Post Reply
6861-6880 of 6935
S'pore Refining Co has not imposed output cuts at its 285,000 bpd plant, because it started a routine month-long turnaround on one of its crackers last week, said a source.
"It depend on how margins are when they complete the turnaround, scheduled for end-Sep. If margins are still poor, they can slow down the process of bringing it back to full capacity," the source said.
Seems like for oil exploration concessions that come up 'dry' (no commercial oil reserves), SPC will expense their share of the cost. In 2Q 06, SPC expensed $7m for Upstream activities....I presume it is their portion of the drilling offshoreVietnam which was 'dry'.
For exploration which is result in commercially viable fields, I would presume SPC will capitalise their exploration and production infrastructure costs and depreciate it when the field starts to generate revenue....Oyang and Jeruk fields.
How much costs will SPC incur everyday to dig for oil along the IDR coast? EVeryday will incur a loo if they don't find anything! Big boys reducing refining capacity, Think SPC will see their profits being refined lower as well. I can accumulate when it goes lower.
VIENNA : High oil prices are still being propped up by a shortage of refinery capacity and there is little sign of the bottleneck easing until 2010, industry executives and officials discussing OPEC's future have warned.
That potential respite relies on the unlikely prospect all 66 refineries planned by oil companies and producers being built, as well as a total of about 300 billion dollars in investment by 2015, they added.
"The need for downstream capacity is just as important as other issues," said Claude Mandil, executive director of the International Energy Agency at a two-day conference which was continuing Wednesday.
"There is a general recognition now that no spare capacity in refining together with no spare capacity in crude production are the key factors we have to manage on high prices," he added.
Mandil said: "If everything goes well, we could witness starting 2010 some spare capacity in refining. I say if - this is a huge question mark."
The 11 nations in the Organisation of Petroleum Exporting Countries are pumping out about 30 million barrels of crude oil per day, according to recent data.
A quota for 10 of them is set at a 25-year record high, to cope with strong global demand boosted by China's emerging economy in recent years.
Prices have fallen back from a 78 dollar peak in July in response to fears that global economic growth and therefore demand for energy is about to tail off. However, they are still high - around the 63 dollar mark.
"Current downstream tightness in the form of inadequate refining capacity is putting much pressure on oil prices generally," said Mohamed Barkindo, acting secretary general for OPEC.
No new refineries have been built in the United States for 30 years and for about 20 years in Europe, said Shukri Ghanem, head of Libya's National Oil Corporation.
"With so much uncertainty regarding oil demand in the short term, no one can tell for sure whether all or part of this investment will materalise during the next five years," Ghanem said.
Refinery capacity is essential to transform crude into petrol (gasoline), diesel, or household fuel.
A shortage of spare refining capacity adds to overall supply bottlenecks.
"There are 66 refineries being considered for construction, I have some doubts whether all of these will go through," Mandil said.
Barkindo said 160 billion dollars needed to be ploughed into downstream capacity within 10 years, and another 150 billion dollars for maintenance and replacement.
"Such amounts are not forthcoming: there is an investment gap of something like 100 billion dollars," he added.
Saudi Arabia's Oil Minister Ali al-Nuami told the conference that "prudence" was to be expected while crude prices were so volatile.
"It is estimated that a difference of just one million barrels per day of projected production from OPEC entails an over or under investment of 8.0 billion dollars by 2010 and about 15 billion dollars by 2025," he explained.
OPEC has long been looking to oil companies to make the kind of investment that provided large amounts of spare capacity in the 1970s.
However, they were offered little respite from the Anglo-Dutch giant Shell. Chief executive Jeroen van der Veer said there were expectations of unlimited investment from industry.
"This is not how we look at it at Shell," he told the conference.
The refinery industry faces added challenges.
On the consumer's end of the chain, more stringent energy efficiency and environmental standards translate into an upgraded need for highly refined cleaner fuels, officials said.
And Nuami pointed out that on the production side, the kind of crude oil being extracted is becoming heavier and sourer, requiring even more extensive and costly refining before it is turned into fuel for transport and industry.
The slump in refining profits have driven plants to take more than 160,000 bpd of capacity offline, the deepest cuts since crude embarked on a four-year rally fuelled by fears of a shortage of refining capacity.
But analysts warned that the curbs may be short-lived if a hurricane disrupted U.S. production or winter hit early or hard, lifting margins out of the red and encouraging higher runs.
Exxon Mobil has cut output by 8-10% at its 600,000-bpd Singapore plant since August, mostly of light products such as naphtha. Royal Dutch Shell has also cut runs at its 500,000-bpd Singapore plant, industry sources said, but it was unclear to what extent. Typically refiners cut by 5-10%.
In South Korea, SK Corp.-owned SK Incheon Oil has opted to cut September operations to 170,000 bpd, about 20,000 bpd less than it initially planned, and will keep runs steady next month.
Those cuts come on top of reductions reported last week at South Korean peers GS Caltex and Hyundai Oilbank. Japan's Nippon Oil said it was trimming output due to reduced domestic demand for fuel oil, while giant SK Corp. was already running about 11% below capacity.
The cuts represent just about 0.7% of Asia's total capacity, but may still give some boost to markets.
"I think it... restores a bit more positive sentiment rather than takes any meaningful barrels out," said Merrill Lynch analyst Adrian Loh. "I think there will be an uptick (in margins), I'm just not sure of the magnitude of it."
The curbs revived memories of the late 1990s, when refiners were forced to idle 20% of their capacity due to a slump in demand after the Asian crisis, although analysts said autumn maintenance plans and the approach of peak winter demand should improve margins soon, prompting refiners to reverse the curbs.
"September and October are usually a low-demand season. It is likely that demand will pick up after mid-October," said Thomas Yi, an analyst at Samsung Securities in South Korea.
They also highlight what many traders say is a key factor behind oil's nearly 20% dive over the past month -- the reemergence of spare refining capacity to sate winter demand and sooth fears of any unexpected outages -- at least for now.
The price fall and the refinery run cuts will be troubling for OPEC, which may have to consider its first official supply cuts in two and a half years to keep prices from falling below the US$50-US$60 range that many members deem appropriate.
Simpler refiners in Asia are often the first to feel the effects of sliding margins, as the region has more capacity than it has demand for most fuels, despite rapid growth in China.
Export-oriented refiners are cuttting back after simple margins in Singapore -- a proxy for topping plants across Asia -- fell about US$3 into the red over the past month, at one point nearing minus US$5, their lowest point in a decade, according to Reuters data based on average Dubai yields.
Fuel oil's discount versus crude has rebounded thanks in part to the cuts, recovering to around minus US$14 a barrel after hitting an all-time low of minus US$20 early last week.
But profits on light fuels remain anaemic, with Singapore's 92-octane gasoline hovering US$1 above benchmark European BFO crude and naphtha's premium to Brent near a one-year low of US$60 a tonne.
"The meltdown of NYMEX unleaded gasoline futures prices tells refiners and importers to cut gasoline supply," said Jan Stuart at UBS, pointing to a 30% slide in New York this month.
News of the Exxon Mobil cuts may bite especially hard as it will tighten supplies in the refining and trading hub of Singapore, where prices for fuels across Asia are set.
The cuts are likely the most widespread since margins emerged from a five-year slump in 2003. In the late 1990s, refineries in Asia ran at about 80% of their capacity, a figure that jumped to 90% in 2003 and 2004 amid unexpectedly quick demand growth from China, BP data show.
The cuts are also the result of bulging inventories, especially in Asia, where traders have been forced to book tankers to hold excess fuel oil offshore Singapore and Japanese refiners have topped up winter distillate inventories to their highest seasonal point since 2003.
Looks like SPC will drop another few cents today!! 6 cents maybe?
Does anyone know if Car Insurance covers car jacking incident in JB?
Oop!!! the 5th sen..is smell, any one smelling a discount coming since oil price drop another US$2/- to US$63.76, Iran said it would like it px to stick at about US$64/- per barrel. Other said about US$50-60
SPC price is hit due to lower crude prices. The potential to punt on this stock is great ( high risk high returns ) but should be only for those who can hold on to it. The entry point i think is around $4.20 ( 15-20% )off the price of $5.00. However, if crude price still heads south, then might SPC might fall evern harder!! So, enter the market at yr own risk. High Risk, High Returns.