Monday, April 22, 2019

Oil market is up as US announces Iranian oil sanctions

U.S. to impose sanctions on allies in drive to push Iranian oil sales to zero

Secretary of State Mike Pompeo speaks during a news conference on April 22 at the State Department in Washington. (Sait Serkan Gurbuz/AP)

https://www.washingtonpost.com/world/national-security/us-to-impose-sanctions-on-allies-in-drive-to-push-iran-oil-sales-to-zero/2019/04/22/cf9e7a93-d052-4951-b754-e1e5b068a224_story.html?utm_term=.d4ac326b406b

“This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” a statement from the White House said. It said the United States, Saudi Arabia and the United Arab Emirates would ensure global demand is met.

Pompeo said Iran had been taking in $50 billion a year in oil revenue before the sanctions were reimposed. He estimated that U.S. sanctions have cost the Islamic republic $10 billion so far.

“This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” a statement from the White House said. It said the United States, Saudi Arabia and the United Arab Emirates would ensure global demand is met.

Pompeo said Iran had been taking in $50 billion a year in oil revenue before the sanctions were reimposed. He estimated that U.S. sanctions have cost the Islamic republic $10 billion so far.

“The regime would have used that money to support terror groups like Hamas and Hezbollah and continue with its missile development in defiance of U.N. Security Council Resolution 2231,” he told reporters. “And it would have perpetuated a humanitarian crisis in Yemen.”

Last November, the administration reimposed sanctions that had been lifted with the 2015 nuclear agreement. President Trump granted waivers to eight of Iran’s biggest customers, allowing them a six-month grace period to wind down their purchases. The big buyers are China, India, Japan, South Korea, Italy, Greece, Turkey and Taiwan.

The waivers expire May 2, one year after the United States withdrew from the Iran nuclear deal. Initially, countries were given six months to wean themselves from oil, but seven countries and Taiwan could not meet the target and were given another six months.

Some of them expected another extension, but none will be granted, Pompeo said.

“We’re going to zero,” Pompeo said. “We're going to zero across the board. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits.”

Friday, April 19, 2019

U.S. refiners planning major plant overhauls in second quarter


https://www.reuters.com/article/us-usa-refinery-overhauls/us-refiners-planning-major-plant-overhauls-in-second-quarter-idUSKCN1RV0NV

HOUSTON (Reuters) - U.S. oil refiners are planning a heavy slate of plant overhauls in the second quarter, with total production this month off 8.5 percent compared with the start of the year, according to data from the U.S. Energy Information Administration.

Early spring and winter traditionally are heavy periods for U.S. refinery maintenance. But refiners are planning more upgrades than usual in the first half of 2019 to avoid fall and winter shutdowns as they prepare to meet coming low-sulfur standards. 

This year’s maintenance schedule and higher crude prices helped push U.S. gasoline prices to a national average of $2.83 a gallon last week, up 26 percent since the start of the year, according to data from the American Automobile Association. U.S. crude futures rose 32 percent in the first quarter. 

International Maritime Organization (IMO) 2020 is a standard for maritime diesel that takes effect on Jan. 1 and is designed to reduce air pollution. Refiners have been revamping their plants to make IMO 2020 compliant fuel. 

“They will push (winter) turnarounds later into 2020 to take advantage of that margin bump from the switch to IMO 2020,” said Susan Bell, a senior associate at energy consultancy IHS Markit.

Most U.S. refiners typically ramp up production of motor fuel during the second quarter to build inventories for the summer driving season. But Bell said an average of 1 million barrels per day (bpd) of crude oil refining capacity could be offline through the second quarter. 

Work on refiners’ crude distillation units (CDUs) and catalytic crackers helped send volumes down to 15.85 million bpd in the last week of March, from 17.5 million bpd in the first week of January, the EIA said. CDUs generate feedstocks for fuel processing units such as catalytic crackers. 

Among the refiners scheduling major maintenance this month are Valero Energy Corp and BP Plc. Valero’s Memphis, Tennessee, refinery will shut its 65,000 bpd gasoline producing fluidic catalytic cracking unit for a 60-day overhaul the last week of April. 

BP is shutting one of two small CDUs at its 413,500 bpd Whiting, Indiana, refinery on Monday for 30 days of work. The Whiting refinery is BP’s largest in North America. 

Work also is continuing this month on a planned overhaul of the 112,000 bpd gasoline-producing residual catalytic cracking unit at Royal Dutch Shell Plc’s 218,200 bpd Norco, Louisiana, refinery. That unit is expected to restart in the first full week of May.

Two other major overhauls finished during the switchover between the quarters. 

Exxon Mobil Corp recently finished CDU overhauls at two plants: its 560,500 bpd Baytown, Texas, refinery wrapped up work on its largest CDU in late March and the company’s 502,500 bpd Baton Rouge, Louisiana, refinery restarted its second-largest crude unit on Monday.

Thursday, April 18, 2019

PB Tankers takes issue with US blacklisting



Italian-based PB Tankers has expressed concern at being included on the US Office of Foreign Assets Control (FAC) blacklist for allegedly trading with Venezuela.
 
FAC recently issued its latest list of tanker companies and vessels to be blacklisted for trading with Venezuela.
 
The following companies were added to the list - Jennifer Navigation Ltd, Large Range Ltd, Lima Shipping Corp, and PB Tankers.
 
As for the ships involved, they were named as ‘Alba Marina’, a floating storage tanker claimed to be attached to PB Tankers; ‘Gold Point’, ‘Ice Point’,’Indian Point’, ‘Iron Point’ and ‘Silver Point’, all attached to PB Tankers; ‘Nedas’ attached to Jennifer Navigation; ‘New Hellas’ attached to Lima Shipping and S-Trotter, attached to Large Range.
 
In response, PB Tankers said it was shocked and concerned by the action taken by OFAC in adding the company and a number of the its vessels to the current SDN (Specially Designated Nationals) list in relation to trade with Venezuela.
 
This was done without any notification or contact with the company, who only became aware through the media. As a consequence, we will be taking immediate steps to ensure that both are de-listed as a matter of urgency, the company said.
 
PB Tankers, also said that as an Italian shipping company with more than 100 years of service to the international community, has been taking regular advice from both its UK and US lawyers and has been diligent in taking all possible steps to ensure compliance with current US sanctions including, but not limited to, possible restriction of trade under a single timecharter contract, which pre-dates the current sanctions regime.
 
The company further claimed that it does not have any ships in Venezuela, nor will be trading into or out of Venezuela.
 
PB Tankers will continue to meet its obligations as a matter of international law, the company stressed.

Wednesday, April 17, 2019

Red Hot Permian Set To Jolt U.S. Shale Output To New Record

Permian Basin.jpg

https://oilprice.com/Energy/Crude-Oil/Red-Hot-Permian-Set-To-Jolt-US-Shale-Output-To-New-Record.html

Crude oil production from the seven key shale regions in the United States is expected to increase by 80,000 bpd from April to hit a record 8.46 million bpd in May, with the Permian accounting for half of the monthly growth, the EIA said in its latest Drilling Productivity Report.

Crude oil production from the seven major shale producing regions is set to increase from 8.38 million bpd this month to 8.46 million bpd next month. The fastest-growing region, the Permian, is expected to see its crude oil production jump by 42,000 bpd from April to hit a record high of 4.136     million bpd in May, according to the EIA estimates—a figure that would place the US hotspot as OPEC’s third-largest producer behind only Saudi Arabia (9.79 bpd) and Iraq (4.52 bpd).
In the report forecasting production in May, the EIA sees the Niobrara region adding 22,000 bpd to reach oil production of 764,000 bpd in May—this would be the second-largest growth after the one in the Permian. The Bakken, the Eagle Ford, and Appalachia regions are also expected to see higher production in May compared to April, while Anadarko region’s crude oil production is forecast to drop slightly next month.

After oil prices collapsed by some 40 percent in the fourth quarter of 2018, U.S. shale drillers put some brakes on drilling activities. U.S. oil production growth has slowed, with average daily U.S. crude oil production slipping in January from the previous month for the first time in nearly six months, according to the EIA’s report from end-March.

In terms of total U.S. crude oil production, the EIA estimated in its April Short-Term Energy Outlook last week that U.S. crude oil production averaged 12.1 million bpd in March, up by 300,000 bpd from the February average. EIA now expects U.S. crude oil production to average 12.4 million bpd this year and 13.1 million bpd next year, chiefly driven by the Permian production growth. 

By Tsvetana Paraskova for Oilprice.com

Tuesday, April 16, 2019

Citgo's future at stake as creditor seeks $1.4B from PDVSA in lawsuit

Flags fly outside Citgo Petroleum Corp. headquarters stands in Houston, Texas, U.S., on Thursday, Feb. 14, 2019.

NEXT: See the world's largest oil refineries. Photo: Loren Elliot, Bloomberg

https://www.chron.com/business/energy/article/Future-of-Citgo-at-stake-as-creditor-seeks-1-4B-13769799.php

The future of Houston's Citgo Petroleum is taking center stage in a federal appeals court this week as creditors for its parent company, Venezuela state-owned PDVSA, continue attempt to recoup billions of dollars in debt owed by the Venezuelan government.

Oral arguments were heard Monday afternoon in the U.S. Third Circuit Court of Appeals in Philadelphia the case involving one of PDVSA's creditors, Crystallex International Corp. a defunct Canadian gold mining company seeking to collect on $1.4 billion award owed by Venezuela.

Crystallex has targeted the Houston refiner Citgo Petroleum Corp. because it is the biggest U.S. asset of the crisis-ridden, cash-strapped Venezuelan government. In August 2018, a federal judge agreed that PDVSA's assets in the United States., namely Citgo, could be used to satisfy Venezuela's debts owed to Crystallex and now that decision is under appeal.It could take weeks for the panel of three judges to make a decision on the appeal.

Last month, the court approved Venezuela's opposition government, led by interim president Juan Guaidó,to intervene in the case. Guaidó is trying to stop Crystallex and other creditors from carving up the country's foreign assets. His administration is arguing Citgo's loss could harm the country's chances of political and economic recovery.


Venezuela already has paid Crystallex $500 million  and attorneys for Guaidó's administration argued in court documents that Crystallex's additional attempts "ignore the economic reality of the Republic's humanitarian and economic crisis." They also said it could upset U.S. foreign policy.

Guaidó, who is recognized by the United States as Venezuela's legitimate leader, is trying to consolidate control over the country's assets abroad as he seeks to setup  his government-in-waiting for rebuilding the country once it wrestles control away from Nicolas Maduro's regime. In February, Guaidó successfully replaced Citgo Petroleum's board of directors with new leaders in Houston.

For the past few years creditors have  circled Citgo, which is valued at up to $8 billion by some analysts, as they seek to recoup billions owed to them by PDVSA and the Venezuelan government. Venezuela previously has settled similar debt-collecting lawsuits with Houston company ConocoPhillips and Rusoro Mining Ltd. Similar to Crystallex, these companies sought to enforce arbitration awards after a nationalization campaign expropriated their Venezuelan investments.

But the Trump administration wants to keep Citgo intact to help the new government rebuild the country ravaged by economic and political turmoil, hyperinflation and shortages in food, water and electricity. The Trump administration has granted Citgo certain exemptions from U.S. oil sanctions against Venezuela and PDVSA to allow  Citgo to continue operating and preserve at least 3,400 jobs in the U.S., including about 800 in the Houston area.

Citgo has distanced itself from the Maduro regime and recently secured a $1.2 billion loan help fund its daily operations.

Separately, Citgo is also under threat in a 2020 bond PDVSA took out with Citgo as collateral. PDVSA has an April 27 deadline to pay $71.6 million for a 2020 bond; it default bondholders could exercise a lien to sell 50.1 percent of Citgo Holding to recover their losses, according to the international investment bank and consulting firm Caracas Capital Markets.