february 2020 · 2020. 1. 30. · hydrocarbon processing industry. 76 enhanced life, reliability...
TRANSCRIPT
True Zero Leakage TechnologyAdvanced modulating Pilot Valves
February 2020
Hydrocarbon Engineering
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CONTENTS
THIS MONTH'S FRONT COVER
February 2020 Volume 25 Number 02 ISSN 1468-9340
03 Comment
05 World news
12 Energy anxietyNg Weng Hoong, Contributing Editor, looks at Asia’s energy insecurity as the region’s strong oil demand outlook is matched by continuing supply fears.
19 The quest for a digital solutionJan-Willem Hennipman and Marco van Son, Comprimo, look beyond the hype cycle and focus on the downstream applications of digitalisation from the perspective of a sulfur recovery licensor.
23 Steel belts for sulfur processingTom Smith, IPCO Germany GmbH, Germany, outlines how enhanced steel belt technology delivers greater resistance to corrosion.
27 Analyser applicationsParisa Akhshi, AMETEK Process Instruments, Canada, evaluates solutions for sulfur recovery analysis.
33 De-risking catalyst removalGlen Derman, EnerMech Ltd, Australia, addresses the signifi cant risks associated with catalyst handling in the LNG sector.
39 Let it fl owSteven Fulk and Ralph Weiland, Optimized Gas Treating Inc., USA, assess what affects effi ciency in trayed and packed columns.
45 Optimising hydrogen production parametersDiyar Kılıç, İsmail Bahadır Kara, Aslı Reyhan, Eda Bayraktar, and Sultan Orman, Tüpraş, Turkey, evaluate methods to optimise hydrogen production cost in a steam methane reformer.
54 From zero to heroBrian Burkhart, Baker Hughes, USA, seeks to defi ne ‘zero leakage’ of equipment and outlines how it can be achieved.
62 Not in isolation?Mark Abbott, ValvTechnologies, USA, examines the challenges to effectively isolating hot, high-pressure fl uids in oil and gas, and the modern valve solutions which exist to address this issue.
69 The power of pumpsUli Eibl, NETZSCH Pumps & Systems, Germany, explains how individually confi gured positive displacement pumps can handle diffi cult tasks in midstream and downstream areas.
71 Retrofi t or replace?Luca Lonoce, Sulzer, looks at the benefi ts of using retrofi t technology to meet the changing demands of the hydrocarbon processing industry.
76 Enhanced life, reliability and performanceRambabu Chundru, Elliott Group, USA, discusses how fi nite element analysis applied to compressor impeller design can enhance compressor life, reliability, and performance in oil and gas and petrochemical applications.
81 Working in tandemTravis Phoenix, Siemens Oil & Gas, USA, sets out the considerations for implementing mixed compression arrangements in gas processing facilities.
85 A close connection Stuart Hall and John Morton, John Crane, UK, consider how advancements in rotating equipment go hand-in-hand with mechanical seal improvements.
The refi ning industry has reluctantly accepted unwanted environmental emissions and costly process loss from leaking pressure relief valves. A recent advancement in Pilot Valve modulation technology has enabled True Zero Leakage at operating pressures as high as 99% while acting as the last line of defence from overpressure events for life, property, and equipment.
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COMMENTCALLUM O'REILLYSENIOR EDITOR
DNV GL’s annual outlook for the oil and gas industry makes for particularly interesting reading this year, and its title of ‘New directions, complex choices’ sums up the
content quite nicely.The report, compiled from a survey of over
1000 senior oil and gas professionals and interviews with industry executives, suggests that optimism for growth in the oil and gas industry has dampened slightly, with 66% of respondents confi dent of industry growth in 2020, compared to 76% last year. This is largely due to uncertainty around the oil price and global economic conditions, with particular concerns that a US-China trade war could lead to a global economic slowdown. It is likely that confi dence will have been boosted by the recent announcement that the US and China have signed a ‘phase one’ trade deal, which will see China increase the value of energy imports by US$52.4 billion above 2017 levels over the next two years. However, Ann-Louise Hittle, Vice President, Macro Oils at Wood Mackenzie, warns that while this trade deal is likely to be benefi cial to the global economy, it will have limited impact on the global oil market, as well as the refi ning market in Asia. She said: “In a free trade market, our proprietary Refi nery Supply Model suggests that an optimal volume of US crude imports for China is only about 400 000 bpd in 2021. Despite the continued growth of US oil exports, China’s appetite for US tight oil is limited given that its deep conversion refi neries are designed to process medium/heavy crudes from the Middle East and Latin America.”
Other key takeaways from DNV GL’s report include the fact that there is an increasing move towards longer-term strategies in the industry, as organisations attempt to establish a position in the energy transition. The number of respondents reporting that their company is actively adapting to a less carbon-intensive energy mix jumped to 60% (up 9% on last year), with 71% expecting to increase or maintain investment in decarbonisation. Strategies being pursued include diversifying into renewable energy, decarbonising oil and gas production, and increasing investment in decarbonised gas. Liv A. Hovem, CEO, DNV GL – Oil & Gas, comments: “Our research shows that the oil and gas industry has placed decarbonisation at the centre of its agenda, and it will remain a priority despite uncertainty from volatile market conditions and stalling expectations for industry growth in 2020.”
The research also suggests that cost effi ciency, automation and digitalisation are an increasing focus for the oil and gas industry this year. Nearly all respondents (92%) expect their organisation to maintain or increase spending on digitalisation this year, with 65% confi dent of an increase in spending, specifi cally.
There was also some good news for the downstream sector. DNV GL reports that its survey respondents from this sector displayed the most confi dence in meeting profi t targets in 2020 (76%, up from 69% in 2019). This has been attributed to the abundance of cheap natural gas and the introduction of IMO’s sulfur emission limits. Brice Le Gallo, Regional Manager, Southeast Asia & Australia, DNV GL – Oil & Gas, explains: “For the downstream industry there’s an opportunity here to suddenly put new products on the market […] The large refi neries will continue to develop new types of fuel for the shipping industry. I can see this driving a lot of refi nery upgrade projects in the next two years.”
1. ‘New directions, complex choices: the outlook for the oil and gas industry in 2020’, DNV GL, (2020).
WORLD NEWS
HYDROCARBONENGINEERING
5 February 2020
USA | Matrix Service wins Eagle LNG EPC contract
Eagle LNG Partners LLC recently announced that it has selected
Matrix Service Inc., a subsidiary of Matrix Service Co., for the engineering, procurement, fabrication and construction of an LNG export facility, to be built in Jacksonville, Florida.
Eagle LNG’s Jacksonville LNG Export Facility, which will require an investment of US$500 million based on final design, will also utilise Chart Industries’ IPSMR® technology and liquefaction equipment technology. The facility will have a production capacity of approximately 1.65 million gal./d of LNG with 12 million gal. of storage, a marine terminal and truck-loading capabilities.
With completion of the Jacksonville LNG Export Facility, Eagle LNG’s investment in Jacksonville, including its Maxville LNG Facility and the Talleyrand LNG Bunker Station on JAXPORT, will rival that of other major manufacturers who are moving to Jacksonville because of its skilled workforce and strong port presence.
Europe | IMO 2020 to hit European refineries hardest
European refi neries are to expect the largest impact from new
IMO 2020 regulations. However, just 23% of these refi neries are focusing on operational improvements which target higher availability to make low sulfur fuels, according to a global study of senior employees in the refi ning industry, commissioned by asset optimisation software company AspenTech.
The survey also revealed a global shortfall in refi neries regarding this
focus on clean fuels, with just 37% claiming to be doing so as a result of IMO 2020.
However, four out of ten (43%) refi neries globally are focusing on operational improvements targeted at improved overall utilisation, relying on digital investment to secure operational effi ciency improvements. Mid-sized refi neries are focusing on this the most, in a ‘survival of the fi ttest’ battle in the lower quartiles.
Globally, nearly two-thirds of oil refi neries (64%) have not made any CAPEX against IMO 2020 regulations, which came into effect on 1 January 2020.
The study also found that refineries expect fuel oil production to fall as a result of IMO 2020, with more than a third (34%) of global refineries expecting to produce less fuel oil in 2020, while just 24% are expected to increase production.
UK | Clariant Refinery Services opens new lab
Clariant Refinery Services has opened a new state-of-the-art
crude and fuel oil laboratory that will focus on applications for transport and storage.
Based in Bradford, UK, the new laboratory has a wide selection of testing regimes and modern methods of crude oil analysis and performance testing. The facility should allow Clariant Refinery Services to find and develop new,
and customised, pour point depressant solutions for the downstream and midstream sector.
With the ability to replicate field conditions within the laboratory, Clariant can conduct full performance potential analyses of any crude oil product, in a real-life simulation, providing customers with reliable solutions, fully tailored to their specific needs.
USA | Service at Enterprise’s isobutane dehydrogenation plant begins
Enterprise Products Partners LP has announced that its isobutane
dehydrogenation (iBDH) plant in Mont Belvieu, Texas, US, recently began service, with volumes expected to continue increasing.
The facility, which is supported by long-term, fee-based contracts with investment grade customers, will ultimately have the capability to process approximately 25 000 bpd of butane into nearly 1 billion lb/yr of isobutylene.
The iBDH plant will provide the necessary feedstock to enable Enterprise to fully utilise its
methyl tert-butyl ether and high purity isobutylene assets and meet growing market demand for isobutylene. Supplies of isobutylene, which is also a by-product of ethylene production plants, have decreased as a result of increased use of low-cost, light-end feedstocks, specifi cally ethane, instead of more expensive crude oil derivatives. The development of this project leverages Enterprise’s extensive integrated midstream network to turn plentiful, cost-advantaged NGLs into a higher-valued product.
WORLD NEWSIN BRIEF
HYDROCARBONENGINEERING
6February 2020
China | Shell Chemicals to produce polycarbonate
Shell recently announced that it has signed a memorandum of
understanding with CNOOC Oil and Petrochemicals Co. Ltd to explore its fi rst commercial-scale polycarbonate (PC) production unit, which would be located at the CNOOC and Shell Petrochemical Co. joint-venture chemicals complex in Huizhou, China.
As an interim step, Shell has started constructing a PC
development unit at its Jurong Island chemicals plant in Singapore.
An expanded product range is a key part of Shell’s growth strategy for its chemicals business. PC is a transparent and impact-resistant engineering polymer, used to make vehicle headlights, LED spotlights, UV-blocking windows and spectacles.
Shell’s PC production units will also produce allkyl carbonates.
TechnipFMC recently reaffirmed that its planned transaction to separate into two companies, TechnipFMC and Technip Energies, is well on track for completion in the first half of 2020. The company anticipates completing the transaction in 2Q20 and intends to host a capital markets event in Paris for Technip Energies before the completion of the spin-off.
Gaz Sintez has nominated Haldor Topsoe as the licensor of its methanol plant in the Leningrad region, Russia. The plant will produce 1.6 million tpy of AA grade methanol based on Topsoe’s SynCOR MethanolTM technology. Gaz Sintez is developing the methanol plant project at the port of Vysotsk in the Leningrad region of Russia. Hyundai Engineering has started the development of the FEED-package, and NIIK has been awarded the Russian general designer contract. The plant is expected to be completed in 2023.
INVISTA’s technology and licensing group, INVISTA Performance Technologies (IPT), and Hengli Petrochemical Co. Ltd (Hengli) have announced the successful start-up of Hengli’s fourth purified terephthalic acid (PTA) line. The 2.5 million tpy capacity plant is located in Changxing Island, Dalian City, China.
Parkland Fuel Corp. recently announced that it has entered into an agreement to acquire the entities and assets comprising Kellerstrass Oil Co. through its wholly owned US subsidiaries, collectively Parkland USA.
France | ExxonMobil and Axens sign licensing alliance agreement
ExxonMobil has announced that ExxonMobil Catalysts and
Licensing LLC and Axens have signed a licensing alliance agreement to allow Axens to provide ExxonMobil’s FLEXICOKINGTM technology and integrated resid conversion solutions.
Under the agreement, Axens is granted a worldwide right to market, license and provide engineering work and technical support for the design, construction and start-up of new FLEXICOKING units. The technology will be offered under a single licence and engineering agreement to be provided by Axens. This new alliance
leverages collective expertise to meet customer needs by providing a resid conversion solution that maximises liquid yields and minimises pet-coke production.
“We are pleased to once again partner with ExxonMobil to better meet client needs to address terminal residue conversion while producing less coke or low-value blendstock,” said Jean Sentenac, Chairman and CEO of Axens. “The alliance brings a combination of FLEXICOKING and H-Oil technologies to provide a compelling new resid conversion option to our customers.”
China | Petronas concludes 12-year LNG deal with Shenergy
Petronas has signed a heads of agreement (HOA) with Shenergy
to supply approximately 1.5 million tpy of LNG to its Wuhaogou receiving terminal in China.
The LNG supply agreement is for a 12-year term starting from 2022. It also involves a shipping collaboration
to construct and charter new mid-sized LNG vessels for the cargo delivery.
The new deal for additional LNG supply allows Petronas to support Shenergy’s increasing demand for LNG, while further strengthening Petronas’ foothold in one of the world’s fastest-growing LNG markets.
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WORLD NEWS
HYDROCARBONENGINEERING
8February 2020
USA | Crude oil exports and production hit record high
US petroleum exports hit a new all-time high of 9 million bpd in
the fi nal month of 2019, according to data released from the American Petroleum Institute’s (API) December 2019 Monthly Statistical Report (MSR).
This latest milestone came as US crude oil production notched a fi fth consecutive monthly increase to reach a record 12.9 million bpd.
The MSR notes that total US petroleum exports included a record 3.6 million bpd in crude oil exports.
Productivity and well completions drove record US crude oil production, while solid December jet fuel demand contributed to an annual record.
Refi ning and petrochemical demand for naphtha and gasoil ‘other oils’ also set records for December 2019 and the year.
API Chief Economist Dean Foreman said that the the strong December performance capped a “historic year”in the US’ energy revolution.
DIARY DATES10 - 12 March 2020StocExpoRotterdam, the Netherlandswww.stocexpo.com
15 - 19 March 2020CORROSION 2020Houston, Texas, USAnacecorrosion.org
22 - 24 March 2020AFPM Annual MeetingAustin, Texas, USAwww.afpm.org/events
07 - 09 April 2020Asia Turbomachinery & Pump SymposiumKuala Lumpur, Malaysiaatps.tamu.edu
15 - 17 April 202022nd Annual International Aboveground Storage Tank Conference & Trade ShowOrlando, Florida, USAwww.nistm.org
19 - 22 April 2020GPA Midstream ConventionNew Orleans, Louisiana, USAgpamidstreamconvention.org
20 - 22 April 2020Sulphur World SymposiumChicago, Illinois, USAwww.sulphurinstitute.org/symposium-2020/
11 - 15 May 2020RefCommGalveston, Texas, USAwww.events.crugroup.com/refcomm/home
09 - 11 June 2020Global Petroleum ShowCalgary, Alberta, Canadawww.globalpetroleumshow.com
10 - 11 June 2020Downstream 2020Houston, Texas, USAwww.downstreamevent.com
06 - 10 December 2020World Petroleum CongressHouston, Texas, USAwww.wpc2020.com
UAE | Axens awarded licensing contract for Borouge 4 project
The Abu Dhabi Polymers Co. Ltd (Borouge), a joint venture
between Abu Dhabi National Oil Co. (ADNOC) and Borealis, has awarded Axens a licensing contract to supply a methyl tert-butyl ether (MTBE) unit coupled with 1-butene production unit and 1-hexene unit for the Borouge 4 project in Ruwais, Abu Dhabi, UAE.
The scope of Axens’ work includes the supply of process books, catalysts and adsorbents, as well as proprietary equipment, training and technical services.
The Borouge 4 complex will include the world’s largest mixed-feed cracker on the same location as its three existing plants. The complex will consist of a number of production units. The primary products will be ethylene, propylene, butadiene, MTBE, 1-butene, pygas, 1-hexene and benzene from the new mixed-feed cracker and its derivative units. The ethylene and propylene will be converted into polyethylene and polypropylene products.
Turkmenistan | Haldor Topsoe opens ATR-based methanol plant
Haldor Topsoe recently announced the offi cial opening
of the world’s only natural gas-to-gasoline complex in Turkmenistan.
The complex includes the world’s largest methanol plant based on autothermal reforming (ATR), using Topsoe’s SynCOR MethanolTM solution, with methanol production capacity of 5225 tpd.
In the Turkmen gas-to-gasoline complex, the SynCOR Methanol solution has been combined with a gasoline synthesis loop to produce synthetic gasoline. This concept is named SynCOR TIGASTM.
Global demand for methanol is increasing. Accordingly, investors and producers plan for larger plants with improved energy effi ciency to achieve economy of scale.
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ENERGY ANXIETY
February 202013HYDROCARBONENGINEERING
T hese days, the growing divide between Asia and the West is not just confi ned to trade issues or human rights. The oil market’s outlook is just as bifurcated, with the West relaxed about long-term energy
prices as it focuses on peak demand and rising production, while a jittery Asia is increasingly worried about the lack of stockpiles amid the threat of supply disruptions.
The International Energy Agency’s (IEA) latest forecast for benign market conditions over the next two decades should be a source of comfort, but Asia’s mostly oil-defi cit economies are far from comforted. The IEA’s ‘World Energy Outlook 2019’ report affi rmed the prevailing dual themes of rising supply out of the US, and slowing global oil demand from 2025 leading to the fl attening of growth from 2030.1
But Asia’s oil appetite is unlikely to diminish despite a slight slowdown in demand growth in recent years. The region is forecast to continue expanding its share of global oil consumption, having risen from 30% a decade ago to over 36% today.
Ng Weng Hoong, Contributing Editor, looks at Asia’s energy insecurity as the region’s strong oil demand outlook is matched by continuing supply fears.
February 2020 HYDROCARBONENGINEERING
14
While rising energy consumption underlines Asia’s continued economic expansion, it also points to the region’s deepening oil addiction, for which there seems to be no cure. Increasingly, Asia is dependent on oil imports from politically unstable producing countries in the Middle East and Africa.
On 14 September, Asian consumers were given a timely reminder of their vulnerability to supply shocks when military drones attacked two of Saudi Arabia’s main oilfi elds, briefl y shutting down more than 5% of global production.
The benchmark Brent crude price surged nearly 20% to just under US$72/bbl the following trading day, due in part to panic-buying in Asia.
Prices fell back over the next three weeks after Saudi Arabia convinced the market it was on course to fully restore operations at the affected fi elds.
Nevertheless, the attacks have struck fear throughout Asia, especially in India and China which will drive the bulk of the oil industry’s growth over the next two decades.
Growing at an annual rate of 1.3%, China’s primary oil demand will rise from 12.1 million bpd in 2018 to 15.9 million bpd in 2040, predicts the Organisation of Petroleum Exporting Countries (OPEC) in its latest ‘World Oil Outlook’ report.2
India will be even more alarmed by the report’s forecast that the country’s primary oil consumption will grow by 3.5%/yr or nearly three times as fast as China’s. India will be using 9.8 million bpd in 2040, up from 4.6 million bpd in 2018.
China faces deteriorating energy security and economic outlook“The Chinese nation cannot be stopped”, China’s President Xi Jinping declared in a nationalistic speech on 1 October to mark the 70th anniversary of the country’s independence.
Those could prove to be famous last words as China’s economic model is starting to show cracks after an impressive 40-year run of rapid growth. What could stop the Chinese nation is its deteriorating energy security, with the US emerging as a surprise new threat.
Mr Xi delivered his tough speech just weeks after the drone attacks on Saudi Arabia that was followed by the US government’s imposition of sanctions on Chinese tankers for transporting Iranian crude.
The Middle East, which holds nearly half of the world’s oil reserves, plunged further into turmoil when US President Donald Trump announced the withdrawal of US troops from northern Syria.
Already hard hit by the trade war with the US, China must now worry about further political instability in the Middle East which supplies 45% of its oil.
The drone attacks on the Abqaiq and Khurais oil fi elds served up an immediate source of threat as Saudi Arabia is China’s leading oil supplier. According to S&P Global Platts, the Kingdom accounted for 16% of China’s oil imports of over 9.7 million bpd for most of 2019.3 Invested in major oil and petrochemical projects in China, state-owned Saudi Aramco has also committed to increasing supply to its largest customer for the long-term.
The Saudi guarantee of secured oil supply to China suddenly looks wobbly. The attackers encountered little resistance as they evaded US intelligence and expensive,
high-tech military equipment to immediately cut off 5.7 million bpd of oil production. The US, Saudi Arabia and some European countries have blamed Iran, setting the stage for revenge attacks and an expansion of confl ict.
Just as Beijing was coming to grips with the Saudi supply cut-off, the US government announced a surprise decision to impose trade sanctions on six Chinese fi rms for shipping Iranian oil.
The sanctions will hinder the export of Iranian oil, especially to China. Traders estimate that Iran shipped up to 500 000 bpd to China in the fi rst half of 2019. The State Department described the sanctions as among the most punitive it has taken out against entities for handling Iranian oil since sanctions were reimposed in November 2018.
The department said it blocked the use of “all property and interests in property of these Chinese entities that are in the United States or within the possession or control of a US person, and provides that such property and interests in property may not be transferred, paid, exported, withdrawn”. It has also banned US citizens and companies from dealing with these Chinese fi rms, thus depriving them of the services of US fi nancial institutions.
The sanctions were imposed just days after China and Iran announced they had signed trade deals worth a total of US$400 billion, including the sale of Iranian oil to Chinese refi ners at a reported discount of 20% to 30%, according to the Middle East Monitor.4 China’s decision to help keep Iran’s economy afl oat has alarmed the Islamic regime’s main enemies, notably the US, Saudi Arabia and Israel.
Energy scholar Michal Meidan calls the US sanctions a bigger threat to China’s energy security than the drone attacks: “Even as China remains concerned about its vulnerability in the Middle East, the US is emerging as its biggest source of energy insecurity”, she wrote in a report for the Oxford Institute for Energy Studies.5
The Saudi supply disruption and the unprecedented US action comes on the heels of reports that China’s dependence on oil imports had set a new high of nearly 70% last year. Despite spending billions of dollars on domestic upstream projects, that fi gure is on course to reach 76% in 2040, according to BP.6
Despite attempts to diversify its energy mix, and improve energy effi ciency and conservation, China has become addicted to oil, particularly for its booming transportation and petrochemicals sectors.
China’s oil consumption reached a record of over 13.5 million bpd last year, pushing the country’s share of the global total to nearly 14%, up from 11.8% in 2013 and 9% in 2008.
India: oil and gas imports from the US set to rise amid stronger bilateral tiesIndia’s appetite for US oil and gas is set to grow as New Delhi’s search for energy security adds to the strengthening of bilateral ties between the two countries.
US-India relations have also been raised to their strongest level in decades on account of their respective growing geopolitical rivalries with China and Pakistan. The personal warmth between President Donald Trump and Prime Minister Narendra Modi was on full display in Houston, Texas in
February 2020 HYDROCARBONENGINEERING
16
September when the Indian leader came to witness the signing of a US$7.5 billion LNG deal between an Indian state-owned company and a US fi rm.
US crude oil exports to India have risen from zero in 2016 to over 150 000 bpd in 2018 to 267 000 bpd in the fi rst seven months of last year, according to the US Energy Information Administration (EIA). The numbers were boosted in early 2019 when IndianOil Corp. became the fi rst Indian fi rm to secure a term contract to import crude oil from the US. The 60 000 bpd year-long deal, which started in April 2019, has raised the prospects of more US oil fl ows into India.
IndianOil described the US$1.5 billion deal as “a part of its strategy to diversify term crude (supply) sources”. Allied with this strategy of energy diversifi cation is the growing geopolitical bond between the US and India.
That theme was reinforced by top government offi cials and business executives from both countries who met at US consulting fi rm IHS Markit’s annual CERAWeek India Energy Forum in New Delhi last October.
“Energy cooperation is a centrepiece of our bilateral economic relationship”, declared the US ambassador to India, Kenneth Juster.
Elaborating on the new strategic energy partnership between the two countries, he said that apart from oil, the US expects to increase the export of LNG and coal as well as equipment and services for renewables and nuclear energy to India.
India’s need for diversity of oil supply was underlined by the drone attacks on Saudi Arabia, its second largest oil supplier after Iraq. Last year, India imported more than 810 000 bpd of crude from the Kingdom. India has also reduced its import of Iranian crude oil to comply with US-ordered trade sanctions against the state.
Mr Juster offered the US as a solution to India’s search for long-term stable energy supply and national security as it confronts the potential military threats of neighbouring Pakistan and China.
India’s petroleum minister omits mention of China and PakistanStriking a more diplomatic stance at the forum, India’s Petroleum Minister Dharmendra Pradhan focused his welcome speech on his country’s energy sector and economic needs while omitting any mention of rivalry with China and Pakistan.
“The energy sector will be driving India’s goal of becoming a US$5 trillion economy. India will have the fastest growing energy demand among all large economies”, he said. As the world’s sixth largest economy, and the third largest energy consumer, he said India will be the key driver of global energy demand in coming decades.
BP has forecast India’s oil demand to grow at an annual average rate of 2.6% from 5 million bpd in 2017 to 9 million bpd by 2040.7
But in line with this year’s slowing economy, India’s oil demand grew by a much slower rate of 1.8% in the fi rst eight months of 2019 over the same period last year, according to research fi rm Jefferies India.
Apart from its traditional use as fuel for transportation, cooking and heating, oil will increasingly be converted into
chemical and plastics through India’s new generation of oil-to-chemicals processing plants, said IHS CERA.
Another participant at the event, BP’s outgoing CEO, Bob Dudley, said his company plans to expand its downstream retail presence in India through its newly established partnership with local fi rm Reliance Industries. The joint venture will build on Reliance’s existing fuel retailing network and aviation fuel business in India.
Australia: stockpile debate gains urgency on drone attacks on Saudi oil plantsAs one of the world’s leading energy producers and exporters, Australia has been among a handful of lucky countries seemingly untouched by the threat of global oil supply disruptions.
But the 14 September drone attacks in Saudi Arabia seemed to have struck a rare nerve among Australian policy makers who were shocked by the immediate 20% surge in the Brent crude price.
While Australia is not directly dependent on Saudi oil, the sudden loss of nearly 6% of total world output sent shock waves across the global economy. Australia, increasingly dependent on imported fuels from Asian refi neries, will be forced to join in the panic-buying if a wider confl ict in the Middle East ensues.
As scenario planners prepare for an expansion of confl ict in the region, the Australian government called for another investigation into the state of the country’s oil stockpiles. Five days after the attacks, the Australian parliament’s upper house ordered the Senate Economics References Committee to begin an inquiry into the reasons and implications for the country’s low level of oil stockpile. The committee is scheduled to report its fi nding in March 2020.
In June 2015, a parliamentary report on Australia’s energy resilience found the country had only 34 days of stockpile, making it one of the lowest in the developed world. Despite continuing pressure from the IEA to raise that to the recommended level of 90 days, successive governments elected to offi ce over the last four years have kept faith with Australia’s seemingly laid-back policy on fuel security.
None of the three prime ministers during that period has made any attempt to raise the national emergency fuel stockpile levels. Indeed, the stockpiles were hovering at just over 30 days of consumption at the end of August 2019, according to the Department of the Environment and Energy.
Until now, Canberra’s policy has followed closely the arguments of the local oil industry that Asia and Middle East refi neries have more than enough capacity to meet Australia’s oil demand of nearly 1.1 million bpd. The industry has also warned that consumers will end up paying for the additional cost of tripling the country’s stockpile.
However, attitudes may soon be changing as a result of rising geopolitical tensions in the Middle East and Asia.
Just before the drone attacks, the government of Prime Minister Scott Morrison was exploring the possibility of accessing the emergency stockpiles of the US.
In August, Mr Morrison announced his government’s decision to commit troops to a US-led operation to protect
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18
the shipping lanes of the Strait of Hormuz which channels a fi fth of the world’s oil supply.
Strong outlook for Australia’s oil trade Thanks to increased sales volume and a weak Australian dollar, the country’s earnings from crude and condensate exports are expected to rise sharply in the current fi scal year, said the Department of Industry, Innovation and Science.
In its latest quarterly report, the department forecasts the export earnings will surge by over 26% from AUS$9 billion in FY2018 to AUS$11.4 billion for the current year ending 30 June 2020 (US$1=AUS$1.45).8 This would represent consecutive years of massive earnings growth as exports for FY2017 brought in AUS$6.87 billion.
“The outlook for crude and condensate remains strong, with production forecast to increase at an average annual rate of 11%, up from 340 000 bpd a day in 2018 – 2019 to 417 000 bpd in 2020 – 2021”, it said.
Australia’s refi neries produced 502 000 bpd of fuel and feedstocks in FY2018, meeting just 39% of the country’s domestic consumption, the Department said. Imports met 70% of Australia’s demand for diesel and 36% for gasoline.
In line with slower economic growth, Australia’s oil consumption fell in the fi rst half of 2019.
“Australian GDP grew by 1.4% – the lowest growth in a decade – and per capita GDP growth was negative”, it said. As a result, the department expects a slowdown in Australia’s import of refi ned oil products for the rest of the year.
Brunei: China’s Hengyi Petrochemical starts up refinery-petrochemical complexChina’s Hengyi Petrochemical Co. Ltd said it has started commercial operations at its joint venture integrated oil-petrochemical complex in the Southeast Asian state of Brunei.
The company has a 70% stake in subsidiary Hengyi Industries Sdn Bhd which owns and operates the US$3.4 billion complex located on the Pulau Muara Besar industrial park. Brunei state fi rm Damai Holdings is the minority partner with the remaining 30% share.
The complex comprises an 8 million t (160 000 bpd) refi nery that will produce fuels and refi ned products, mostly for export to neighbouring countries. It will also supply feedstock directly into the integrated petrochemicals plant which has an annual
capacity to produce 1.5 million t of paraxylene and 500 000 t of benzene for export to China.
Hengyi Petrochemical is a subsidiary of the Zhejiang Hengyi Group. Based in China’s eastern Zhejiang province, the group is one of the world’s largest producers of paraxylene, a raw material for purifi ed terephthalic acid (PTA) which is used to create polyester fi bre (PET). By turning crude oil directly into high-end petrochemical and plastic products, the new plant yields better margins than a traditional oil refi nery that produces fuels.
Hengyi Industries has also begun selling the plant’s refi ned products, ensuring it has little surplus capacity from start-up.
As a result, the company has announced it is already planning to massively expand the complex, potentially tripling its refi ning capacity to 18 million t.
In September, the company’s Singapore-based trading subsidiary, Hengyi Industries International Pte Ltd (HYII), secured the long-term sale of the plant’s LPG production to the Philippines’s Phoenix Petroleum.
To meet rising fuels demand in Southeast Asia, Phoenix Petroleum is expanding its network of downstream assets.
It recently acquired its fi rst pressurised carrier of 2500 t capacity and committed to the long-term charter of a 4500 t vessel to boost ship LPG shipments to the Philippines.
References1. ‘World Energy Outlook 2019’, International Energy Agency, https://www.
iea.org/reports/world-energy-outlook-20192. ‘OPEC’s World Oil Outlook 2019 launched in Vienna’, OPEC,
(5 November 2019), https://www.opec.org/opec_web/en/press_room/5731.htm
3. ‘Saudi Aramco to supply agreed Sep, Oct term crude volumes to China buyers, but grades may vary’, S&P Global Platts, (1 October 2019), https://www.spglobal.com/platts/en/market-insights/latest-news/oil/100119-saudi-aramco-to-supply-agreed-sep-oct-term-crude-volumes-to-china-buyers-but-grades-may-vary
4. ‘Iran, China agree deals worth $400bn’, Middle East Monitor, (18 September 2019), https://www.middleeastmonitor.com/20190918-iran-china-agree-deals-worth-400bn/
5. MEIDAN, M., ‘China’s Energy Security at 70’, Oxford Energy Comment, (3 October 2019), https://www.oxfordenergy.org/wpcms/wp-content/uploads/2019/10/Chinas-energy-security-at-70.pdf?v=3e8d115eb4b3
6. ‘BP Energy Outlook 2019 – China’, BP, (2019), https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/energy-outlook/bp-energy-outlook-2019-country-insight-china.pdf
7. ‘BP Energy Outlook 2019 – India’, BP, (2019), https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/energy-outlook/bp-energy-outlook-2019-country-insight-india.pdf
8. ‘Resources and Energy Quarterly - September 2019’, Department of Industry, Innovation and Science, (September 2019), https://publications.industry.gov.au/publications/resourcesandenergyquarterlyseptember2019/documents/Resources-and-Energy-Quarterly-September-2019.pdf
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