October 30, 2015

Bitumen Blend Loosing out to Cheaper Crude Oil But Gaining over straight run Fuel Oil


Demand for imported crude, petroleum bitumen blend and straight-run fuel oil by independent teapot refineries in China's eastern Shandong province was more or less steady this week, despite narrowing refining margins on lower local oil product prices.

But teapot refineries that have recently been granted both import quotas and import licenses for crude oil continued to take in crude cargoes, particularly largest Shandong teapot refiner Dongming Petrochemical.

The 7.5 million mt/year (150,000 b/d) Dongming has received a 240,000-mt cargo shipped from the Gulf of Mexico at Rizhao port early this week, adding to imports of 350,000 mt earlier this month. The latest shipment brings the total volume of crude imported under its import quota of 6 million mt/year to 2.84 million mt.

Adding on to the volume received by four other Shandong teapot refineries with import quotas, teapot refineries have imported a total of around 3.74 million mt of crude since end-July, when Dongming took its first cargo.

The four refineries are: Sinochem Hongrun Petrochemical, Kenli Petrochemical, Yatong Petrochemical and Lihuayi Petrochemical -- better known as Lijin.

For November, the 3.5 million mt/year Yatong Petrochemical is taking in a crude cargo much larger -- possibly a VLCC -- than its first import cargo comprising 60,000 mt of Indonesian Duri crude in mid-October, said a source from the refinery. But details, including the crude grade, of its planned November import could not be ascertained.

Meanwhile, the 3.5 million mt/year Lijin Petrochemical, which is scheduled to restart from an ongoing full turnaround in early November, has not fixed any imported crude cargoes for the coming month so far.

Shandong's teapot refineries are able to crack crude and fuel oil, but they have been using less imported fuel oil since November 2014 because of relatively high procurement costs.

After the government granted teapot refineries access to imported crude, crude has been the top feedstock choice, while bitumen blend is still considered favorable for those that have no access to both domestic and imported crude.

THREE BITUMEN BLEND CARGOES HEARD FIXED FOR NOV SO FAR

Demand for petroleum bitumen blend among Shandong teapot refiners remained thin over the week, with around three cargoes heard so far fixed for November delivery.

This compares with an estimate 530,000 mt of bitumen blend imports, in five cargoes, into Shandong ports in October.

The latest arrival is a 97,000-mt cargo from Malaysia into Rizhao port this week, taken by the 3 million mt/year Yuhuang Petrochemical. The supplier was heard to have resold the cargo to Yuhuang -- which earlier had no plans to buy bitumen blend for October -- after the original buyer decided not to take the cargo.

Still, overall estimated bitumen blend imports in October were lower than September's imports of 1.1 million mt in 12 cargoes.

The fall in bitumen blend imports was attributed to more teapot refineries being allowed to import crude, freeing up domestic crude supply to other refiners and displacing the share of bitumen blend in refiners' feedstock mix as a result.

Adding to this, Shandong customs officials have been scrutinizing imports of bitumen blend more closely since end-September in a bid to identify misrepresented fuel oil cargoes. This has led some teapot refineries to suspend their import activities for the time being.

Premiums of November-delivery common grade bitumen blend cargoes are now heard lower, at around $20-$25/mt to the Mean of Platts Singapore 380 CST high sulfur fuel oil assessments on a CFR basis, from MOPS 380 CST HSFO assessments plus $27-$30/mt, CFR, last heard for October cargoes.

Common grade bitumen blend has a density of 0.98-0.99 kg/l, sulfur content of 2%-3% and carbon residue of 12%-14%.

And in the domestic spot market, bitumen blend prices were heard to have fallen to around Yuan 2,200/mt this week, from Yuan 2,300/mt last week, due to weak buying interest from teapot refiners.

Teapot refineries in Shandong -- China's main buyers of imported straight-run fuel oil before November 2014 -- have largely switched to comparatively cheaper bitumen blend that does not incur consumption tax and import tariffs.

ONE M100 FUEL OIL CARGO FIXED FOR NOVEMBER, POSSIBLY TO SHANDONG

On Russian M100 fuel oil, western trader Mercuria was understood to have chartered the Cap Laurent to load 100,000 mt of M100 fuel oil from Russia's Kozmino this week to northern China, possible to Shandong.

And on Thursday, a 90,000-mt combination cargo of M100 and straight-run fuel oil had arrived at Longkou port. Regular M100 importer Hengyuan Petrochemical was heard as the buyer.

M100 fuel oil cargoes for early November delivery were heard talked at premiums of around $50/mt to MOPS 180 CST fuel oil assessments on a CFR basis, steady from last levels heard for October, but down from premiums of $55/mt for September.

Still, teapot refiners see the latest premium levels as too high, sources said.

Meanwhile, eyes are on Russian state-owned Rosneft's upcoming M100 term supply for loading over January-December 2016.

Rosneft currently has a term contract for 2.8 million mt of M100 for loading over January-December 2015 from Nakhodka or Vanino with Mercuria, at a term premium of around $85-$88/mt to MOPS 180 CST HSFO assessment on a FOB basis.

--Staff, newsdesk@platts.com
--Edited by Irene Tang, irene.tang@platts.com
 
 Singapore (Platts)--29 Oct 2015 723 am EDT/1123 GMT
-- Source Link

October 21, 2015

Bitumen Market Research Report 2015

Global Bitumen Market (Paving Bitumen, Oxidized Bitumen, Cutback Bitumen, Bitumen Emulsion, Polymer Modified Bitumen and Others) for Roadways, Waterproofing, Adhesives, Insulation and Other Applications -

Industry Analysis, Size, Share, Growth, Trends and Forecast, 2014 - 2020
102 pages   Published Date: 2014-09-09  

Bitumen is primarily used as a binder in road construction along with other applications such as electronics, waterproofing for roofing, and in adhesives due to its resistance to water, insulation properties and high durability.

The properties of bitumen can be altered by adding polymers to it, thereby increasing its application scope. Bitumen is known as “asphalt” or “asphalt cement” in North America.

However, “asphalt” is a term used for a mixture of sand, small stones and other filler materials in the rest of the world. This mixture contains about 5% of bitumen. The mixture is known as “asphalt concrete” or more particularly “blacktop” in North America.

Bitumen is available in a number of grades based upon the standard mentioned by certain tests such as penetration test. Bitumen 80/100, bitumen 60/70 and bitumen 40/50 are the most commonly used bitumen, where the numerical values represent hardness of bitumen.

Softer bitumen represents greater penetration units.

Similarly, VG-10, VG-20, VG-30 and VG-40 are the viscosity grades of bitumen. Thus, different grades of bitumen are often represented as bitumen 80/100/VG-10.

Infrastructure activities to improve road networks in developed and developing nations are expected to drive the growth of the bitumen market. Furthermore, increasing applications of polymer modified bitumen (PMB) as chemical additives and adhesives in household and road construction are anticipated to boost the demand for bitumen. Additionally, rising construction activities for industries, commercial buildings and housing are estimated to drive the demand for bitumen over the next six years. However, environmental issues associated with the extraction of bitumen from oil sands are projected to hamper market growth. Increasing substitution of bitumen by concrete is also likely to adversely affect the bitumen market. However, development of bio-based bitumen or bio-bitumen and its commercialization over the next few years is expected to offer opportunities for the bitumen market. Furthermore, development of bio-bitumen is anticipated to ease the production pressure on the depleting fossil fuel reserves.

Paving grade bitumen, which is used in roadway application as a binder for asphalt, was the largest consumed type of bitumen in 2013. It accounted for over 65% of the market share in 2013.

Polymer modified bitumen (PMB) is expected to be the fastest growing segment of the market due to its increasing demand in road construction and roofing applications. Polymer modified bitumen is increasingly used in construction of roadways and waterproofing applications as it offers various advantages such as heating at lower temperatures, ability to increase porosity of roads and enhancement of performance of the applications.

With over 80% share in 2013, road construction was the largest application segment for bitumen due to its high viscosity and stickiness.

Other applications of bitumen include its usage in roofing industry, paints and enamels, adhesives, automotives and decorative applications, and as an insulator in electrical and electronics industry.

Focus of national governments of China and India on improving road network and the consequent inclusion of the same in the five-year plans is anticipated to fuel growth of bitumen in Asia Pacific over the next six years.

However, waterproofing is expected to be the fastest growing application of bitumen during the forecast period, due to growth in infrastructure activities in developing countries such as China and India.

North America was the largest consumer of bitumen in 2013 due to the significant network of roads in the U.S. The region accounted for over 30% of the market in 2013.

Redevelopment and repair of existent roads accounts for the primary consumption of bitumen in this region. This is in contrast to emerging economies where the consumption is driven by development of new infrastructure.

However, Asia Pacific (including China) is expected to be the fastest growing market for bitumen during the forecast period due to rapid industrialization in the region. This is expected to drive infrastructure development in the next few years.

The bitumen market is highly fragmented, with the top eight companies accounting for approximately 39% of the total market share in 2013. Leading bitumen manufacturing companies include Shell Bitumen, NuStar Energy, ExxonMobil, Marathon Oil Company and Valero Energy Corporation.

Source - Transparency Market Research

October 20, 2015

Reverse Split and Merger- Sign of Consolidation in Bitumen Industry

(GLOBE NEWSWIRE) -- Epcylon Technologies, Inc. (OTC PINK:PRFC) ("Epcylon" or the "Company") announces that it has entered into a Memorandum of Understanding (MOU) with Bitumen Capital Inc. (TSXV: BTM.H) ("Bitumen") whereby Bitumen and Epcylon will enter into an Asset Purchase Agreement (as defined hereunder) (the "Transaction") which will constitute Bitumen's qualifying transaction (the "Qualifying Transaction"), as per Policy 2.4 of the TSX Venture Exchange (the "Exchange" or "TSXV").

Pursuant to the terms of the MOU, subject to execution of a definitive asset purchase agreement ("Asset Purchase Agreement") and receipt of applicable regulatory and Exchange approvals, Bitumen will issue to Epcylon's shareholders 182,202,994 common shares of the CPC in exchange for all the assets of the Company, as further agreed upon by the Parties. The MOU is intended to be binding upon the Parties until execution of the definitive Asset Purchase Agreement.

There are currently 13,150,001 common shares of the CPC issued and outstanding and 1,315,000 allotted stock options entitling the holders, certain officers and directors of Bitumen to acquire common shares of the CPC (the "Stock Option(s)"). Each Stock Option entitles its holder to acquire a common share of the CPC at a price of $0.10 per common share at any time up to October 17, 2017. Upon completion of the Transaction, all of the 1,315,000 issued and outstanding Stock Options to officers and directors of Bitumen shall be cancelled.

Prior to closing of the Transaction, Bitumen will complete a reverse split of its common shares consisting in one (1) old share for 0.538 new shares, resulting in an aggregate number of 7,000,000 issued and outstanding common shares of Bitumen.

Current shareholders of Bitumen will hold approximately 3.7 per cent and current holders of the Company will hold approximately 96.3 per cent of the resulting issuer's common shares issued and outstanding before giving effect to the Private Placement described below.

The Transaction is not a "Non-Arm's Length Transaction" under the Exchange's policies.

Concurrently with the Qualifying Transaction, the parties intend to complete a non brokered private placement for total proceeds of USD$1,000,000 consisting of secured convertible debentures with a three (3) year term and yielding at 8 per cent at a price of US$0.20 per secured convertible debenture and one half share purchase warrant, each whole share purchase warrant entitling its holder to purchase one common share of the Resulting Issuer at a price of USD$0.30 per common share within 24 months from the date of the issuance of the warrant (the "Private Placement").

Closing and final acceptance of the Transaction are subject to the satisfaction of certain conditions, including the completion of a satisfactory due diligence, the execution of the Asset Purchase Agreement, obtaining required approval by shareholders, if applicable, third party and regulatory authorities and completion of the Private Placement. There are no guarantees that the Qualifying Transaction will be completed as proposed or at all.

- See more at: http://globenewswire.com/news-release/2015/10/19/777358/10152877/en/Epcylon-Technologies-Inc-Enters-Into-MOU-With-Bitumen-Capital.html#sthash.dPRf10Fj.dpuf

October 8, 2015

Nigeria Missed the Bus Again - This time Not Crude But Bitumen

Iriele is a small community situated in Ondo State and the indigenes have high demands for development. Over the years, they have dreamt of the day when bitumen would be exploited, creating job opportunities, infrastructure and economic prosperity. The people of this town consider bitumen as a God endowed heritage which should be harnessed immediately to create jobs, deliver infrastructure and reduce the hardship they face daily. 

Those dreams have not become reality up till now, denting their hopes and leaving them frustrated as the indigenes of these towns wait endlessly for the government to attract the needed investment.

In the light of the foregoing, is the wider debate about Nigeria’s rich mineral reserve and the failure of the government to properly utilise the wealth of the nation to the betterment of lives of the citizenry. This belief is voiced by majority of the ordinary people in this bitumen bearing community including border communities like Agbabu and Ilubirin.

Nigeria is the sixth largest bitumen deposit in the world with most of the reserve found in Ondo State. However, there’s a wider debate about Nigeria’s rich mineral reserves and the failure of the government to properly utilize the wealth of the nation to the betterment of lives of the citizenry.

This belief is voiced by majority of the ordinary people in this bitumen bearing community including border communities like Agbabu and lIubirin. They have argued that since 

Nigeria’s crude might no longer generate sufficient revenue to run the nation’s economy, there should be an alternative to fall back on. In the perspective of these pro-bitumen agitators, bitumen is a guaranteed option as Nigeria re-defines its roadmap to economic recovery.

A lawmaker representing the Irele-Agbabu State Constituency in Ondo State House of Assembly, and one of the key proponents of bitumen Honourable Afolabi Iwalewa, thinks that the wobbly situation of Nigeria’s oil is a wakeup call for the exploitation of bitumen:

“ Any moment from now, crude oil will fade off. Look at what is happening now with the talk of oil theft. Every state is crying now, even the Federal Government is crying that it is not getting what it used to get from oil. What is the Federal Government doing, and why can’t we find another alternative? If crude oil is not going to fetch us what we project (in terms of revenue), why can’t we switch over to bitumen?”

Another standpoint of Honourable Iwalewa’s pro-bitumen advocacy is that the non-exploitation of the resource is causing people in these communities a lot of trouble because they have to cope with the reality of spill ravaging precious farmlands where bitumen is found so close to the surface that a simple shovel can excavate the glossy black substance.

Bitumen is found in tar sands, which is also a combination of clay, sand and water. A heavy black viscous substance, oil-rich bitumen is extracted from tar sands, which is then refined into oil. The bitumen in tar sands cannot be pumped from the ground in its natural state; instead tar sand deposits are mined, usually using strip mining or open pit techniques, or the oil is extracted by underground heating with additional upgrading.

In essence, it involves a complex process that will certainly disrupt their lives and livelihoods beyond what they can imagine. This is what the people of the bitumen bearing communities in Ondo State are calling for when they appeal for the exploitation of the resource in their soil.

Taking a closer look at the experience of Canada, the biggest producer of tar sands globally, shows that exploitation has actually resulted in serious damage to the local communities and the environment. The clearing of vast area which is a component of the mining process is responsible for the Canadian moon-landscape we see in Alberta, Canada, where large forest with pristine trees that sprawled across its landscape now looks more like a waste land ravaged by the exploration of bitumen.

In spite of all of the warnings pointing at the dangers of venturing into tar sands exploitation, especially the apparent impacts of livelihoods of ordinary people due to the far reaching implications for the environment, including the lands and water bodies, the people in the bitumen bearing communities have inclined to brush these opinions aside.

Olofun of lrele, Oba Olarenwajulebi, the octogenarian traditional ruler of the Irele community, for instance, criticizes talk of possible environmental hazards if bitumen were to be extracted in the area. He brags about of what his realm would look like if development were to prevail, using bitumen as the tool.

“If development were to succeed the way the people of this area want it, this town would have looked like Lagos. I say so because bitumen will provide a lot of employment for all the youths in this area, not in Irele alone, but all over the Southern senatorial district and even in the whole of Ondo State. The bitumen deposit here is a very huge one. It is the second largest in the world, according to the survey conducted by some experts,” he enthused.
And on the Canadian experience he explained: 

“In Canada, they do it in Calgary, and I have been there. They don’t drive away communities, and they replenish the soil. Where they mine the bitumen, they mix the soil with some chemicals, and restore it for the farmers to go back there and farm. And when those people were working here, I talked to them and they told me that even if they have to relocate some communities, they will have to build some fine buildings for them, and that the exploitation won’t affect much of their lands. It is something that they will dig from the ground; and it won’t affect us adversely.”

There’s no doubt that the allure of jobs, development and the improvement they envisage that bitumen development would give to their communities has strengthened their resolve to continue campaigning for the exploration of their God-given wealth. Any attempt to make the pro-bitumen agitators to consider the consequences is usually met with cold shoulders.

However, a geologist at the Federal University of Technology, Akure, Ondo State, Professor Peter Odeyemi offered a much more balanced picture of the realities on the ground. Odeyemi, who was a member of the defunct Federal Government’s Bitumen Implementation Committee (BIC) made a poignant observation when he noted that the mere presence of a resource does not necessarily translate into commercially viable deposits.


“The first thing is that how much is there? We don’t know! We need to carry out further work in that area in the first instance. Secondly, exploration can be carried out by an oil company because bitumen is a hydro-carbon but also there are difficulties (technical difficulties). If an oil company is going to carry out an exploration there, there is an interest, financial one. This company will calculate how much it’s going to get. It will also look at certain technical issues and the ease of exploitation. This is so because although both of them are hydro-carbon, one is easier to exploit than the other.

Also,how will you exploit without exposing the soil to direct rain fall impact, denudation, erosion and degradation. So they have generation of enlightened professors and everything. The place is highly enlightened and the environmental issues are potent here like in Europe. If you look at the Niger Delta, the people just welcomed oil companies with open hands not knowing that oil companies are devils. They are only interested in profits. They are not in any way interested in environmental sustainability, in flora, in fauna and even in the development of the people,” he said.

He continued: “Our problem is not bitumen; our problem is corruption. What do we do with the money we have been getting from oil? The one we are exploiting, what are we doing with it? The people are getting poorer; there is no electricity, water, healthcare, and education. This is despite the fact that we are making trillions of dollars. So, if we now exploit bitumen and add another trillion, we are just going to multiply the corruption,” Odeyemi concluded.

There is no doubt that the exploration of bitumen will have a heavy toll on the environment of Iriele, and neighboring Agbabu and IIlubirin Communities in Ondo State. Water will be polluted, farmlands destroyed, large expanse of forest will be brought down and communities destroyed. Is this kind if cost these communities are willing to pay or are their alternative development paths that communities can take that will have more sustainable economic impact? As the federal government plans to diversify the economy, and explore mining of solid minerals as an alternative, there’s no gainsaying that the environment must be protected even as the nation seeks improved economic fortune.


Inwerogu wrote from Lagos