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Crude awakenings
31 jack-up rigs ordered YTD worldwide
Full-year figure is likely to exceed the 2007 peak
Modern high-specification jack-ups enjoying higher utilisation
The jack-up market is at the start of a replacement cycle
75% of the 400-plus global jack-up fleet >20 years of age
Keppel’s 2011 performance has been strong with 68% market share
Sembcorp Marine is next with a 13% market share
2011 jack-up orders likely to exceed 2007 peak
(Wai Mun, Leong)
Already surpassed the 20 for whole of 2010
31 jack-ups ordered YTD globally. We estimate the total value at
US$6.7bn. We think the full-year figure will likely exceed the 2007 peak
orders of 34 jack-ups.
Driven by the need for newer, high-specification rigs as the industry is
at the start of a replacement cycle.
75% of the 400-plus global jack-up fleet is over 20 years of age.
Modern, high-specification jack-ups have much higher utilisation
Utilisation rate at 75% for rigs with more than 300ft operating water
depth, compared with <65% for those under 300ft operating water
depth (Fig 24, page 7).
Jack-up rigs can operate in water depth of up to 500ft.
Keppel holds 68% market share of jack-ups ordered YTD
Sembcorp Marine is next with a 13% market share.
Dalian Shipbuilding is in third place with c.10%.
Cosco Shipyard Group is No. 4 with a c.6% share.
Global and regional news highlights
China's domestic product oil prices falter over tariff cut and fall in crude prices
China's domestic product oil prices have faltered as the global crude oil prices slumped over
the International Energy Agency's decision to release 600 million metric tons (tonnes) of
strategic oil reserves and the Chinese government’s announcement that it will cut import tariffs
on gasoline and fuel oil, and levy zero import tariffs on diesel and jet fuel. The wholesale price
of product oil has declined 300 yuan/tonne from last month in Southwest China. Oil majors
including CNPC and Sinopec have lowered the product oil wholesale prices by 30 to 100
yuan/tonne in cities including Shanghai, Nanchang, and Fuzhou. Retail prices have also
dropped. (Source: Xinhua)
Husky Energy to launch secondary listing in HK
Husky Energy Inc, one of Canada’s largest integrated energy companies, has secured
approval from the Hong Kong Securities and Futures Commission to launch a secondary
listing on the Hong Kong Stock Exchange. The company, controlled by Li Ka-Shing, has not
made a final decision on whether to proceed with a secondary listing, nor has a deadline been
set for reaching a final decision. However, it noted that no new shares will be issued as it has
sufficient cash after recently raising C$1.2b in North America through new share issuance.
(Source: China Knowledge Online)
China launches eastern part of second west-east gas line
State-owned China National Petroleum Corporation on Friday said it has launched operations
at the eastern section of the second west-to-east gas pipeline, enabling Central Asian gas to
reach the southern province of Guangdong for the first time. The second west-to-east pipeline,
which is deemed the world's longest gas pipeline, spans 8,704 km (5,396 miles) and has a
gas transmission capacity of 30 billion cubic meters/year (2.9 Bcf/d). The pipeline comprises
one main line and eight branch lines. The pipeline will transport imported natural gas from
Turkmenistan to South China's Pearl River Delta. (Source: Platts)
China introduces public tenders for shale gas exploration
China’s Ministry of Land and Resources will open a second public tender for the sale of shale
gas prospecting rights later this year after its first tender sale, in an effort to promote the shale
gas mining industry. The second public tender may open the sector partially to foreign
companies. The first public tender offered prospecting rights in four regions, and bidders
included the country’s leading oil producers. Results will be made public in July.
(Source: China Daily)
Weekly Energy Technicals (extracted from Standard Chartered Weekly Energy Technicals, dated 4 Jul 2011)
ICE Brent and WTI crude prices rose last week as bear pressure drew out buyers. The gains are seen as being corrective
in nature, though, and are not expected to persist. This leaves them vulnerable to a protracted bear move further out, if
upticks can hold below nearby resistance and risk. The ICE Brent contract pushed lower last week to USD 102.28/barrel
(bbl) in the front-month continuation contract where buyers stepped in for a bounce during the week. This uptick is seen
as being corrective in nature and is expected to find sellers at USD 113.80/bbl congestive resistance up to USD
119.00/bbl resistance (minor). Stronger resistance above this is placed at USD 121.00/bbl where a congestive area
builds, and is expected to hold over the coming weeks. If this area does continue to cap the upside, then the trend bias
will remain on the downside, with a slide to USD 98.55/bbl still at risk over the coming weeks (50-week moving average).
The WTI crude contract bounced late last week but the gains are expected to find sellers from USD 96.00/bbl congestive
resistance to USD 100.00/bbl, with key resistance at USD 104.60/bbl (11 May 2011 high) expected to hold above the
latter. As long as USD 104.60/bbl holds, the bear risk will remain high for a slide towards USD 81.33/bbl rising trendline
support further out. The current consolidation to higher levels is expected to offer a selling opportunity, but the key will be
for gains to run out of steam. The ICE gasoil contract fell away early last week but buyers stepped in, which was in line
with the view that bottom fishing ahead of the 50-week moving average (USD 842.72/tonne (t) now) will likely be seen.
This leaves the trend outlook still focused on a push above USD 1,000/t over the coming weeks, which is expected to
leave USD 1,079.50/t open next (21 August 2008 high). Dips need to hold well above the 50-week moving average now in
order to keep the focus on the upside, otherwise a slide to USD 750.50/t will likely follow. The ICE gasoil/Brent crack
spread continued to consolidate last week as the long-term basing pattern continued to unfold. We favour sustained gains
above USD 14.00/bbl resistance in the near term, which would help to confirm the basing pattern. We look for the rally to
find follow-through buyers for a push to USD 15.97/bbl (9 May 2011 high) and then USD 18.69/bbl (16 March 2011 high).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Crude awakenings
31 jack-up rigs ordered YTD worldwide
Full-year figure is likely to exceed the 2007 peak
Modern high-specification jack-ups enjoying higher utilisation
The jack-up market is at the start of a replacement cycle
75% of the 400-plus global jack-up fleet >20 years of age
Keppel’s 2011 performance has been strong with 68% market share
Sembcorp Marine is next with a 13% market share
2011 jack-up orders likely to exceed 2007 peak
(Wai Mun, Leong)
Already surpassed the 20 for whole of 2010
31 jack-ups ordered YTD globally. We estimate the total value at
US$6.7bn. We think the full-year figure will likely exceed the 2007 peak
orders of 34 jack-ups.
Driven by the need for newer, high-specification rigs as the industry is
at the start of a replacement cycle.
75% of the 400-plus global jack-up fleet is over 20 years of age.
Modern, high-specification jack-ups have much higher utilisation
Utilisation rate at 75% for rigs with more than 300ft operating water
depth, compared with <65% for those under 300ft operating water
depth (Fig 24, page 7).
Jack-up rigs can operate in water depth of up to 500ft.
Keppel holds 68% market share of jack-ups ordered YTD
Sembcorp Marine is next with a 13% market share.
Dalian Shipbuilding is in third place with c.10%.
Cosco Shipyard Group is No. 4 with a c.6% share.
Global and regional news highlights
China's domestic product oil prices falter over tariff cut and fall in crude prices
China's domestic product oil prices have faltered as the global crude oil prices slumped over
the International Energy Agency's decision to release 600 million metric tons (tonnes) of
strategic oil reserves and the Chinese government’s announcement that it will cut import tariffs
on gasoline and fuel oil, and levy zero import tariffs on diesel and jet fuel. The wholesale price
of product oil has declined 300 yuan/tonne from last month in Southwest China. Oil majors
including CNPC and Sinopec have lowered the product oil wholesale prices by 30 to 100
yuan/tonne in cities including Shanghai, Nanchang, and Fuzhou. Retail prices have also
dropped. (Source: Xinhua)
Husky Energy to launch secondary listing in HK
Husky Energy Inc, one of Canada’s largest integrated energy companies, has secured
approval from the Hong Kong Securities and Futures Commission to launch a secondary
listing on the Hong Kong Stock Exchange. The company, controlled by Li Ka-Shing, has not
made a final decision on whether to proceed with a secondary listing, nor has a deadline been
set for reaching a final decision. However, it noted that no new shares will be issued as it has
sufficient cash after recently raising C$1.2b in North America through new share issuance.
(Source: China Knowledge Online)
China launches eastern part of second west-east gas line
State-owned China National Petroleum Corporation on Friday said it has launched operations
at the eastern section of the second west-to-east gas pipeline, enabling Central Asian gas to
reach the southern province of Guangdong for the first time. The second west-to-east pipeline,
which is deemed the world's longest gas pipeline, spans 8,704 km (5,396 miles) and has a
gas transmission capacity of 30 billion cubic meters/year (2.9 Bcf/d). The pipeline comprises
one main line and eight branch lines. The pipeline will transport imported natural gas from
Turkmenistan to South China's Pearl River Delta. (Source: Platts)
China introduces public tenders for shale gas exploration
China’s Ministry of Land and Resources will open a second public tender for the sale of shale
gas prospecting rights later this year after its first tender sale, in an effort to promote the shale
gas mining industry. The second public tender may open the sector partially to foreign
companies. The first public tender offered prospecting rights in four regions, and bidders
included the country’s leading oil producers. Results will be made public in July.
(Source: China Daily)
Weekly Energy Technicals (extracted from Standard Chartered Weekly Energy Technicals, dated 4 Jul 2011)
ICE Brent and WTI crude prices rose last week as bear pressure drew out buyers. The gains are seen as being corrective
in nature, though, and are not expected to persist. This leaves them vulnerable to a protracted bear move further out, if
upticks can hold below nearby resistance and risk. The ICE Brent contract pushed lower last week to USD 102.28/barrel
(bbl) in the front-month continuation contract where buyers stepped in for a bounce during the week. This uptick is seen
as being corrective in nature and is expected to find sellers at USD 113.80/bbl congestive resistance up to USD
119.00/bbl resistance (minor). Stronger resistance above this is placed at USD 121.00/bbl where a congestive area
builds, and is expected to hold over the coming weeks. If this area does continue to cap the upside, then the trend bias
will remain on the downside, with a slide to USD 98.55/bbl still at risk over the coming weeks (50-week moving average).
The WTI crude contract bounced late last week but the gains are expected to find sellers from USD 96.00/bbl congestive
resistance to USD 100.00/bbl, with key resistance at USD 104.60/bbl (11 May 2011 high) expected to hold above the
latter. As long as USD 104.60/bbl holds, the bear risk will remain high for a slide towards USD 81.33/bbl rising trendline
support further out. The current consolidation to higher levels is expected to offer a selling opportunity, but the key will be
for gains to run out of steam. The ICE gasoil contract fell away early last week but buyers stepped in, which was in line
with the view that bottom fishing ahead of the 50-week moving average (USD 842.72/tonne (t) now) will likely be seen.
This leaves the trend outlook still focused on a push above USD 1,000/t over the coming weeks, which is expected to
leave USD 1,079.50/t open next (21 August 2008 high). Dips need to hold well above the 50-week moving average now in
order to keep the focus on the upside, otherwise a slide to USD 750.50/t will likely follow. The ICE gasoil/Brent crack
spread continued to consolidate last week as the long-term basing pattern continued to unfold. We favour sustained gains
above USD 14.00/bbl resistance in the near term, which would help to confirm the basing pattern. We look for the rally to
find follow-through buyers for a push to USD 15.97/bbl (9 May 2011 high) and then USD 18.69/bbl (16 March 2011 high).
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