation, creating a disincentive for European and Japanese banks to issue those banks credits.
The designation of Iran on the Coast Guard's terrorism list is likely to punish any major shipping lines that still include Iran on their trade routes to America. Coast Guardsmen will seek to verify that the ships that have berthed in Iran had a security plan and arranged for armed men to guard the ship around the clock while at port.
Vessels that visited Iran during their last five port calls "will be boarded at sea by the Coast Guard to ensure the vessel took the required actions," a Coast Guard Port Security Advisory says.
The director of government affairs for the World Shipping Council, Charles Diorio, said the new measure from the Coast Guard would make it more difficult for shipping lines that did business in Iran. "This is an added hurdle, or concern if you have a ship coming from Iran in the last five ports," he said. "The Coast Guard boards ships for a variety of reasons. There are a litany of issues. Any time you have a ship held out from a boarding, you start to miss work shifts with the longshoreman, there are all sorts of operational impacts, you are delayed a day. These things have a cascade effect."
In 2000, President Clinton lifted trade restrictions on Iranian carpets, pistachios, and caviar in a bid to create an opening with the government of President Khatami. Iran's chief export is crude petroleum, but almost all of it is shipped to East Asia.
The vice president of the American Association of Port Authorities, Susan Monteverde, said that the new Coast Guard measures applied to Iran put it on a list of other suspect countries that includes Syria.
"This is what they do for any kind of suspect port from a country of concern, they will go ahead and increase the inspections. When they come to the United States, the Coast Guard has a boarding party, they check the identifications, the paperwork, if they suspect a problem they may inspect a specific piece of cargo," Ms. Monteverde said.
"The Coast Guard will be looking at those vessels," she added. "It's going to slow things down."
Mr. Bush, in Europe, highlighted Iranian intransigence toward a proposed American-European offer to lift sanctions and provide nuclear cooperation in exchange for Iran promising not to enrich uranium and continue work on a heavy water plutonium enrichment facility.
On Saturday, speaking with President Sarkozy of France, Mr. Bush said, "I am disappointed that the leaders rejected this generous offer out of hand. It is an indication to the Iranian people that their leadership is willing to isolate them further. Our view is we want the Iranian people to flourish and to benefit."
The New York Sun reported last week that one possible new measure being considered in pressuring Iran is to encourage the exporters of refined petroleum to end their deliveries to Iran.
Source: New York Sun
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Iran Has 15 Supertankers Idling in Persian Gulf, Signals Show |
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 Iran, OPEC's second-largest oil producer, has 15 supertankers stationed in the Persian Gulf capable of storing more than 30 million barrels of crude, according to ship-tracking data compiled by Bloomberg. That compares with data compiled a week ago, which showed there were 14 such carriers. The Hengam, owned by National Iranian Tanker Co., has been at the Kharg Island loading facility since June 5. The carrier Homa signaled June 12 it's been there since May 25. One carrier, the Noah, which had been at Kharg since April 2, set sail for Ulsan in South Korea.
Iran, which had to use tankers for storage while its refinery customers carried out annual repair works, will start using the carriers for deliveries again by mid-summer, Hojatollah Ghanimifard, executive director of international affairs at the National Iranian Oil Co., said June 2.
Three National Iranian Tanker Co.-hired vessels, Astipalaia, Safwa and Eastway, which have a combined capacity of about 5 million barrels of crude, have departed from Kharg.
Source: Bloomberg
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China turns gasoline importer |
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 China's refinery production in May fell from a year ago for the first time in five years, helping turn the world's number-two consumer into a net gasoline importer for the first time ever, data showed on Monday. State-owned energy majors Sinopec and PetroChina are dramatically stepping up fuel imports and cutting back domestic refinery runs after tax cuts by Beijing made buying gasoline and diesel from international markets a better bargain than making it domestically.
While they face losses either way due to Beijing's refusal to allow domestic motor fuel prices to rise in line with global markets, the losses are minimised by importing fuel.
"The companies just aren't willing to refine with losses like this," said Wu Jun, analyst at futures firm CIFCO in Shanghai.
"If they refine themselves they can't get so many subsidies, but if they import, even though it is more expensive, they can get more money from the government."
Refinery production slipped 1.1 percent in May to 27.78 million tonnes (6.54 million barrels per day), data from the National Bureau of Statistics showed on Monday.
The last time refinery runs were down from a year earlier was 2003, when efforts to halt the spread of the deadly SARS virus brought much of China to a standstill and crippled its economy.
The surge in motor fuel imports has helped drive up prices and offset a decline in demand from the United States.
Crude oil climbed over $130 for the first time last month, deepening losses that refiners face by selling their fuel into a market where pump prices have risen only once in the past two years, a 10 percent increase last November.
But refiners are also under intense pressure to keep oil supplies flowing ahead of the Olympics, and in recent years have never failed to notch up an overall increase in refinery runs as Sinopec and PetroChina race to expand capacity to meet demand.
EARTHQUAKE IMPACT
The devastating Sichuan earthquake, which briefly shut some plants and caused the suspension of a key pipeline, contributed to the decline, as did a strong baseline from May 2007. But major refineries had already planned a 3 percent cutback for the month.
In addition many of the independent refineries that provide around 20 percent of China's capacity have been mothballed, but most of them do not show up in official statistics -- meaning shortages could be worse than figures suggest.
The lacklustre processing rates, and pressure from Beijing to prioritise diesel production, likely contributed to record gasoline shipments and China's debut as a net importer.
The country bought 338,572 tonnes of gasoline from abroad, customs data showed, while exports were 160,000 tonnes. Diesel imports of 700,000 tonnes were the third highest on record, and fuel oil imports hit a ten-month high of 2.86 million tonnes.
Beijing has offered value-added tax rebates on most imported diesel and gasoline to try and tempt its oil firms to make up for the performance of refineries that now face feedstock costs over $50 per barrel above break-even levels.
MARKET TROUBLE?
The rise in imports flies in the face of years of policy in China, which has struggled to match demand growth with expansion of refining capacity, to avoid having to buy or sell too much pricier product in international markets.
Already the world's number two oil consumer and number three importer, the country's leaders are highly sensitive about their economic growth being fingered as a factor behind high prices.
But new capacity expected to come on line in the second half of 2008 across the region, including in neighbouring India, means that China's growing reliance on foreign refiners shouldn't roil traders too much, analysts said.
"I'm sure it will worry some people but all in all one needs to look at the overall petroleum input requirements by China," said Victor Shum at Purvin & Gertz in Singapore.
"We have crude runs coming down as product imports increase."
The most obvious solution to China's supply woes would be a rise in oil product prices, which were last raised in November, but leaders have pledged not to act until they can tame inflation that in April was hovering near the highest in over a decade."
Source: Reuters |
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