Impact of Saudi oil attack on crude flows will depend on duration of outage, Rystad says

first_img‘Situation in Middle East just got more fragile’ Wood Mackenzie research director, Vima Jayabalan, said: “Abqaiq and Khurais are main processing centers for Saudi Arabia’s Arab Extra Light and Arab Light crude oil.“China, South Korea, Japan and India are the biggest takers in Asia, with China and Japan leading the pack at an average of 900 – 1,100 kilo barrels per day each. India could be most exposed as its reserves are the least. China has SPR (Strategic Petroleum Reserve) and commercial crude storage, while Korea and Japan have IEA reserves to fall back on.“Collectively, Asian demand for Saudi Arabian crude is around 5 million barrels per day; accounting for almost 72% of Saudi Arabia’s crude exports. Asian consumption of Arab Extra Light and Arab Light grades alone from the affected facilities varies between 2.5 and 2.7 million barrels per day seasonally. The region’s dependence has increased significantly over the last 1.5 years.“The impact and the next course of action will depend on the duration of the outage. Saudi Arabia has enough reserves to cover the shortfall over the next week, but if the outage extends, then filling the gap with the right type of crude quality could be a challenge. Moreover, OPEC+ output cut predominantly consists of medium and heavy sour crudes.“In terms of refining and petrochemicals, the spike in crude oil prices will dent margins further.“A prolonged outage and/or further upside above-ground risks in the near term could have an impact on the preparation ahead of the IMO marine bunker specifications change, but at the moment it is still early days to assess.”Offshore Energy Today StaffSpotted a typo? Have something more to add to the story? Maybe a nice photo? Contact our editorial team via email. Also, if you’re interested in showcasing your company, product or technology on Offshore Energy Today, please contact us via our advertising form where you can also see our media kit. Rystad: Oil price spike likely short-lived  Oil prices on Monday saw the biggest surge since 1991 following a drone attack on the state-owned Saudi Aramco’s oil processing facility in Saudi Arabia, according to Reuters. The attack has shut down about 5% of the world’s crude output, but the impact of the attack on crude oil flows will depend on the duration of the outage, Rystad has said. Illustration. Source: Flickr; Author: Sergio Russo – under the CC BY-SA 2.0 licenseThe world’s biggest crude oil processing facility, Abqaiq, was damaged in a drone attack on Saturday, September 14, 2019.In a short statement on Saturday, Saudi Aramco said that its emergency crews had contained fires at its plants in Abqaiq and Khurais, as a result of terrorist attacks with projectiles.These attacks resulted in production suspension of 5.7 million barrels of crude oil per day, according to the company.After visiting the incident locations, Amin H. Nasser, Saudi Aramco President & CEO, said: “We are gratified that there were no injuries. I would like to thank all teams that responded timely to the incidents and brought the situation under control. Work is underway to restore production and a progress update will be provided in around 48 hours.”The U.S. officials blamed Iran for the drone attack on Saudi facilities, but Iran denied blame, Reuters reported on Monday.Oil prices surged by as much as 19% in early trade on Monday before easing off to show a 10% gain after the U.S. President Trump said he would release the U.S. emergency supplies, the news agency further said.Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!— Donald J. Trump (@realDonaldTrump) September 15, 2019 Commenting on reports of drone attacks against vital oil infrastructure in the Kingdom of Saudi Arabia, Per Magnus Nysveen, head of analysis at Rystad Energy, said: “The air attack by Iranian backed militia on vital oil processing terminals in the heart of Saud Arabia’s oil region has turned the market on its head over the weekend. From a situation of unprecedented global oversupply risks, the market will have to replace 5 million daily barrels of oil production by pulling from existing stocks until the oil facilities are brought back to safe operations.”Nysveen added: “This could take a longer time than the authorities initially are claiming. Despite lower exports this year, Saudi Arabia has also depleted its crude oil stocks to the lowest levels in 10 years, so the country alone does not have the same robustness to Middle East interruptions as it used to have. Also, the US cannot quickly replace this volume, as it takes time to relocate oil tankers, and US still has limited export capacity by Very Large Crude Carriers (VLCC).Bjørnar Tonhaugen, head of oil market analysis at Rystad Energy, commented: “This will trigger a significant pull-down of crude oil stocks held by Saudi Aramco, stocks that serve as a crucial security buffer in case of a blockade by Iran in the Strait of Hormuz. The immediate impact on crude prices could be around $10 per barrel and we expect the impact could be around 5 dollars for weeks, as the situation in the Middle East just got more fragile.” ….sufficient to keep the markets well-supplied. I have also informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.— Donald J. Trump (@realDonaldTrump) September 15, 2019 After the biggest attack on oil infrastructure since the Gulf War, Bjørnar Tonhaugen, head of oil market research at Rystad Energy, commented: “The bullish reaction in oil prices will likely be limited by Saudi Arabia’s vast quantities of crude in storage, estimated to equal roughly 26 days of current crude exports, a large portion of which is at the main export terminal Ras Tanura. The country also has strategic storage facilities in Rotterdam, Okinawa and Sidi Kerir (Egypt).”The drone attack on the world’s largest oil processing facility, Abqaiq in the heart of Saudi Arabia’s oil industry, forced Saudi Aramco to shut in 5.7 million barrels per day (bpd) of crude production, Rystad Energy said.“The world is not even close to being able to replace more than 5 million bpd day of Saudi Arabian exports. The market’s reaction to Saudi Arabia’s importance, in the new era of US shale, will now be put to the test,” Tonhaugen remarked.The longer the processing facility remains disrupted, the larger the potential impact on actual crude flows will be.“In a scenario where the damages result in a longer duration of the 5.7 million barrels per day production shut-in, say for 10 days or more, the situation for Saudi Arabian crude flows to the market will be critical, in our view, as there are limits globally to the volume of export replacement barrels,” Tonhaugen remarked.“Strategic Petroleum Reserves in the OECD countries would then be called upon. The US stands as one of the few countries that would be able to increase exports in the short term. We believe US crude exports could potentially be increased by about 1 million bpd, from 3 million to 4 million bpd, if prices allow for higher utilization of the current crude exports capacity.“Other countries with available capacity to increase exports by a few hundred thousand barrels per day each include UAE, Russia, Kuwait, and Iraq.”Rystad noted that Saudi Arabia has approximately 185 million barrels of crude stocks in storage currently, and has drawn down its domestic crude stockpiles by more than 40% (or 140 million barrels) since 2015. A large part of the storage is located near crude loading terminals, with storage capacity at Ras Tanura estimated at 60 million to 70 million barrels, representing 10 to 11 days of normal crude exports from the terminal.“The global flow of crude oil will not be disrupted immediately, Rystad Energy believes, due to storage capacity at the main export terminals. However, the longer the processing facility remains disrupted, the larger the potential impact on actual crude flows will be,” Tonhaugen added. Commenting on the attacks, Wood Mackenzie VP for Refining, Chemicals an Oil Markets, Alan Gelder, said: “This attack has material implications for the oil market, as a loss of 5 million barrels per day of supplies from Saudi Arabia cannot be met for long by existing inventories and the limited spare capacity of the other OPEC+ group members.“A geopolitical risk premium will return to the oil price,” Gelder added. Loss of supplies can’t be met for long by existing inventories Impact on Asian markets: India most exposed  Bloomberg reported that oil briefly surged above $71 a barrel on Monday after the strike on the Saudi oil facilities. Prices have since pulled back by about half of the initial gain.However, as Saudi officials are now less hopeful of rapid recovery, crude is still heading for the biggest advance in almost three years, according to Bloomberg.Remember when Iran shot down a drone, saying knowingly that it was in their “airspace” when, in fact, it was nowhere close. They stuck strongly to that story knowing that it was a very big lie. Now they say that they had nothing to do with the attack on Saudi Arabia. We’ll see?— Donald J. Trump (@realDonaldTrump) September 16, 2019last_img read more

Fonte backs Bertrand for England

first_img Press Association The on-loan Chelsea full-back blasted his first Saints goal as Ronald Koeman’s men saw off QPR 2-1 at St Mary’s on Saturday. Bertrand has two England caps and a Champions League winners’ medal, but his season-long switch to Southampton is his ninth loan stint away from Chelsea. Captain Fonte believes Southampton can now help 25-year-old Bertrand force his way back into Roy Hodgson’s England plans. “I’ve been telling him a lot he needs to get forward, that he needs to start scoring goals to get in the England squad,” said Fonte. “He has the ability for that. He’s a great player and he’s been great for us so far. “He came and he gelled very well. Also, we want to keep pushing him so he can be better and better. “He’s a player with a great pedigree. “I think he’s enjoying it here: we gave him a lot of confidence, a lot of self-belief. “He’s matured now, he’s a little bit older and everything’s getting together for him. “I just hope he can keep pushing on, and I hope he can get in the England squad.” Southampton manager Koeman won 78 caps for Holland as a defender packing a goal threat, and he can see a kindred attacking spirit in Bertrand. The former Ajax and Barcelona defender said Bertrand now needs regular football to reach his potential. “We spoke about the possibilities after (Luke) Shaw went to United because we needed a player in that position,” said Koeman. “If you are a Chelsea player that means you have good quality but he missed playing regular games. “I like him as a player because he’s an offensive left full-back. “He has shown his qualities from the first day, but I expected this kind of quality. “All he needed was to play every weekend, and now he’s doing that it makes him stronger and more confident.” Ryan Bertrand can develop the goal threat to break back into the England squad, according to Southampton team-mate Jose Fonte. last_img read more

Pellegrini bids to end Lampard saga

first_img Lampard has been the face of New York City’s marketing campaign ahead of their inaugural season and many fans demanded a refund on their season tickets after it was confirmed he would remain in Manchester until the summer. City boss Pellegrini said: “I think it’s an issue which is finished. Frank now is here. I know that there a lot of different opinions about Frank, about that. I respect all of them, but the decision is taken already and Frank will stay here until the end of the season.” Lampard released a statement via Steve Kutner Management on Friday morning seeking to clarify the situation, although clarity is one thing sorely lacking. “I want to make it completely clear about my situation as I have read a lot of lies and nonsense over the last few days,” the 36-year-old said. “When released from Chelsea last year at the end of my contract I signed a commitment to play for NYCFC for two years starting January 1, 2015. I was then offered the chance to train and be part of the Man City squad in the interim to keep myself in the best shape going into New York. “This period has since been extended by Man City and I will now start playing for NYCFC at the end of this current Premier League season. “There has always been a constant dialogue between all parties in this time to find the best solution for everyone. I can say that I am very excited about arriving in New York and giving everything to the team to make us a success in the MLS as soon as possible.” Pellegrini, meanwhile, did not rule out trying to hold onto Lampard beyond the end of the season. The Chilean said: “I think Frank is doing very well with us and I am happy with him as part of the squad. Not only on the pitch but off the pitch, as a professional, as a leader, which is always good for young players, to see him working here. “But at the end of the season, he finishes his contract here. I cannot say what will happen in the future. If I say I cannot say, you will suppose that maybe he will stay here.” There has been confusion over the precise nature of Lampard’s contract status in relation to both clubs since it was announced on New Year’s Eve that he would remain with the Barclays Premier League champions until the end of the season. That announcement has delayed his debut with sister club New York until midway through their first MLS campaign, to the anger of many fans in the United States. On Thursday, the Premier League announced that, after reviewing Lampard’s status, it was satisfied his contract was solely owned by Manchester City with no agreement in place between the two clubs – which sparked fresh speculation he might never play in MLS. But Lampard issued a statement via his representatives which said he does have an agreement in place with New York and will move there in the summer. Quoted in the Guardian, City said: “The statement on the NYCFC website in July saying Lampard’s two-year contract took effect from Aug 1, 2014 was a mistake. [The] initial statement on City’s website that it was a loan was also an error. “There was a head of terms commitment from Lampard to join NYCFC from Jan 1, 2015. That was extended to the end of this season. Any contract with NYCFC will now take effect from July 1, 2015.” Manchester City and New York City, both part of the City Football Group, have been criticised on both sides of the Atlantic for their handling of the situation. With Yaya Toure heading to the African Nations Cup, City were understandably keen to keep Lampard after his return of seven goals, largely as a substitute, but in doing so they have angered the fan base of New York City before they have kicked a ball in competitive action. Manchester City on Friday admitted making mistakes in the way the former Chelsea midfielder’s move to the Etihad Stadium was reported. It was claimed in August that Lampard had joined City on loan until the start of January after penning a deal with Major League Soccer side New York City FC earlier in the summer. Manuel Pellegrini wants a line to be drawn under the Frank Lampard contract saga. Press Associationlast_img read more

I’ll continue to support COVID-19 fight in Ghana till it’s gone – Agyemang Badu

first_imgGhanaian midfielder Emmanuel Agyemang Badu says he intends to keep supporting the efforts to fight COVID-19 in Ghana until the disease is eradicated.Badu, who plays for Serie A club Hellas Verona, is in the midst of a strict lockdown in Italy which has been hit harder than most countries by the disease.Italy currently has 178,972 confirmed cases of the disease with 23,660  deaths so far a rise by about 10,000 cases and 1,500 deaths since Friday.Drawing from his experience in Italy, Badu says he knows how desperate the situation globally is and says he intends to do everything he can to support the efforts in his home country.“I’m in the middle of this pandemic here in Italy, so I know how people are struggling and suffering. This is the time for me to help.”He stated that he has donated some PPE to hospitals in Kumasi and  Berekum and has also made some items available to the police as well.“I bought some masks, gloves and sanitizers for a hospital in Kumasi – the women and children’s ward. And I played in Berekum for a long time, so I bought some for the hospitals there, and for the police and Muslim community.”“And in the village I was born, I donated a lot of stuff to the police and the hospitals. They’re saying prevention is better than cure, so I wanted them to have these things to be safe and be very careful of this dangerous virus.”Ghana currently has 1,042 confirmed cases with nine deaths but a three-week lockdown which was imposed to curb the spread has since been lifted.Badu insists that he will continue to send more items to the country in order to help contain the spread.“The numbers are increasing, so next week I need to send some more stuff to hospitals. We will keep doing it until we see this virus is gone. I am in the middle of it here and I know how much I’m struggling here so we all need to help and take care of people in Africa.”A number of other Ghanaian players have donated to the efforts as well including Inter Milan player Kwadwo Asamoah.The Ghana Football Association has also offered the Ghanaman facility for use as an isolation centre.last_img read more