Last Week in World Oil:


  • Oil prices inched up at the start of the week, buoyed by the effective implementation of the OPEC producer cuts. However, the rising prices have also encouraged rising production in the US, keeping gains in check along with stubbornly high US stockpile levels.
  • The Brent crude benchmark, which forms the bulk of global oil trade, is being overhauled for the first time in a decade to account for declining production in the North Sea. Effective immediately, pricing agency Platts has added the Norwegian Troll crude grade to the basket of four British and one Norwegian crudes (Brent, Forties, Oseberg and Ekofisk) that from Brent to expand the physical volume of crude underpinning the benchmark, making it less vulnerable to manipulation.

Upstream & Midstream

  • TransCanada has re-filed an application with Nebraska to route the proposed Keystone XL pipeline through the state. The original application was withdrawn after President Obama vetoed the pipeline project, but with a friendlier administration in the White House, this brings Keystone XL one step closer to implementation and  operational reality.
  • Iraq and Iran have agreed to explore the possibility of a pipeline linking the two nations, expanding export options for Kirkuk crude in northern Iraq as well as provide crude for the Abadan refinery in Iran. Currently Kirkuk crude is transported through Kurdish territory, complicating matters as the Kurds have interrupted Kirkuk transit in the past.
  • Thirteen new onshore oil and gas rigs were added to the US rig count last week, offsetting a loss of three offshore rigs to bring the total active rig count up to 751. It is the fifth consecutive week of rises, leading to the EIA forecasting a rise in domestic oil output to 4.87 mbpd in March, which would be the fastest rise since October, underpinned by shale oil plays.


  • The Ras Laffan Refinery 2, which began production in late 2016, will be geared towards producing aviation fuel, with a dedicated pipeline connecting it to the Doha International Airport expected to be completed in 2018. Ras Laffan 2 runs on condensate, with a capacity of 146 kb/d, and will also produce naphtha for petrochemical processing and ultra low-sulphur diesel for export to Europe.

Natural Gas and LNG

  • Petronas and the government of British Columbia are offering an additional $145 million to two First Nation groups that would allow a US$27 billion LNG project to go ahead. Federal approval for the project was given last September for the Pacific Northwest LNG, but additional amendments are proposed to quell environmental and native group opposition to the project. Politics is now also in the fray, with the opposition candidate for the BC premiership opposing the current site of the planned facility, with elections due in May 2017.

Last Week in Asian oil:

Upstream & Midstream

  • Petronas may be selling a large minority stake in a prized upstream gas asset in Sarawak, to raise cash and cut development costs as the Malaysian state player seeks to improve its financials. Petronas will retain a majority stake in the SK316 offshore gas block, but up to 49% of the asset may be sold off. The block is currently home to the NC3 field, which feeds the LNG9 joint venture export project with JX Nippon, as well as the Kasawari field. Likely buyers would be Japanese and Korean gas importers.
  • Chevron has secured an offshore permit in Western Australia for AUS$3 million, the first cash bid permit to be awarded since 2014. The cash bid permit was reintroduced to drive interest in mature areas or areas known to contain petroleum accumulations’, essentially a cost-effective way of driving interest in areas that have a high percentage of recoverable resources. The WA-526-P permit is in a gas-rich area of the Northern Carnarvon basin close to the Gorgon and Pluto LNG projects, and is the first success of a series of disappointing cash bid auction results.

Downstream & Shipping

  • Thailand’s largest oil refiner ThaiOil set out its operational plans for 2017 last week, aiming to runs its 275 kb/d refinery at within 100-103% capacity with no major maintenance shutdowns planned. Productivity rates exceeding 100% are common in Thailand where official refinery capacity is underestimated, with the Sriracha refinery reaching rates of 108% last year, almost all of which was consumed domestically.

Natural Gas & LNG

  • More LNG will be entering Singapore as natural gas contracts supplied via pipeline from Malaysia and Indonesia near expiration. To mitigate this, Shell and Pavilion Gas will deliver their first LNG cargoes to Singapore later this year, under contracts awarded in October 2016 for three years or a maximum of 1 million tons per year. Singapore will also be allowing for up to 10% of imports coming from the spot market, to even out supply and bolster its ambitions of becoming the LNG trading hub for Asia
  • Weak LPG prices are boosting demand in South Korea. Traditionally used as a transport fuel, LPG consumption in South Korea has declined significantly since 2010 as vehicles switched to gasoline and diesel, leaving major importers SK Gas and E1 scrambling for new customers. With a glut in natural gas liquids leading to low prices and a recovery in consumer plastics strengthening Asian petrochemical margins, LPG demand has jumped, benefitting American exporters. In 2016, South Korea’s LPG demand rose to 9.4 million tons while imports jumped to 7 million tons, more than half of which was supplied by US Gulf exporters. LPG usage in petrochemicals more than doubled to 3.3 million tons.
  • The Elk-Antelope LNG project in Papua New Guinea is now targeted at the end of 2018, a delay from its original date of late 2017. One of the largest undeveloped gas assets in Asia, the Elk and Antelope fields are operated by Total, partnering with InterOil on the LNG export project. The ExxonMobil acquisition of InterOil would have streamlined the natural gas scene in PNG, but some ownership quibbles have delayed the acquisition until the Supreme Court of Yukon confirmed that the sale could go ahead on Sunday.

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About The Author Easwaran Kanason

Easwaran Kanason has over 18 years of entrepreneurial experience in oil & gas, skills development and conferencing. He is currently the CEO of PetroEdge, Asia’s leading oil & gas training provider, and co-founder to NrgEdge, a professional networking platform dedicated to the energy industry.