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Tuesday(April,08 2014)

OIL MARKET NEWS (WEEK11): WEEK ENDED MARCH 14, 2014

  Major Highlights
  • Brent trades in a range of $107-$109 per barrel.
  • Cedi depreciates by 0.76% resulting in higher GHS equivalent FOB prices of petrol,gasoil and LPG.
  • Libya’s former PM voted out; forces set up to liberate ports and end blockage.
  • IEA and EIA revises global oil demand; Iraq’s production the most since 1979.
Average Dated Brent price for the week (published by Platts) decreased by $1.23 to $108.03 from the previous week's average of $109.26 a barrel, indicating a 1.13% drop. Brent crude recorded marginal losses and gains during the week ended March 14, 2014. Brent crude price fell as improvement in weather conditions in North America and data from China showed growth in investment, retail sales and factory output all fell in the first two months of the year to multi-year lows in the world's second largest consumer of oil, amplifying worries about a slowdown. The released weak data showed the No. 2 oil consumer's exports in February fell 18.1 percent from a year earlier. "The weak economic numbers and exports out of China in the last week are driving prices lower," said Oliver Sloup, director of managed futures with iitrader.com in Chicago. Brent, however, drew support from worsening crisis in Libya and Ukraine, which raised fears of supply disruption; but China’s weak data kept the lids on gains. "The market is driven by geopolitical factors rather than fundamentals, and it is therefore difficult to point to a clearer direction for prices," said Tetsu Emori, a commodity fund manager at Astmax Investment. Brent crude oil price decreased by 1.13%, while free on board (FOB) prices of petrol fell by 1.52%, gasoil by 1.96% and LPG by 1.20% during the period under review. However, due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 0.76%), the GHS equivalent of crude oil decreased by 0.37%, petrol by 0.76%, gasoil by 1.21% and LPG by 0.45%.

Geopolitics
Libya's parliament voted Former Libyan Prime Minister (PM) Ali Zeidan out for failing to stop rebels independently exporting oil in a challenge to Libya's fragile unity. Nuri Ali Abu Sahmain, head of parliament, ordered formation of a force made up of regular soldiers and allied militias to take back the ports, which previously handled a total of more than 700,000 barrels of oil per day. With tension between the two sides escalating, government forces seized a tanker that had loaded crude worth $30 million at the rebel-held Es Sider port. "With control of the central government and Libya's oil at stake, all of these groups, rivalries, and alliances of convenience are coming to the fore," said Geoff Porter, North Africa specialist at West Point's Combating Terrorism Center. He again said, "One of the reasons that Libya has reached this impasse is that dialogue had failed, not least because there was no one in Libya that could speak authoritatively and had the capacity to translate words into action."

Inventories
According to the import schedule, petrol of about 55.0 million litres was expected for delivery, while diesel of about 72.2 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (March 15, 2014).
The CDU and RFCC units at TOR both remain shut down.
The U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels to 370.0 million barrels while gasoline stockpiles decreased by 5.2 million barrels to 226.61 million barrels in the week ended March 7, 2014. Inventories of distillate fuel, a category including heating oil and diesel, also decreased by 1.4 million barrels to 113.9 million barrels over the same period. Total commercial petroleum inventories decreased by 1.6 million barrels last week.

The U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels to 370.0 million barrels while gasoline stockpiles decreased by 5.2 million barrels to 226.61 million barrels in the week ended March 7, 2014. Inventories of distillate fuel, a category including heating oil and diesel, also decreased by 1.4 million barrels to 113.9 million barrels over the same period. Total commercial petroleum inventories decreased by 1.6 million barrels last week.

Demand and Supply
According to the International Energy Agency (IEA), oil demand will be higher in 2014 than previously estimated as global economic growth recovers. Pressure on supplies will ease in coming months as seasonal consumption dips. World consumption will increase by 1.4 million barrels a day, or 1.5 percent, this year to a record 92.7 million a day, or about 95,000 a day more than forecast last month, according to the IEA, a Paris-based adviser to oil-consuming nations. While freezing U.S. weather has eroded oil inventories to their lowest level in more than a decade, fading demand for winter fuels coupled with a 35-year peak in supplies from Iraq will help replenish stockpiles, the agency said. “Growth momentum is expected to benefit from a more robust global economic backdrop,” the IEA said in its monthly market report. Meanwhile, the U.S. Energy Information Administration (EIA) cut its forecast for 2014 world oil demand growth by 40,000 bpd in its monthly Short Term Energy Outlook. It predicted a 1.22 million barrel year-on-year increase.

OPEC’s members boosted output by 500,000 barrels a day to 30.49 million in February as a surge
in Iraq’s exports pushed the organization’s production above its 30-million barrel ceiling for the first time in five months, according to the IEA. Iraq’s production climbed by 530,000 barrels a day to 3.62 million a day, the most since 1979, while that of Saudi Arabia, the group’s biggest member, rose 90,000 to 9.85 million.

References
  • www.bloomberg.com
  • www.reuters.com
  • www.bbc.co.uk
Tuesday(April,08 2014)

INDIGENISATION OF GHANA'S PETROLEUM DOWNSTREAM INDUSTRY: NPA MAKES PROGRESS

After several years of domination by multinational companies, Ghana’s petroleum downstream industry is seeing increasing participation by indigenous and wholly-owned Ghanaian Companies.
Currently, indigenous companies now control 70 per cent market share of petroleum products marketed and distributed, up from under 28 per cent in 2001.
The increased involvement of Ghanaian companies in the downstream sector can be seen in terms of the number of companies licensed to operate as well as the volume of products marketed and distributed by the indigenous companies.

This increase in local participation by indigenous companies in the petroleum downstream sector can be attributed to the local content initiatives that have been championed since the establishment of the National Petroleum Authority (NPA) by an Act of Parliament, Act 2005, (Act 691).
These include section 12 of the NPA Act and the revised licensing requirements for Petroleum Service Providers (PSPs), which specifies that before NPA grants a license to a person to engage in a business or commercial activity in the downstream industry, he or she must be a citizen of Ghana. Also, a foreign individual or foreign company in a registered joint venture relationship with a citizen of Ghana or a Ghanaian company must provide evidence of local partnership that is at least 50 per cent shares must be held by a Ghanaian citizen before the grant and issue of license by NPA.

Background
Prior to the commencement of crude oil processing at Tema Oil Refinery (TOR), Ghana relied completely on imported refined petroleum products distributed by the local branches of multinational oil companies, such as Shell, Texaco, British Petroleum, Mobil and Total.
The petroleum sector was encapsulated by the brand name “SHELL”. Indeed, the older Ghanaian generation used to refer to virtually every fuel retail station as “PETROL SHELL”.  
These multinational petroleum companies monopolized and dominated the importation and sale of petroleum products prior to Ghana’s independence in 1957 and soon thereafter. The multinational oil companies were virtually free to set their own products prices without the colonial government’s interference. The establishment of TOR in 1961 and its commencement of crude oil processing in 1963 curtailed the role of the multinational companies in the importation of petroleum products.
Accordingly, when the Refinery started operation in August 1963, it was the local branches of multinational oil companies such as Shell, Mobil, Texaco and British Petroleum (BP) which were given the responsibility by the Government to import the crude oil required by TOR for processing into finished products.
Subsequently, before the establishment of the Energy Commission in 1997 by an Act of Parliament (Act 541) with the mandate to, among other things, grant licenses for the marketing and sale of petroleum products, the Ministry of Energy was in charge of the grant of such licenses.
During that period, the petroleum downstream business environment was dominated by multinational OMCs with Ghana Oil Marketing Company (Goil) being the only indigenous OMC.
However, right from the inception of the Energy Commission through the setting up of the National Petroleum Tender Board in 2004 to the establishment of NPA, the petroleum downstream business environment has witnessed major changes which have led to the increased involvement of Ghanaian companies.
Enhancing the Indigenous Companies
The Act setting up NPA has placed enormous responsibility on the Authority. Besides playing a regulatory role, it is expected to make regulations for licenses and monitor all activities in the downstream sector.
Under the NPA Act 691, it is only Section 12 which spells out the qualification criteria for license to operate in the downstream sector. It states that: “a license under this Act may only be granted to;
(a) a citizen of Ghana; or (b) a body corporate registered under the Companies Code, 1963 (Act 179) or (c) a partnership registered under the Incorporated Private Partnerships Act, 1962 (Act 152); or (d) A foreign individual or foreign company in a registered joint venture relationship with a citizen of Ghana or a Ghanaian company”.
A critical review of the NPA Act would reveal that the Act was silent on encouraging indigenous and wholly-owned Ghanaian companies in the petroleum downstream industry.
However, the same Act grants the Authority the mandate to create additional requirements that it may deem necessary for applicants.
It is for this reason that led NPA to create additional licensing requirements to include and emphasise local content participation in the downstream sector.

The Journey So Far
The industry for the first time after several years has seen an unprecedented proliferation of investment and expansion of petroleum product storage and outlet facilities by Petroleum Service Providers (PSPs) mostly dominated by a growing number of indigenous Ghanaian companies.
This is evident, due to the fact that, prior to the setting up of NPA, the country’s petroleum retail market was made up of a mixture of both multinational and indigenous companies.
In 2001, there were 14 Oil Marketing Companies (OMCs) operating in the country, with six of them being multinational companies; namely Mobil, Shell, Total, Elf, Oando and Engen.
These multinational companies controlled 72 per cent of the total market share of petroleum products marketed and distributed while the indigenous companies made up the remaining 28 per cent. Clearly the market was dominated by the multinational companies.
However, with the setting up of NPA, the market was opened up to allow a lot more indigenous companies to participate in the industry.
Pursuant to that, the number of OMCs increased to 34, with six of them being multinational companies (Mobil, Engen, Oando, Shell, SO Energy and Total) and the remaining 28 were indigenous companies apart from GOIL in 2006. This excludes five indigenous private companies that solely marketed LPG.
The multinational companies made up 55 per cent of the total market share of petroleum products marketed and distributed in the country while the indigenous companies made up the remaining 45 per cent of the market share.
It is instructive and heartwarming to note that as of the year 2012, there were 92 OMCs & LPG Marketing Companies (LPGMCs) with nearly 2,700 retail outlets operating in the country with five of them being multinational companies (Engen, Oando, Shell, SO Energy and Total) and the remaining 87 being indigenous.
 The performance statistics for the year 2012 revealed that the multinational companies had about 30 per cent of the total market share while the indigenous companies made up the remaining 70 per cent.
 
 By the way, that is not the only petroleum service category that NPA has made progress in. The Authority has steered the industry such that we have seen increased local investor interest in the sector; this has resulted in an increase in the numbers of other PSPs currently operating in the country.
 At the moment, there are 22 Oil Trading Companies (OTCs) and 18 Bulk Distributing Companies (BDCs) that supplement production from the Tema Oil Refinery through the importation of finished petroleum products to meet the demand deficit. Over 2150 bulk road vehicles and more than 346 licensed transporters in the country.
 Others include 22 bunkering companies, calibration companies which was three (3) before NPA establishment but now is five (5), lubricant manufacturing; three (3), lubricant blending and marketing; three (3), nine (9) petroleum product export companies, seven (7) bulk oil storage depots, a mooring company, an emulsified fuels production company and a stratification company.

 Conclusion
 It is important to understand that the indigenous companies do not have the same strengths and capacities. It is a fact that the multinationals, to a large extend, have much stronger financial muscle than the indigenous companies.
 Yet, in spite of the financial difficulties, a lot of these private indigenous companies have defied all odds and commendably competed with these giants over the years to the extent that we are noticing a continuous growth in their market share, their contribution to government revenue and employment.   
 This is an indication that with time the indigenous companies alone can handle the petroleum downstream industry effectively should the multinationals at any point in time decide to pull out of the country.
 Obviously, that is good news for a country that wants to encourage citizens to invest in the country and to develop local expertise in such a critical sector as petroleum.
 It’s unfortunate some individuals and entities are still castigating the Authority for not doing much to promote local participation in the downstream sector in spite of all the tremendous efforts and achievements made by the NPA.
 We would therefore leave readers to make their own conclusions and judgments as to whether the NPA has made significant progress in the indigenization of the downstream petroleum industry or not.
 
Friday(March,28 2014)

OIL MARKET NEWS (WEEK13): WEEK ENDED MARCH 28, 2014

Major Highlights
  • Brent crude oil trades in a range of $106-$107 per barrel.
  • Cedi depreciates by 2.51% resulting in increases in GHS equivalent of FOB prices of petrol, diesel and LPG.
  • Libyan protesters block pipeline resulting in production falling by roughly 80,000 bpd.
  • Ghana’s consumption rate of petroleum products drop in Feb. 14 (month-on -month).
Average Dated Brent price for the week (published by Platts) decreased insignificantly by $0.01 to $106.60 from the previous week's average of $106.61 a barrel, indicating 0.01% drop. Brent crude oil slipped, weighed down by a seasonal slump in demand and disappointing manufacturing numbers from the world's biggest oil consuming nations, USA and China. The flash Markit/HSBC Purchasing Managers' Index (PMI), which measures the country's manufacturing activity, showed manufacturing activity in the United States slowed in March after nearing a four-year high in February, while shrinking in China for a fifth month in a row. China's PMI was still below 50 indicating a shrinking economy. "The PMI flash figure is more significant," said Tan Chee Tat, investment analyst at Singapore's Phillip Futures. The lower-than-forecast PMI figure "resulted in a swing in market sentiment to bearishness which weighed on oil prices", the analyst told Reuters. Brent crude oil, however, went up putting the cap on losses, supported by supply disruptions in Nigeria and Libya, and also worries about potential supply disruption due to the possibility of Western sanctions on Russia's energy sector. Phil Flynn, an analyst with the Price Futures Group in Chicago, Illinois said, "It's a two-sided trade right now, of demand expectations versus supply disruptions". Brent crude oil price decreased by 0.01%, while free on board (FOB) prices of petrol increased by 4.70%, diesel increased by 0.79% and LPG decreased by 0.24% during the period under review. However, due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 2.51%), the GHS equivalent of Brent crude oil price increased by 2.88%, petrol by 7.77%, diesel by 4.02% and LPG by 3.21%.

Geopolitics
In Libya, production fell as protesters blocked a pipeline carrying oil condensates from the southwestern al-Wafa oilfield to the Mellitah export port, state-owned National Oil Corp (NOC) said. The action, the latest in a wave of protests paralyzing oilfields and ports across the North African country, knocks out one of the last oil export lines for the cash-strapped government. NOC spokesman Mohammed El Harari said a gas pipeline from the Wafa field, which produces around 30,000 barrels a day (bpd) of very light oil, to Mellitah was still working. Production fell by roughly 80,000 bpd because rebels have occupied ports and oilfields, depressing the country's oil production to below 250,000 bpd, the state-run National Oil Corp (NOC) said. The NOC said it shut the El Feel oilfield, because the pipeline to the Mellitah port was closed.
Elsewhere, the United States and the European Union agreed to work together to prepare possible tougher economic sanctions on Russia, including in the energy sector, and to make Europe less dependent on Russian gas.

Inventories
According to the import schedule, petrol of about 83.2 million litres was expected for delivery, while diesel of about 92.9 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 12 million kilogrammes was also expected for delivery by close of the week (March 29, 2014).
The CDU has been shut down due to lack of feed while the RFCC unit is producing at a rate of 1600MTPSD (68%).
Data from the U.S. Energy Information Administration (EIA), indicated that U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.6 million barrels to 382.5 million barrels while gasoline stockpiles decreased by 5.1 million barrels to 219.6 million barrels in the week ended March 21, 2014. Inventories of distillate fuel, a category including heating oil and diesel, increased by 1.6 million barrels to 112.4 million barrels over the same period. Total commercial petroleum inventories increased by 5.5 million barrels last week.

Demand and Supply
The EIA reported in its Weekly Petroleum Status Report for March 21 that U.S. crude oil imports averaged over 7.6 million barrels per day last week, up by 308,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.3 million barrels per day, 3.2% below the same four-week period last year. Total products supplied over the last four-week period averaged 18.6 million barrels per day, up by 1.1% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 8.7 million barrels per day, up by 3.4% from the same period last year. Distillate fuel product supplied averaged over 3.7 million barrels per day over last four weeks, down by 0.9% from the same period last year.

References
  • www.bloomberg.com
  • www.reuters.com
  • www.bbc.co.uk
Friday(March,21 2014)

OIL MARKET NEWS (WEEK12): WEEK ENDED MARCH 21, 2014

Major Highlights
  • Brent trades in a range of $105-$107 per barrel.
  • Cedi depreciates by 1.71% resulting in marginal increases in GHS equivalent FOB prices of petrol, gasoil and LPG.
  • Russia annexes Crimea region in a referendum.
  • Iran’s February oil export of 1.16 million breaches the 1 million allowed under deal agreed with Western powers.
Average Dated Brent price for the week (published by Platts) decreased by $1.42 to $106.61 from the previous week's average of $108.03 a barrel, indicating a 1.31% drop. Brent crude prices on a whole recorded marginal losses during the week ended March 21, 2014. Brent crude oil fell as concerns eased that fighting could erupt after Ukraine’s Crimea region voted overwhelmingly to join Russia in a referendum. "The referendum basically turned out as expected with no surprise there," Markus Huber, senior trader at Peregrine & Black, said. Also, ample global supplies outweighed concerns over continued tensions between Russia and the West over the fate of Crimea. The lack of military conflict between the two countries also appeased investors. "It's sort of a relief rally there was no real negative surprise (in Ukraine). What happened was what was expected," said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania. Brent crude oil gained marginally as fresh U.S. and European sanctions on Russia renewed fears of a supply disruption from the world's second largest oil producer. Brent crude oil price decreased by 1.31%, while free on board (FOB) prices of petrol fell by 1.27%, gasoil by 1.01% and LPG by 0.77% during the period under review. However, due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 1.71%), the GHS equivalent of crude oil increased by 0.38%, petrol by 0.41%, gasoil by 0.68% and LPG by 0.93%.


Geopolitics
President Vladimir Putin signed laws completing Russia's annexation of Crimea after the region voted overwhelmingly to join Russia in a referendum. Russian troops seized two Ukrainian naval bases, including a headquarters in the Crimean port of Sevastopol where they raised their flag. The United States warned Moscow it was on a "dark path" to isolation as the dramatic seizure came as Russia and the West dug in for a long confrontation over Moscow's annexation of Crimea, with the United States and Europe groping for ways to increase pressure on a defiant Russian President Vladimir Putin. "As long as Russia continues on this dark path, they will face increasing political and economic isolation," said U.S. Vice President Joe Biden, referring to reports of armed attacks against Ukrainian military personnel in Crimea.

Inventories
According to the import schedule, petrol of about 61.7 million litres was expected for delivery, while diesel of about 105.9 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (March 22, 2014).
The CDU began production and shutdown over the weekend while the RFCC unit is producing LPG and Gasoline.
According to the U.S. Energy Information Administration (EIA), U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.9 million barrels to 375.9 million barrels while gasoline stockpiles decreased by 1.5 million barrels to 225.11 million barrels in the week ended March 14, 2014. Inventories of distillate fuel, a category including heating oil and diesel, also decreased by 3.1 million barrels to 110.8 million barrels over the same period. Total commercial petroleum inventories decreased by 0.5 million barrels last week.

Demand and Supply
The U.S. Department of Energy Weekly Petroleum Status Report for March 14, 2014 reported that U.S. crude oil imports averaged over 7.3 million barrels per day last week, down by 2,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.2 million barrels per day, 4.5% below the same four-week period last year. Total products supplied over the last four-week period averaged about 18.6 million barrels per day, up by 1.4% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 8.6 million barrels per day, up by 1.5% from the same period last year. Distillate fuel product supplied averaged over 3.8 million barrels per day over last four weeks, up by 5.1% from the same period last year.
Iran’s February crude loadings to its top four buyers - China, India, Japan and South Korea - rose to 1.16 million barrels per day (bpd) versus 994,669 bpd lifted in January, according to a loading plan seen by Reuters. The intake of Iranian oil by these Asian buyers alone topped 960,000 bpd since November, government and industry data has shown, and adding in an average 100,000 bpd of crude for Turkey, exports have breached the 1 million bpd agreed under the deal between Iran and six world powers in November, and implemented in January 20, 2014.

References
  • www.bloomberg.com
  • www.reuters.com
  • www.bbc.co.uk
Monday(March,17 2014)

DEFICIT FINANCING IS GOOD IF USED FOR DEVELOPMENT - MR ASAGA

The Chief Executive of the National Petroleum Authority (NPA), Mr Moses Asaga has stated that deficit financing was good if it could be proved that it had been used for development purposes.
He discounted the notion that deficit financing was inimical to the economy.
Mr Asaga was addressing participants at the first ever Daily Graphic/Fidelity Bank Meeting on the state of Ghana’s economy in Accra.


According to him, in Ghana’s political economy history, deficit funding were used to undertake infrastructural development such as school, road and expansion of health delivery services.

Mr. Asaga urged political parties to strategize with stakeholders to revitalize the Ghanaian economy.

“I don’t think deficit financing is out of the way if it can be proved it was used for something important,” he said.

He said although deficit financing might have its negative side, it also had positive sides, and gave examples of many developments in the country that showed that Ghana’s middle-income status was real.

Mr Asaga reiterated that “the future is bright for Ghana, despite the macro deficits that have been distorted lately.”

The three-hour breakfast meeting on the country’s economic challenges was undertaken by three gentlemen who have had the opportunity to handle Ghana’s purse at one time or another and it attracted over 236 participants made up of representatives of government agencies, the financial sector, different sides of the political divide, governance experts and economists.

The other discussants were the Minister of Finance, Mr Seth Terkper and a former Minister of Finance, Dr Anthony Akoto Osei, while the Chairman for the forum was Mr Kwame Pianim, an economist.

Friday(March,14 2014)

OIL MARKET NEWS (WEEK10): WEEK ENDED MARCH 7, 2014

  Major Highlights
  • At $111.31 per barrel, Brent crude oil, highest since the end of last year.
  • Cedi depreciates by 0.61% resulting in higher FOB prices of petrol, gasoil and LPG.
  • Russia invades Ukraine’s autonomous Crimea region
  • U.S. crude oil imports averaged over 7.1 million barrels per day last week.

Brent crude started the week on a high of $111.31 per barrel, the highest level since the end of last year, and recorded both marginal losses and gains throughout the week ended 7th March, 2014. Brent crude held above $111 per barrel as tensions over Russia's military intervention in Ukraine rattled global markets and stoked fears of energy supply disruption to Europe. Russia, Europe's biggest gas supplier, exports around a third of its gas through Ukraine,  invaded Ukraine's autonomous Crimea, resulting in the United States and the European Union threatening sanctions if Moscow does not withdraw its troops. Ric Spooner, chief analyst at CMC Markets in Sydney said "It probably isn't in anybody's interest to stop the Russian gas flow to the rest of Europe but it's possibly something that might be used as a bargaining lever by either side." Brent crude price, however, dropped during the week as easing geopolitical risk over the crisis in Ukraine and U.S. data suggesting a larger than expected rise in U.S. crude stocks and also by data showing private employers in the United States added fewer workers than forecast in February and services sector growth hit a four-year low. "The downbeat data out of the United States is painting a weaker picture for oil demand than the market has gotten used to recently," said McCarthy of CMC Markets. Brent crude oil price increased marginally by 0.15%, while free on board (FOB) prices of petrol fell by 1.05%, gasoil by 0.75% and LPG by 1.27% during the period under review. However, due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 0.61%), the GHS equivalent of crude oil increased by 0.75%, while petrol fell by 0.45%, gasoil by 0.15% and LPG by 0.67%.  Average Dated Brent price for the week (published by Platts) increased by $0.16 to $109.26 from the previous week's average of $109.10 a barrel, indicating a 0.15% drop.

Geopolitics
Russia’s invasion of Ukraine's autonomous Crimea region, resulted in the United States and the European Union threatening sanctions if Moscow does not withdraw its troops. Crimea's parliament voted to join Russia and its Moscow-backed government set a referendum within 10 days on the decision in a dramatic escalation of the crisis over the Ukrainian Black Sea peninsula. A high-level diplomatic efforts to resolve the crisis in Kiev took place in Paris, and foreign ministers from Ukraine, Russia and Western nations agreed to continue discussions in the coming days on how to stabilize the situation, U.S. Secretary of State John Kerry said. "The solution to the crisis should be found through negotiations between the governments of Ukraine and the Russian Federation, including through potential multilateral mechanisms," European Council President Herman Van Rompuy said, reading from a communique agreed by all 28 EU leaders.

Inventories
Ghana’s Weekly Petroleum Stock Situation as at March 3, 2014
Product Previous Stocks (million litres) Current Stocks (million litres) Change from Previous Forecasted weekly consumption No. of weeks to last
Diesel 134.2 149.9 15.7 42.0 3.6
Petrol 146.0 141.7 (4.3) 32.0 4.4
LPG* 2.8 6.5 3.7 6.0 1.1
ATK 29.7 26.4 (3.3) 3.9 6.8
Kero 3.6 3.3 (0.3) 1.0 3.3
Premix 2.5 1.5 (1.0) 1.9 0.8
*LPG figures in million kilogrammes

According to the import schedule, petrol of about 130.2 million litres was expected for delivery, while diesel of about 96.4 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (March 8, 2014). The CDU and RFCC units at TOR both remain shut down.
The U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.4 million barrels to 363.8 million barrels while gasoline stockpiles decreased by 1.6 million barrels to 231.81 million barrels in the week ended February 28, 2014. Inventories of distillate fuel, a category including heating oil and diesel, also increased by 1.4 million barrels to 114.4 million barrels over the same period. Total commercial petroleum inventories increased by 2.2 million barrels last week.
 

Demand and Supply
U.S. crude oil imports averaged over 7.1 million barrels per day last week, up by 75 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.4 million barrels per day, 3.2% below the same four-week period last year. Total products supplied over the last four- week period averaged about 18.5 million barrels per day, down by 0.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 8.3 million barrels per day, down by 1.5% from the same period last year. Distillate fuel product supplied averaged over 3.6 million barrels per day over last four weeks, down by 4.3% from the same period last year.
In China, crude oil imports in February rose 10.97% from a year earlier to 23.06 million tonnes, or 6.01 million barrels per day, according to Reuters calculations based on aggregated Jan-Feb figures given by the customs office.

References
  • www.bloomberg.com
  • www.reuters.com
  • www.bbc.co.uk
Monday(March,10 2014)

PETROLEUM PRODUCT MARKING SCHEME LAUNCHED

  The National Petroleum Authority (NPA) has launched a Petroleum Product Marking Scheme (PPMS) to deal with adulteration of petroleum products in the country and also ensure that subsidized petroleum products reach the target group.

The launch was themed: "Quality Fuels, Value for Money".

Speaking at the launch, President John Dramani Mahama in a speech read on his behalf by the Minister of Energy and Petroleum, Hon. Emmanuel Armah Kofi Buah encouraged all stakeholders not to see the theme as a single duty of the NPA but rather embrace it as a collective responsibility.

He said “value for money should not be limited to only quality of the product itself but rather the whole chain of services provided by the industry. Value for money must also be a mix of timely and convenient delivery services in the downstream industry.”

President Mahama stated that bad fuels cause engines to malfunction and come at extra cost to the consumer, adding that, “bad fuels generate toxic fumes that are injurious to the health of the people.”

He also mentioned the impact of bad fuel on the environment and the need for quality fuel for consumers.
He noted that adulteration of petroleum products don't deliver the value the consumer is paying for, affects the reputation of a fuel retailer’s and costs government millions of cedis in revenue every year.”

President Mahama expressed worry about the situation when subsidized products do not reach their intended destinations, paticularly those targeted at the rural areas.

“Premix for the fisher folks and kerosene for the farmers in rural communities are meant to enhance their economic activities and improve livelihood of the people. We clearly defeat these goals with adulteration,” he stressed.
President Mahama assured stakeholders in the petroleum downstream industry that government would continue to create an enabling environment for their businesses to thrive.

On his part, Hon. Moses Asaga, Acting Chief Executive of NPA said the launch would commence the full implementation of the program in accordance with the Legislative Instrument (LI 2187), saying that, “LI 2187 will provide punitive sanctions such as fines, imprisonment or both to send a signal to the industry that the age-old practice of adulteration and diversion of subsidized petroleum products will no longer be tolerated.”

Citing achievements made  since the implementation of the PPMS, he said the Authority from May to June last year undertook an evaluation exercise to ascertain the extent of permeation of the chemical marker.

“Out of the 2,700 retail outlets operating in the country, we sampled 1000 stations and recorded violations of more than 32%. This violation translates into revenue loss in excess of GH¢50 million through diversion of subsidized petroleum products,” he announced. A follow up exercise in September 2013 revealed that the violation had reduced from 32% to 7% indicating the effective nature of the program.

He gave the assurance that the PPMS would succeed and deliver on its core objectives of improving fuel quality and blocking revenue leakage.

Hon. Asaga emphasized his gratitude to his predecessor, Mr. Alexander Mould and the entire staff of the Authority for their remarkable and dedicated work.

The Chairman of the Governing Board of NPA, Mr. Raphael Roland urged management of NPA to continue to be creative in coming up with other innovative ideas to deal with other known industrial malpractices, adding that,  management should count on the support of the Board in future endeavours.

PPMS involves the introduction of a bio-chemical liquid (fuel marker) into the petroleum products at the loading depots prior to delivery of the products to the retail outlets. The marker creates a “finger print” and provides a secure, tamper-proof method of authentication.

Low levels of the marker are usually applied to the petroleum product and the concentration of the marker can only be detected by patent-protected portable field devices. These patent devices are used by field monitoring officers to detect violations.
Wednesday(March,05 2014)

OIL MARKET NEWS (WEEK 9): WEEK ENDED FEBRUARY 28, 2014

  Major Highlights
  • Brent crude oil trades in a range of $108-$110 a barrel.
  • Cedi depreciates by 2.43% resulting in higher FOB prices of petrol, gasoil and LPG.
  • Iran’s oil exports rise by 100,000 barrels per day.
  • Ghana’s consumption rate falls in January, 2014 from January, 2013 (yr-on-yr).
Brent crude started the week on a high of $109.62 against last week’s close of $108.88, experiencing both marginal gains and losses throughout the week ended 28th February, 2014. Brent crude oil slipped on worries that an easing of severe chill in the United States will lower demand for heating fuels and remove a key support for oil, though supply-disruption concerns kept the losses in check. "As weather conditions improve going forward, we may see a decline in demand for heating oil and that will put some pressure on oil,"  said Chee Tat Tan, an investment analyst at Phillip Futures in Singapore. "There is a lot of oil around even though we have disruptions from a few exporters," said a trader with a western trading house. "The immediate demand outlook isn't very strong either, so we see oil prices remaining under pressure." Brent oil was also pressured by civil unrest in Ukraine that curbed overall risk appetite and fueled fears that it would slow growth in Europe and lessen oil demand. Prices were also under pressure on expectations of rising exports from Iran. Brent oil, however, went up supported by continued geopolitical tensions in Libya, South Sudan and others." Crude oil dropped marginally by 0.35%, free on board (FOB) price of petrol by 0.11%, gasoil by 0.95% while LPG increased marginally by 0.97%. However, due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 2.43%), the GHS equivalent of crude oil increased by 2.08%, petrol by 2.32%, gasoil by 1.46% and LPG by 3.43%. Average Dated Brent price for the week (published by Platts) decreased by $0.38 to $109.10 from the previous week's average of $109.48 a barrel, indicating a 0.35% drop.

Geopolitics
Investors were also keeping an eye on escalating tension in the Middle East, North Africa, as well as potential for further disruption in oil exports. In Libya, oil output has plunged further, declining to 230,000 barrels a day after a new protest shut the El Sharara field, down from 1.4 million bpd in July when nationwide protests started. Western powers worry Libya could slide into instability as militias who helped topple Muammar Gaddafi in 2011 still keep their guns to seize oilfields or ministries at will to make political and financial demands. In South Sudan, the capital of the main oil-producing Upper Nile region, Malakal, remains divided between the army and rebels after forces loyal to Riek Machar, former vice president, raided the town and fought against government troops.

Inventories

Ghana’s Weekly Petroleum Stock Situation as at February 24, 2014
Previous Stocks (million litres) Current Stock (million litres) Change from Previous Forecasted weekly consumption No. of weeks to last  
135.0 134.2 42.0 42.0 3.2  
83.6 146.0 32.0 32.0 4.6  
6.0 2.8 6.0 6.0 0.5  
33.7 29.7 3.9 3.9 7.6  
3.3 3.6 1.0 1.0 3.6  
1.1 2.5 1.9 1.9 1.3  
*LPG figures in million kilogrammes
According to the import schedule, petrol of about 56.4 million litres was expected for delivery, while diesel of about 89.9 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (March 1, 2014).
The CDU at TOR shut down as a result of total utility failure on February 14, 2014 while the also RFCC remained shut down.
According to the Energy Information Administration (EIA), U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.1 million barrels to 362.4 million barrels while gasoline stockpiles increased by 0.3 million barrels to 233.41 million barrels in the week ended February 14, 2014. Inventories of distillate fuel, a category including heating oil and diesel, also increased by 0.3 million barrels to 113.0 million barrels over the same period. Total commercial petroleum inventories decreased by 0.5 million barrels last week.

Demand and Supply
Iran's oil exports have risen further this month for a fourth consecutive month, increasing by around 100,000 barrels per day (bpd) to at least 1.30 million bpd in February, just over half the pre-sanctions rate from 2011, tanker tracking sources told Reuters. Ole-Rikard Hammer of Norway's RS Platou Economic Research said a return of Iranian exports was "no longer unrealistic". "Any return of Iranian flows would represent somewhat of a double-edged sword for the tanker market: more transportation volume, but also more vessels available due to reduced floating storage,"  he said. Mexico's state-run oil giant Pemex said it is selling crude to Japan for the first time in 11 years, opening another Asian market as an export destination as the company seeks to diversify away from the United States.

Ghana’s consumption rate of petroleum products in January (year-on-year comparison)
Product Previous Stocks Current Stock Change from Previous
Products Jan-13 Jan-14 % change YoY
Diesel 147.5 141.8 -4%
Petrol 142.7 140.1 -2%
LPG 24.8 22.4 -10%
Kero 3.6 2.3 -36%
All product figures in million litres except LPG in million kilogrammes

Ghana’s consumption rate of petroleum products in January (month-on-month comparison)
Product Previous Stocks Current Stock Change from Previous
Products Dec-13 Jan-14 % change YoY
Diesel 149.9 141.8 -5.4%
Petrol 121.9 140.1 15%
LPG 23.4 22.4 -4%
Kero 0.2 2.3 1050%
All product figures in million litres except LPG in million kilogrammes

References
  • www.bloomberg.com
  • www.reuters.com
  • www.bbc.co.uk
Thursday(January,30 2014)

Petrol supply improves in Accra


*A number of vehicles waiting to be served at the Airport Shell fuel station in Accra

The fuel shortage that hit Accra is beginning to ease, as some of the fuel stations have begun receiving supplies. 
A number of the filling stations received petrol last Tuesday, while others were supplied with the commodity Wednesday.
However, many others were yet to receive their consignment.
When the Daily Graphic visited some filling stations at Nima, Airport, Asylum Down and Adabraka, a few fuel tankers were seen discharging petrol into reservoirs at the stations.
Absence of vehicular queues
Tankers that had already supplied fuel to the stations were parked, while others were leaving the stations.
The unusually long vehicular queues that formed at most of the fuel stations last Monday were absent.
At the Goil Service Station at Nima, there was no petrol, though the station had an adequate supply of diesel.
Insufficient supply
The manager of the station, Mr S. O. Peprah, said since the beginning of this year, petrol supply to his station had been “insufficient, as we do not get the normal supply”.
“I was supplied petrol just this Monday but I had run out of stock as of Tuesday,” he complained, blaming the shortage partly on inadequate supply and panic buying among motorists.
There was petrol for sale to motorists at the Nima Shell Station but the Station Director, Mr Edward Botwe, said,“Since we had insufficient supply on Tuesday, we will run out of stock today.”  
He claimed that Shell was rationing fuel to its retail outlets.
Frustration at shortage
A 57-year-old taxi driver, Mr Kwame Nyame, who was refuelling his vehicle at the Total Filling Station at the Farrar Avenue, Adabraka, said most filling stations he had driven to did not have petrol.
“Much as it is frustrating going to places and being told there is no fuel, I think things are beginning to improve,” he said.
 Mr Adu Poku, another motorist, was disturbed by “the inability of the government to ensure continuous supply of petrol throughout the country”.
“Everything has to do with fuel and we cannot afford enduring these messy shortages,” he fumed.
More fuel expected
When contacted, the Chief Executive of the Association of Oil Marketing Companies, Mr Kwaku Agyeman-Duah, blamed the persistent fuel shortage in the country partly on congestion of delivery fuel tankers at the Tema depot.
“Presently, many tankers are held up at the Tema depot, awaiting deliveries to supply to the various stations across the country,” he said.
Besides, he said, there had been delays by vessels bringing petrol into the country.
However, Mr Agyeman-Duah said a vessel carrying 32.2 million litres of petrol had berthed at the Tema Port, adding that other vessels carrying a total of 131 million litres were expected in the country by January 31.
“As you know, the consumption of petrol in Ghana is 32 million litres a week and so we anticipate that the entire 131 million litres will last for more than three weeks,” he said.
Thursday(January,01 1970)

Thursday(January,01 1970)

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Thursday(January,01 1970)

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