From BT - 25 Sep 2007

SPC expected to quadruple gas, oil output by 2009

It will see total output of 11,000 bpd as Oyong's production stabilises

By RONNIE LIM

WITH first oil starting to flow from its second Indonesian producing oilfield last weekend, Singapore Petroleum Company (SPC) is set to quadruple its oil/gas production to 11,000 barrels per day(bpd) by 2009, CEO Koh Ban Heng told BT.

SPC's latest 'oil strike' comes from the Oyong field, where after the initial ramp-up, oil production is expected to stabilise at between 8,000 and 10,000 bpd. Its 40 per cent share in Oyong will give SPC between 3,200 and 4,000 bpd.

'First oil at Oyong is a significant event for SPC,' an elated Mr Koh said. 'It's the company's second producing asset, and affirms our strategy to develop existing discoveries. With Oyong coming on-stream, our current oil production will be more than doubled and it will contribute positively to the company in the longer term.'

SPC's share of Oyong oil production of 3,200-4,000 bpd will double the 2,800 bpd which it currently gets from its first producing field at Kakap.

In market reaction to the news, SPC's share price shot to an intraday high of $6.50, before finally closing at $6.45, which was 20 cents or 3.2 per cent higher.

'When gas production starts at Oyong in 2009, SPC should get another 4,000 bpd of oil equivalent,' Mr Koh said. This will bring SPC's total oil production by then to around 11,000 bpd, he added.

On gas development there, the company said in a statement yesterday that 'front-end engineering for the development of the gas reserves is currently underway'.

Under a gas sales agreement with PT Indonesia Power, the gas will be transported via a 55km pipeline to an onshore processing facility adjacent to the Grati power station in East Java.

Mr Koh said that the expected gas flow of 60 million standard cubic feet per day (mscfd) will give SPC about 24 mscfd, or another 4,000 bpd of oil equivalent.

The Wortel gas discovery, also located nearby in the same Sampang production sharing contract area as Oyong, 'could potentially be incorporated into the Oyong gas development', SPC said, adding that further appraisal of Wortel has been planned in the first half of next year.

SPC's scaling up of its upstream oil and gas exploration and production (E&P) activities - even as it improves the competitiveness of its Jurong Island refinery - is aimed at making SPC a more integrated oil and gas company.

'We need to grow E&P to balance our reliance on downstream refining which is very volatile,' Mr Koh said in an interview with BT earlier this month.

'By 2010, we are targeting E&P to contribute up to 30 per cent of revenue,' he said.

From Business Times  - 19 Jun 2007

S'pore Refining Co restarts refinery crude unit

Singapore Refining Co (SRC) said on Tuesday that its 90,000 barrels per day (bpd) crude distillation unit at its 285,000-bpd refinery is operating at full capacity following regular maintenance.

'It's running at full capacity,' said a spokeswoman, adding the unit had started up last week. The unit had been shut for around 4 weeks from mid-May.

The company is a joint venture between Singapore Petroleum Co (SPC) and US major Chevron Corp. SRC last had a major shutdown in September 2006, when the 60,000-bpd No 3 CDU was closed for upgrading works in the related residual fluid catalytic cracker (RFCC).

Including the SRC turnaround, Asia-Pacific oil refiners took 1.15 million bpd of crude capacity offline in the second quarter, or about 4.7 per cent of their total, according to Reuters data based on known maintenance works.

That was 1.3 percentage points more than last year, which was already deeper than usual as refiners retooled after maximising runs in the aftermath of hurricanes in the US Gulf Coast.

Business Times - 04 Jun 2007

SPC eyes upstream buys

SINGAPORE - Singapore Petroleum Co Ltd (SPC) is looking for acquisitions to boost its limited oil and gas assets, with a target to lift production to 150,000 barrels per day (bpd) to feed its refinery.

SPC could pay up to $1 billion (US$654 million) for a company with 'good oil reserves' given its healthy cashflow, with the aim of increasing SPC's output from current levels of 2,600 bpd, said chairman Choo Chiau Beng. He did not give a timeframe for the target.

'Our top preference is acquisitions. You pay and you know the risks. When you explore, the risks are higher,' Mr Choo said in an interview in the Reuters Energy Summit.

'But these days, you have to pay top dollar for upstream assets.'

He said SPC was looking at fellow countries in the Association of South East Asian Nations (Asean), as well as further afield in Australia, India and the Middle East, but declined to name any potential targets.

'There are many areas underexplored in the Asean region. Even Indonesia is not fully explored, as well as Myanmar and Cambodia. There is a lot of sense for Asean neighbours to work closely together to grow business and production,' he added.

SPC has to date six exploration and production assets in Asia Pacific, including T06-3 in the Bass Basin in Australia, Block 101-100/04 Song Hong Basin in offshore Vietnam, Block B in offshore Cambodia, the Sampang PSC offshore East Java and the Kakap PSC in West Natuna Sea, Indonesia.

SPC's current gearing ratio is near zero, having fetched a net profit of $112 million in the first quarter. Its shares rose 5 cents to $5.40 in afternoon trade.

But the company seemed less aggressive in growing its 285,000-bpd Singapore Refining Co (SRC), a joint-venture between SPC and US major Chevron Corp, even though refining margins have held strong in the face of an expanding Asian sector.

'There are already a lot of refinery projects around the world and tightness in engineering contracts has caused projects to be delayed. And some projects may not even fly,' Mr Choo said.

'Downstream is more politically sensitive than upstream as it affects the consumers' pockets.'

Submitted to sgx
Choo Chiau Beng bought  100,000 shares from open market at  $4.72 on 9May 2007.

Q1 2007 Results

Profit up 65%, earned a net profit of $112.1mil.

EPS for Q1'07   21.71c (1Q'06: 11.61c) (whole '06: 55.23c)
NAV / share      $3.26   (   '06 : $3.06)


The SPC Group recorded a sales turnover of $1.9 billion and a net profit after tax and minority interests (PATMI) of $112.1 million for 1Q 2007.Crude prices remained firm due to the unresolved Iran nuclear issue. Product prices were stronger as well due to the strong demand and the relatively low global inventories.The Group handled a total sales volume of 20.5 million barrels during the quarter. This was 4.6% lower than the 21.5 million barrels handled for 1Q 2006 due to lower crude and products trading volume. Average realisation for the period of US$61.13 per barrel was lower than the average realisation of US$63.49 per barrel for 1Q 2006.As a result of the lower volume and realisation, the revenue of $1.9 billion for 1Q 2007 was 12.6% lower than the corresponding period for 2006.Refining margins for the quarter improved considerably due to the firm demand for products. The Group was able to achieve an average refining margin of about US$7.00 per barrel for the quarter.[TC : Q2'06 $8 ; Q3'06 $4; first half '06 $6; second half '06 $3] The share of results from joint ventures improved due to the better performance of the joint ventures and the write-back of deferred tax for a Singapore incorporated joint venture.With respect to segment performance, downstream activities contributed $1,914.5 million in turnover and an operating profit of $106.9 million, while exploration and production activities contributed $9.5 million in turnover and $5.1 million in operating profits for 1Q 2007.The Groups profit before income tax of $117.9 million for the current quarter was 50.5% higher than the corresponding quarter of 2006. Group income tax expenses for 1Q 2007 included a write-back of $10.5 millionon deferred tax liability due to the recent lowering of the Singapore corporate tax rate to 18%.The Groups PATMI of $112.1 million for 1Q 2007 was 65.1% higher than the corresponding PATMI for 1Q 2006.


PROSPECTSWe expect that the Group will continue to perform well.The 90,000 barrels per day Crude Distillation Unit No 1 complex at the Singapore Refining Company will be shut down for 25 days from May to June as part of the Groups scheduled maintenance programme. Despite the reduction of throughput by about nine per cent for the second quarter, this turnaround activity is not expected to negatively impact the Groups marketing and trading activities. The Group will have sufficient inventory during thisperiod.Oil production from the Oyong field is targeted to commence in June and this will contribute to the Groups performance for the rest of the year.The Group has announced in March that it has entered into a Share Sale Agreement for its 40.16% equity interest in Tiger Oil Corporation in Korea. This sale would be completed in the second quarter of 2007.

BT, Published March 30, 2007

Betting on upstream set to pay off for SPC 

KEPPEL Corp has been nibbling at Singapore Petroleum Company's shares in the open market over the last six months - picking up over five million shares and raising its stake in the associate company from 44.08 per cent to 45.02 per cent. This is a complete turnaround from just a few years back when Keppel was looking at divesting out of SPC - then mainly a downstream oil refiner and marketeer - altogether.

So what's behind the buying?

Apart from being a confidence-booster by an insider party, it also appears a no-brainer price-wise. Keppel in just the last couple of months alone bought 1.2 million shares at prices ranging from $4.32 to $4.64. This works out to a 23-28 per cent discount from SPC's 52-week high of $6.05. There is little downside, on the other hand, to the stock's year-low of $4.04, given today's high oil prices.

Oil prices, from all accounts, seem set to rise again this year, especially in the second half. In that respect, SPC's increasing forays into upstream exploration and production (E&P) should help it offset refining's ups and downs - for example, in FY2006, net earnings fell almost 30 per cent due to a demand slowdown and lower H2 refining margins. Companies with producing oilfields invariably benefit when oil prices are high.

Because of the latest geopolitical tensions over Iran's nuclear programme - heightened by its capture of British navy personnel - oil markets have again become jittery over possible disruption to Iranian exports of some 2.2 million barrels per day.

Price surge

That saw a knee-jerk reaction late Tuesday when oil prices spiked by US$5 to US$68 over rumours of some sort of conflict over Iran, before prices stabilised at around US$64 - which is still high - in the last few days.

Despite it being just a minor league E&P player at this stage with one producing Indonesian field, SPC shares rose on the news, and closed at $4.84 - up 14 cents or 3 per cent - on Wednesday. Yesterday, the stock closed a further two cents up at $4.86.

Keppel's management, especially senior executive director Choo Chiau Beng who is also SPC chairman, has increasingly been steering SPC upstream to make it a more integrated, international oil company. This makes sense, as Keppel, the leading rig-maker worldwide, surely has its ears tuned to E&P prospects.Just around the corner, the Oyong field in Indonesia - in which SPC has a 36 per cent stake - is set to start producing oil in Q2, according to the field's Australian operator Santos. This will be SPC's second producing field after Kakap in West Natuna, which is currently giving it 2,540 barrels of oil daily. Oyong should easily triple SPC's current crude production. The field's initial production target is 10,000-20,000 bpd, which puts SPC's share at 3,600-7,200 bpd. Additionally, there will be a second phase at Oyong involving production of 24 million cubic feet of natural gas daily.Additionally, SPC - which cut its E&P teeth in neighbouring projects in Indonesia, Vietnam and Cambodia - seems to have also gained the confidence to spread its wings beyond Southeast Asia to booming, offshore Australia. Last month, it acquired a 4.7 per cent stake, worth over A$10.7 million (S$13.1 million), in Tap Oil, shortly after entering into an E&P joint venture with Tap and Jubilant Energy to explore for oil and gas in the Bass Basin off south-east Australia.  SPC chief executive Koh Ban Heng all but hinted of more such ventures further afield when he said 'this is our first JV in oil and gas exploration in an Australian Basin, a strategic move towards expanding our E&P footprint outside of South-east Asia'.

Risky business

Would it also partner the bigger boys, like, say, Indonesia's Pertamina or Malaysia's Petronas, for other ventures beyond Australasia? Time will tell. Sure, E&P is a risky business. But then again, no risk, no gain.  Jeruk, an Indonesian oilfield which SPC earlier considered its hottest prospect, was a costly lesson when it proved less than prospective. As Merrill Lynch put it at that time - SPC was rolling the dice on E&P to become more integrated, in the belief that upstream oil production will lower the extreme volatility in refining. Still, starting with the upcoming Oyong field, SPC may be just about ready to cash in some chips.

-- Edited by KK at 01:20, 2007-03-31

OPEC Report :

http://www.opec.org/home/Monthly%20Oil%20Market%20Reports/2007/pdf/mr022007.pdf

Some points :

1.  Refinery Margins

Continued warm weather across the board during a large part of
January, coupled with gasoline stock-builds over the last few weeks, capped the crack spread
level of the top and middle of the barrel complex from the previous month.
Despite these bearish developments, refinery margins for different benchmark crudes
improved across the globe, attributed mainly to lower crude oil prices.

As Graph 6 shows, refinery
margins for benchmark WTI in the US Gulf Coast rose to $4.52/b in January from $3.91/b in the previous month. In Europe, refinery margins were lifted sharply to record $2.80/b from minus 21¢/b in December. Lower Dubai crude oil prices from December, along with the improved performance of the middle and bottom of the barrel cut, also contributed to the surge in the benchmark Dubai margin in the Singapore market to reach $4.47/b from $2.67/b in the last month of 2006.

2. Refinery Utilisation

Refiners usually maximize their throughput levels during January every
year, but this time due to factors such as the warm weather, lower seasonal
demand for heating oil and comfortable stock levels of different products, they
have not followed the traditional policy and kept their throughput levels lower
than last year. In some areas, refiners even reduced their utilization rate
compared to December 2006.
As Graph 7 indicates, Japanese refiners cut throughput levels slightly compared
to December, with utilization rates dropping to 90.1% from 90.3% in the
previous month. European refiners also reduced utilization rates very marginally compared to
December, recording 85.5% from 86% in the previous month. US refiners cut throughput levels more than in the other areas as utilization rates fell to 85.6% in January from 89.4% in December.
With the start of seasonal maintenance, the utilization rate in the USA may be trimmed further in the coming months.

3. World oil demand forcast

    2006 - 84.13mb/d
    2007 - 85.37mb/d
    Q1 '07 - 85.72mb/d
    Q2 '07 - 83.97mb/d
    Q3 '07 - 85.26mb/d
    Q4 '07 - 86.53mb/d

Developing Countries (DCs) are expected to maintain strong oil demand. DCs will account for
92% of the world oil demand growth in the first quarter. Economic growth of 7.8% in India is
expected to yield moderate growth of 2.6% for oil demand. Expected strong new car sales along
with booming industrial and agricultural activities are expected to be the main drivers for oil
demand growth.
Strong economic activities, including massive growth of petrochemical plants in the Middle East,
are expected to increase demand for oil in 2007. The oil demand for the Middle East is
expected to average 6.47 mb/d, representing y-o-y growth of 0.3 mb/d.

In 2007, China is expected to see strong oil demand growth at 6.25%. Expected strong economic activities are the impulse behind the strong demand for energy. However, low oil imports in January caused the apparent demand to be lower than expected; hence, China’s first-quarter y-o-y oil demand growth was revised down by 0.06 mb/d to 0.3 mb/d. On a different note, the long-awaited Chinese oil strategic storage is finally in operation. The Zhenhai strategic storage currently has 25 million barrels of oil or almost 75% of total designed capacity. The other 25% is estimated to be filled by May 2007. According to Chinese officials, there are three more strategic oil storages with a capacity of 69.2 mb that are under construction and the commissioning will take place in 2007 and 2008. Encouraged by both the cut in import tariffs and the cold weather, China’s diesel imports surged in January. As for gasoline, the newly discounted price should have a positive effect on gasoline demand in the short term.


4. Balance of supply and demand
    Pg 44

Extracts fm IE

Oil Domestic Exports

9. Oil domestic exports improved to grow by 5.5 per cent in January 2007 after declining by 16 per cent in December 2006. The growth in oil domestic exports was led by increased oil sales to Indonesia (+64 per cent), Australia (+25 per cent) and China (+41 per cent) in the month. In volume terms, oil domestic exports also recovered to rise by a strong 18 per cent in January 2007 following a 15 per cent drop in December 2006.

-- Edited by KK at 23:24, 2007-02-16

BT, Published February 10, 2007

SRC set to start work on clean motor fuels plant

Upgrading will raise capacity for output of 'green' gasoline, diesel

SINGAPORE Refining Company - a joint venture oil refinery equally owned by Singapore Petroleum Company and Caltex - looks set to finally start construction of its clean motor fuels plant soon, sources said. Earlier estimated to cost between US$100 million and US$400 million, the investment could now be at the higher end of this range given rising materials and engineering costs.

The upgrading project will enable SRC's 285,000 barrels per day refinery to produce greater volumes of ultra low-sulphur gasoline (ULSG) with lower benzene content, and ultra low-sulphur diesel (ULSD) of Euro IV specification for 'green' or environment-conscious markets.

BT understands that the basic engineering design for the plant is practically completed. Once the two SRC partners give their final go-ahead on the plant choice - which sources said is expected in the next few months - the company will proceed with the EPC contract for detailed engineering design, procurement of materials and construction proper of the plant. It could include combinations of units like desulphurisation units, splitters, catalytic reformers or cokers, which are the usual plants associated with clean fuels production.

SPC officials said in January last year that both partners had given the go-ahead to proceed with the project, which would be fast-tracked to enable SRC to stay ahead of the curve as countries go 'green'. But there have been subsequent delays over the choice of the plant to build. Typically, such clean fuels plants take up to three years to build, Chevron's head of global refining, Jeet Bindra, earlier said.

Still, with one year of basic design work already covered, it means that if the construction go-ahead is given shortly, the clean fuels plant could be completed by 2009. In Singapore, use of ULSD became mandatory in December 2005, with legislated use of ULSG coming up next, possibly in 2008-2009 according to earlier indications.

But the SRC upgrading isn't intended just for the local market, which is considered small. In SPC's case, CEO Koh Ban Heng earlier said it intends to supply clean fuels from the project to markets like Australia, Europe and the US.

BT, Published January 25, 2007

SPC's profit down 29.5% on lower refining margins

SINGAPORE Petroleum Company yesterday said its full-year net earnings for 2006 fell 29.5 per cent to $284.6 million due to lower refining margins. The earnings per share of 55.33 cents were below analysts' consensus of 62.7 cents for the year.The bottom line declined despite a 14.7 per cent rise in revenues to a record $8.57 billion. 'High inventories of crudes and products and a slowdown in demand growth in the second half resulted in lower refining margins in the second half year,' said its chairman Choo Chiau Beng. 'This, coupled with the highly volatile operating environment, resulted in a lower profitability for 2006.' The group's gross profit margin is compressed to 6 per cent from 7.6 per cent the year before. Meanwhile, its expenses were also up significantly. Operations expenses climbed 25 per cent to $66.7 million, while general and administrative expenses increased by a similar quantum to $117.3 million.

Still, the net profit of $284.6 million for 2006 represents a healthy return on average equity of 19 per cent, said Mr Choo. As a reward to shareholders, the refiner said it has recommended a payout of a final dividend of 35 cents per share, consisting of an ordinary dividend of 20 cents and a special dividend of 15 cents. Based on SPC's last traded price of $4.36, the dividend yield works out to a high 8 per cent. That would mean a total payout of some $180 million - about half the net cash of $374.8 million generated by its operating activities.

Mr Choo said the group continued to operate all its plants, retail stations and other facilities including the Singapore Refining Company refinery safely, at the same time maintaining a high standard of environmental awareness.

For the current year, he said prospects continue to be positive in light of the International Monetary Fund's global economic growth forecast of 5 per cent for 2007.

Prior to yesterday's results, analysts were expecting SPC to rake in earnings per share of 64 cents this year. That would mean that it is currently trading at 6.8 times its forecast earnings. According to Reuters, among SPC's Asian peers, Thai Oil PCL trades at about 6.8 times earnings and Shell Refining, the Malaysian refining unit of Royal Dutch Shell, trades at 9.7 times.

Yesterday, SPC shares climbed 12 cents or 2.8 per cent to end at $4.36.

Rogers Says Crude Oil Will Rise Above $100 After `Correction'

Jan. 18 (Bloomberg) -- Jim Rogers, the author of ``Hot Commodities'' who predicted the start of the rally in 1999, said the recent slide in oil is a ``correction'' before prices resume their march toward $100 a barrel. ``I'm just not smart enough to know how far down it will go and how long it will stay, but I do know that within the context of the bull market, oil will go over $100,'' Rogers said in an interview. ``It will go over $150. Whether that is in 2009 or 2013, I don't have a clue, but I know it's going to happen.''

Crude oil in New York has fallen 33 percent to a 19-month low since rising to a record $78.40 a barrel in July. Rogers has said oil is set to carry on rising because there hasn't been a major discovery for 30 years and economic growth in China and across Asia is driving demand higher.

Rogers, 64, who created a series of commodities indexes and has advocated a long-term bull market, said that he hadn't changed his positive view on oil, metals and grains as investments. The Goldman Sachs Commodity Index has fallen 9 percent this year.

``When you have big bull markets, 50 percent corrections, or retractions, are normal,'' he said in Tokyo yesterday. ``It has often happened throughout history in a bull market.'' Rogers, in Tokyo to speak about commodities at an event organized by commodity futures trader Yutaka Shoji Co., said some corrections could last as long as two years, as happened to gold after a run-up in prices in the 1970s.

`Turn Around'

``Corrections go down long enough to scare everybody out and make sure they give up, and then they turn around,'' he said. ``We are in a secular bull market for commodities which has another decade or two to go.'' .

Rogers said corn, wheat, and nickel had performed strongly even as the weighting given to oil has dragged down the overall Rogers International Commodity Index, which has fallen 7 percent on a total return basis this year.

Rogers doesn't buy individual commodities on the advice of his lawyers. He said he recently bought the Rogers Agriculture Index to benefit from surging grain demand. The index has fallen 0.5 percent this year on a total return basis.

He said he favored investment in non-U.S. dollar currencies, and had bought airline shares. `The only airline where I'm losing money in the last year is Japan Airlines,'' he said.