Japan’s brewers eye raising a can to new markets

Japan’s craft brewers have suddenly found their cups are running over, and exporting beer in aluminum cans may be the answer to their problem.

Since April 1, breweries seeking a new license in Japan have been required to produce at least 60,000 kiloliters/year of beer, up from a minimum of just 2,000 kl/year earlier.

Along with the surge in volume, the country’s definition of what constitutes beer has also been rewritten.

Beverages that contain 50% malt can now be called beer, with breweries free to choose the remaining 50% content. Previously, beer had to be 67% malt and the balance 33% strictly water, hop yeast, corn, rice or more malt.

Beer ingredient pricse

This change has enabled craft beer breweries to develop new flavor combinations. Along with that, their interest in new packaging options — notably aluminum cans and PET bottles — has surged.

The 60,000 kl/year volume requirement cannot be met selling beer to regulars at a single bar. The founder of one popular microbrewery in Tokyo told me that even on her best day, she serves 400 liters of beer.

This means Japan’s new breweries need to tap into a mass consumer base many miles away to sell, in effect, 5,000 kl/month of beer.

However, securing packaging is proving a challenge, with several small craft breweries saying they have been turned away by the major packaging providers because their requirements are still too small.

“Craft beer accounts for only 0.8% of Japan’s total beer production currently and could possibly grow to 3% share in 2021,” according to a spokesman for Kirin Brewery.

This equates to an aluminum ingot requirement of less than 500 mt/month, rising to 2,000 mt/month in 2021.

Beer packaging material prices

“I am using PET bottles for takeaways because that is handy. We get PET bottles from the brewery machine maker,” said a source at one Tokyo brewery.

Far from being discouraged, the packaging dilemma is prompting some Japanese craft brewers to think big, and target consumers beyond national and even cultural borders.

A few are even aiming to break into the Middle East alcohol-free beverage market, to avoid competition with established brands in the West.

Tokyo-based brewery Nippon Beer earned certification from Saudi Arabia’s halal authorities in 2017 for its Ninja brand of alcohol-free malt beverage.

Ninja for export is packaged in aluminum cans, while for sales within Japan — via Amazon — it comes in glass bottles.

Some Japanese trading houses have seized the opportunity to launch projects providing aluminum ingot and can storage to craft breweries that simply do not have the space.

On March 31, the last day of fiscal 2016-17, I went to a craft beer bar and ordered a pint. I could not finish my drink, and asked the bartender if he had a bottle, possibly an aluminum one, I could pour it into to take home.

The bartender stared at me hard and said: “I have had people asking for second or third drinks, but never who could not finish one.”

He went on to educate me about beer’s short life: malt beer matures in two weeks and loses flavor once it is out of the barrel.

The craft beer boom has already resulted in the development of compact brewery machines for microbreweries, which are just a little bigger than a grand piano — and could be made lighter if stainless steel components were replaced by aluminum ones.

However, it seems likely that the next major developments in the booming microbrewery sector will be in packaging — which bodes well for the aluminum, PET, steel and glass sectors, as well as for designers.

The post Japan’s brewers eye raising a can to new markets appeared first on The Barrel Blog.

Source: http://blogs.platts.com/2018/04/19/japan-brewers-aluminum-pet-packaging/

Advertisements

Is peace in the (gas) pipeline for Pyongyang?

What’s the similarity between a peace pipe and a gas pipeline?

Both are out of place in Pyongyang.

When a senior South Korean minister revived talks last month of a gas pipeline, running through North Korea, and carrying Russian natural gas to the south, it piqued the interest of gas players.

Such a move would put piped gas in direct competition with seaborne LNG, in the third-largest LNG importing country in the world for the first time.

The gas pipeline between the two Koreas and Russia could be reviewed if the security situation on the Korean Peninsula improved, state-affiliated Yonhap News reported in late March, citing South Korean Foreign Minister Kang Kyung-wha, who was speaking at a Seoul forum on regional energy cooperation.

Is peace in the (gas) pipeline for Pyongyang? - Roadmap

The security situation she referred to was the planned summit between US President Donald Trump and North Korean leader Kim Jong-un. The talks would be the first time a serving US president has held a meeting with a North Korean leader.

But the trans-Korea gas pipeline project has been in the works for decades, long before Pyongyang’s charm offensive at the recently held Winter Games, that set the stage for peace talks.

This 2011 roadmap to bring 10 billion cu m (7.5 million mt) of Russian piped gas to South Korea from 2017, was supposed to lead to commercial negotiations, and the signing of intergovernmental and host government agreements with Pyongyang, which would be paid a gas transportation fee.

But the project was derailed due to the aftermath of the financial crisis, deteriorating security situation on the Korean peninsula, western sanctions on Russia and Pyongyang, and South Korea’s focus on LNG on the back of the world’s biggest shipbuilding industry.

LET IT FLOW

Today, there are two major drivers for the pipeline project to go forward. Russia is keen to boost gas supply to Asian markets, and diversify from its European customer base.

So far, besides LNG, it only has pipelines to China, and a new customer could give it greater pricing leverage in Asia.

Under its long-term energy plan — Russian Energy Strategy 2030 — Moscow wishes to diversify as much as 25% of its natural gas markets to Asia, the biggest market for LNG.

The other driver is South Korean President Moon Jae-in himself, who has been pushing to normalize relations with Pyongyang even before he was elected.

The cornerstone of his presidency is an energy plan that phases out coal and nuclear power with gas and renewables.

 Is peace in the (gas) pipeline for Pyongyang? - South Korean LNG imports

His “New Northern Policy” and “Presidential Committee on Northern Economic Cooperation” are focused on joint projects including energy, shipbuilding, fishery and transportation, with its northern neighbors.

Russia is central to Seoul’s “northbound” policy, and ASEAN to its “southbound” policy, both aimed at diversifying its economy from excessive reliance on China and the US.

So what is stopping the pipeline from going forward?

Basic energy security considerations for starters.

“It doesn’t make strategic sense based on Seoul’s threat perception,” Singapore’s S. Rajaratnam School of International Studies research fellow Collin Koh said.

Koh said the possibility of an inter-Korean deal for such a pipeline cannot be discounted, though it’s likely to be met with fierce domestic resistance in Seoul, where many won’t be too enthusiastic.

Kim is unlikely to interfere with any pipeline that has Russian interests as it will incur Putin’s wrath.

But no one in their right mind would want to give him the keys to Seoul’s energy supply that he could turn off at will.

The role of the US may be the biggest show stopper. An energy alliance in the Far East involving American allies, Russia and North Korea will not sit well with Washington or help US geopolitical strategy in any way.

After all, South Korea was one of the first countries to fall in line with American interests, when the US imposed sanctions on imports of Iranian crude.

The post Is peace in the (gas) pipeline for Pyongyang? appeared first on The Barrel Blog.

Source: http://blogs.platts.com/2018/04/18/peace-gas-pipeline-pyongyang/

Basrah Light imports rebound on rising refinery run rates: In the LOOP

Imports of Iraqi Basrah Light crude into the Louisiana Offshore Oil Port so far in April have risen by more than 4.4 million barrels from the same period in March, according to data from Platts Analytics and US Customs.

In the first half of April, 4.937 million barrels of Basrah Light were imported into Morgan City, Louisiana, the delivery point for LOOP. This represents more than double the amount of the grade imported into LOOP for all of March, which had a total import level of 2.027 million barrels. In the
first half of March, only 525,000 barrels were imported in Morgan City.

Imports of Basrah Light crude are also higher year on year. For the first half of April 2017, only 525,000 barrels of Basrah Light were imported into LOOP. For the whole of that April, such imports amounted to 3.557 million barrels, about 1.38 million barrels less than in the first half of April 2018.

As spring refinery maintenance season draws to a close, rising refinery run rates have led to increased demand for imported sour grades. Maintenance remains ongoing at 12 regional refineries, with a total combined capacity of 3.126 million b/d, according to Platts data.

Since the start of March, refinery run rates in the US Gulf Coast have increased 666,000 b/d to 9.053 million b/d, according to data from the US Energy Information Administration.

Basrah Light, which has an average API gravity of 30.6 degrees and typical sulfur content of 2.19%, is a component grade of a crude blend called Segregation 17. The blend also includes Arab Medium and Kuwait Export Crude.

Segregation 17 makes up part of LOOP Sour crude, which also includes domestic medium sour grades Mars and Poseidon.

The post Basrah Light imports rebound on rising refinery run rates: In the LOOP appeared first on The Barrel Blog.

Source: http://blogs.platts.com/2018/04/17/basrah-light-imports-loop/

As oil flows in the US, so does borrowing power: Fuel for Thought

Credit lines for US oil and gas producers set to rise in 2018

US E&P companies needing cash for drilling are likely to hear good news from banks currently preparing to size up borrowing profiles, as upstream activity continues to tick higher.

„„With crude prices sustained at above $60/b, the upcoming round of credit-worthiness reviews could see bank lending increase by the low double-digits.

Haynes and Boone, in its spring 2018 survey of oil and gas borrowers and lenders, saw a “modestly improved” outlook for the upstream industry.

The survey, which polled dozens of upstream lenders, producers, and oilfield service providers, showed most expected a 10%-20% increase in E&P borrowing bases.

“That is the most positive response we’ve had since we started the survey in 2015,” said Kraig Grahmann, head of Haynes and Boone’s energy finance practice group.

E&P borrowing bases will most likely inch up, particularly for those focused on the most impactful plays like the Permian, Ben Tsocanos, oil and gas director for S&P Global Ratings, said.

“I think banks are in a lending mood,” Tsocanos said. “Oily Permian [Basin] companies especially will probably see meaningful increases of about 20%” in their ability to borrow money. “They’re under less pressure  because corporate leverage is going down.”

The first round of bank redeterminations usually take place in April-May, and the second round in October-November. Borrowing was largely flat in the October/November 2017 cycle.

But the positive outlook could spell even better prospects for the late-2018 round if oil prices continue at current levels, which will inspire confidence in the sector. Oil and gas drilling is brisk and rig counts continue to move up.

On Wednesday, investment bank Barclays estimated the top 40 US onshore producers would spend 9% more this year than they did in 2017, with Permian spending increasing 19% compared to relatively flat in other oil basins.

“As companies are drilling a lot this year, they can add reserves, and that will support increases in borrowing bases in the fall,” Tsocanos said.

PRODUCERS TOUT LEVERAGE REDUCTIONS

S&P Global Ratings withdrew ratings on many E&P companies that went into bankruptcy since early 2015, although some have come back into debt markets seeking new ratings, Tsocanos said.

North American oil and gas producer bankruptices“If a company is paying $200 million-$300 million a year in interest, it’s virtually impossible  to succeed,” he said.

During the downturn, banks began to stipulate that producers cut their debt levels to 3.5 times debt-to-EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses), from the earlier customary five times. EBITDAX measures a company’s operating performance.

But these days, many larger companies are touting 2.5, 2 or even 1.5 times debt/EBITDAX.

Analysts say increased drilling in second-half 2017 coupled with a large number of wells drilled but left uncompleted, amount to money in the ground for E&P operators, whose borrowing capacities are based in large part on oil and gas reserves.

But in the last few years, dozens of companies went through bankruptcy.

According to Haynes and Boone’s most recent Oil Patch Bankruptcy Monitor, 144 North American E&P companies filed for bankruptcy between the start of 2015 through first-quarter 2018. Collectively, their debt, secured and unsecured, totaled $90 billion.

Interestingly, two of this year’s crop of six operators were among the larger filers of the last three years.

Privately held Fieldwood Energy and Exco Resources, a public company, together accounted for 86% of the $7 billion of debt represented by year-to-date bankruptcy filings.

The relatively bigger size of those operators and their greater production bases may have given them the ability to stall off bankruptcy for awhile and “kick the can down the road” until oil prices climbed a bit, said Grahmann.

In any case, “we certainly expect the pace [of bankruptcy filings] will be slower in 2018 than in the last year and a half,” Grahmann said.

The survey also showed oil and gas companies on average have 50% to 60% of their production hedged this year, and that most plan to use cash flow from operations, bank debt and private equity as their primary
sources of capital in 2018.

In fact, most larger public producers have openly touted their intention to spend within cash flows – a mantra not heard from the oil industry in years.

The post As oil flows in the US, so does borrowing power: Fuel for Thought appeared first on The Barrel Blog.

Source: http://blogs.platts.com/2018/04/16/us-oil-gas-producers-credit-lines/

Improving the on-line art transaction experience

Is there a way to apply digital innovation to make buying and selling art a much more pleasurable experience? Yes, and I’m part of a start up with that goal in mind. This post is the first in a short series on the topic of…

The post Improving the on-line art transaction experience appeared first on Digital Oil and Gas.

Source: http://digitaloilgas.com/improving-the-on-line-art-transaction-experience/

Overwhelming market interest for blockchain-powered oil trading platform VAKT: Gunvor

An initiative to modernize energy trading processes through blockchain was receiving overwhelming interest from market participants, Chief Operations and IT Gunvor Group Eren Zekioglu said in an exclusive interview. The new platform, to be developed by a newly created, London-based company called VAKT, aims to modernize the post-transaction management of physical energy commodities trading.

Gunvor kicked off the collaborative project in November 2017 together with a consortium of companies including energy majors BP, Shell and Statoil; trading houses Koch Supply & Trading and Mercuria; and banks ABN Amro, ING and Societe Generale.

Eren Zekioglo, Gunvor Group

Eren Zekioglu, Head of Operations and IT, Gunvor Group

“The amount of interest we’ve seen since the launch has been overwhelming. The biggest names in our respective industries have all contacted us, expressing an interest in being part of this movement,” Zekioglu said.

“From being a participant, a user, or even an investing partner, the market has expressed its support, and we’ll reciprocate that support with collaboration. The commodities trading industry, which is known for being one of the most competitive in the world, has clearly sent us a message that it wishes to unite to move it forward,” he added.

Few details on the functionality of the platform have been disclosed since the consortium was launched. What is known is that it intends to set up secure, smart contracts and authenticated transfers of electronic documents, to help its members move away from traditional and cumbersome paper contracts and operations documentation. This will reduce risks of error and cut costs, while improving the reliability and efficiency of back-end trading operations.

A truly market-transformative function would be for the platform to also match counterparties in the way that brokerages do. This does not appear to be on the cards in the short-term, but Zekioglu did not discount it altogether.

“If you can send a Tesla into outer space, then you can do anything. It just depends on the needs of the users and the imperative to preserve a competitive environment for everyone,” he said.

The main challenge in setting up VAKT has been the technology itself, “which continues to mature very quickly,” he pointed out.

“We’ve had to keep pace and jump in while everything evolves. This means establishing a true subject-matter collaboration in terms of trading and technology,” he said.

“When setting up a company with the involvement of such major firms (oil majors, banks, traders, etc.), you’d assume every step would be a challenge.

But to the full credit of everyone involved, we haven’t experienced any standard bureaucratic issues,” he added.

VAKT, which is the Swedish word for guard, has a growing number of employees and is being led by industry veteran Jon Jimenez, who holds the role of interim CEO, after a 20-year career at BP.

More details could surface later this week, when VAKT is expected to issue its second statement.

The post Overwhelming market interest for blockchain-powered oil trading platform VAKT: Gunvor appeared first on The Barrel Blog.

Source: http://blogs.platts.com/2018/04/16/blockchain-oil-trading-vakt-gunvor/

#TeamUlterra in Canada showing their support for the Humboldt Broncos bus crash victims and their families #HumboldtJerseyDay #HumboldtStrongpic.twitter.com/ArNLa8DJIv

in Canada showing their support for the Humboldt Broncos bus crash victims and their families

source https://twitter.com/UlterraBits/status/984497585695219713
Source: https://ulterra.blogspot.com/2018/04/teamulterra-in-canada-showing-their.html