February 2018, Vol. 245, No. 2

In The News

World News

EIA Raises Global Oil Demand Forecast

Global consumption of petroleum and other liquid fuels is expected to grow at a faster rate in 2018 than previously expected, according to the U.S. Energy Information Administration (EIA).  

Based on EIA’s mid-January forecast revision, petroleum and other liquid fuels consumption growth will average 1.7 MMbpd in 2018 and almost 1.7 MMbpd in 2019 – approximately 100,000 bpd higher than predicted in EIA’s prior forecast.  Non-OECD countries, led by India and China, will account for 1.2 MMbpd and 1.3 MMbpd of the global growth in 2018 and 2019, respectively, EIA predicted.  

Global consumption of petroleum and other liquid fuels averaged 98.4 MMbpd in 2017, a 1.4 MMbpd increase over the 2016 average.  Inventory draws averaged 400,000 bpd in 2017, marking the first year of global inventory draws since 2013. Global inventories are expected to grow by about 200,000 bpd in 2018 and by about 300,000 bpd in 2019.

Asian Buyers Line Up for Mozambican LNG

LNG buyers from Japan, China and at least three other countries have reportedly reached preliminary agreements with Anadarko Petroleum to secure long-term supply from the Mozambique Area 1 project it plans to start up in 2020.

Japan’s Tohoku Electric confirmed in December that it has entered into a heads of agreement (HOA) to purchase up to 0.28 million tons per year for 15 years from the start of production at the Anadarko-led Mozambique 1 project.  Anadarko also acknowledged in January that it’s talking with “a variety of Chinese counterparts, including international oil companies and emerging independent LNG buyers.”  The Houston-based company said China’s increasing consumption makes it a long-term strategic market for the Mozambique LNG project.   

Anadarko and its partners need more sales and purchase agreements to justify a final investment decision on the estimated $15 billion-$20 billion Area 1 project.  Sources close to the negotiations told Reuters that unannounced agreements have already been reached with Mozambican LNG to China National Offshore Oil Corp., Indonesia’s Pertamina, Thailand’s PTT, the United Arab Emirates and unnamed companies in India.  Anadarko has rounded up sales agreements for about 2.6 million of the plant’s for 12 million tons of annual output capacity, Bloomberg reported.  

Anadarko’s Area 1 partners include Mitsui, Oil India Limited, Bharat PetroResources, PTT and Mozambique’s state-run ENH.

Kreuz Subsea Awarded Offshore Hydrostatic Testing Contract

Kreuz Subsea has been awarded a contract by Larsen & Toubro (L&T) to conduct hydrostatic testing on pipelines associated with Oil & Natural Gas Corporation’s (ONGC) Pipeline Replacement Project (PRP4) and Daman field development projects, off the west coast of India.

To complete the project, the company will utilize five vessels, including the DP2 purpose-built SURF vessel, Kreuz Installer, and the diving support and construction work barge, Kreuz Supporter.

“The waters of Daman field are known for experiencing very high tidal currents and near zero visibility,” Kreuz Subsea CEO AJ Jain, said. “Being awarded this work to ultimately support ONGC in the region reaffirms our reputation for providing flexible, safe operations, dedicated and experienced personnel, as well as the ability to pass on great value to our clients.”

Contract Awarded for Balticconnector Pipe Production

Corinth Pipeworks Pipe Industry SA has been awarded a contract from Elering and Baltic Connector OY to manufacture the 77-km (48-mile) undersea portion of the Balticonnector gas pipeline.

Under the terms of the contract, Corinth Pipeworks will produce 6,500 sections of pipe by the end of 2018. Once completed, the pipe will be welded together and laid beneath the Gulf of Finland.

The Balticconnector Pipeline Project includes the construction of a 153-kilometer (95-mile) pipeline that will connect the gas networks of Estonia and Finland. The project will transport 7.2 MMcm/d of natural gas and is expected to be placed in service in 2019.

Forties Pipeline Resumes Operations after Crack Repair

The North Sea Forties Pipeline System resumed full operations after a three-week shutdown to repair a hairline crack that Swiss-based Ineos discovered less than two months after acquiring the system from BP.

The 378-km (235-mile) Forties system links 85 North Sea oil and gas fields and delivers almost 40% of the UK’s North Sea oil and gas output. The crack was found during inspection of an onshore section of the 450,000 bpd pipeline near Aberdeen. Some North Sea production was shut down during the pipeline repair, helping to lift the price of Brent crude to its highest level since mid-2015.

Forties crude is sent through the pipeline to the Scottish coast and loaded directly onto oil tankers at Hound Point to be sent to storage tanks or piped to Ineos’s 200,000 bpd Grangemouth refinery.

Construction of China-Russia Natural Gas Pipeline Gains Steam 

China National Petroleum Corporation (CNPC) said it has accelerated pipelaying for the East-Route Pipeline connecting China to Russian natural gas supplies.

Welding of the northern part of the 3,371-km (2,094-mile) East-Route pipeline has begun, the company announced. The pipeline originates in northeast China's Heilongjiang Province and terminates in Shanghai in the east. Construction began in June 2015 and will be completed in 2020.

Upon completion, the pipeline will provide China with 38 Bcm of natural gas from Russia annually. It will have far-reaching significance for optimizing China's energy structure, CNPC said, cutting emissions and improving air quality. The Russian section of the pipeline began construction in eastern Siberia in 2014.

PetroChina’s Biggest Refinery Doubles Russian Pipeline Oil Intake

Since the new Russia-China oil supply agreement took effect at the start of the year, PetroChina’s largest refinery has almost doubled the amount of Russian pipeline crude oil that it is processing, according to a report that Reuters attributed to a senior industry source with direct knowledge of the volumes.

The 410,000 bpd PetroChina refinery in the northeast port city Dalian will process 260,000 bpd of Russian pipeline crude oil in 2018, up by 85-90% compared to 2017, Reuters reported.

The higher volumes of Russian pipeline crude will replace seaborne Russian shipments of the ESPO blend from the Kozmino port in the Russian Far East and crude oil shipments from the Middle East, according to the industry source.

An extension of the East Siberia-Pacific Ocean oil pipeline between Russia and China started operating in January, doubling the export volumes from 15 to 30 mtpa, or almost 220 million barrels. Russia’s oil giant Rosneft is the supplier of the crude via the ESPO pipeline, and PetroChina is the buyer.

The pipeline crude will also increase Russia’s market share in China. Last year Russia displaced Saudi Arabia as the top crude oil supplier to the world’s biggest importer, while Saudi shipments have taken a hit as the Kingdom cuts oil supply as leader of the OPEC pact to restrict production.

Halfwave Awarded Nord Stream 2 Inspection Contract

Halfwave has been awarded a contract to custom-build ART Scan tools for the Nord Stream 2 Pipeline Project. The tools will be used to inspect new pipelines during the pre-commissioning phase and have the capability to inspect an entire pipeline in one single run while providing high resolution inspection results.

“This is one of the largest and most exciting contracts that we have been awarded, and we are pleased that Nord Stream 2 AG has recognized the added value the ART technology provides,” said Halfwave CEO Paul Cooper. “After a very diligent technology evaluation process, it is very rewarding to be recognized by Nord Stream 2 AG as their leading technology provider and preferred supplier of pipeline inspection services.” P&GJ

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