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Tuesday(June,17 2014)

OIL MARKET NEWS (WEEK 24): WEEK ENDED JUNE 13, 2014

  Major Highlights
Brent crude oil trades in a range of $109-$113 per barrel.
The average GHS/US Dollar exchange rate weakened by 1.77% over the previous week’s rate.
Insurgents seize two more Iraqi towns, Obama threatens air strikes.
Ghana’s current stock of petrol to last 1.4 weeks, diesel 2.8, LPG 0.7 and ATK 2.0 weeks.
China consumed roughly 9.41 million barrels of oil per day (bpd) in May 2014.

Average Dated Brent price for the week (published by Platts) increased by $1.98 to $110.82 per barrel from the previous week's average of $108.84 a barrel, indicating 1.82% gain. Brent crude oil rose as violence in Iraq prompted worries about supply outlook. "Iraq has become a key supplier as it has managed to ramp up output quite rapidly and it has helped offset losses from other producers," said a source at an Asian refinery. "So if there is any disruption from Iraq, everybody is worried that the impact on the market will be serious." Also supporting Brent crude oil were strong Chinese trade data and U.S jobs figures pointed to healthy economic growth and higher oil demand from the world’s top two consumers. "We have been getting a series of overall positive economic numbers from China and the United States that is helping support oil prices as the overall demand outlook looks good." said Ken Hasegawa, a Tokyo-based commodity sales manager at Newedge Japan. He added that "Oil is now in a new price territory and is likely to climb more as investors rework their positions, supported by the uncertainty and technicals." Free on board (FOB) prices of petrol increased by $18.5 to $1023.10/MT from the previous week's average of $1004.60, indicating 1.84% gain; diesel went up by $14.50 to $898.70/MT from the previous week’s average of $883.90, indicating 1.67% gain and LPG went up significantly by $36.30 to $776.40/MT from $740.10, indicating 4.90% gain, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 9 June 2014 to 13 June 2014 was 2.9852 (depreciated by 1.77%) compared to 2.9333 during the previous period. The weakened Ghana cedi against the U.S dollar increased the contribution of the international prices of crude oil and petroleum products in the price build-up, resulting in higher ex-pump prices. The GHS equivalent FOB price of petrol, diesel and LPG increased by 3.64%, 3.47% and 6.76% respectively during the period under review.

Geopolitics

Islamist rebel fighters captured two more Iraqi towns overnight in a relentless sweep south towards the capital Baghdad in a campaign to recreate a mediaeval caliphate carved out of fragmenting Iraq and Syria. U.S. President Barack Obama threatened military strikes against the radical Islamic State of Iraq and the Levant, highlighting the gravity of ISIL's threat to redraw borders in an oil-rich region with the risk of any new entity turning into a launch-pad for attacks on Western interests. In the spreading chaos, Iraqi Kurdish forces seized control of Kirkuk - an oil hub just outside their autonomous enclave that they have long seen as their traditional capital - as Iraqi government troops abandoned posts in panic over ISIL's advance. "I don't rule out anything because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either Iraq or Syria," Obama said at the White House, when asked whether he was contemplating air strikes. "In our consultations with the Iraqis, there will be some short-term immediate things that need to be done militarily," he said. A U.S. defence official said the United States had been flying surveillance drones over Iraq to help it fight ISIL.

Inventories
                                                                                                                                                                                                                                      According to the import schedule, diesel of over 43 million litres was expected for delivery, while petrol of about 66 million litres was expected for delivery to add to existing stockpiles. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (June 14, 2014).
The CDU is still down since March 16, 2014 due to lack of crude oil while the RFCC shut down on May 19, 2014 for planned mini maintenance.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for June 6, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.6 million barrels to 387.0 million barrels while gasoline stockpiles increased by 1.7 million barrels to 215.8 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 0.9 million barrels to 119.0 million barrels over the same period. Total commercial petroleum inventories increased by 6.2 million barrels last week.


Demand and Supply

China's implied oil demand fell 3.1 percent in May from the previous month to its lowest since August 2013 as refineries scaled back production for maintenance and continued to export surplus fuel to trim inventories as the nation's economy slowed. China consumed roughly 9.41 million barrels per day (bpd) of oil last month, according to Reuters calculations based on preliminary government data, the lowest level in nine months and down from 9.71 million bpd in April. May consumption was also down 0.7 percent from 9.48 million bpd a year earlier, the calculations showed.
According to the U.S. Department of Energy, U.S. crude oil imports averaged over 7.1 million barrels per day last week, up by 23,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.1 million barrels per day, 8.1% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 560,000 barrels per day. Distillate fuel imports averaged 106,000 barrels per day last week. Total products supplied over the last four-week period averaged 18.8 million barrels per day, up by 1.6% from the same period last year. Distillate fuel supply averaged 4.0 million barrels per day over the last four weeks, up by 1.1% from the same period last year.


References
 www.bloomberg.com
 www.reuters.com
 www.bbc.co.uk
Tuesday(June,10 2014)

OIL MARKET NEWS (WEEK 23): WEEK ENDED JUNE 6, 2014

  Major Highlights
•    Brent crude oil trades in a range of $108-$109 per barrel.
•    The average GHS/US Dollar exchange rate weakened by 1.42% over the previous week’s rate.
•    Protests at oil facilities and fighting causes Libya to lose $30 billion in oil revenue.
•    Ghana’s current stock of petrol to last 3.4 weeks, diesel 3.3, LPG 1.1 and ATK 0.03 weeks.
•    Ghana’s consumption of petroleum products experience mixed movements.

Average Dated Brent price for the week (published by Platts) decreased by $0.85 to $108.84 per barrel from the previous week's average of $109.69 a barrel, indicating 0.77% loss. Brent crude slipped on ample supply in the United States and as tensions over Ukraine cooled. Ukraine's President-elect and western leaders are working on a peace plan to end violence in the east of the country which caused oil prices to rise in May. "The situation in Ukraine seems to be getting better, so prices are unlikely to spike up," said Ken Hasegawa, a Tokyo-based commodity sales manager at Newedge Japan. “Avenues of communication are open and the talks this week meant the market is not as concerned as it was when Crimea crisis erupted,” Christopher Bellew, broker at Jefferies Bache, said. A strong dollar and recent data showing rising OPEC oil production also weighed on prices. A stronger dollar tends to put pressure on commodities including oil, which are priced in the U.S. currency as it makes them more expensive for non-U.S. importers. Brent gained in the course of the week on renewed optimism over steady demand growth in the world's top oil consumer the United States following healthy economic data, with supply disruption concerns providing additional support. Orders for long-lasting U.S. manufactured goods unexpectedly rose and consumer confidence perked up, underpinning risk assets and bolstering U.S. equity markets to another record close. "There are quite a few bullish factors in the oil market that are supportive, we have good economic indicators and uncertainty over Libya and Ukraine," said Tetsu Emori, a commodity fund manager at Astmax Investment. Free on board (FOB) prices of petrol decreased by $10.65 to $1004.60/MT from the previous week's average of $1015.25, indicating 0.77% loss; diesel went down by $18.23 to $883.90/MT from the previous week’s average of $902.13, indicating 2.02% drop while LPG went up by $2.10 to $740.10/MT from $738.00, indicating 0.28% gain, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 2 June 2014 to 6 June 2014 was 2.9333 (depreciated by 1.42%) compared to 2.8922 during the previous period. The weakened Ghana cedi against the U.S dollar increased the contribution of the international prices of crude and petroleum products in the price build-up, resulting in higher ex-pump prices. The GHS equivalent FOB price of petrol and LPG increased by 0.36% and 1.71% respectively, while diesel fell by 0.63% during the period under review.

Geopolitics

Gunmen in Libya shot dead a Swiss national working for the International Committee of the Red Cross (ICRC), fired a grenade at the prime minister's office and tried to kill a renegade general in a series of attacks. Anarchy is spreading in the North African oil-producing country where turmoil and political infighting have reigned since the 2011 uprising that ousted Muammar Gaddafi. Libya has lost $30 billion due to 10 months of protests at oilfields and export terminals but has sufficient foreign currency reserves to keep the country running, a central bank official said. A wave of protests at oil facilities has reduced the North African country's oil output to less than 200,000 barrels a day down from 1.4 million bpd in July before the strikes started. "The damages the state has now suffered after more than 10 months, Libya has lost not less than $30 billion," Musbah Alkari, director of the central bank's reserves department, told Reuters.

Inventories
                                                                                                                                                                                                                                      According to the import schedule, diesel of over 39 million litres was expected for delivery, while petrol of about 45 million litres was expected for delivery to add to existing stockpiles. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (June 7, 2014).
The CDU is still down since March 16, 2014 due to lack of crude oil while the RFCC shut down on May 19, 2014 for planned mini maintenance.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 30, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.4 million barrels to 389.6 million barrels while gasoline stockpiles increased by 0.2 million barrels to 214.1 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 2.0 million barrels to 118.1 million barrels over the same period. Total commercial petroleum inventories increased by 8.8 million barrels last week.

Demand and Supply

Ghana’s consumption of petroleum products experienced mixed movements, with Kerosene, MGO Foreign and ATK experiencing significant drops in volumes, while petrol gained from April 2013 to April 2014. Kerosene saw the highest drop of 82%. This could be attributed to the removal of subsidies and the introduction of the Petroleum Product Marking Scheme which has significantly reduced adulteration in the industry. In terms of month-on-month consumption, diesel, petrol and MGO Foreign increased while LPG, Kerosene and ATK dropped, as illustrated in the table below.  

 References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Wednesday(June,04 2014)

OIL MARKET NEWS (WEEK 22): WEEK ENDED MAY 30, 2014

Major Highlights
  •  Brent crude oil trades in a range of $109-$110 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 0.26% compared to the previous week.
  •  Ukraine elects new president.
  • Ghana’s current stock of petrol and diesel to last 4.1 weeks each; LPG 1.1 weeks.
  •  U.S. total commercial petroleum inventories increased by 3.2 million barrels last week.
Average Dated Brent price for the week (published by Platts) decreased by $1.17 to $109.69 from the previous week's average of $110.86 a barrel, indicating 1.05% loss. Brent crude oil slipped, weighed down, as expectation of a build in U.S. crude inventory pushed traders to take profits ahead of a government inventory report, and also by easing geopolitical tensions in Ukraine, after a successful presidential election. "This is profit-taking ahead of the EIA and API reports," said Bill Baruch, senior market strategist at iitrader.com in Chicago. "With regards to Ukraine, there is a positive aspect in that there is some light at the end of the tunnel." A stronger US Dollar also weighed on Brent. Losses were, however, capped by deterioration in violence in Ukraine and Libya. Free on board (FOB) prices of petrol increased by $4.05 to $1015.25 from the previous week's average of $1010.95 per metric tonne (MT), indicating 0.43% gain, LPG went up by $5.80 to $738.00 from $732.20 per MT, indicating 0.79% gain, while diesel went down by $9.37 to $902.13 from the previous week’s average of $911.50 indicating 1.03% drop, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 26 May 2014 to 30 May 2014 was 2.8922 (depreciated by 0.26%) compared to 2.8848 during the previous period. The weakened Ghana cedi against the U.S dollar increased the contribution of the international prices of crude and petroleum products in the price build-up, resulting in higher ex-pump prices. The GHS equivalent FOB price of petrol and LPG increased by 0.69% and 1.05% respectively, while diesel fell by 0.77% during the period under review.

Geopolitics

Ukraine’s election of a new President, deemed a success by the European Union, is likely to ease pressure for far-reaching sanctions against Russia as Europe worries about how punitive steps might hurt its own economy. The election had been billed as a crucial test of whether Europe needed to step up pressure on Russian President Vladimir Putin. But deep trade ties with Russia and widespread dependence on its energy reserves mute any EU enthusiasm to tighten sanctions. European Commission President Jose Manuel Barroso and Herman Van Rompuy, head of the body representing the EU's 28 governments, said in a statement "we welcome statements by the Russian Federation indicating that it will respect the will of the Ukrainian people and engage in a dialogue with the new Ukrainian president."

Inventories

According to the import schedule, diesel of over 50 million litres was expected for delivery, while petrol of about 55 million litres was expected for delivery to add to existing stockpiles for the market by close of the week (May 31, 2014).
The CDU is still down since March 16, 2014 due to lack of crude oil while the RFFC commenced production on May 18, 2014 at rate of 1800MTPSD (76%).
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 23, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.7 million barrels to 393.0 million barrels while gasoline stockpiles decreased by 1.8 million barrels to 213.9 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, decreased by 0.2 million barrels to 116.1 million barrels over the same period. Total commercial petroleum inventories increased by 3.2 million barrels last week.

Demand and Supply

According to the U.S. Department of Energy, U.S. crude oil imports averaged about 7.8 million barrels per day last week, up by over 1.3 million barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.1 million barrels per day, 9.3% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 725,000 barrels per day. Distillate fuel imports averaged 148,000 barrels per day last week.

Total products supplied over the last four-week period averaged 19.1 million barrels per day, up by 2.2% from the same period last year. Over the last four weeks, motor gasoline supply averaged over 9.1 million barrels per day, up by 5.4% from the same period last year. Distillate fuel supply averaged about 4.1 million barrels per day over the last four weeks, up by 8.6% from the same period last year. Jet fuel product supply was down 1.6% compared to the same four-week period last year.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(June,03 2014)

INSTILLING SANITY IN THE PETROLEUM DOWNSTREAM SECTOR

In order to ensure sanity in the petroleum downstream sector, the National Petroleum Authority (NPA) has introduced a new scheme to halt the adulteration of petroleum products and ensure that subsidized petroleum products reach the target group. This will also recoup revenue for government which would have been lost through diversion of subsidized petroleum products.

The new measure, known as the Petroleum Product Marking Scheme (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.

The implementation of the PPMS is as a result of NPA’s objective of ensuring that the industry continues to be efficient and profitable whilst consumers are satisfied.

ADULTERATION
Adulteration of petroleum products is a practice confronting many countries in the world. In recent past in Ghana, adulteration of diesel with kerosene has been the main reason why much of subsidized kerosene intended for the rural population does not get to the intended targets. Adulteration is not limited to diesel and kerosene alone.

Gasoline adulteration with premix fuel is also practiced as a result of the significant price differentials between these products due to government subsidies on the “social” products. Product adulteration is also a contributory factor to reports of malfunctioning of vehicle engines and harmful emissions to the detriment of the environment and public health.

Some countries confronted with this challenge have attempted to address this challenge by the use of colour dyes.

In Ghana, we responded by changing the colour of premix from red to blue. Prior to this, the similarity of the colour between premix and petrol made adulteration undetected by visual observation. The change in colour from red to blue differentiated premix from petrol to discourage adulteration and diversion to premix.

However, coloration of the petroleum products has a lot of limitations since the dye can be easily removed by both physical and chemical processes such as acid washing, clay filtration, UV filtration, among others.

Presently, the petroleum regulatory authorities of most countries such as Brazil, South African, Uganda, Tanzania, among others have adopted a modern and robust technology known as Fuel Marking to combat adulteration of petroleum products as well as recover fiscal tax revenue from the sale of petroleum products.

In Brazil, for instance, fuel marking began 10 years ago. The technology has been used successfully by the National Agency for Petroleum, Natural Gas and Biofuels (ANP) to reduce the incidence of gasoline adulteration with organic solvents from 12.5% to 2%. In South Africa, apart from the reduction of incidences of adulteration of diesel with kerosene, fuel marking technology has been significantly used to recover fiscal tax revenue from the sale of diesel by the Oil Marketing Companies.

The South African Revenue Service (SARS) currently collects about 300 million Rand annually (US$4.4m) in tax revenue from the sale of diesel. The high tax revenue from diesel is attributed to the benefit of fuel marking in South Africa.

Pursuant to the success stories of these countries, a Technical Committee was formed by the NPA to undertake study tours to these countries.

Based on the recommendations of the team and in line with its mandate per the NPA Act 691, the NPA took the decision in 2011 to mark petroleum products in the country with the following objectives.
  •   To enable the NPA, as the regulatory body, monitor the quality of fuel
  • To help combat adulteration of petroleum products as well as recover fiscal tax revenue from the sale of petroleum products.
  • To prevent the smuggling of petroleum products into and out of Ghana

The NPA proposed a Legislative Instrument (LI) which was laid before the Parliament of Ghana on 26th July 2012 and  subsequently passed into Law, LI2187 (Petroleum Product Marking regulations) on 13th of September,2012. This means that where applicable, punitive sanctions such as fines, imprisonment or both would apply to defaulting Petroleum Service Providers.

The implementation of the fuel marking process commenced in February 2013 at Cirrus Depot in Tema and was replicated at all operational depots in the country by the end of March 2013. Also, the Authority has acquired the necessary equipment and has set up field monitoring teams which monitor the product quality at all petroleum product retail outlets and other bulk consumption points in the country.

Following the successful introduction of the fuel marking program at all of Ghana’s ten operational fuel depots, a nationwide sampling and testing was conducted from May to June 2013. This was to ensure that the fuel marker was at the required levels at the outlets and to establish a base line for the degree of fuel adulteration and resulting revenue losses to the Republic of Ghana.

Out of the 2700 retail outlets operating in the country, the Authority sampled 1000 stations and recorded violation of more than 32%. This violation translates into revenue loss in excess of GH₵50 million through diversions of subsidized petroleum products.

Subsequently, from September to November 2013, a total of 2,997 visits were made to petroleum product retail outlets in the country. During these visits, 6,887 petroleum product samples were taken and tested onsite.

FUEL-TAX

The percentage of outlets suspected to be engaged in one form of adulteration or the other has reduced from 32% (recorded in the May to June exercise) to about 7% at the end of November 2013 indicating the effective nature of the program.

These results suggested there is a deterrent effect resulting from the regular field monitoring and that taxable revenue will further increase significantly if sanctions are enforced.

This drop in failure rate translates to an estimated revenue recovery of about GHc17m per annum in tax revenue and a significant savings on subsidies.

The fuel-tax integrity program has been successfully implemented for the Republic of Ghana. The fuel marking levels of gasoline and diesel are at the required levels and it is possible to detect dilution in the distribution-chain.  A 78% reduction in the station failure rate has been observed since program start, providing evidence of a deterrent effect on illicit fuel trade even prior to the start of sanctions.

All testing rounds to-date have shown that there is material dilution of both gasoline and diesel. Full program execution and enforcement will benefit the people of Ghana a further estimated revenue recovery of GH₵ 33 million per annum.

As an additional benefit, in most cases, the adulterant used to dilute either gasoline or diesel will affect the quality of the end product and may result in vehicle engine failures and in harmful emissions to the detriment of the environment and public health.  

A well-executed program including enforcement can further benefit the people of Ghana by reducing pollution created by fuels adulterated by kerosene, used engine oil and other unknown contaminants.
Tuesday(May,27 2014)

OIL MARKET NEWS (WEEK 21): WEEK ENDED MAY 23, 2014

  Major Highlights
  •  Brent crude oil trades in a range of $110-$111 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 0.43% compared to the previous week.
  •  Libya proposes June election as crisis escalates.
  •  Ghana’s current stock of petrol to last 3.6 weeks; diesel to last 4.5 weeks.
  •  U.S. total commercial petroleum inventories increased by 2.1 million barrels last week.

Average Dated Brent price for the week (published by Platts) increased by $1.28 to $110.86 from the previous week's average of $109.58 a barrel, indicating 1.16% gain. Brent crude oil held steady above $110 a barrel, supported by conflicts in Libya and Ukraine as well as positive economic data in the world's top oil consumers, the United States and China. The fragile situation in Libya supported global oil prices, with new fighting breaking out in the capital Tripoli, according to witnesses. The reports by Tripoli residents of gunfire and explosions near two military camps came days after gunmen stormed parliament in the worst violence in months. The oil market was supported by signs of global economic growth, with U.S. manufacturing growth picking up to a three-month high in May, and China's factory sector turning in its best performance this year in May. China’s preliminary Purchasing Managers’ Index was 49.7 for May, up from 48.1 the previous month and the highest reading this year, according to HSBC Holdings Plc and Markit Economics. This figure signaled that the economy of the world’s second-biggest oil consumer is stabilizing. “China’s manufacturing is now only barely contracting” and today’s data is a welcome improvement, Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London, said. “We remain cautious as to whether this is enough to give a significant boost to industrial commodities like oil.”

Free on board (FOB) prices of petrol increased by $14.00 to $1010.95 from the previous week's average of $996.95 per metric tonne (MT), indicating 1.40% gain, LPG went up by $8.60 to $732.20 from $723.60 per MT, indicating 1.19% gain, while diesel went down marginally by $0.90 to $911.50 from the previous week’s average of $912.40 indicating 0.10% drop, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 19 May 2014 to 23 May 2014 was 2.8848 (depreciated by 0.43%) compared to 2.8725 during the previous period. Due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 0.43%), the GHS equivalent FOB price of petrol, diesel and LPG increased by 1.84%, 0.33% and 1.62% respectively during the period under review.

Geopolitics
Libyan authorities proposed a June national election as the government sought to resolve a standoff over parliament involving powerful brigades of former rebel fighters. Libya's General National Congress (GNC) is at the heart of the crisis after gunmen claiming loyalty to a renegade former general attacked parliament with anti-aircraft cannons, demanding its suspension. The June 25 election proposal appears to be an attempt to ease tensions after recent attack claimed by forces loyal to former General Khalifa Haftar, and to avoid the potential response by rival Islamist militia brigades.

Inventories
According to the import schedule, diesel of over 11 million litres was expected for delivery, while petrol of about 32 million litres was expected for delivery to add to existing stockpiles for the market by close of the week (May 24, 2014).
The CDU is still down since March 16, 2014 due to lack of crude oil while the RFFC commenced production on May 18, 2014 at rate of 1800MTPSD (76%).
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 16, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.2 million barrels to 391.3 million barrels while gasoline stockpiles increased by 1.0 million barrels to 215.7 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 3.4 million barrels to 116.3 million barrels over the same period. Total commercial petroleum inventories increased by 2.1 million barrels last week.

Demand and Supply
According to the U.S. Department of Energy, U.S. crude oil imports averaged about 6.5 million barrels per day last week, down by 658,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.0 million barrels per day, 11.3% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 997,000 barrels per day. Distillate fuel imports averaged 176,000 barrels per day last week.
Total products supplied over the last four-week period averaged over 18.9 million barrels per day, up by 1.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 8.9 million barrels per day, up by 5.3% from the same period last year. Distillate fuel product supplied averaged about 4.1 million barrels per day over the last four weeks, up by 7.7% from the same period last year. Jet fuel product supplied is down 0.3% compared to the same four-week period last year.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(May,20 2014)

OIL MARKET NEWS (WEEK 20): WEEK ENDED MAY 16, 2014

Major Highlights
  •  Brent crude oil trades in a range of $108-$111 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 1.39% compared to the previous week.
  •  Iran and six world powers enter decisive phase of diplomacy on nuclear issues.
  •  Ghana’s current stock of petrol to last 4.7 weeks; diesel to last 3.3 weeks.
  •  U.S. crude production of 8.428 million barrels per day, the most since October 1986.
Average Dated Brent price for the week (published by Platts) increased by $1.23 to $109.58 from the previous week's average of $108.35 a barrel, indicating 1.14% gain. Brent crude oil steadied above $109, supported by renewed tensions in Ukraine, where the conflict looks increasingly out of control and heightening the risk of disruption to energy supplies. Seven soldiers were killed and seven wounded in an ambush in the biggest single loss of life by the Ukrainian army since it was sent to eastern Ukraine to smash pro-Russian separatist groups. Also supporting prices were concerns over output in Libya, where recently opened fields were closed again and clashes erupted in the east. "We have to take Libyan reports that these oilfields are back up with a grain of salt because it's still very uncertain there," said Joseph Posillico, senior vice president of energy derivatives at Jefferies Bache in New York. Free on board (FOB) prices of petrol went up by 0.58%, diesel by 1.23% while LPG went down by 1.05%, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 12 May 2014 to 16 May 2014 was 2.8725 (depreciated by 1.39%) compared to 2.8332 during the previous period. Due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 1.39%), the GHS equivalent FOB price of petrol increased by 1.97%, diesel by 2.63% and LPG by 0.33%, during the same period under review.

Geopolitics

Six world powers and Iran launched a decisive phase of diplomacy to draft a lasting accord that would curb Tehran's contested nuclear activity in exchange for a phased end to sanctions that have hobbled the Iranian economy. After three months of discussing expectations rather than negotiating possible compromises, the sides are to set about devising a package meant to end years of antagonism and curtail the risk of a wider Middle East war with global repercussions. Diplomats from both sides have said they want to resolve all sticking points about issues such as Iran's capacity to enrich uranium and the future of its nuclear facilities, as well as the timeline of sanctions relief, by a July 20 deadline.
Elsewhere, Libyan irregular forces backed by helicopters clashed with Islamist militias in Benghazi in fighting that left at least 12 people dead and posed a new test to the country's fragile government. The violence prompted Libya's prime minister to order the regular military to control any armed groups - including Haftar's forces - in the eastern city, where militants often clash with the army, and assassinations and bombings are common.

Inventories

According to the import schedule, diesel of over 22 million litres was expected for delivery, while petrol of about 32 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 (May 17, 2014).
The CDU and RFFC are both shutdown due to lack of feed and planned mini maintenance respectively.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 9, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.9 million barrels to 398.5 million barrels while gasoline stockpiles decreased by 0.8 million barrels to 214.7 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, decreased by 1.1 million barrels to 112.9 million barrels over the same period. Total commercial petroleum inventories increased by 3.4 million barrels last week.

Demand and Supply

The U.S. Energy Information Administration (EIA) said in its monthly Short-Term Energy Outlook that U.S. crude production climbed to a 28-year high last week as the shale boom moved the world’s biggest oil-consuming country closer to energy independence. Output rose by 78,000 barrels a day to 8.428 million, the most since October 1986. “This is an incredible phenomena that looks set to continue,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said. “There’s a long way to go before we explore and exploit all of the shale deposits out there.” The U.S. met 87 percent of its energy needs in 2013, and 90 percent in December, the most since March 1985, according to the EIA, the statistical arm of the Energy Department. Crude output will average 8.46 million barrels a day this year and 9.24 million in 2015, up from 7.45 million last year, the EIA said in its monthly Short-Term Energy Outlook. Next year’s projection would be the highest annual average since 1972.

China's implied oil demand fell 0.8 percent in April from the previous month to its lowest since September as refineries scaled back production for maintenance and continued to export surplus fuel to trim inventories as the nation's economy slowed. China consumed roughly 9.71 million barrels per day (bpd) of oil in April, according to Reuters calculations based on preliminary government data, the lowest level in seven months and down from 9.79 million bpd in March. Chinese investment, retail sales and factory output growth all disappointed in April by hitting multi-year lows, suggesting the world's second-largest economy is still losing steam despite government efforts to shore up activity. April consumption was up 1.1 percent from 9.6 million bpd a year earlier, while for the first four months of 2014, oil demand climbed just 0.4 percent from a year ago to 9.9 million bpd.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(May,13 2014)

OIL MARKET NEWS (WEEK19): WEEK ENDED MAY 9, 2014

             Major Highlights


  •  Brent crude oil average about $108 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 1.48% compared to the previous week.
  •  Libya’s new Prime Minister pledges to form a unity government.
  •  Ghana’s consumption of petroleum products (year-on-year) fell in March 2014 with the exception of ATK.

Average Dated Brent price for the week (published by Platts) decreased by $0.79 to $108.35 from the previous week's average of $109.14 a barrel, indicating 0.73% loss. Brent crude oil fell, pressured by reports that China's manufacturing sector contracted and Libya's oil output recovered. Data on China's manufacturing sector weighed on crude oil prices. A private survey showed that the Chinese manufacturing sector contracted for a fourth consecutive month in April. The HSBC/Markit purchasing managers' index for April came in at 48.1, lower than a preliminary reading of 48.3, but up slightly from an eight-month low of 48.0 in March. A reading below 50 indicates contraction, adding to worries that the Chinese economy is still losing momentum. Also weighing on prices were news of tribesmen ending a blockade of the El Sharara oilfield with engineers hoping for resumption of pumping within a week. Brent crude oil was, however, supported by positive economic data, with the U.S. trade deficit narrowing in March as exports rebounded to the second-highest level on record, indicating healthy demand for energy in the world's biggest oil consumer. Also heightened tension in Ukraine and the possibility of the country slipping into civil war also helped lift oil markets, as traders weighed the risk of supply disruptions from Russia, the world's biggest oil producer. Free on board (FOB) prices of petrol went down by 2.56%, diesel by 0.62% and LPG by 0.47%, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 5 May 2014 to 9 May 2014 was 2.8332 (depreciated by 1.48%) compared to 2.7920 during the previous period. Due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 1.48%), the GHS equivalent FOB price of petrol decreased by 1.12%, while diesel and LPG increased by 0.85% and 1.00% respectively, during the same period under review.

Geopolitics

Libya’s new Prime Minister, Ahmed Maiteeq, said he wants to engage all political forces in forming a "crisis government" and devolve some powers to regions in the oil-producing state. Maiteeq was sworn-in after a chaotic vote in parliament that was immediately disputed by many deputies, another sign of the chaos gripping the North African country three years after the fall of Muammar Gaddafi. The new PM faces high expectations from Libyans tired of political infighting and the country's turbulent transition to democracy since the 2011 uprising. In a brief speech carried by state television, Maiteeq said he wanted to talk to all forces and groups of society to form a cabinet representing a "national accord". "I want to form a crisis government," he said. "The government will be based on four pillars - to improve state control and sovereignty, rebuild the security and military institutions, start...a national reconciliation, and find urgent solutions for transitional justice and grievances."

Inventories

According to the import schedule, diesel of over 11.0 million litres was expected for delivery, while petrol of about 55.0 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, while ATK of over 7 million litres was expected for delivery by close of the week (May 10, 2014).
The CDU and RFFC are both shutdown due to lack of feed and planned mini maintenance respectively.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 2, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.8 million barrels to 397.6 million barrels while gasoline stockpiles increased by 1.6 million barrels to 215.5 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, decreased by 0.4 million barrels to 114.0 million barrels over the same period. Total commercial petroleum inventories increased by 7.2 million barrels last week.

Demand and Supply

According to the U.S. Department of Energy, U.S. crude oil imports averaged 6.9 million barrels per day last week, down by 598,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 1.1% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 583,000 barrels per day. Distillate fuel imports averaged 123,000 barrels per day last week. Total products supplied over the last four-week period averaged 18.5 million barrels per day, down by 0.3% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 8.6 million barrels per day, up by 1.4% from the same period last year. Distillate fuel product supplied averaged about 4.1 million barrels per day over the last four weeks, up by 11.6% from the same period last year.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(May,06 2014)

OIL MARKET NEWS (WEEK18): WEEK ENDED MAY 2, 2014

  Major Highlights


  •  Brent crude oil trades in a range of $108-$110 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 0.33% compared to the previous week.
  •  Gunmen storm Libya’s parliament forcing lawmakers to abandon a vote on next prime minister.
  •  Ghana’s current stock of petrol to last 4.2 weeks; diesel to last 4.3 weeks.
Average Dated Brent price for the week (published by Platts) increased by $0.10 to $109.14 from the previous week's average of $109.04 a barrel, indicating 0.10% gain. Brent crude oil prices rose marginally, as traders focused on geopolitical risks from an outbreak of violence in Libya and Russia's intervention in Ukraine. Gunmen stormed Libya's parliament, wounding several people, while a suicide bomber in a car killed at least two people and wounded two others at an army camp in the eastern city of Benghazi. The developments raised questions about how soon oil flows will resume from the Zueitina port. "When you see an action like that, then you wonder if the port will in fact reopen," said James L. Williams, energy economist at WTRG Economics in London, Arkansas. "It just creates more uncertainty about it," he said. Also supporting price increases were an escalation in tension between Russia and Ukraine. Hundreds of pro-Russian separatists stormed the regional government headquarters in Ukraine's eastern city of Luhansk, gaining access by breaking windows and facing no resistance from police. “The Ukraine tension is escalating and it’s pushing Brent higher,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago said. Brent crude oil gains were however capped, weighed down by lacklustre China data, a potential rise in Libya's oil supply as a result of the lifting of a force majeure from the eastern Zueitina oil port and record-high inventories in the United States weighed on prices. Free on board (FOB) prices of petrol went down by 2.13%, diesel by 1.24% and LPG by 2.85%, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 28 April 2014 to 2 May 2014 was 2.7920 (depreciated by 0.33%) compared to 2.7828 during the previous period. The depreciation of the GHS against the USD is not as steep as the previous weeks’ value, suggesting some level of stability in the local currency. The relatively stable exchange rate resulted in the GHS equivalent FOB price of petrol decrease by 1.81%, diesel by 0.92% and LPG by 2.53% during the period under review.

Geopolitics

Gunmen stormed Libya's parliament and opened fire, forcing lawmakers to abandon a vote on the next prime minister, witnesses said. Parliament spokesman Omar Hmeidan said several people were wounded in the shooting incident, who were linked to one of the defeated candidates for prime minister. Lawmakers fled from the building, witnesses said. The incident ended quickly but the vote was postponed until next week. Hmeidan said deputies had started the final vote on a replacement for Premier Abdullah al-Thinni, who resigned two weeks ago saying that gunmen had attacked his family. Elsewhere, the stand-off between Russia and Western powers over Ukraine also showed no sign of abating, adding to concerns that the conflict will ultimately lead to the disruption of some oil supply due to tighter sanctions.

Inventories

According to the import schedule, diesel of over 59.0 million litres was expected for delivery, while petrol of about 55.0 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 (May 3, 2014).
The CDU and RFFC are both shutdown due to lack of feed and planned mini maintenance respectively.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for April 25, 2014 that U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.7 million barrels to 399.4 million barrels while gasoline stockpiles increased by 1.6 million barrels to 213.9 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 1.9 million barrels to 114.4 million barrels over the same period. Total commercial petroleum inventories increased by 7.9 million barrels last week.

Demand and Supply

Iran's oil exports fell in April for a second month, according to sources who track tanker movements, moving closer to levels allowed by November's interim deal on curbing Tehran's nuclear programme. Iran's crude exports have averaged 1.1 million barrels per day (bpd) in April, down from almost 1.3 million bpd in March. That would bring exports back down to the average 2013 level of Iranian imports.

According to the U.S. Department of Energy, U.S. crude oil imports averaged 7.5 million barrels per day last week, down by 313,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.7 million barrels per day, 0.1% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 651,000 barrels per day. Distillate fuel imports averaged 173,000 barrels per day last week.
Total products supplied over the last four-week period averaged 18.4 million barrels per day, up by 0.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 8.7 million barrels per day, up by 2.1% from the same period last year. Distillate fuel product supplied averaged 4.0 million barrels per day over the last four weeks, up by 7.5% from the same period last year.

References
www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
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.
 
Thursday(April,03 2014)

Fuel Station Scam: NPA threatens sanctions

The National Petroleum Authority (NPA) has warned that it will deal severely with any fuel retailer or distributor found to be short-changing consumers at the pump.

The sanctions could include “imprisonment, fine or both,” the Authority said on Monday.

The regulator’s warnings were in response to a series of public complaints that some fuel retailers have been ripping off consumers.

During Monday’s edition of the Citi Breakfast Show, a flood of callers into Accra-based Citi 97.3 FM alleged various forms of malpractices against retailers operating within Ghana’s petroleum downstream industry.

Many of the callers accused a number of fuel stations of selling sub-standard petroleum products to customers.

Some of the callers alleged that they were shocked to learn that some fuel station owners have been squeezing a few extra cedis out of customers’ pockets.

One such caller from Navrongo said, “That’s what happens here in the Upper East Region. They blow in air and you’d think its fuel and before you know it’s finished. It’s not just the fuel alone, even gas. They have a way of manipulating it….”

Another caller from Sakumono, a suburb of Accra, also expressed his frustrations: “There is this particular filling station and when you say you want to buy 20 Ghana cedis, two attendants would come and start conversing with you to divert your attention and by the time you realise they have [put]only 2 Ghana cedis [into the car] for you.”

“For a week, I use 30 cedis of fuel for my motorbike but for sometime time now even 40 Ghana cedis does not suffice for 3 days. There NPA should be serious and check these things because it is affecting us and our businesses,” said another caller.

In a swift response to the complaints, the NPA, which regulates the industry, said it already has measures in place to ensure all pumps across the country do not cheat customers.

The Authority said people who have qualms with the quantity or quality of fuel they buy at any gas station must report to the proper authorities for prompt action.

“There are specific standards that are indicated in our manuals and these standards must be followed strictly,” NPA Spokesperson, Yaro Kasambata said. “The Industry knows so if we come and you have fallen short of that quality standard sanctions apply”.

“Now, with the L.I that is backing this petroleum product marking scheme, it’s even making sure that the penalties are very punitive. You have imprisonment, fine or both depending on the gravity of the offense…”

He said, “It is in pursuance of the consumer satisfaction that the NPA has embarked on this program which we launched about two months ago to ensure that now onward we can even tell from time to time what the quality standard is”.

Source: citifmonline.com
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
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