#LNG Grows for Trading Houses From @Gunvor to @Trafigura, @Glencore - Bloomberg

LNG is enjoying more rapid growth with about $150 billion in revenue last year, according to McKinsey Energy Insights. By next year, LNG volumes will be more than triple what they were at the start of the century, making it the quickest-growing segment of the fossil-fuel industry, according to Shell.

Commodity Traders Turn to LNG as Big Oil Profits Prove Elusive

Gunvor, Vitol and Trafigura are doing for natural gas what they did in the oil market in the 1970s.

By Anna Shiryaevskaya and Andy Hoffman

March 27, 2019, 6:00 AM GMT+1 Updated on March 27, 2019, 12:33 PM GMT+1

With margins narrowing in the crude oil business, some of the world's biggest commodity trading houses are helping to reshape the energy industry with a drive into liquefied natural gas.

Gunvor Group Ltd., Trafigura Group Pte. Ltd. and Vitol SA have moved a step beyond trading LNG, investing in ships and terminals handling the fuel. That's accelerating the growth of the industry, moving more gas that traditionally has flowed through pipelines onto ocean-going tankers chilled to minus 162 degrees Celsius (minus 260 degrees Fahrenheit).

Those houses in the 1970s broke away from Big Oil's long-term contracts and created a market where cargoes change hands in the blink of an eye. Now they're turning their attention to LNG, where spot trading is rapidly expanding. The result is handing utilities from Centrica Plc to RWE AG more flexibility to buy gas, encouraging them to make the leap away from more polluting coal.

"It looks like a much younger crude oil market,'' Russell Hardy, chief executive officer of Vitol, said in an interview in Lausanne, Switzerland. "It is an area that can grow and that is a positive for us.''

A Boom for LNG

Volumes by the end of this decade will at least triple since 2000.

The top three commodity trading houses active in LNG have more than doubled their delivered volumes over the past two years and took almost 9 percent of the global trade in 2018, according to data compiled by Bloomberg. Royal Dutch Shell Plc remains the industry leader with 22 percent and stakes in LNG plants and import terminals.

Other traders such as Glencore Plc and Koch Supply & Trading LP also are building expertise or looking to expand in LNG. Most trading houses set up their desks earlier this decade, while Vitol started back in 2005.

Trading Houses in LNG

Three largest commodity traders have boosted volumes in past few years.

#China’s First #Oil Futures Contract Turns 1. What’s the assessment?

From Platts' The Barrel Blog

Insight from Shanghai: China's international crude contract marks first birthday

It's now a year since China took the first steps to opening up its mainly domestic futures market to the world with the launch of the Shanghai crude oil futures contract.

It was the first of three to be "internationalized" last year – the other two were the existing iron ore and PTA futures contracts. But Shanghai crude was different to those in that it was a new contract, hosted on a new trading venue – the Shanghai International Energy Exchange (INE) – and designed specifically to attract international participants.

The goal was to create a new China-based global pricing point for crude alongside incumbent international crude futures contracts NYMEX WTI and ICE Brent.

The success of a new futures contract is typically measured by its liquidity, market depth and open interest. In the case of a physically settled contract, the delivery mechanism of any new contract will also be closely scrutinized by the market.

Liquidity & market depth

While liquidity is not everything when it comes to benchmarks, when it comes to derivatives it certainly helps. In February, less than a year after it started trading, 2,116 million barrels of Shanghai Crude were traded. It took ICE Brent more than 14 years to reach a similar monthly volume.

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Liquidity on Shanghai crude is generally concentrated in just one contract. This is usually the contract that expires at the end of the current month. However, in the last 10 days before expiry liquidity moves to the next month forward as traders who are not allowed to take physical delivery are forced to liquidate their positions and roll them into the next contract.

On March 25, with just four days before the April 2019 contract expires, virtually all the volume and open interest had moved to the May 2019 contract, which expires at the end of April.

Taking Over #CITGO Is the Key for #Venezuela's Future @CaracasChron

Taking Over CITGO Is the Key for the Future

By Igor Hernández @CaracasChron-icles

March 17, 2019

On February 13th, the National Assembly appointed a new board of directors for PDV Holding, CITGO Holding and CITGO Petroleum, as well as members for an administrative board for PDVSA, the National Oil Company of Venezuela. The announcement came two weeks after the Treasury Department's Office of Foreign Assets Control (OFAC) and the Secretary of the Treasury, in accordance with Executive Order 13850, determined that PDVSA was subject to U.S. sanctions. Because of this, all PDVSA assets subject to U.S. jurisdiction are blocked, and U.S. persons are barred from engaging in transactions with the company.

How are these two announcements linked and why was it so important that the National Assembly quickly designated a new board of CITGO? In order to answer that, we need to provide some background.

The menaces of the recent past

As shown below, PDV Holding is the parent company of CITGO Holding and CITGO Petroleum Corporation, owners of several assets in North America including the following: three refineries with a combined processing capacity of 750,000 barrels per day (bd), 48 terminals, nine pipelines, over 5,500 independent retail stations in 29 U.S. states, as well as other transport and storage facilities. As of 2015, the company reported an estimated equity value for CITGO Holding (net of debt) of $8.5 billion, and more recent estimates put the value of the company between $4 billion and $8 billion, making this subsidiary PDVSA's most valuable asset abroad.   

Problem is that this asset is at risk of being taken out of Venezuela's hands. First, as explained by Daniel Urdaneta here, 50.1% of CITGO Holding's equity was pledged as collateral for PDVSA bonds expiring in 2020 (USD 2.5 billion), and the remainder was used as collateral for USD 1.5 billion loan to Rosneft. Daniel also explained that there are other bonds that could potentially provide a claim to those bondholders over CITGO assets.

The second group of interested parties is related to companies making claims against Venezuela for damages relating to expropriation. The mining firm Crystallex, as well as others such as ConocoPhillips and Owens Illinois are included in this group. Even though some of these claims were against the republic and not specifically targeted at PDVSA, there is now a precedent that opens the possibility for these companies to claim equity in CITGO. A federal judge in Delaware ruled in August 2018 that Venezuela's discretionary control of PDVSA rendered the company the "alter ego" of the government.

In other words, the two entities are one and the same, and therefore, the assets of one could be used to pay the debts of the other. In a report from September 2017, legal experts estimated that Venezuela's exposure to these claims was around $16 billion. This means that even if we don't consider other possible claims coming from other bondholders and companies, the value of CITGO assets will not cover all claims. To put it simply in Caribbean Spanish: "no hay cama pa' tanta gente".   

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As you can see in the chart, by 2015, approximately 28% of CITGO crude oil purchases (imports and local purchases in the U.S.) were coming from PDVSA and PDVSA affiliated suppliers (CITGO Petroleum chairwoman Luisa Palacios also mentioned similar numbers on March 12th at CERAweek, one of the most important conferences in the energy sector worldwide). The increasing share of the U.S. is due in great part to the increase in supply coming from hydraulic fracturing in this country, reducing the need to import light crude. 

See the whole post here: https://www.caracaschronicles.com/2019/03/17/taking-over-citgo-is-the-key-for-the-future/?mc_cid=63dff9440e&mc_eid=ba21069e8b

#Israel: @ExxonMobil Mulls an Offshore Bid for #Oil & #Gas blocks

Israel: ExxonMobil Mulls an Offshore Bid, Signaling a Shift in the Middle East Business Climate

Mar 14, 2019 | 21:31 GMT

4 mins read

(Stratfor)

The Big Picture

To say that Israeli-Arab ties have been contentious may be an understatement, but now those ties are beginning to show signs of subtle improvement, even if a full normalization remains far off. But even the current improvements will have business consequences, with opportunities increasing since companies may no longer face Gulf Arab economic retaliation for investing heavily in Israel. ExxonMobil may be on the verge of putting the new reality on display. 

What Happened

ExxonMobil is reportedly exploring whether to bid on blocks in Israel's ongoing second offshore bidding round. The firm, which has held discussions with Israeli Energy Minister Yuval Steinitz regarding a possible bid, has until March 28 to submit a letter of interest and documentation to prequalify as an operator for a block. (Whether it has already done so remains unclear.) ExxonMobil would then have until June 17 to submit a bid on any of the 19 available blocks. Should it win in July, the company would become the first oil and gas supermajor to enter Israel's oil and gas sector.

What It Means

ExxonMobil will not take the decision to invest in Israel's oil and gas sector lightly. Western companies – from the oil and gas sector and others – have long had to balance their relationship with Israel against their relationship with Israel's Arab neighbors, particularly Gulf countries like Bahrain, the United Arab Emirates, Kuwait and, of course, Saudi Arabia. Western energy companies have feared that investing in Israel would limit investment opportunities in much larger, more lucrative Arab markets.

#Venezuela: #PDVSA's main #oil export terminal & heavy crude processing complex shut down as historic #blackout persists

Venezuelan oil operations halted, blackout persists

Argus Media

Venezuela's main oil export terminal and heavy crude processing complex in Jose are shut down as a historic blackout persists across much of the country today.

Crude exports were already backed up because of US oil sanctions before the record power outage darkened nearly all of Venezuela on 7 March. Around 14mn bl of crude are backed up in tankers anchored offshore.

Three heavy crude upgraders and a blending operation that national oil company PdV operates with foreign minority partners, as well as petrochemical plants run by Pequiven in Jose, are suspended, PdV officials tell Argus.

The halted upgraders are PetroPiar with Chevron, PetroMonagas with Russia´s Rosneft and PetroCedeño with Total and Equinor. The three plants have nameplate synthetic crude production capacity of around 450,000 b/d.

Also affected is the 160,000 b/d blending facility Sinovensa that PdV runs with China´s CNPC.

Other oil and gas operations are suspended as a precaution.

PdV has been working since yesterday to restore the Barbacoa-Jose power transmission line that services the strategic industrial complex in Anzoátegui state, but multiple tests failed yesterday. The company is testing the line again today after cleaning the Jose substation.

The blackout originated in the 10GW Guri hydroelectric complex and a 765kW transmission line that supplies central Venezuela. Thermoelectric plants that would have compensated for Guri´s breakdown are mostly out of service for lack of investment and maintenance.

Electricity service is returning in some parts of Caracas and other areas of the country today, but many Venezuelans have been without power and associated water supply for more than 70 hours. Looting and intimidation by paramilitary gangs were reported overnight. Among the areas that have power is the neighborhood around the 190,000 b/d Puerto La Cruz refinery.

Venezuela´s main airport in Maiquetía is mostly shut down.

Venezuela's president Nicolas Maduro and senior government officials have said the blackout was caused by a cyberattack perpetrated by the US. Critics say such an attack is impossible.

Juan Guaidó, the opposition leader that most Western countries recognize as interim president, called the blackout a long-foreseen "catastrophe" that will require international help to address problems across generation plants, transmission lines and substations after years of corruption.

Speaking across a halting internet signal from outside the National Assembly that he presides over, Guaidó said lawmakers will meet in an emergency session tomorrow to declare a "state of national alarm" and blamed Maduro for the crisis. "We need to address this catastrophe immediately," he said, urging Venezuelans to sustain anti-government protests.

"You have every right to be very angry, but now is the time to take action," he told supporters. "We all know who is responsible and we need to find solutions. We need to take action together in the street."

Some of Guaidó´s supporters are urging him to invoke Article 187 of Venezuela´s 1999 constitution that allows the assembly to authorize military intervention from abroad. Yesterday Guaidó said the opposition should be prepared to invoke Article 187 "when the time comes."

The US and allies in Latin America have pledged to support a political transition but rule out armed intervention.

Guaidó said 17 people have died as a result of the blackout, including 15 patients in a hospital in Maturin in eastern Venezuela. Julio Castro, a physician accompanying Guaidó today, said many others are at risk, including newborns, diabetics and dialysis patients.

The lack of water is also raising alarm bells over the further spread of diseases such as malaria and dengue.

https://www.argusmedia.com/en/news/1862932-venezuelan-oil-operations-halted-blackout-persists?amp=1&backToResults=true&__twitter_impression=true

#Citgo looking for $1.2BN to fund daily operations as US #sanctions cripple parent, #Venezuela's #PDVSA #OOTT

Citgo Petroleum Corp. is looking to get a $1.2 billion loan to fund its daily operations as U.S. sanctions cripple its parent company, state oil giant Petroleos de Venezuela SA.

The Houston-based refiner hired Houlihan Lokey to find lenders to help it refinance bank credit lines maturing this year, a slide deck seen by Bloomberg shows. The deal launched this week and is expected to close on March 22, according to the presentation, which was given to investors by Curtis Rowe, Citgo’s vice president of finance.

The five-year term loan B may pay a coupon of between 4.5 and 5.5 percentage points above the Libor rate and could be issued at 99 cents on the dollar, according to the presentation. Proceeds will be used for "general working capital requirements" and to "provide ongoing liquidity,” the slides show.

The new loan would replace a $900 million secured revolver and a $320 million accounts receivable facility, according to the presentation. Deutsche Bank AG was the lead arranger of the revolver, issued in 2014 alongside Citgo’s existing term loan, which matures in 2021. The German lender and other banks involved in that financing have been reluctant to roll over their exposure, leading Citgo to consider other options, people with knowledge of the matter said.

See the whole story here:  https://www.bloomberg.com/news/articles/2019-03-08/citgo-eyes-1-2-billion-loan-amid-battle-for-control-of-refiner