It was reported that Petronas will load the cargoes from its LNG complex in Bintulu, Sarawak in Malaysia and the same will be delivered to Shenergy’s terminals in Shanghai.

This was not the first agreement signed between Petronas and Shenergy. Last year, both parties signed a non-binding agreement which will see Petronas supply about 1.5 million tonnes per annum (mmtpa) of LNG to its Wuhaogou-receiving terminal in China for a 12-year term.

Earlier this week, Arif Mahmood, Petronas’ executive vice president and chief executive of downstream, said at the Platts APPEC 2021 conference that the company hopes to restart its Pengerang refinery-petrochemical complex by the end of this year. The complex is a joint venture between Petronas and Saudi Arabia state-owned oil company Saudi Aramco.

He said, “When it comes to refining, petroleum products, we remain cautious.” He further added that travel curbs continue to weigh on aviation fuel demand recovery. “We’ll see recovery hopefully towards the end of this year, early next year.”

Recently, it was also reported that China-based Sinopec’s plan to receive 6 million tonnes per year liquefied natural gas (LNG) has secured state approval. The company also added that it is planning to import 24.2 billion cubic metres of LNG this winter, without giving a comparison figure.

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The trading unit of Chinese oil a gas major Sinopec, Unipec has acquired four North Sea crude shipments this week. The Kingdom, which is considered the world’s largest oil exporter has planned to slash output of 1 million barrels per day through March at the time when several traders were expecting a surge in supply.

Furthermore, the Kingdom hiked official selling prices (OSPs) for crude oil sell in the Asian sub-continent. The Kingdom’s flagship product, Arab light grade will be the highest since August last year.

Tamas Varga, an analyst at brokerage PVM Oil Associates, told the media, “It is down to the Saudi cut and the consequent rise in their February OSP to Asia.”

Asian oil refiners may have already acquired four or five cargoes of CPC Blend crude for February. The refiners have secured seven shipments of the grade from the Russian terminal located in the Black Sea. Global oil traders are expecting a stringent supply following the Kingdom’s output slash. The majority of the Kingdom’s crude oil is sold to Asian refiners.

The kingdoms’ oil output cut has not only sent shockwaves across the global oil segment but came as a surprise to other 22 alliance peers. The Kingdom’s government believes that the cuts were vital to bolster global oil market rebalancing.

The global oil market is walloped by the pandemic and expect to rebound this year.

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Hin Leong Trading is a Singapore-based oil trader and one of Asia’s largest independent traders. Sinopec is a Chinese oil and gas company headquartered in Beijing. It is reported that Sinopec had approached Hin Leong Trading earlier this month to discuss a potential deal.

The deal will benefit both parties if it successfully comes through. Hin Leong’s founder Lim Oon Kuin and his family owns 41 percent of the terminal through Universal. PetroChina holds 25 percent of the terminal and  Macquarie owns the remainder of 34 percent, media reports said. Macquarie is an Australian investment bank.

According to media reports, an official said, “Sinopec is aware of the good asset quality of Universal Terminal, but the question is at what price and if the terminal can come clean of creditors’ debt claims.”

The stake sale could provide sufficient cash for Hin Leong Trading, media reports said. Currently, the company owes a total of $3.85 billion to 23 banks. Against this background, it has appealed for a delay in debt repayments at a Singapore court.

It is reported that a major advantage for Sinopec owning an integrated marine infrastructure is equal to having its own port authority in the city-state. In 2016, a stake sale in the terminal valued it entirely at more than US$1.5 billion, media reports said. Sinopec owns several storage facilities beyond China. These include in Rotterdam, Antwerp, and Fujairah.

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The company’s decision to set-up an oil unit comes as it seeks to supply fuel to ships passing a prominent maritime route, the media reports said. Sinopec is China’s latest investment in Sri Lanka and is considered important to its Belt and Road Initiative’s infrastructure plan.

Sinopec has strategically identified Hambantota on the Indian Ocean along a major maritime route between the Suez Canal and the Malacca Strait. The route is used by two-thirds of global oil shipments and hence there is ‘huge’ potential to supply fuel to ships. 

China considers relations with Sri Lanka important and has shown support to Colombo’s efforts to safeguard national unity and strengthen economic development. In 2017, China had offered to work with Sri Lanka to advance the construction of Colombo Port City, Hambantota Port and logistics parks. 

This year, India’s Accord Group and Oman’s Ministry of Oil and Gas signed a $3.85 billion deal to construct an oil refinery in Sri Lanka. The deal is seen as the biggest foreign direct investment pact in the country. 

The refinery will be built on 585 acres near the Hambantota Port with a capacity to produce 200,000 barrels per day. The refinery is expected to produce 9 million metric tonnes of refined oil each year for export from the port. 

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Angus Rodger, research director of Asia-Pacific upstream at Wood Mackenzie, said, shale oil makes up less than one percent of China’s crude output. “China’s shale oil has very low permeability, which means very low per well output that makes the economics hard to work,”a spokesperson from China’s Ministry of Natural Resources said.

Sinopec is confident that Shell’s expertise in shale oil exploration could help it to generate huge profits from the exploration at Shengli oil reserves.

According to experts, the country’s shale oil reserves are found in its eastern regions such as the Songliao and Bohai Rim basins, and North China’s Ordos and Junggar basins are also believed to hold shale oil in high concentration.

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