Last Week in World Oil:


  • Oil traders appear to have moved on from the OPEC production cut, despite its reported effectiveness, to focus on a strengthening US dollar, rising US crude output and Asian buyers sourcing crude from non-OPEC sources. This has sent oil prices back to their previous levels, a holding pattern that hovers around US$53/b for WTI and US$55/b for Brent.

Upstream & Midstream

  • OPEC compliance with its output cut has been reported at 92%, an optimistic figure given the organisation’s history of breaking quotas. More encouragingly, the 11 non-OPEC producers that elected to join the global deal have also lived up to their promise, with a constructive 40% compliance rate of the overall reduction in January as Russia implements the cuts in phases.
  • Long seen as comfortable within its own borders, state giant Qatar Petroleum (QP) is now exploring overseas options. The largest LNG producer in the world will also be trimming domestic costs by merging Qatargas and RasGas, while pursuing upstream assets in Morocco and Cyprus, where it recently won a bid for 40% of an exploration plot.
  • The active US oil and gas rig count is now 80% higher than its recent lowest point in May 2016, with eight new oil rigs joining four gas rigs to bring the total count to 591 for oil rigs and 741 for the overall count.


  • London-listed Irish conglomerate DCC has agreed to purchase ExxonMobil’s fuel retail network in Norway for a reported NKR2.43 billion (US$294 million). It is the latest pullout by a supermajor from the mature European fuel retail market, with the 142 company-operated Norwegian sites now joining DCC’s European fuel retail network.

Natural Gas and LNG

  • Petrobras’ attempt sale of a natural gas distribution unit to Brookfield Asset Managament for US$5.2 billion has hit a snag, the latest legal snafu to set back the Brazilian oil giant’s attempt to restore financial health through asset sales. A federal judge in Brazil has blocked the sale of Nova Transportadora do Sudesteon on the grounds that the sale was not sufficiently publicised, raising concerns that the asset sales was being rushed through without fostering competitive bids. A separate regional court has also suspended Petrobras’ planned divestment of two offshore gas fields to Karoon Gas Australia.


  • France’s Total has outperformed most other supermajors in 2016, announcing adjusted net profit of US$8.2 billion, above Shell (US$7.2 billion), BP (US$2.6 billion) and Chevron (US$1.8 billion), behind only ExxonMobil (US$8.9 billion). Its 4Q16 net profit beat analyst expectations at US$2.4 billion, and Total is planning to buck the supermajor trend by hunting for upstream and downstream assets put on sale by its rivals.

Last Week in Asian Oil:

Upstream & Midstream

  • Crude is coming into Asia and into China from all over the world now, from places that do not normally send crude here. Husky Energy just recorded the first sale of its Atlantic Canada crude to China last week, sending a million barrels from the White Rose field to China, instead of its usual destinations in the US and Europe. The trade became possible because of the OPEC supply cut, that led to cuts in deliveries to Asian buyers, but also because of the unusually low shipping rates that are now opening up uncommon trades and shipping routes as beleaguered shippers clamour for business.

Downstream & Shipping

  • Saudi Aramco has inked an agreement with Chinese oil refiner North Huajin Chemical Industries Group to supply crude to its 150 kb/d refinery. Primarily aimed at producing naphtha for petrochemical production, the steady flow of Arab Extra Light is Saudi Aramco’s attempt to regain its status as the top crude supplier to China, after coming in second to Russia in 2016. Huajin is a unit of China’s military group NORINCO and while it is not an independent Chinese teapot, it is a new customer for Saudi Aramco as the latter makes its push to seek new Chinese buyers by offering spot cargoes and competitive credit terms.

Natural Gas & LNG

  • The Singapore Exchange (SGX) and broker Tullett Prebon are developing a new LNG spot pricing index, joining its existing Singapore and Northeast LNG Sling indexes. The new Sling Index focuses on west Asia, known as the Dubai-Kuwait-India (DKI) Sling that will be published every Monday and Thursday covering spot prices between the Middle East and India. The new index should launch in the second quarter of 2017, standardising LNG pricing in Asia and positioning Singapore as the region’s trading hub.
  • Indonesia is facing a glut of LNG this year, with a reported 63 uncommitted cargoes of the fuel between the Tangguh and Bontang projects, according to the Director General of Oil and Gas. At current bookings, Bontang will have 32 uncommitted LNG cargoes and Tangguh 31, and there may be more in 2018 with the expansion of Tangguh being sanctioned. LNG cargoes are generally locked up in long-term contracts, with uncommitted cargoes sold on the prompt market at spot prices.
  • South Korea’s Kogas has expressed interest in buying into US shale gas projects, aiming for supply security, as US-South Korean trade relations head for rockier times under the Trump administration. Kogas is the world’s second largest buyer of LNG, receiving its first US LNG cargo from Cheniere this year. But rather than be a mere buyer, Kogas is following the example of Japanese gas companies by becoming asset owners as well, hedging against rockier political times.


  • A surprise shakeup has happened at Pertamina. CEO Dwi Soetjipto and Deputy CEO Ahmad Bambang have been removed from their positions by the Pertamina Board of Commissioners and the Ministry of State-owned entreprises. With Yenni Andayani (the former new and renewable energy director) as acting CEO, the changes are reportedly to ‘refresh’ the company structure as the ‘complex recruitment and management structure has obstructed cooperation.’ Pertamina chairman Tanri Abeng denied that the removals were linked a corruption case. The company aims to introduce a new streamlined corporate structure and new CEO by the beginning of March.

Get more insights like these here.

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.