Oil and gas supplies to China, oil and gas industry of China

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Debt of CNPC to Transneft could not stop oil supplies from Russia to China

In the Russian media has been widely discussed the situation, associated with the supply of oil to China, implemented on the basis of agreement between the companies CNPC, Rosneft and Transneft from January 1, 2011. The opinions of the Russian media is based on the opinion of the vice-president of Transneft, as vice-president of "Transneft" Mikhail Barkov said,- the Chinese company CNPC owed to Transneft over $ 100 mln. US dollars. As reported Mikhail Barkov, the Chinese company CNPC is trying to reduce the price on the transportation of Russian oil, which the company buys from Rosneft and Transneft and insists on lowering prices by 2-3%. However, in the Chinese press do not consider this situation as intractable, and do not believe, that the debt of the Chinese company for the supply of oil can create any obstacles to oil supplies in China. As reported by Chinese newspaper "Science and Technology ", oil supplies from Russia to China based on the principle "loans-for-oil" and Chinese banks have provided billions dollars in loans to Russian companies: Rosneft obtained a loan of $ 15 billion, the company "Transneft" obtained a loan of $ 10 billion. But, in exchange for these loans, the Russian companies Rosneft and Transneft are obliged to ensure an uninterrupted supply of oil to China, during the 20 years. As reported by Chinese media, China can get oil from other countries, currently being negotiated with the countries of South America and Africa on oil supplies to China, but where else can receive such large loans the Russian companies Rosneft, Transneft and other Russian companies? For the Chinese media, the answer is obvious-only in China. So, in China believe, that Transneft will not apply to the London Court of International Arbitration. Most of the views, expressed in the Chinese press, reduced to the fact, that oil supplies from Russia to China is not in danger, because Russian companies will continue to need in the Chinese credits.

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China gets access to the petrochemical technologies of Europe
Saturday, 14 May 2011
　

Yesterday, the EU Antitrust Authority approved the agreement about getting a Chinese company PetroChina control over certain assets of third in the world (after BASF and Dow Chemical) petrochemical company Ineos. The transaction amount is estimated at 1.015 billion U.S. dollars, the Chinese company PetroChina will control of two refineries in Scotland and France. INEOS Group of Companies is the third largest global manufacturer of chemical products - petrochemicals, specialty chemicals and petroleum products. The INEOS Group includes 15 companies, and its production network more than fifty companies in 13 countries. Every year INEOS Group produce over 40 million tons of petrochemicals and 20 million tons of refined products (fuels). Annual sales of the INEOS Group is about 29 billion U.S. dollars. The INEOS Group has unique technology of chemical and petrochemical production, operates in 17 countries, introducing their development at 68 production sites. Back in 2008, the INEOS Group has patented a unique method of production of motor fuel from waste - including solid waste that is put into municipal landfills, and waste of agricultural products and organic debris. With the help of its technology, Ineos can produce 400 liters of ethanol from tons of solid waste. In 2010, Ineos began producing fuel from waste on an industrial basis. Until now, biofuels are produced mainly from grains, particularly maize. Chinese enterprises are very long-sought access to technology of Ineos-even in 2006, Ineos has already provided a license to Sinopec for the production process «Innovene S Process», and in 2009 Ineos has granted a license «Innovene S Process» to Chinese Petrochemical Company (China Petrochemical International) for the production of polyethylene of high and medium density. License the production process used by Sinopec Wuhan in Wuhan, China. The Chinese company PetroChina has long held talks with Ineos about how to obtain access to the latest petrochemical technologies, PetroChina receives a significant economic benefit from their use, especially after the increased demand of China in the oil refining products. PetroChina is engaged in processing of transportation and distribution of petroleum and petroleum products and petrochemicals. For the first time in recent history, the EU Antitrust Authority gave consent for such a large transactions between PetroChina and Ineos, in the future it will allow technologies of oil refining in China to switch to more high level, that will allow the Chinese company PetroChina in the near future to press on the world market Western oil corporations - Exxon Mobil and British Petroleum Plc. Chairman of PetroChina said: "Our goal - to become an international integrated energy company." In the past five years, PetroChina spends about $ 2.3 billion to buy foreign assets. However, during the crisis amounts of foreign investment companies have risen sharply due to falling asset prices. In 2009, PetroChina has spent $ 7 billion to buy oil refineries and blocks from the fields Australia, Canada, Singapore, as well as in Central Asia. Total amount for 2011-2020 indicates, that over the next ten years, PetroChina is ready to spend annually to acquire of foreign assets about $ 6 billion. PetroChina in the years 2011-2020 will become one of the leading suppliers of oil and petroleum products on world markets. Interest in the latest European technology of oil processing for China mainly due to the fact, that objects of PetroChina interest in the years 2011-2020 will be the first large undeveloped fields, especially in Angola and Nigeria. In addition, a lot of potential in terms of development, are the oil fields in Venezuela and Canada. The development of these oil fields improve of existing technologies for processing of oil in China, which will not be able to provide processing of increased volumes of oil. China spends at least $ 6 billion annually for the purchase of assets (and technology) of oil companies abroad, and it is important for any major oil company. This puts PetroChina on equal or even better than the position of the amount of oil assets in the world.

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Rosneft and BP declined to "Arctic deal" - China has a chance to get oil and gas in the Arctic
Wednesday, 18 May 2011

On May 16, 2011 the British company BP and the Russian company Rosneft declined to joint exploration of the shelf in the Arctic, as the parties failed to reach consensus on the development of oil resources in the Arctic. Previously, the parties have already announced the postponement of the transaction. Originally set for completion of the transaction due to expire on April 14, 2011. But BP and Rosneft have decided to extend the deadline for the mutual exchange of shares for a month until May 16, 2011. Recall that in January 2011, Rosneft and BP signed a series of agreements on strategic cooperation and exchange of shares. In particular, the parties agreed to establish a strategic alliance for the development of oil fields in the Arctic, as well as the exchange of shares. Rosneft can receive 5% stake in BP, a British company - 9,5% stake in Rosneft. The conclusion of this deal would begin joint development of oil fields in the Arctic, the value of which, according to the U.S. Geological Survey (USGS), estimated at 90 billion barrels. In addition,in the Arctic may be 47.3 trillion. cu. meters of gas. Total in the Arctic, according to U.S. Geological Survey estimates, there are up to 13% of the world's undiscovered oil reserves and 30% of gas reserves. The U.S. Geological Survey also compiled data on stocks in the Arctic as belonging to different countries. The probability of finding oil and gas USGS assessed by comparing the Arctic regions with deposits with similar geologic conditions (in the USGS data base includes 95% open in the world oil and gas). Russia, according to USGS, has the largest sector among the Arctic countries .- hydrocarbon resources to the areas in which Russia already owns or on which claims to account for more than 250 billion barrels. oil and gas in oil equivalent. This is 60,1% of total reserves. Among the sectors in the Arctic are the largest aggregate reserves in the Western Siberian Basin - 3.6 billion barrels. oil, 18.4 trillion cubic meters. m. of gas and 20 billion barrels. condensate, which gives a total 132 billion barrels. oil and gas in oil equivalent. Followed by the Arctic shelf of Alaska (29 billion barrels. oil, 6.1 trillion cubic meters. of gas and 5 billion barrels. NGLs) and the eastern Barents Sea (7.4 billion barrels. Oil and 8.97 trillion cubic meters. M of gas and 1.4 billion barrels. NGLs). In addition, the fields in the Arctic have large deposits of coal, gold, silver, diamonds, titanium, copper and other minerals. But especially such major oil and gas fields have attracted the attention of many countries, including China. In China believe, that global warming and the subsequent melting of Arctic ice could bring considerable economic benefits. Firstly, after the melting of Arctic ice, fields of mineral resources become available, so now is the time to think about a place under the Arctic sun. Secondly, when the ice will melt, the Arctic waters become navigable in the summer, and this is another benefit - a new sea route from Shanghai to Hamburg will be shorter than the traditional sea routes through the Suez Canal for more than six thousand miles and more secure - not likely to go Somali pirates will get and cheaper: because of pirate attacks on the southern route- the cost of insurance of vessels increased by 10 times. Therefore, having no outlet on the coast of the Arctic, China is seeking alternative ways to gain access to the Arctic Ocean. Prospects for the development of Arctic fields have encouraged China to allocate more funds for research in the Arctic, which has already allowed to spend four China Arctic expeditions, China also opened its research stations on Svalbard. According to SIPRI, China has one of the strongest research programs to study the Arctic. And this despite the fact, that because of the global financial crisis, many Arctic countries have reduced the amount of funds, allocated to research in the Arctic. But China has managed to pass this difficult stage, moreover, in the near future in the Arctic will increase the intensity of not only academic and scientific research of China, but even the initial development of the Arctic. With this purpose in 1993, China has purchased in Ukraine the world's largest non-nuclear-powered icebreaker, named after Xuelong ("Snow Dragon") (see a photo), which now conducts research in the Arctic waters. In addition, in China over the next few years developed a program to create own production of heavy-duty icebreakers, the first of which should go into the water in 2013 Due to the fact, that China is not the Arctic country, China found itself at a disadvantage and China is seeking to secure for itself the legal basis for future activities in the Arctic. Currently, China has yet to temporary status of observer at the Arctic Council, an alliance comprising eight countries: Russia, Norway, Denmark, Iceland, Canada, USA, Finland and Sweden. However, China reveals a desire to participate more actively in the Arctic cooperation. On this occasion, Ambassador of China in Norway, Tang Guoqiang, said: "China is interested in stable development of the region, because changes in the Arctic ecosystem is directly affected by the climatic conditions in China." Norway has supported granting China permanent observer status in the organization. China is also expanding its cooperation with the Arctic countries. In 2010 the President of Iceland, said that China has expressed interest in Iceland as a potential logistical base in case, then global warming will send Chinese exports to Europe through the Arctic, shortening the path to 6000 kilometers, compared with the transit through the Suez Canal . After that, it was announced about the currency swap deal to $ 500 million between China and Iceland. Given the economic difficulties at that time in Iceland, it would be hard to find economic reasons for this transaction, without taking into account geopolitical motives, associated with Arctic fields. Also, all of a sudden, in the summer of 2010, a delegation from China visited the largest city within the Arctic Circle in the world- the Murmansk in Russia, where they signed a memorandum of understanding to establish sister-city relationship between the province of Hainan, China and the Murmansk Region, Russia. It should be noted that the Murmansk region - this is the only sister city of Hainan Province in Russia and Murmansk is a city with largest park in the Arctic for icebreakers. After that, since 2010, in the Chinese press began to appear regularly posts devoted to the Arctic, we present the most interesting of them. As said Lee Dzhenfu from Dalian Maritime University: "Who controls the Arctic routes, will oversee the global economy and international strategy. The majority of mineral fields of Arctic concentrated in the economic zones of countries connected to the Arctic, mostly in Russian. However, Russia has not the technology and resources for their development, so Russia can cooperate with China". According to Chinese Vice Foreign Minister: "The Arctic States should take into account " the interests of all people in the world, not just their own. " We have written on our website about situation, when Russian companies Rosneft and Transneft received multibillion loans from Chinese banks under guarantee oil supplies to China on the challenge of ESPO: Rosneft obtained a loan of $ 15 billion, the company "Transneft" - $ 10 billion, but after after the start of oil deliveries to China, the conflict appeared, involving non-payment by the Chinese side of oil supply in full, because of which the indebtedness of the Chinese side at more than $ 100 million. This situation will be discussed at the talks, which will be held in May 2011 and is very likely, that the possibility of repayment of this debt will be linked with the prospects of a new partnership oil companies of Russia and China in the Arctic area. Therefore, in the near future we should expect greater attention of China to Arctic area, it is possible, that the new partner of the Russian company Rosneft will be the company from China.

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Libyan Opposition began to supply oil to the USA- it could have far-reaching effects
Thursday, 09 June 2011 12:25
CNN reported, that the Libyan National Transitional Council signed the first contract to supply oil to the U.S.. On May 25, 2011 Tesoro Refining Corporation in the U.S. signed an agreement with Libya's National Council, to supply over 1.2 million barrels of Libyan oil to the U.S.. In accordance with this agreement, the oil tanker Equator due to arrive from Libya to the Hawaiian Islands.

After this is supposed to extend the supply of Libyan oil to the U.S. as the U.S. State Department has adopted a new resolution, calling for a new economic policy for Libya, as a result, support for the U.S. State Department deals with the Libyan National Transitional Council of Libya's oil sales to continue in the future.

It should be reminded, that in mid-February 2011, Libya began mass protests, making demands on care Muammar Gaddafi. Protests in further escalated into war between government forces and rebels, during which in the city of Benghazi, located on the eastern part of Libya, was formed a Libyan National Transitional Council, which was subsequently declared by the rebels the only legitimate authority in the country.

Before the war, Libya has provided 2% of global oil production, but in EU countries, Libya has provided no more than 7% of oil consumption. The main consumers of Libyan oil before the war were: Italy (28%), France (15%), Spain (10%) and Germany (9%). It is estimated, that Libya undersupplies caused world loses from 1.2 million to 1.5 million barrels of oil per day. In addition, almost completely halted gas supplies to Italy (gas from Libya to provide about 10% of the domestic market).

Despite the war, there were several reports, that representatives of the Libyan National Transitional Council sent oil tankers in some European countries, including Italy, as well as in China. Some analysts report, that in Italy, and China has already put up half a million barrels from the representatives of the Libyan National Transitional Council. Director of the largest in the north African oil refineries have repeatedly stated, that "work for an early resumption of exports of petroleum products in Italy is already underway."

Oil supplies from Libya on the old routes were almost completely paralyzed at the end of February 2011, when the banks refused to make payments for oil, due to the imposition of sanctions against Libya. And such European countries as Italy and France, bought a significant portion of oil in Libya.

EU countries since the beginning of the war in Libya began to actively seek a replacement of oil from Libya, is counting on Russia. Chairman of the Association of European Businesses Rainer Hartmann said earlier: "... in Europe hoping, that Russia can, if necessary, compensate for a deficiency of supply of oil and gas to EU countries."

In Russia help to Europe in trouble with the gas, and Gazprom increased gas supplies to Italy from 30 to 48 million cubic meters a day. Gazprom could fully compensate for the entire share of Libyan gas to Italy, but the Russian gas is too expensive, so the gas from Libya in the future may replace the cheaper gas from Nigeria.

But representatives of the Russian oil industry refused to increase oil supplies to Europe. As said by the representatives of oil companies in Russia- Russia has no resources to increase oil production. And increase the oil supplies to Europe can only reduce the oil supply to China, but at this time it is unacceptable.

It is noted, that between Russia and China since January 2011 was a dispute, arose relating to non-payment by the Chinese side of oil supplies from Russia to China, as a result, until the end of May 2011, there debt of Chinese company worth about $ 200 million (we had previously published a article on our website about this story), but after the representatives of Europe called on Russia to increase oil supplies to Europe, the Chinese company unexpectedly quickly extinguished all debts. It is therefore unlikely in the near future will increase oil supplies to Europe from Russia.

Since the oil-refining enterprise in Italy and France prefer high-quality Libyan oil to obtain petroleum products with a minimum cost of processing, the latest initiative of the American company Tesoro on the organization oil supplies in the U.S., can greatly complicate the work of oil-refining enterprises in Italy and France, which will seek other suppliers of oil.