New shipping rules, China pummel Asian refinery profits

Gasoil exports from Asian producers are expected to be around 7.5-8.0 million tons in November, up from October’s 7.3-7.4 million. (Reuters/File)
Updated 25 November 2019

New shipping rules, China pummel Asian refinery profits

  • Refinery margins in Asia have been knocked to the lowest since the financial crisis in 2008 by some measures

LAUNCESTON, Australia: Profits at Asian refineries are being buffeted by a combination of factors, chief among them uncertainty over how exactly new shipping fuel standards will play out and the rise of China as a product exporter.

Refinery margins in Asia have been knocked to the lowest since the financial crisis in 2008 by some measures, as the industry grapples with the disparate factors.

The return from processing a barrel of Dubai crude at a typical Singapore refinery was a loss of $1.19 a barrel in early Asian trade on Monday. This compares with the October average profit of $4.11 a barrel and the 365-day moving average of $4.08 a barrel.

Another measure of refinery profits is known as gross refining margins, which measures the incentive a refiner has to process an additional barrel of crude, and not total profit derived from all barrels of oil sent through the plant.

Under this measure, a typical Singapore refinery processing a barrel of Dubai crude is making a loss of $10.53 a barrel, which is actually slightly worse than the low of $10.49 seen in July 2008. The gross refining margin has also dropped rapidly, given it was at a profit of $6.14 a barrel on Sept. 23.

What the numbers show is just how quickly refining margins have collapsed in recent weeks.

Part of the problem is a surge in the availability of gasoil, the fuel used to make diesel and jet kerosene.

Refineries in China are exporting more diesel and jet kerosene, a result of a combination of factors including soft domestic demand growth, the addition of new refining capacity and a desire to use up export quotas prior to the end of the year.

China’s exports of diesel jumped 11.5 percent in the first 10 months of the year, while those for jet kerosene surged 21.5 percent, according to official figures.

Gasoil exports from Asian producers, including China, are expected to be around 7.5-8.0 million tons in November, up from October’s 7.3-7.4 million, according to Refinitiv Oil Research, which tracks tanker movements and port data.


MoU signed to facilitate investment in Saudi Arabia

Updated 21 February 2020

MoU signed to facilitate investment in Saudi Arabia

RIYADH: The Saudi Arabian General Investment Authority (SAGIA) and the Diriyah Gate Development Authority (DGDA) signed a memorandum of understanding (MoU) to step up cooperation, the Saudi Press Agency reported on Thursday.

Under the MoU, the two authorities will establish a joint working group to boost cooperation in several areas including facilitation provided to investors, conducting economic studies of the market, building partnerships with commercial and industrial bodies and local companies, launching businesses, promoting the ease of doing business, providing logistic support, participating in local and international exhibitions, forums and special visits and exchanging knowledge and information.

All this will predominantly be in aid of attracting local and foreign investors. 

“SAGIA believes in the importance of such cooperation that can unify and multiply the efforts in a way that sets the world’s attention on the Kingdom’s cultural and heritage treasures and investment opportunities,” said SAGIA Gov. Ibrahim Al-Omar.

“This is done through close cooperation with DGDA to highlight these opportunities and market them internationally and locally. This MoU is a step in the right direction to achieve the objectives and directives of both bodies.”

Jerry Inzerillo, CEO of the DGDA, said: “Cooperating with SAGIA is one of the most important international investment motors to attract local and international investments to the Kingdom. This comes at a time where developing the Kingdom’s investment infrastructure is found within the objectives of its Vision 2030.

“At DGDA, we aim at attracting the best technologies and regional and international investments to the Kingdom. This will contribute to the improvement of the local economy and promote our objectives seeking to turn Diriyah into the Kingdom’s gem and an international economic tourist destination,” he added.