U.S. Oil Exports Boom, Putting Infrastructure to the Test

Tankers carrying record levels of crude are leaving in droves from Texas and Louisiana ports, and more growth in the fledgling U.S. oil export market may before long test the limits of infrastructure like pipelines, dock space and ship traffic.

U.S. crude exports have boomed since the decades-old ban was lifted less than two years ago, with shipments recently hitting a record of 2 million barrels a day. But shippers and traders fear the rising trend is not sustainable, and if limits are hit, it could pressure the price of U.S. oil.

How much crude the United States can export is a mystery. Most terminal operators and companies will not disclose capacity, and federal agencies like the U.S. Energy Department do not track it. Still, oil export infrastructure will probably need further investment in coming years. Bottlenecks would hit not only storage and loading capacity, but also factors such as pipeline connectivity and shipping traffic.

Analysts believe operators will start to run into bottlenecks if exports rise to 3.5 million to 4 million barrels a day. RBC Capital analysts put the figure lower, around 3.2 million bpd.

The United States has not come close to that yet. A total of the highest loading days across Houston, Port Arthur, Corpus Christi and St. James/New Orleans - the primary places where crude can be exported - comes to about 3.2 million bpd, according to Kpler, a cargo tracking service.

But with total U.S. crude production currently at 9.5 million barrels a day and expected to add 800,000 to 1 million bpd annually, export capacity could be tested before long. Over the past four weeks, exports averaged 1.7 million bpd, more than triple a year earlier.

“Right now, there seems to be a little more wiggle room for export levels,” said Michael Cohen, head of energy markets research at Barclays.

“Two to three years down the road, if U.S. production continues to grow like current levels, the market will eventually signal that more infrastructure is needed. But I don’t think a lot of those plans are in place right now.”

If exports do hit a bottleneck, it would put a ceiling on how much oil shippers get out of the country. Growing domestic oil production and limited export avenues could sink U.S. crude prices.

Shippers have booked vessels to go overseas in recent weeks because the premium for global benchmark Brent crude widened to as much as $7 a barrel over U.S. crude, making exports more profitable for domestic producers.

Export Plans

Exports could hit 4 million bpd by 2022, an Enterprise Products Partners LP executive told an industry event in Singapore recently.

Though some operators are already eyeing expansion plans, there are limitations, said Carlin Conner, chief executive at SemGroup Corp, which owns the Houston Fuel Oil Terminal. SemGroup has three docks for exporting crude and is building additional ones.

“There aren’t very many terminals with the needed pipeline capabilities, tank farm capacity and proper docks to load the ships ... Adding this is expensive and not done easily. So there are limitations to unfettered export access,” he said.

For instance, exports are expected to start from the Louisiana Offshore Oil Port (LOOP) in early 2018 at around one supertanker a month, according to two sources. The LOOP is potentially a key locale for exports. Its location 18 miles (29 km) offshore means it can handle larger vessels than other, shallower ship channels.

While LOOP can load around 40,000 barrels per hour, operating at that capacity is not likely because that same pipe is used to offload imports, the sources added. LOOP did not respond to a request for comment.

In Houston, when looking at the top 30 loading days, crude exports averaged 700,000 bpd, Kpler added. That includes Enterprise’s Houston terminal, among the largest of the export facilities, that had 615,000 bpd.

Other terminal operators are also developing additional facilities. NuStar Energy LP currently can load between 500,000 to 600,000 bpd at its two docks in Corpus Christi, which has about 1 million in capacity, according to a port spokesman. NuStar is developing a third dock, which should come online either late first quarter or early second quarter.

In Houston, Magellan Midstream Partners LP is planning a new 45-foot draft Aframax dock for mid-2018. Aframax vessels can carry about 500,000 to 700,000 barrels of crude.

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Hudson River anchorage restrictions

http://www.tankeroperator.com/ViewNews.aspx?NewsID=9105

New York State is put restrictions on tankers anchoring in the Hudson River.

 

On Tuesday, Governor Andrew Cuomo signed legislation to allow the state to establish guidelines for ‘tanker avoidance zones’.’

He said that the new law will protect the river’s ecosystem, as well as residents who live alongside the Hudson.

The legislation was introduced after the US Coast Guard proposed to allow petroleum tankers sailing between Albany and New York City to anchor at 10 locations.

This proposal prompted opposition from thousands of Hudson Valley residents who feared the plan would pose safety problems as well as threaten the environment and spoil scenic river views, the Associated Press said.

Tanker sector officials had requested new anchorage sites for vessels required to wait for weather improvement, icebreaking, or other voyage factors.

IMO puts the record strait

http://www.tankeroperator.com/ViewNews.aspx?NewsID=9102

Answering recent reports questioning the transparency and inclusive approach by those addressing the threat of climate change at the IMO, secretary general Kitack Lim explained that te organisation’s efforts to reduce harmful air emissions from ships spans decades.

 

He said that work was continuing this week with the second meeting of the Intersessional Working Group on Reduction of GHG Emissions from Ships with 57 IMO member states and 21 NGOs participating in the meeting.  

As is the case in other UN agencies of a technical nature, the make-up of national delegations to IMO is entirely a matter for the countries themselves and those countries who wish to include industry technical experts or others, may do so. Neither the IMO Convention, nor any of the rules of procedure for individual meetings limits, in any way, members' ability to structure their delegations, as they consider most appropriate in order to carefully consider the issues before them, he stressed.  

In addition he said that the IMO currently has consultative arrangements with 77 NGOs, including environmental groups, seafarer organisations, and others representing class societies, shipbuilders and shipowners. The range of NGOs represented at IMO rightfully covers the broad spectrum of shipping, maritime and social interests. 

These NGO's are selected by the members based on their ability to substantially contribute to the work of the IMO by providing information, expert advice and representation of large groups whose activities have a direct bearing on its work. 

Participation of organisations representing so many different viewpoints provides a balance that adds considerably to the credibility of the organisation's overall output. This inclusiveness is one of IMO's great strengths, he concluded. 

Saudi Crown Prince Backs Extending OPEC Cuts Into 2018

Saudi Crown Prince Mohammed bin Salman.
Photographer: Fayez Nureldine/AFP via Getty Images

https://www.bloomberg.com/news/articles/2017-10-26/saudi-crown-prince-backs-extending-opec-output-cuts-into-2018-j987r4ea

• Prince Mohammed bin Salman says ‘of course’ supports roll-over
• Heir to throne says Saudi Aramco IPO is ‘on track’ for 2018

Saudi Arabian Crown Prince Mohammed bin Salman backed the extension of OPEC production cuts beyond March 2018, making it all but certain the cartel and its allies will roll over the curbs at a meeting next month.

The prince, who’s become the kingdom’s dominant political force, said in an interview with Bloomberg News that "of course" he wanted to extend the cuts into 2018. "We need to continue stabilizing the market," he said.

Until now, Saudi officials have signaled they favored prolonging the cuts, but stopped short of making a formal commitment, saying all options were still open. Oil erased losses on Prince Mohammed’s comments, with West Texas Intermediate crude little changed at $52.17 a barrel at 10:26 a.m. in London after having earlier dropped as much as 0.4 percent.

His comments, weeks after Russian President Vladimir Putin also gave provisional backing to an extension, signal that Riyadh and Moscow are ready to prolong their collaboration to reduce oil supply and lift energy prices. If confirmed at OPEC’s meeting next month, the extension may boost oil prices, improving the fortunes of the global energy industry and oil-dependent countries from Nigeria to Brazil.

For Prince Mohammed, who replaced his cousin earlier this year as heir to the throne, higher prices will help revive economic growth in Saudi Arabia and eventually feed through to the initial public offering of the country’s state-owned oil giant, Saudi Aramco.

IPO Plans

The 32-year-old royal said Aramco will IPO in 2018, most likely in the second half. "We are on the right track," he said, repeating the same formula Saudi officials have been using for weeks to counter talk of a potential delay.

"We don’t have any problems, we have a lot of work and a lot of decisions and there are a lot of things that will be announced," he added. The Aramco IPO is the cornerstone of Vision 2030, a much wider plan conceived to reshape the Saudi economy and diminish its dependence on oil.

Tadawul, Saudi Arabia’s stock exchange, hopes to be the sole venue for the Aramco listing, Chief Executive Officer Khalid Al Hussan said at a conference in Riyadh on Thursday. The company is still considering locations for the listing, with London and New York vying for a major role alongside Hong Kong, Singapore, Tokyo and Toronto.

Prince Mohammed said that extending the cuts would bring benefits for both OPEC and non-OPEC producers.

"Everyone is benefiting," he said. "It’s the first time we have an OPEC and non-OPEC deal in stabilizing the oil market," he added, speaking as the country welcomed a who’s who of global finance in a meeting in Riyadh many participants dubbed "Davos in the Desert."

Putin said earlier this month in Moscow that if OPEC and its allies decided to extend the cuts, they should do it until the end of next year. OPEC Secretary-General Mohammad Barkindo said last week that statement is the basis for talks ahead of next month’s meeting, led by Russian Energy Minister Alexander Novak and his Saudi counterpart Khalid Al-Falih.

Graphic: Tracking OPEC's Production Cuts

"Every day, everyone is starting to believe it more," Prince Mohammed said in Riyadh, declining to give a timeline of the extension. "They have seen the results. So everyone has the interest to continue keeping the agreement.”

OPEC and a coalition of non-OPEC nations, led by Russia, agreed a year ago to reduce production by 1.8 million barrels a day -- roughly equal to the consumption of France. The deal, personally negotiated by Prince Mohammed and President Putin, was the first Saudi-Russia collaboration in oil in a decade, marking a turn in the frosty relationship between the two nations.

The 24 oil-producing nations that participated in the cuts initially intended to reduce output for six months starting in January, but the supply glut that has weighed on prices since late 2014 has ebbed more slowly than expected. As a result, the group agreed to roll over the cuts in June for another nine months, until the end of March 2018.

While oil prices have risen, with international benchmark Brent near $60 a barrel as the physical market has improved, traders and analysts are still painting a cautious outlook for next year due to forecasts for rising output from the U.S., Brazil and Kazakhstan.

Yet, Prince Mohammed gave a rosier view of the oil market, suggesting he believes higher prices are coming.

"The market has already swallowed the new supply of the shale oil,” he said. "It’s swallowed. Now it’s part of supply. Now we are going into a new era.”

— With assistance by Riad Hamade, Erik Schatzker, Wael Mahdi, Glen Carey, and Matthew Martin

Russia Cements Top Spot in Crude Sales to China as Saudis Recede

https://www.bloomberg.com/news/articles/2017-10-24/russia-cements-top-spot-in-crude-sales-to-china-as-saudis-recede

Russia continues to pull ahead of its oil rivals including Saudi Arabia in China, the world’s biggest energy user.

The Asian nation’s imports of Russian crude jumped 61 percent to a record 6.35 million metric tons in September from a year earlier, according to General Administration of Customs data. That helped Russia retain the top spot for the seventh straight month. Saudi Arabia, the world’s biggest crude exporter, supplied about 10 percent more at 4.28 million tons, while retreating to the third-biggest. Angola was the No. 2 seller.

Russia is on a path to become the top supplier for the full year again, after last year surpassing the Middle Eastern kingdom that has been a dominant supplier for years. Russian shipments during the first nine months were 45 million tons, the biggest volume among suppliers, data compiled by Bloomberg show. Angola shipped 39.9 million tons and Saudis 38.5 million tons.

Russia is dominating amid heightened competition for major markets including China and India as OPEC and other producers such as Russia implement output cuts to clear a glut and lift oil prices. The nations that are part of the deal will meet on Nov. 30 in Vienna to discuss prolonging the curbs beyond March.

— With assistance by Sungwoo Park, and Sarah Chen

Bitcoin splits again, creating a new cryptocurrency called bitcoin gold that then plunged 66%

https://www.cnbc.com/2017/10/25/bitcoin-gold-price-plunges-what-is-hard-fork.html

• The price of bitcoin gold plunged over 66 percent since it started trading
• Experts are divided on whether the bitcoin split is a good or bad move

The price of bitcoin took a hit after the cryptocurrency underwent another split, with the newly-created bitcoin gold seeing its value plunge over 60 percent.

Bitcoin hit a low of $5,374.60 on Wednesday before recovering nearly $300. The initial fall followed the "hard fork" that occurred Tuesday.

CNBC runs through what you need to know about the big event.

What is the 'hard fork' about?

Firstly, it's important to understand how the bitcoin system works. Transactions by users are gathered into "blocks" that are turned into a complex math solution. So-called miners, using high-powered computers, work these solutions out to determine if the transaction is possible. Once other miners also check the puzzle is correct, the transactions are approved and the miners are rewarded in bitcoin.

The need for high-end machinery has meant that mining is controlled by a small group of people with powerful computers.

Jack Liao, the CEO of LightningASIC, which sells mining equipment, came up with bitcoin gold as a way to change this dynamic.

The idea is to allow bitcoin gold to be mined by more people with less powerful machines, therefore decentralizing the network further and opening it up to a wider user base.

To this end, the collective behind bitcoin gold came up with a code that creates a "fork" or split in the bitcoin blockchain. That occurred on October 24 and resulted in the creation of the bitcoin gold cryptocurrency.

Hasn't a fork happened before?

Yes. In July, bitcoin underwent a similar fork that led to the creation of bitcoin cash.

There was an initial surge in price, and it hit an all-time high of $914.45, but has fallen steadily, according to data from Coinmarketcap.com. On Wednesday, bitcoin cash was trading just above $330.

Bitcoin cash's market capitalization — the total value of the cryptocurrency in circulation — is just over $5.5 billion, compared to more than $93 billion for bitcoin.

How is bitcoin gold trading?

Everyone who owns bitcoin will receive bitcoin gold. This is being issued at the rate of 1 bitcoin gold to bitcoin. Since bitcoin gold was issued, its price has plunged over 66 percent, trading at just over $161 per coin, according to Coinmarketcap data.

It appears the sell-off was due to investors dumping the cryptocurrency, perhaps signaling a lack of faith in the newly-created coin.

Bitcoin also fell sharply Wednesday before recovering and other cryptocurrencies like ethereum took a hit too.

Bitcoin gold has faced teething problems in the few hours it has been around. The website for the new cryptocurrency suffered a distributed denial-of-service attack, which is when a server is overloaded with requests.

And many major cryptocurrency exchanges have not begun trading in bitcoin gold yet.

What are experts saying about the fork?

There are differences of opinions within the bitcoin industry as to whether a fork is good or bad.

"These forks are very bad for bitcoin. Saturating the market with different versions of bitcoin is confusing to users, and discredits the claim that there are a limited number of bitcoins — since you can always fork it and double the supply," Sol Lederer, blockchain director at Loomia, said in an emailed statement Tuesday.

But some have said forks are a good part of any cryptocurrency ecosystem.

"If a crypto-community has irreconcilable differences, then you can go your separate ways and that is just fine," Bob Summerwill, chief blockchain developer at Sweetbridge, a company creating blockchain solutions, said in a statement Tuesday.

Still, there is bullishness around bitcoin. A survey carried out by CNBC last week asking where the bitcoin price was headed found that 49 percent of the 23,118 people who voted answered "above $10,000."

Could The Worst Gas Leak In U.S. History Be Causing Health Problems? (HBO)

World’s Biggest Oil Traders See Wildly Diverging Crude Price

• Gunvor and Glencore see crude at $60 as demand growth quickens
• ‘Huge’ wave of U.S. shale could push price to to $45: Vitol

The world’s biggest oil traders say crude could rise above $60 a barrel in a year as demand grows and OPEC keeps cutting. Or it might fall to $45 as another wave of U.S. shale hits the market.

The disagreement between Glencore Plc, Gunvor Group Ltd. and Trafigura Group Pte on the bullish side, and Vitol Group on the other, underscores the huge uncertainty over the key drivers of oil supply and demand. Growth in consumption has been stronger than expected this year, helping the recent price gain, but the speed of the expansion in U.S. output has also proved hard to predict.

A big surprise from one of those competing forces in 2018 could tip markets in either direction.

"Towards the back end of next year we’re going to be well above $60," Jeremy Weir, chief executive officer of Trafigura, said at the Oil & Money conference in London on Wednesday. Demand is growing, oil-field productivity is declining in the U.S. and further weakening of the dollar will boost commodities, he said.

The market has certainly tightened up in the last few months, said Vitol CEO Ian Taylor, but U.S. shale producers still have the ability to drive down prices, just as they did back in 2014.

Shale Wave

“The one biggest downside to the market in terms of price is the fact that we still see a huge amount of incremental production ready to come on from the States,” Taylor said in a Bloomberg television interview. “We’re moving more and more oil from the U.S. all the way over into the Far East and I think that will have an impact. That’s one of the reasons why in the short term I think I should be a bit bearish.”

In the past three years -- as U.S. shale production ebbed and flowed, while the Organization of Petroleum Exporting Countries made historic shifts in production policy -- the oil price has fallen by half from above $100 a barrel, rebounded to more than $65, then plunged to a 12-year low of $28. Brent crude, the international benchmark, traded at $58.14 a barrel at 1:20 p.m. in Hong Kong on Thursday.

 

In such a volatile environment, traders aren’t the only ones struggling to get a grip on the direction of the market.

The International Energy Agency has increased its estimate for 2017 oil demand growth in each of the past four months, now predicting the strongest expansion in two years. Nevertheless, even if OPEC extends its output cuts through 2018 it’s unlikely to dramatically reduce the bloated stockpiles that have weighed on prices, the agency said.

Differing Forecasts

OPEC disagrees, forecasting internally that the inventory surplus will finally clear by the third quarter of 2018. The big difference in their outlooks comes down to the strength of supply from outside the producer group. The IEA sees an extra 1.5 million barrels a day of non-OPEC oil production next year, 600,000 above OPEC’s estimate.

Gunvor CEO Torbjoern Toernqvist said he’s cautiously optimistic about the oil market for the year ahead. OPEC will probably sustain its production cuts for at least another six months because Russia and Saudi Arabia have shown they’ll do what’s necessary, he said in an interview with Bloomberg television.

Unsurprising for seasoned participants in a volatile market, all the traders acknowledged they could be wrong.

"Consensus is a dangerous thing, because consensus drives decision making and that decision making will have consequences" that could change the direction of prices, said Toernqvist. Disruption to supplies from Iraq’s Kurdish region could potentially push prices above $60 in the very short term, said Vitol’s Taylor.

"You’ll see oil at $100 again I’m sure, you’ll see oil at $25 again -- that’s just the nature of the oil price,” said Alex Beard, global head of oil at Glencore.

Saudi Arabia: Second-largest petroleum exporter to the United States after Canada

http://www.hellenicshippingnews.com/saudi-arabia-second-largest-petroleum-exporter-to-the-united-states-after-canada/

Saudi Arabia – the largest exporter of total petroleum liquids – exported an average of 1.1 million b/d of total petroleum liquids to the United States in 2016, according to data released by the US Energy Information Administration, EIA.

”In the first half of 2017, U.S. total petroleum liquid imports averaged slightly higher at 1.2 million b/d. Since 2012, Saudi Arabia has been the second-largest petroleum exporter annually (after Canada) to the United States, when it surpassed U.S. imports from Mexico,” the EIA said in its Saudi Arabia County Analysis.

”In 2016, after the United States, the next four top importers of Saudi crude and petroleum products were Japan (1.2 million b/d), China (1.0 million b/d), South Korea (0.9 million b/d), and India (0.8 million b/d), according to Global Trade Tracker, GTT.

Saudi Arabia has 16 percent of the world’s proved oil reserves, is the largest exporter of total petroleum liquids in the world, and maintains the world’s largest crude oil production capacity at roughly 12 million barrels per day.

In 2016, Saudi Arabia was the largest exporter of total petroleum liquids (crude oil and petroleum products), with exports mostly destined to Asian and European markets. During that same year, Saudi Arabia was the world’s second-largest petroleum liquids producer behind the United States and was the world’s second-largest crude oil and lease condensate producer behind Russia. During the first half of 2017, Saudi Arabia has maintained this position, despite lower production than in the previous year.

More than 5% of Saudi Aramco could be offered beyond the IPO, Saudi billionaire investor Prince Alwaleed Bin Talal says

https://www.cnbc.com/2017/10/23/more-than-5-percent-of-saudi-aramco-could-be-offered-in-ipo-saudi-billionaire-investor-prince-alwaleed-bin-talal-says.html

• Prince Alwaleed Bin Talal floated the idea that Saudi Arabia could list more than 5 percent of state oil giant Saudi Aramco in the coming years.
• The plan at present is to launch offer 5 percent of the company in an initial public offering next year.
• Alwaleed said he fully backs the economic transformation plan that the IPO will underwrite.

Saudi billionaire investor Prince Alwaleed Bin Talal on Monday floated the idea that the kingdom could publicly list an increasing portion of its state oil giant Saudi Aramco in the coming years.

"No one talks about this idea that if you go 5 percent, there's nothing that prohibits you from going another 5 percent next year, and 5 percent the third year and fourth year, and so forth, depending on the situation," he told CNBC on Monday from his apartment in Riyadh.

"Now, I know this is our treasure, and we have to keep it, but that treasure also needs to support the country," the chairman of Kingdom Holding Company added in an exclusive interview on CNBC's "Squawk Box."

Saudi Arabia is aiming to launch an initial public offering for Saudi Aramco next year and is expected to offer about 5 percent of the company to investors. The IPO is expected to be the largest ever.

On Sunday, Saudi Aramco CEO Amin Nasser told CNBC the listing is on track for the second half of 2018.

During that interview, Nasser denied reports that Saudi Aramco is considering shelving the IPO in favor of selling private shares to big institutional investors or sovereign wealth funds, the investment vehicles that manage nations' money. He also swatted down a report that China is a leading contender for such an investment.

Even if Saudi Arabia did seek a large investor in Saudi Aramco prior to the listing, it would not necessarily delay the IPO, Alwaleed said on Monday. In fact, it might expedite the process by confirming the price that Saudi Aramco is seeking, he said.

"I'm not a member of the government, but I read these reports, and I will not be surprised if China will be looking at this opportunity because China depends on oil and will depend on oil for a long time to come. And Saudi Arabia is an anchor exporter of oil to China," he said.

The kingdom aims to raise about $100 billion by taking a portion of its state oil giant Saudi Aramco public. The funds will underwrite an effort led by Crown Prince Mohammed bin Salman to diversify the nation's economy through a plan called Vision 2030.

The precipitous drop of oil prices from more than $100 a barrel in 2014 to roughly $55 today has hastened Saudi Arabia's transition from a petrostate to a Gulf nation built on a broader range of industries.

Alwaleed said he fully backs the transformation plan, which he believes fulfills the requirements to safeguard Saudi Arabia's economy that he laid out prior to King Salman bin Abdulaziz's rise to the throne in 2015.

"Saudi Arabia is in the midst of a major overhaul and change on all fronts — economical, financial, social, entertainment and even political," he said.

"We always heard about the so-called Arab Spring in certain Arab countries," he said, referring to the wave of political protests throughout the Middle East and North Africa that peaked in 2011. "This is our version, our Saudi version, of Arab Spring, our peaceful Arab Spring."

Piracy - still a cause for concern

http://www.tankeroperator.com/ViewNews.aspx?NewsID=9078

There is continuing concern over the number of pirate attacks in the Gulf of Guinea and Southeast Asia in the first nine months of this year, according to the latest report from the International Maritime Bureau (IMB). 

 

A total of 121 incidents of piracy and armed robbery against ships were reported during the period. The IMB’s third quarter report warned that, while piracy levels were down, compared to the same period in 2016, there is continuing concern over attacks in the Gulf of Guinea and in Southeast Asia.

The increase in attacks off the coast of Venezuela and other security incidents against vessels off Libya – including an attempted boarding in the last quarter – highlights the need for vigilance in other areas, the IMB said. 

In total, 92 vessels were boarded, 13 were fired upon, there were 11 attempted attacks and five vessels were hijacked in the nine month period, according to the report.

No incidents were reported off the coast of Somalia in the last quarter, although the successful attacks from earlier in the year suggested that pirates in the area retain the capacity to target merchant shipping at distances from the coastline.

The four main highlights of the report, were -   

1) Malaysia’s success story - One vessel was reported hijacked in 3Q17 when a Thai product tanker was attacked off Pulau Yu in Malaysia in early September.

However, thanks to the prompt intervention of the Malaysian Maritime Enforcement Agency, 10 hijackers were successfully apprehended and the tanker was safely escorted to a nearby port. The pirates were quickly tried and sentenced to long periods of imprisonment.

“The Malaysian response demonstrates exactly the type of speedy and robust action that is needed to deter such attacks,” said Pottengal Mukundan, IMB director.

2) Nigeria remains risky - A total of 20 reports involving all vessel types were received for Nigeria, 16 of which occurred off the coast of Brass, Bonny and Bayelsa.

Guns were reportedly used in 18 of the incidents and vessels were underway in 17 of 20 reports. Some 39 of the 49 seafarers kidnapped globally occurred off Nigerian waters in seven separate incidents.

Other crew kidnappings in 2017 were reported 60 nautical miles off the coast of Nigeria.

 

“In general, all waters in and off Nigeria remain risky, despite intervention in some cases by the Nigerian Navy. We advise vessels to be vigilant,” said Mukundan. “The number of attacks in the Gulf of Guinea could be even higher than our figures as many incidents continue to be unreported.”

3) An increase in violence off Venezuela - While only three low-level incidents took place in Venezuela during the same period in 2016, the number this year rose to 11.

All the vessels were successfully boarded by robbers armed with guns or knives and mostly took place at anchorage. Four seafarers were taken hostage during these incidents, with two assaulted and one injured.

 4) Tackling piracy - a team effort - Perhaps the biggest takeaway of this quarter’s report is the proven importance of the 24-hour manned IMB Piracy Reporting Centre (PRC), which has provided the maritime industry, governments and response agencies with timely and transparent data on piracy and armed robbery incidents received directly from the vessels or owners, flag states or navies, the bureau claimed.

The PRC’s prompt forwarding of reports and liaison with response agencies—using Inmarsat Safety Net Services and email alerts, all free of charge—has already helped bolster the response against piracy and armed robbery, keeping seafarers safe.

“One of the strongest weapons triggering the fight against piracy is accurate statistics,” said Mukundan. “There should be free and reciprocal sharing of information between the IMB PRC and regional information centres. With a clearer picture of when and where violent incidents are taking place, authorities are able to better allocate their resources to tackle this global issue.”

Maritime charity, Sailors’ Society, said that while the number of incidents had fallen, compared to the same period in 2016, the report showed that attacks in the Gulf of Guinea and Southeast Asia were still an issue and there had been a rise in attacks off the coast of Venezuela.

The statistics don’t take into account unreported incidents, the charity stressed.

The Sailors’ Society has set up three crisis response networks in Africa, Asia and Europe to support survivors of piracy attacks and crises at sea. CEO Stuart Rivers, said: “The fear of piracy is a massive issue for seafarers. While we are encouraged that incidents of piracy are generally decreasing, piracy is a still a major concern and any incident is one too many.

“Survivors of piracy and kidnappings are exposed to violence and terror, which can have a devastating impact on them and their families for years to come.

“By coming alongside these survivors and their families, we can work with other agencies to help them come to terms with what has happened and give them financial, physical and psychological support to help them pick up the pieces of their lives.”

Iraq's Oil Exports via Turkey Dwindle as Kirkuk Fields Stay Shut

https://www.bloomberg.com/news/articles/2017-10-19/iraq-s-oil-exports-via-turkey-dwindle-as-kirkuk-fields-stay-shut

Crude exports from northern Iraq fell again, and output remained curtailed in the nation’s disputed Kirkuk province. Oil Ministry engineers worked to replace computers and other critical equipment missing from fields in Kirkuk that government troops recaptured this week from Kurdish forces, according to a person with knowledge of the situation.

The Kirkuk area’s Bai Hassan and Avana oil fields were still shut, with exports stopped, the person said Thursday, asking not to be identified because the information isn’t public. The two deposits had been pumping an estimated 275,000 barrels a day before the Iraqi offensive against the Kurds. Iraq won’t be able to restore Kirkuk’s oil output to last week’s levels before Sunday because of missing equipment at the fields, Reuters reported earlier Thursday, citing an unidentified oil ministry official.

Flows by pipeline from northern Iraq to the port of Ceyhan, Turkey, fell to 196,000 barrels a day on Thursday from about 225,000 barrels the previous day and far below their normal daily level of 600,000 barrels, according to a port agent report and Bloomberg tanker tracking. Iraq’s central government piggybacks its exports from Kirkuk with Kurdish shipments through a Kurdish-operated pipeline to Turkey.

Kirkuk, home to Iraq’s oldest-producing oil field, is a flashpoint in the power struggle between the central government in Baghdad and the semi-autonomous Kurdistan Regional Government. Tensions in Kirkuk erupted into outright hostilities between the central government and the KRG on Monday following a Kurdish referendum on independence from Iraq. The KRG included Kirkuk in the Sept. 25 referendum despite competing claims to the ethnically mixed area, which lies outside the boundaries of the KRG-ruled Kurdish region.

Iraq, the second-largest producer in OPEC, pumps most of its 4.47 million barrels a day from fields in the south and ships it from the Persian Gulf port of Basra. But with Iraq supplying about 14 percent of total production from the Organization of Petroleum Exporting Countries, a recovery of curtailed exports from the north could affect crude markets. Brent crude was 71 cents lower at $57.44 a barrel on Thursday at 3:29 p.m. in London. The global benchmark closed Wednesday at the highest since Sept. 26.

Local Supplies

Iraq’s Oil Ministry deployed engineering teams at Avana and Bai Hassan after workers and guards stayed away from the fields earlier this week when government troops pushed back Kurdish peshmerga fighters from the area, an official at the central government-run North Oil Co. said Wednesday. The company will pump only enough oil from the fields to supply local needs until Iraq’s central government can reach an agreement with Kurdish authorities allowing exports from Kirkuk via the Kurdish pipeline to Turkey, he said.

As it consolidated control over Bai Hassan and Avana and other oil facilities in Kirkuk, the Oil Ministry reiterated its long-standing position that international energy companies must not sign any contracts that bypass the central government. 

“Irresponsible statements” by some officials or foreign companies regarding their intention to sign deals “with X party” inside the country are a blatant intervention in Iraq’s internal affairs and infringe on its sovereignty, the ministry said in a statement. While it didn’t identify any such officials or companies, the ministry issued the statement just a day after Russia’s Rosneft PJSC signed an agreement with the KRG to develop five oil blocks. 

Rosneft’s deal is in line with legislation and is similar to agreements that other international companies have in the Kurdish area, Mikhail Leontyev, a company spokesman, said by phone on Thursday. Russia’s state-run oil producer always abides by local law, he said.

“The government is reiterating its past statements that no one should be signing oil production deals with the Kurds,” said Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group, which has operations in Iraq. “I don’t think that at this stage it’s an effort to roll back any of the contracts currently in place.”

— With assistance by Anthony Dipaola

Nigerian producers eye India's new-found appetite for US crude

https://www.platts.com/latest-news/oil/london/feature-nigerian-producers-eye-indias-new-found-27878389

The competition that Nigerian crude oil cargoes has faced from US crude oil grades in Northwest Europe over the past two years has begun to expand into other regions, according to trading sources.

• Largest buyer of Nigerian oil India importing more US oil
• NNPC pragmatic on US crude threat

Since the US crude export ban was lifted in December 2015, there has been a gradual increase in shipments of US barrels to Northwest European and Mediterranean refiners, with the flow increasing sharply in recent weeks due to a wider Brent/WTI futures spread.

As Northwest Europe is a major demand center for Nigerian light sweet barrels, this could be a rather bearish development for Nigerian differentials.

In recent weeks, this competition has also extended east, with India increasingly looking to the US for its crude oil buy tenders.

India is the largest buyer of Nigerian crude and as such plays a crucial role in the direction of Nigerian crude differentials.

While the quantity of US crude being purchased by India companies hasn't yet impacted Nigerian differentials, West African crude traders said that it is another form of competition for Nigerian sellers to be aware of.

"There is competition from the US in India, but it's not big competition yet," said one WAF crude trader. "US crude is quite variable in quality and the Indians want to be certain about the quality they are getting. Some US cargoes are better than others."

This week, Indian Oil Corporation (IOC) issued a tender for one Suezmax or VLCC cargo of US crude loading in December, along with one Suezmax or VLCC of West African crude.

This followed news earlier in the week that the state-run company expected a second US crude cargo containing around 2.2 million barrels to arrive on the west coast by the end of October, company officials said Tuesday.

IOC, the country's flagship refiner, has contracted 3.8 million barrels of US crude since July. Indian refiners have purchased heavier MARS crude from the US, as well as light sweet barrels.

Other state-run refiners like Bharat Petroleum Corp. Limited (BPCL) and Hindustan Petroleum Corp. Limited (HPCL), which are also key buyers of Nigerian crude, have also recently purchased US oil.

Related video:Is India's appetite for US crude oil sustainable?

Representatives of Nigerian National Petroleum Corp. have been pragmatic about the threat posed by US crude, and have said that rising US exports have actually created opportunities for more Nigerian barrels to head to US Atlantic Coast refiners.

"In the short term we are not worried [about rising US crude exports] because we actually sell into the US today so there is a reverse flow of trade, going from Nigeria to the US," said Mele Kyari, general manager of state-owned NNPC's crude oil marketing division in a recent interview with S&P Global Platts.

So far this year, 17% of Nigerian crude exports have been to the US, Kyari said, which was a sharp rise from few years ago. Indeed, since the US started exporting crude in 2015, Nigeria's exports to the US have increased.

By comparison in 2014, only 3.1% of Nigerian exports went to the US, according to NNPC data.

BATTLEGROUND EUROPE

For the moment, however, Northwest Europe remains the primary battleground for the competition between US and Nigerian light sweet cargoes.

With the Brent/WTI front-month futures spread trading around $5.60-5.70/b Wednesday, sources said that US crude remains an attractive proposition for Northwest European and Mediterranean refiners.

"US grades are a very good option for anyone searching for light grades considering the Brent/WTI spread...if you have a grade that is marked on Dated Brent then it will likely see dropping differentials," said a Nigerian crude trader.

According to traders, as much as 250,000 b/d of US crude is expected to land in Northwest Europe in October, which is around 100,000 b/d more than the amounts traders have seen for much of the year.

--John Morley, john.morley@spglobal.com
--Eklavya Gupte, eklavya.gupte@spglobal.com
--Takeo Kumagai, takeo.kumagai@spglobal.com
--Edited by James Leech, james.leech@spglobal.com

China Crude Oil Storage Splurge is OPEC's Best Friend

China’s crude oil imports surged to the second-highest on record in September, but this isn’t a sign of supercharged demand in the world’s second-biggest economy.

It’s rather a shuffling of where oil is being stored around the globe and a couple of factors that caused a temporary boost to Chinese import demand.

China’s crude imports jumped to 37 million tonnes in September, equivalent to 9 million barrels per day (bpd), according to preliminary customs data released on Oct. 13.

This was up from August’s 8 million bpd, but it’s worth noting that August was an eight-month low. More importantly, China’s oil imports are up 12.2 percent in the first nine months of 2017 from the same period last year.

This certainly looks like solid growth in the world’s biggest crude importer, and indeed, demand for refined fuels had been higher than expected at the start of the year, mainly on the back of strength in infrastructure and construction.

But it also appears that China is buying substantial amounts of crude for its strategic and commercial storages.

The September figure was likely boosted by the start-up of China National Offshore Oil Corp’s new Huizhou refinery, with plants typically requiring around 21 days of commercial reserves to ensure smooth operations.

The return from maintenance of some of the independent refineries also likely boosted crude imports in September.

But it also appears that China’s ongoing build-up of its strategic storage contributed to import demand.

China rarely releases data on its Strategic Petroleum Reserve (SPR), but Thomson Reuters Oil Research and Forecasts estimated that at least 1.15 million tonnes, or about 280,000 bpd, flowed into the SPR in September.

The International Energy Agency said on Oct. 12 that China has been building its crude stockpiles at a record pace in 2017, contributing to the country’s expected demand growth of 540,000 bpd in 2017 from 2016.

The IEA does expect China’s crude oil demand growth to slow to 325,000 bpd in 2018 as the country closes in on filling its available storage tanks.

While China’s buying of crude for its SPR isn’t a new dynamic, in the global oil market it effectively represents a shift of where oil is being stored.

Stored Oil Flows to China

As the global benchmark Brent crude moves into backwardation, where prices for oil for future delivery become cheaper than cargoes for immediate shipping, it becomes unprofitable for producers and traders to store crude.

This has resulted in stored oil being released onto the market, and China has shown it’s a willing buyer.

In particular it appears that crude in floating storage in the Asian region has been moved to China.

While it may seem of limited consequence for oil simply to move from one place to another, it does matter for market dynamics.

Oil in China’s SPR is effectively off the market, insofar as it’s unlikely to be used or be available for sale, unless there is a crisis of some description.

However, oil stored in anchored tankers or in land-based facilities can be traded and shipped. In other words, it is dynamic and part of the global physical oil market.

It’s these inventories that the Organization of the Petroleum Exporting Countries (OPEC) and its allies have been targeting in their efforts to re-balance the global market and boost the price of crude.

The overhang of crude acted as a drag on the price, and as oil moves out of storage it tightens the market, allowing OPEC and other producers to raise prices.

In some ways China’s demand for oil for its SPR has been OPEC’s biggest ally, but it should also be noted that China most likely has boosted oil imports precisely because the price has been relatively cheap.

Whether China would ease purchases for its SPR if crude prices rose strongly remains to be seen, but it certainly would be a possibility.

With Brent remaining below $60 a barrel despite the output curbs by OPEC and its allies, it’s also likely that China will continue to fill its SPR.

This means the country’s crude imports will likely remain robust in coming months, even if they slip back somewhat from September’s elevated levels.

However lower quotas for the export of refined products may also hamper China’s demand for imported crude in the fourth quarter, with refiners getting close to having used up their allocations for the year.

As usual there are competing dynamics at work in China’s crude oil markets, but it is likely that good consumption growth in the domestic market and strong flows into storages will offset any loss of demand from slowing refined product exports.

https://www.tankterminals.com/news_detail.php?id=4652&utm_medium=email&utm_campaign=Subscribers%20-%20Week%2042&utm_content=Subscribers%20-%20Week%2042+CID_f9c98d4a14730f909d572fe485de4c88&utm_source=Weekly&utm_term=COLUMN-China%20Crude%20Oil%20Storage%20Splurge%20is%20OPECs%20Best%20Friend 

Shell preps for the future with acquisition of EV charging network

https://www.yahoo.com/finance/news/shell-preps-future-acquisition-ev-212400762.html

Royal Dutch Shell (or just Shell, if you're into the whole brevity thing) has already committed a billion dollars toward alternative fuels, and now it's showing us where some of that money is going. The gas station corporation has agreed to buy NewMotion, a Netherlands-based company that owns some 30,000 electric-vehicle charging points across Western Europe according to Reuters.

Shell says that these will complement the company's existing roll-out of charging stations. "One is fast charging on the go on the forecourt and the other is a slightly lower rate of charge at the workplace or at home," vice president of new fuels Matthew Tipper said. "At this stage there are no plans to integrate the two."

Meaning, don't expect the NewMotion locations to be where you can top off a charge on your way home. While these won't be Shell's first foray into building an EV-ready infrastructure, it hows that the company is planning for a future where petroleum-based fuels won't be as prevalent. For you and me, that should translate to range anxiety (potentially) becoming a thing of the past.

VLCC Markets - Owners in the driving seat

http://www.tankeroperator.com/ViewNews.aspx?NewsID=9063

Extensive holidays in the east were barely noticed as VLCC activity was reported as high.

Continued demand for all the major routes propelled the already firm market still further, Fearnleys said in its weekly report.

 

Charterers went out further on dates to have more ship choices and owners optimism rose together with rates.

 

Earnings from MEG and WAfrica/East were around $20,000 per day with owners aiming to push rates higher into the winter.

 

The WAfrican Suezmax market softened over the past week with third decade dates only infrequently quoted, causing rates to erode gradually and settle at the WS72.5 level.

 

Meanwhile, the main focus has been on the Black Sea and Med where an Aframax shortage in the 3rd decade has spilled over onto the Suezmaxes, which have been soaking up the part cargoes at premium rates. Foe example, TD6 is currently at WS87.5.

 

As a result, this has thinned the Suezmax list thus creating a firmer trend. Naturally, this has ignited owners bullish sentiment and with early November WAfrican dates due to show imminently, owners know there is potential momentum as cargo volumes set to increase and they will look to capitalise accordingly.

 

North Sea and Baltic Aframaxes experienced an upturn in rates on the back of more ships leaving the area and thus not re-appearing in a normal fixing position for the current window. A busier programme for the 3rd decade, coupled with bad weather in the North Sea, is also filling owners with more confidence.

 

Moving forwards towards the end of the month, we expect rates to climb further, Fearnleys said.

 

The winner of last week’s Mexican standoff was everyone having tonnage in the Med and Black Sea. A heavy 3rd decade programme out of the Black Sea, combined with less tonnage and determined owners, drove rates up by 10 points.

 

As a consequence, the above mentioned Suezmaxes came into play. We are currently at WS150 ex Black Sea and we are waiting to see the outcome of Petrogal’s long cross-Med cargoes with both Suezmaxes and Aframaxes quoting WS160 and upward.

 

Going forward, we expect more activity ex Libya and the last couple of cargoes out of the Black Sea for 3rd decade, so this market will not soften anytime soon, Fearnleys concluded.

 

Looking at the Asian product tanker market, while growth in the product tanker fleet has been fairly moderate this year, compared to the crude tanker segment, overcapacity has weighed on clean tanker freight rates in Asia over the year, Ocean Freight Exchange (OFE) said in its weekly report.  

 

Fleet growth for LRs and MRs hit around 6% and 3%, respectively, thus far this year. The pace of newbuilding deliveries is expected to ease in the fourth quarter, due to high slippage rates.

 

A series of unplanned refinery outages in the West provided some respite for LR owners in the third quarter, most notably Hurricane ‘Harvey’, which took out nearly 25% of US Gulf Coast refining capacity.

 

The subsequent redrawing of trade patterns boosted tonne/mile demand significantly, as more LR tankers were chartered to move middle distillates from Asia/AG to Europe following the open East-West arb, which had been shut for most of the year.

 

As a result, LR freight rates rebounded from their sluggishness to hit the year’s high at WS145 for TC1 and WS152.5 for TC5 on the back of tight tonnage until the second half of October, OFE said.

 

Rates are currently softening, as these vessels return from their long-haul voyages, lengthening the position list in Asia/AG again. While there is some near-term downside, OFE expected to see a surge in LR rates towards the end of the year, due to robust demand-side factors.

 

Naphtha demand in Asia typically sees a seasonal boost in fourth quarter, due to higher LPG prices, which makes it less competitive, as well as the end of cracker turnaround season. Winter heating demand for LPG renders the fuel too expensive to be used as a petchem feedstock, with propane trading at a $76.25 per tonne premium to naphtha as of 11th October.

 

As such, higher naphtha imports into Asia in the fourth quarter are expected to underpin LR tanker demand and subsequently freight rates.

 

With the East/West gasoil EFS widening to more than -$25 per tonne on 10th October, the arb remained open. Middle distillate flows from Asia/AG to Europe are expected to remain elevated in the short run, lending support to LR tanker demand.

 

The trading play in the Asian gasoil market last month led to Winson Oil taking at least seven LR2s for gasoil storage around Singapore ranging from 30 to 90 days. This helped to tighten the prompt supply of ships, putting a floor under LR tanker rates.

 

The effects of ‘Harvey’ also reverberated through the MR segment with a surge in MR vessels taken for long-haul voyages from Asia to the US and Latin America.

 

Similar to the LRs, the return of these ships has lengthened the position list in Asia once more and led to a moderation in MR rates.

 

Tighter quotas are expected to cap Chinese exports in fourth quarter, weighing on MR demand and freight rates. In a bid to curb pollution, the recently-released fourth batch of Chinese fuel export quotas (under both processing trade and general trade terms) stands at 5 mill tonnes, 67.4% lower than the previous batch.

 

This brought the year’s total amount of quotas to 37.4 mill tonnes, 19% lower than that of 2016. As such, any seasonal spike in MR rates is likely to be fairly muted, compared to previous years, OFE concluded.

 

Elsewhere, d’Amico Tankers signed its second memorandum of agreement in recent weeks.

 

This time it was for the sale of the 2006-built MR ‘High Prosperity’ for $14.245 mill.

 

This transaction will generate a positive net cash effect of around $6.9 mill for d’Amico Tankers, contributing to the liquidity required to complete DIS’ fleet renewal programme, the company said.

 

In addition, d’Amico Tankers will retain the commercial control of the vessel, having also agreed a six-year timecharter with the buyer at a competitive rate.

 

In the charter market, brokers reported several fixtures, including the 2005-built MR ‘Helen M’, which was reportedly relet from RS Shipping for about 60 to 90 days by Koch at $17,000 per day. She was originally fixed to RS Shipping for 12 months at an undisclosed rate.

 

Laurin was reported to have taken a 2002-built MR for six months, option six months at $11,250 per day, while Clearlake was said to have fixed the 2011-built ‘Vinjerac’ for between 30 and 120 days at $12,750 per day.

 

Another MR, the 1996-built ‘Dawn Madurai’ was said to have been taken by IOC for 12 months at $12,750 per day.

 

The 2014-built VLCC ‘Miltiadis Junior’ was thought fixed to new Iraqi venture Al Iraqia for five years at $22,750 per day and LMCS was thought to have fixed the 2001-built Suezmax ‘DS Symphony’ for 12 months at $15,000 per day.

 

Chevron was believed to have taken the 2008-built Aframax ‘Atlantic Explorer’ for 12 months at $14,250 per day, while ST Shipping was said to have fixed the 2003-built Aframax ‘Al Mahfoza’ for six months at $14,000 perday. 

 

A measure of the Jones Act was illustrated by the reported fixture of the US flag 2010-built MR ‘Lone Star State’ to Military Sealift Command for 12 months at $83,836 per day.

 

In the S&P sector, Trafigura was said to have purchased the 2000-built Suezmax ‘Gener8 Argus’ for $11 mil, while the 2002-built Aframax ‘BLS Advance was reported as committed to Avin International for $7.8 mill.

 

Ardmore was also believed to have purchased the 2012-built MR ‘Challenge Pearl’ for $16.5 mill.

 

Three Handies were reported to have changed hands. Greek interests were said to have taken the 2003-built ‘Vardar’ for $9 mill, while West African interests were thought to be behind the purchase of the 2002-built ‘Maersk Ellen’ for $9.5 mill. She was said to have recently passed her special survey.

 

In addition, undisclosed purchasers were thought to have taken the 2002-built ‘Seaways Ambermar’ for a price quoted to be in the mid-$9 mill mark.  

Russia-OPEC crown new relationship with Moscow meetings

https://www.platts.com/podcasts-detail/spotlight/2017/october/russian-energy-outlook-101117

Russian and OPEC officials last week discussed the progress of their landmark crude oil production deal, and plans to increase bilateral cooperation, during multiple meetings and events held in Moscow.

Russia's relationship with Saudi Arabia took center-stage, with the Saudi King’s historic visit to Moscow reflecting the extent to which the two countries are overcoming geopolitical differences and market rivalry to forge a new energy relationship. S&P Global Platts managing editor in Moscow Nadia Rodova discusses this, as well as Russia's cooperation with longer-term partners Iran and Venezuela, with oil editors Rosemary Griffin and Nastassia Astrasheuskaya.

Podcast Transcript

NADIA: Hello and welcome to Platts Commodities Spotlight podcast for October 11. I’m Nadia Rodova, managing editor at Platts bureau in Moscow, and I’m joined here today by editors for oil news Rosemary Griffin and Nastassia Astrasheuskaya. We had a busy few days in Moscow last week, which included the Saudi king’s state visit, as well as OPEC ministers taking part in Russian Energy Week.

As his visit drew to a close on Friday Saudi Energy Minister Khalid Al-Falih summed up the impact of last week’s meetings on Saudi Arabia’s relationship with Russia and what it means for bilateral energy cooperation going forward.

FALIH RECORDING: “I think that the relationship clearly went to quite a new level this week with the Saudi King’s first visit to Russia … I am also of course encouraged and excited about the investments that have been outlined. We already have over $1 billion in investments by PIF here in Russia and yesterday we witness the signing of a $1 billion fund to be dedicated to energy services.”

NADIA: Rosemary could you give us a bit more detail on that?

ROSEMARY: Hello Nadia, sure. We’ve really seen a shift in the Saudi-Russian relationship recently, both politically and economically. In the past the two countries often found themselves on opposite sides of key geopolitical issues. Also as the world’s largest crude producers they were seen as rivals rather than potential partners. That began to change when they agreed the OPEC/non-OPEC crude production cut deal late last year, and has strengthened as that deal has held. We’re in the middle of seeing Russia and Saudi Arabia forge a new energy relationship. While so far that has been built mainly on their mutual interest in rebalancing oil markets and supporting oil prices, we’re also now seeing the two sides look to increasing bilateral cooperation, signing agreements that could have implications long after the deal expires.

NADIA: Right, last week they signed several agreements. Saudi Aramco signed an MOU with Lukoil’s trading division Litasco to set up joint oil trading. This may include supply of Russian crude to Saudi refineries and supply of Saudi crude to Lukoil’s European plants. Furthermore Saudi Aramco CEO Amin al-Nasser said the company is keen to expand its refining, trading and LNG cooperation with Russian companies. This may come on top of MoUs Saudi Aramco signed with Gazprom to look into possible cooperation in the gas sector, and with Gazprom Neft on research cooperation. It also agreed to establish a joint venture with Russian petchems firm Sibur, and set up that $1 billion energy investment fund that Falih mentioned earlier.

ROSEMARY: Worth mentioning Russia’s President accepted the Saudi king’s invitation to visit Riyadh, so we may expect a follow-up of this progress soon.

NADIA: Indeed. Nastia, we had other ministers from OPEC countries in Moscow last week, including Venezuela and Iran - were bilateral talks a common theme?

NASTIA: There was some progress on cooperation between Russia and Iran and Venezuela last week, but Russia’s energy ties with these countries go back to long before the OPEC/non-OPEC deal to curb crude production. Iranian and Russian companies signed MoUs on exploration in Iran, and apparently made progress on the long discussed oil-for-goods deal. Novak expects crude supplies under the deal could start within a month. As for Venezuela, its oil minister Eulogio Del Pino indicated that Russian companies may be interested in offshore development in Venezuela. This would add to Russian involvement in several upstream projects in the country, trading contracts, and joint ownership of a network of refineries in the US.

NADIA: Right, we also saw Venezuelan president Nicolas Maduro meet Russian President Vladimir Putin in the Kremlin to discuss restructuring his country’s debt to Moscow. In recent years Russia has proved to be a lifeline to Venezuela, as it struggles to cope with low oil prices and a broader economic crisis. Russia’s top producer Rosneft previously provided Venezuela’s PDVSA with around $6 billion in loans as prepayment for supplies of crude and oil products. What’s also interesting here is that cash-strapped PDVSA used its nearly 50% stake in a major US refiner Citgo as collateral for a portion of the loans, which raised concerns over US energy security if the Venezuelan company defaults on its loans.

NASTIA: And Del Pino said the Citgo situation was being discussed last week, and there should be a decision on it “soon.” Besides holding talks on bilateral projects, of course everybody was talking about the OPEC/non-OPEC deal itself. Russian President Vladimir Putin said that while any decision to extend the deal will be taken based on the situation on the market. If there is an extension it will likely be until the end of 2018.

ROSEMARY: That was interesting, it’s also still unclear what participants are going to push for in terms of an extension to the deal when discussions reach the decision making stage at the end of this year. For now the ministers are saying they’re satisfied, Falih went so far as to say he is more optimistic on fundamentals now than he has been for the last 2-3 years. Novak and Falih are set to meet at least once again before the Vienna meetings at the end of November.

NASTIA: Ministers did comment on one other area of potential change to the deal – new non-OPEC participants. According to Del Pino, the group is in talks with some 10-16 countries to join including Egypt, Uganda, Chad and Congo.

NADIA: Right, there’s a lot to follow as we continue to monitor the progress of the deal and the increasingly close relationship between Russia and Saudi Arabia and OPEC. That was Nastassia Astrasheuskaya, Rosemary Griffin, and Nadia Rodova today in the studio. Join us next time for Platts Commodities Spotlight.