Friday, September 18, 2020

Venezuela - Colombia / The most dangerous Border / How People Live

Venezuela and Iran defy U.S. sanctions with new tanker delivery

Oil condensate tanker "Honey" 

Oil condensate tanker "Honey"

https://www.worldoil.com/news/2020/9/14/venezuela-and-iran-defy-us-sanctions-with-new-tanker-delivery

(Bloomberg) --An oil tanker is discharging Iranian condensate for Venezuela as both countries continue to avoid U.S. sanction tripwires.

The ship, identified as Honey, turned off its satellite signal and started unloading about 2 million barrels of South Pars condensate at Venezuela’s state-controlled port of Jose on Saturday, according to a report and a person with knowledge of the situation.

The cargo will most likely be used by the state oil company Petroleos de Venezuela SA to blend with Venezuela’s tar-like crude and help prop up production in the Orinoco oil belt.

OPEC founding member Venezuela, owner of the world’s largest oil reserves, has been struggling to stave off a fall in production after U.S. sanctions cut off access to equipment and buyers for its oil. Output slumped to 339,000 barrels a day in July, the lowest level seen since the 1910s, according to OPEC and government data compiled by Bloomberg.

This is the first time Venezuela has imported crude from Iran, although it’s imported gasoline. It’s also the country’s first oil import since April 2019, when it got a parcel of Nigerian oil Agbami to mix with its heavy oil and produce flagship Merey 16, the country’s top exported blend.

Imports are used to offset Venezuela’s declining production of light oil, used to make Merey, or to act as a diluent and blend with viscous types of crude to make them more marketable.

Venezuela’s information ministry, PDVSA and Iran’s foreign ministry didn’t return calls and email seeking comment.

The U.S. has been ratcheting up sanctions, leaving little room for companies to work with the regime of President Nicolas Maduro.

Last month, the U.S. seized four tankers carrying Iranian gasoline bound for Venezuela in an unprecedented move by the Trump administration. The tankers were transporting 1.116 million barrels of petroleum, confiscated after help from “foreign partners,” the Justice Department said at the time.

After Russian companies Rosneft Trading SA, TNK Trading SA and Mexican Libre Abordo SA de CV cut ties with the regime, Caracas expanded business with Iran.

So far this year Tehran has supplied 1.5 million barrels of gasoline to PDVSA and food for the first Iranian supermarket in the South American nation.

A shortage of gasoline is forcing Venezuelans to queue for hours and even days, while Caracas is hit by rationing. The prospect of worsening fuel shortages and increased social unrest in the country has PDVSA grappling to revive a refining network crippled by years of mismanagement.

Thursday, September 17, 2020

OPEC and non-OPEC allies to review oil production cuts after dire demand warnings

Oil pumping jacks, also known as "nodding donkeys", are reflected in a puddle as they operate in an oilfield near Almetyevsk, Russia, on Sunday, Aug. 16, 2020. 

Oil pumping jacks, also known as “nodding donkeys”, are reflected in a puddle as they operate in an oilfield near Almetyevsk, Russia, on Sunday, Aug. 16, 2020.
Andrey Rudakov | Bloomberg via Getty Images

https://www.cnbc.com/2020/09/17/opec-meeting-saudi-russia-review-oil-output-cuts-amid-demand-concerns.html

  • OPEC and non-OPEC allies, sometimes referred to as OPEC+, will convene for an online meeting to review the market and discuss compliance with deep production cuts.
  • Analysts do not anticipate OPEC+ to announce further output cuts on Thursday, though the issue of compliance is likely to resurface amid signs some exporters may have reneged on their commitments.
  • The meeting comes shortly after OPEC and the IEA, two prominent forecasters, trimmed their 2020 outlook for oil demand.

LONDON — A group of some of the world’s most powerful oil-producing nations on Thursday will meet to review production policy, amid a faltering recovery from the pandemic-driven rout and a bleak outlook for energy demand.

OPEC and non-OPEC allies, sometimes referred to as OPEC+, will convene for an online meeting to review the market and discuss compliance with deep production cuts.

The energy alliance agreed in July to cut output by 7.7 million barrels per day from August through to December, in an effort to prop up oil prices by limiting supply. Iraq and others also pledged to pump below their quotas in September to offset overproduction earlier in the year.

Analysts do not anticipate OPEC+ to announce further output cuts on Thursday, though the issue of compliance is likely to resurface amid signs some exporters may have reneged on their commitments.

OPEC kingpin Saudi Arabia and non-OPEC leader Russia, the two biggest producers in the alliance, have both pushed for full conformity in recent months.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman has previously used OPEC meetings to publicly press recalcitrant members to stick to the pledged output cuts.

International benchmark Brent crude traded at $42.04 a barrel on Thursday afternoon, down over 0.4%, while U.S. West Texas Intermediate crude stood at $39.87, more than 0.75% lower.

Oil prices have dropped more than 35% since the start of the year.

“I do not believe we should expect any material change of course out of the OPEC meeting this week when they review market fundamentals, in part because compliance with previously agreed production cuts has been high,” Tim Bray, senior portfolio manager at GuideStone Capital Management, told CNBC via email.

“It might set the stage for action at future meetings, however,” Bray said.

Demand outlook

“Once again, OPEC+ meets against a worrying backdrop of soft global oil prices and an uncertain demand outlook,” Cailin Birch from The Economist Intelligence Unit told CNBC via email on Thursday.

“We maintain our view that Brent crude prices will average just over $42 a barrel in 2020, assuming that OPEC+ partners reconfirm their commitment to output cuts at their September meeting,” Birch said.

The meeting comes shortly after OPEC and the IEA, two prominent forecasters, trimmed their 2020 outlook for oil demand.

OPEC warned on Monday that risks would likely “remain elevated and skewed to the downside,” while the IEA said on Tuesday that the path ahead would be “treacherous” amid weakening sentiment and an upsurge in the number of coronavirus cases reported worldwide.

Separately, U.K.-based energy giant BP said on Monday that demand for oil may have peaked in 2019. The company laid out three scenarios for energy demand over the next 30 years, all of which predicted a decline for oil demand through to 2050.

Two of the scenarios, in which policymakers impose more aggressive measures to significantly reduce carbon emissions, would see oil demand fail to fully recover from the coronavirus crisis.

“It remains to be seen whether the make-or-break year-end period will provide the glutted oil market with a much-needed reprieve,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note.

“What is certain is that skepticism over the oil rebalancing will endure so long as the world continues to grapple with the Covid crisis,” Brennock said.

Compliance quotas

“Saudi Arabia’s efforts to secure higher compliance delivered results in August, with Iraq even partially delivering the promised ‘catch-up’ cuts … and Nigeria moving closer to full compliance,” Richard Bronze, co-founder of Energy Aspects, said in a research note.

The United Arab Emirates, traditionally a loyal partner to OPEC kingpin Saudi Arabia, emerged as a major laggard in delivering oil output cuts last month, Reuters reported on Wednesday, citing OPEC+ data.

The country has since said it will reduce oil supply in the coming months to compensate for pumping above its agreed limit in August.

Output from Iraq and Nigeria, respectively, was expected to remain low in September, Bronze said, then rise from October. “While OPEC+ will track how fundamentals and prices respond, we do not sense an appetite for deeper cuts,” he added.

Wednesday, September 16, 2020

OPEC at 60: An oil cartel on life support

OPEC headquarters

https://www.dw.com/en/opec-saudi-arabia-russia-united-states-peak-oil-covid-19/a-54875289

The 13-member bloc of oil-rich nations is turning 60 amid a pandemic that's jeopardizing its very existence. Waning influence and a global shift to cleaner energy sources mean that OPEC's glory days are over. 

In 1973, a handful of oil-rich countries, led by Saudi Arabia, Iran and Iraq, brought the mighty US economy to its knees by slapping an oil embargo on Washington and its allies. The suspension of oil shipments from the Middle East to the US and steep production cuts in retaliation for the Americans' support of Israel during the Yom Kippur War wreaked havoc on the US economy, leading to fuel shortages and causing oil prices to go through the roof.  

The ban was lifted within months following hectic negotiations, but not before it pushed the US economy into its worst recession since World War II. The Organization of Petroleum Exporting Countries (OPEC), which until then had maintained a relatively low profile, mainly negotiating higher oil prices from major oil companies for its members, had emerged as a force to reckon with. 

Nearly five decades later, OPEC remains only a pale shadow of its past glory, weakened by infighting within its ranks, the rise of the United States as a major oil exporter thanks to a shale boom, and a global push for renewable sources of energy amid climate change worries.  

"OPEC is significant primarily as a political club. It fails economically as a cartel, but it does boost the prestige and standing of its members, most of whom would not otherwise have a seat at the table in world affairs," said Jeff Colgan, a professor at Brown University who authored the book Petro-Aggression: When Oil Causes War. "A functional cartel needs to set tough limits to production and stick to them. OPEC sets easy targets and still often fails to meet them," he told DW.

The bloc has seen its market share progressively diminish over the years, in part thanks to its efforts to artificially boost oil prices by holding back its own production. OPEC's share of the global oil market has fallen to around 30% from above 50% in 1973. It has also been hurt by involuntary losses in war-torn Libya and the fallout from US sanctions in both Iran and Venezuela

It was OPEC's weakness amid the rise of the US as a major oil producer that prompted the once exclusive club to join hands with Russia and some other oil producers to form OPEC+ and attempt to balance the oil markets. The alliance's inception in 2016 was preceded by a disastrous campaign by the Saudi-led bloc to force weaker US shale players out of business, which caused oil prices to collapse to around $30 (€25) a barrel. US shale players then proved to be more resilient than the Saudis had expected — strong enough to push the US to become the world's biggest oil producer.  

Peak oil debate heats up amid COVID-19 crisis 

The bloc's waning influence has coincided with oil's fall from grace. The fossil fuel has seen its share in the global energy mix diminish to about 33% from a peak of 50% in 1973, according to estimates by BP, as governments and companies shift to cleaner energy sources to combat climate change. By contrast, renewables, mostly from solar and wind, have seen their share rise, accounting for over 40% of global energy growth last year, according to BP's data. 

"Oil isn't as significant or visible as it used to be. For example, do you know who the head of Exxon is? Probably not. Do you know who the head of Tesla is? Yes, Elon Musk," said Philippe Benoit, from consultancy Global Infrastructure Advisory Services 2050. 

The COVID-19 pandemic has further dimmed oil's prospects. Global lockdowns brought cars, planes and trains to a screeching halt, causing oil consumption to drop by a quarter and oil prices to crash to multiyear lows, even trading below $0 a barrel in the US at one point. Transportation accounts for close to a third of the global oil demand. 

Experts don't see the automobile and aviation sectors returning to their pre-pandemic levels for the next 3-5 years at least. The airline industry was touted to be the biggest growth engine for oil, riding on demand from people getting richer, but that now looks unlikely, especially over the next few years. 

Oil industry leaders, including BP's chief executive, Bernard Looney, and Royal Dutch Shell's boss Ben van Beurden, have said the current crisis may cause the oil demand to peak sooner than expected.      

"The backdrop of declining demand means that the Kingdom [of Saudi Arabia] and its Gulf allies would find it increasingly difficult to manipulate supply and boost prices for any length of time," Jason Tuvey, of Capital Economics, wrote in a note to clients. "If prices are kept artificially high for an extended period, oil demand will end up declining at an even faster pace and the nimbleness of US shale production means that non-OPEC supply will expand." 

'OPEC is a Saudi mouthpiece' 

OPEC was founded in Baghdad in September 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The bloc, which has expanded and contracted over the years, has been plagued by squabbles over strategy and regional power struggles, which have occasionally turned into full-blown conflicts like the Iran-Iraq war and Iraq's invasion of Kuwait in 1990. 

Saudi Arabia, which produces a third of OPEC's oil, has remained the de facto leader of the bloc since the 1990s, when conflicts, corruption and poor management wrecked production in other member countries, including regional rivals Iran and Iraq.  

Riyadh has oscillated between propping up crude oil prices and shielding its market share, often unilaterally. "OPEC is a Saudi mouthpiece," Colgan said. In March, when OPEC+ negotiations to cut output in response to the pandemic collapsed, Saudi Arabia launched a price war against Russia — much to the dismay of weaker OPEC members such as Nigeria and Angola, already bleeding due to low oil prices caused by Riyadh's 2015-16 misadventure. 

Despite all its sway, Saudi Arabia has struggled to rein in the bloc's so-called cheaters, including Nigeria and Iraq, which have been notorious for failing to comply with pledged output cuts aimed at propping up oil prices. Riyadh, which is more vulnerable to low oil prices than other major oil producers with its break-even oil price exceeding $80 a barrel, has ended up doing much of the heavy lifting to ensure overall compliance.  

Tuvey of Capital Economics says in the medium-term Saudi Arabia will scale back its efforts to prop up oil prices and revert to the strategy of shielding its market share at any cost to avoid leaving substantial quantities of oil stranded amid falling demand.  

"Such a shift in policy, particularly if it were sudden and unexpected, would put some downward pressure on oil prices. But this is unlikely to be too troubling for the kingdom, and the government has proven its willingness to impose harsh fiscal austerity," Tuvey said. "Saudi policymakers won't have much sympathy for other producers that fail to adjust their economies to low oil prices."  

Bigger role for OPEC? 

Yet it may be too early to write an obituary for the bloc, which has survived many crises in the past 60 years, eliciting comparisons to the proverbial cat with nine lives. Oil is likely to remain the world's most important commodity for years to come. 

"Paradoxically, OPEC as an aggregator, a point of meeting for many producing nations, could potentially play a bigger role in managing the tensions of a contracting market among those oil producers," Benoit said.

Monday, September 14, 2020

Mexico to Present Projects Open to Private Capital as it Moves to Undo Energy Reform

Mexico oil, gas and products pipelines map - Click on map to enlarge

Mexico will present a set of infrastructure projects in the energy sector where private companies will be invited to participate, while it prepares to undo the energy reform conducted by the previous administration.

Mexico will announce a set of infrastructure projects before Sept. 15, when Mexicans celebrate Independence Day, President Andres Manuel Lopez Obrador said Sept. 7. The joint plan between the government and the private industry to reactivate the economy had originally been announced in November.

According to a presentation filtered to the press, which presumably originated in the office of the presidency, the government’s announcement will consist of 168 projects worth roughly $44.4 billion where the private industry will provide over 50% of equity.

The announcement comes at a time when lawmakers from the president’s party prepare to discuss a series of changes to the constitution that would effectively undo the energy reform carried out by former President Enrique Pena, which opened up the sector to private investment after over seven decades of monopoly.

Senators from Morena, the party formed by the president and which currently has majority in both Houses of Congress, will discuss modifications to undo the 2013 energy reform, according to the party’s legislative agenda for the next period, which began on Sept. 1 ends in January. The plan includes changes to Mexico’s Hydrocarbon’s law, Pemex’s internal rules, the law of the energy regulators and the law for hydrocarbon revenues, the agenda shows.

The main goal of the modification is to strengthen Pemex and CFE, the state hydrocarbon and power companies, respectively, for them to become economic engines for the country, the president has repeatedly said.

The energy reform allowed private companies to participate in all areas of the energy sector for the first time in over 70 years and attracted over $200 billion in committed investments, including power generation and oil exploration.

Undoing of energy reform

Lopez Obrador has touted with the idea of modifying the constitution to undo the energy reform for many years and even used it as a presidential campaign promise. Yet since he took office in December 2018, he promised to wait until his third year in office to do so.

Sources have told Platts in recent months they see limits to the changes the current administration can make, because modifying many laws is a complex political process that needs coordination and therefore many of them expected the changes next year, after next year’s elections, which could add strength to the president’s party.

In July, Mexico will renovate the lower House of Congress as well as 13 out of the 32 governorships in the biggest election process in modern history.

Sources have also said undoing the reform is hard because many of the rules of the market are also included in the recently signed United States-Mexico-Canada Agreement.

Modifying the constitution to achieve something similar to what the president has mentioned is clearly against the treaty, said Rosanety Barrios, an independent consultant who helped implement the 2013 reform as public official.

“The goals of the administration would imply closing the market to private investments and even expropriations, which is against the treaty,” she said.

The Mexican energy sector and its investments are part of the USMCA and all the other trade treaties Mexico has signed, said Guillermo Zuñiga, a US-based consultant during a Sept. 8 webinar organized by Mexico Evalua, a Mexico-based think-tank, during the presentation of their recent report on Pemex and CFE.

However, many participants consider this administration does not need to change the law.

“The president has managed to dismantle the market without changing a coma in the constitution,” said Miriam Grunstein, founder partner at Mexico-based Brilliant Energy Consulting during a Sept. 7 webcast webinar on the future of the Mexican oil industry.

Energy projects

The government has cancelled oil rounds and long-term electricity auctions; it has stopped issuing new import permits for gasoline importers; it has issued new regulations to curb the participation of private power generators and has captured regulators to benefit Pemex and CFE, prompting international criticism.

At least three regulators have acted in ways that resulted in some sort of benefit in favor of Pemex or CFE in recent months, Mexico Evalua’s report shows.

Pemex and CFE representatives did not respond to requests for comment.

Mexico could present 23 energy projects

Among the 168 infrastructure projects the government could announce, there are 23 related to the energy sector, the filtered presentation shows. Sources said that if the presentation were real, the announcement would be disappointing as many of the projects have been on the table for years, at least on paper and only two of the projects have some advancement. Others think it is unlikely to be presented.

The plan includes three combined-cycle power plants, three natural gas pipelines, three fuels storage terminals, two LNG export terminals and one coker unit, the presentation shows.

https://tankterminals.com/news/mexico-to-present-projects-open-to-private-capital-as-it-moves-to-undo-energy-reform/?utm_medium=email&utm_campaign=Newsletter%20Other%20-%20Week%2038&utm_content=Newsletter%20Other%20-%20Week%2038+CID_8353552dcd9680d123627178b0ea8379&utm_source=weekly&utm_term=Read%20more 

Friday, September 11, 2020

Never Forget 9/11/2001 / God Bless NYC & God Bless America!

 


Tanker carrying gasoline seized by U.S. arrives off Freeport, Texas

 EUROFORCE

https://www.reuters.com/article/us-usa-iran-cargo-texas/tanker-carrying-gasoline-seized-by-u-s-arrives-off-freeport-texas-idUSKBN2603FM 

HOUSTON (Reuters) - A tanker containing a cargo of Iranian gasoline confiscated by the United States arrived on Wednesday at a Texas port where it was preparing to discharge, according to a pilots group spokesperson.

The Euroforce arrived off of Freeport, Texas, on Wednesday and had retained Texas Marine Agency, a Houston-based cargo agent, in preparation to offload its fuel, the spokesperson for Brazos Pilots Association said. Texas Marine referred inquiries to the U.S. Department of Justice.

The United States government last month said it seized fuel from Iran-linked tankers that was bound for Venezuela, part of Washington’s efforts to disrupt trade between Venezuela and Iran.

The fuel was transferred to the Euroforce and Maersk Progress, two large tankers, according to data and sources. The Maersk Progress is due to arrive in Houston later this month.

A DOJ spokesperson did not immediately reply to a request for comment. In August, the DOJ said the fuel seized had been bound for Venezuela and was then in U.S. custody. (tinyurl.com/y4352p63)

The Euroforce was carrying about 640,000 barrels of gasoline when it arrived in Freeport, according to Refinitiv Eikon tanker tracking data. A port of Freeport spokesman said the vessel was not scheduled to be unloaded at the port’s public docks and likely would be handled by one of two private docks.

Owners of four Iranian fuel cargoes have challenged the seizure in a U.S. District Court, asserting their rights to control the cargoes, which they said were bound for customers in Peru and Colombia.

Venezuela, which has the world’s largest crude oil reserves, is rationing gasoline leaving residents in long lines at service stations. Three fuel tankers that left Iran in August are on their way to the South American nation.

Reporting by Gary McWilliams, Jonathan Saul and Marianna Parraga; Editing by David Gregorio

Thursday, September 10, 2020

Tanker Rates Have Plummeted And Likely To Remain Depressed Through 2021

crude tanker

Euronav-owned VLCC (Photo: Euronav)

https://seekingalpha.com/article/4373293-tanker-rates-plummeted-and-likely-to-remain-depressed-through-2021 

Summary

VLCC rates are highly sensitive to oil flow volumes.

VLCC fixtures have plummeted due to lower OPEC+ production and low oil demand.

Transportation uses of oil have collapsed because of the pandemic.

OPEC+ has agreed to keep production down through 1Q2022.

An oversupply of tankers v. demand is therefore likely to keep rates down for an extended period of time.

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Tanker rates for Very Large Crude Carriers (VLCCs) are highly sensitive to oil transportation volumes, which in turn, are a function of global oil production and consumption. And so it follows that the lower the demand for oil, the lower the demand for tankers.

However, a special case developed in the spring when oil demand plummeted as economies worldwide were shut down to control the spread of COVID-19. The resulting oil price collapse created a demand for tankers as temporary floating storage facilities, and tanker rates spiked. That was an unexpected boon for tanker owners, who, at the beginning of the year, were focused on impacts of the IMO-2020 regulations.

With oil futures prices rebounding, the financial incentive to store oil at sea has dissipated, and so tankers that were taken off trade have returned to market. Port congestion has also eased at Asian ports that were coping with the pandemic. Middle distillate inventories at Asia’s Singapore oil hub have surpassed a nine-year high, according to official data.

As a result these dynamics, VLCC availability has been rising and tanker rates have plummeted. As of September 4th, Poten & Partners quoted the dirty tanker rate for VLCC, 270 at just $6,000 Spot TCE Earnings. That’s off from an average of $68,300 per day for 2020 year-to-date.

 

Global oil demand could be 9 to 10 million barrels per day lower this year due to the pandemic, Russian Energy Minister Alexander Novak was quoted. Transportation fuels, which account for the bulk of global oil demand, continue to be depressed due to travel restrictions and fears by would-be travelers of contracting the disease.

U.S. airport travel data show that throughput is still more than 60 percent lower than last year, as of September 5th.

U.S. demand for jet fuel was down 47% over the past 4 weeks from a year ago. Jet fuel consumption is a little less sensitive to the number of persons on board compared to the number of flights.

And this is about three months after travel restrictions have eased in the States. Infection rates did not ease during the warm summer months as many had expected. And the death toll has reached 188,000 in the U.S.. According to Dr. Anthony Fauci, the death toll could reach 410,000 by January.

The US Centers for Disease Control and Prevention sent guidance last week that vaccines could be distributed as early as the end of October in what they have called Phase 1.

Availability for Vaccine A will be approximately 2 million doses by late October; 10-20 million by late November; and 20-30 million doses by the end of December. Availability for Vaccine B will be approximately 1 million doses by late October; 10 million by late November; and 15 million doses by the end of December.”

It should be noted that the initial trials of vaccines are given to people meeting very high health standards, but that 8 out of 10 people who have died have been 65 or older and many suffering from underlying conditions. And so it may be unclear for an extended period of time before there is data on how safe and effective the vaccines may be for the high risk group, and according to Bill Gates, whose foundation is heavily involved in the vaccine effort, 40+ percent of the population may not want to take a vaccine when one becomes available—at least not until the vaccine's effectiveness and the safety statistics are well established.

Furthermore, work-at-home and online Zoom meetings may have a long-term impact on travel demand for fuels. The cost and time effectiveness of meeting online instead of in-person is profound and may be disruptive to physical travel.

All three of the primary oil forecasting agencies, the International Energy Agency, the U.S. Energy Information Administration, and the Organization of Petroleum Exporting Countries, have published forecasts through 2021, and none foresee global demand returning to pre-COVID levels prior to 2022.

OPEC+ made an agreement to cut their combined crude production by 7.7 million barrels a day from baselines from May to July for the balance of 2020 and then to 5.8 million barrels during 2021 and the first quarter of 2022 to drawdown global inventories from glutted levels. Saudi Aramco (ARMCO) oil shipments to the USA have averaged 310,000 b/d in the 4 weeks ending August 28th, down 31% from a year ago.

The rebound in U.S. petroleum product demand has stalled with demand off 15.9 % v. last year. A recent report showed U.S. job growth slowed further in August, as financial assistance from the government ran out.

Conclusions

Tanker rates have crashed and the share prices of tanker owners such as Nordic American Tankers (NYSE:NAT) have recently dropped. I expect to see further downside as the drop in oil demand extends into the months ahead.

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Disclosure: I am/we are short NAT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Wednesday, September 9, 2020

South Korea Imports Oil from China Storage in Rare Flow

[Reuters] – South Korean refiners have bought nearly 2 million barrels of Omani crude from Chinese storage tanks in the past two months, seldom seen trades created by low prices and high inventories, according to trade sources and shipping data on Refinitiv Eikon.

The cargoes were among the first to be lifted from bonded storage tanks operated by Shanghai’s International Energy Exchange (INE) for delivery to South Korea, the sources said.

Strong buying from Chinese investors betting on a rebound in oil prices earlier this year pushed Shanghai crude futures to a premium over global benchmark Brent.

The trend reversed from July, though, prompting refiners to buy crude from the exchange at prices lower than spot supplies, the sources said.

One source with direct knowledge of the matter said SK Trading International in July bought 700,000 barrels of Omani crude from Litasco, trading arm of Russian oil producer Lukoil.

Another source said GS Caltex bought two Omani crude cargoes in July and August via traders from the exchange.

Three tankers delivered oil from ports in Shandong and Hainan provinces to Yeosu and Ulsan in the past two months, Refinitiv data showed.

Chinese refiner Hengli Petrochemical also made its first purchase from the INE in August, lifting a 500,000-barrel Upper Zakum crude cargo from Dalian storage, a source familiar with the matter said.

Middle East crude sold via the exchange are “a couple of dollars” cheaper than spot supplies, but procedures such as customs clearance are complicated, he said.

The sources declined to be named due to the sensitivity of the matter. SK Innovation owner of SK Energy – and GS Caltex and Hengli declined to comment.

Shanghai Futures Exchange, which owns INE, and Litasco did not respond to requests for comment.

INE’s storage peaked at more than 45 million barrels at end-July to early August, according to data on its website.

Buyers of INE crude have to be flexible as the cargoes typically ship within weeks and the crude grade and loading port are decided by the exchange, the sources said.

Asian refiners normally buy crude two months ahead.

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Tuesday, September 8, 2020

Japan Dispatches Third Disaster Relief Team to Mauritius Oil Spill Site

Credit...Agence France-Presse — Getty Images

https://www.petroleumafrica.com/japan-dispatches-third-disaster-relief-team-to-mauritius-oil-spill-site/ 

Dispatch of the third Japan Disaster Relief (JDR) Team in response to the oil spill off the coast of the Republic of Mauritius

The team will leave Japan on September 2nd to undertake on-site environmental assistance activities after arriving in the country

TOKYO, Japan, September 1, 2020/ — Japan has decided to dispatch the third Japan Disaster Relief (JDR) Expert Team, which consists of 6members, to the Republic of Mauritius to deal with the oil spill from the bulk carrier “WAKASHIO” which has been stranded off the coast of the country since July 25th. The team will leave Japan on September 2nd to undertake on-site environmental assistance activities after arriving in the country.

  1. The accident has caused serious damage to the environment in the Republic of Mauritius, which could have a serious impact on the country’s tourism industry as well. Japan has decided to dispatch the team out of comprehensive and holistic consideration of all circumstances, including the request of assistance from the Government of the Republic of Mauritius and the friendly relationship between the two countries.
  2. Japan will continue to closely cooperate with the Government of the Republic of Mauritius as well as relevant countries and organizations, and make utmost efforts to contribute to the restoration of natural environment and the recovery of economic activities of the Republic of Mauritius.

Distributed by APO Group on behalf of Ministry of Foreign Affairs of Japan.

Friday, September 4, 2020

US sanctions 11 foreign firms for helping Iran export petroleum

The sanctions 'reaffirm the United States's commitment to denying the Iranian regime the financial resources it needs to fuel terrorism and other destabilising activities', US Secretary of State Mike Pompeo said in a statement [File: Nicholas Kamm/Reuters] 

The sanctions 'reaffirm the United States's commitment to denying the Iranian regime the financial resources it needs to fuel terrorism and other destabilising activities', US Secretary of State Mike Pompeo said in a statement [File: Nicholas Kamm/Reuters]

The US said the companies helped facilitate Iran's export of petroleum and petrochemicals in violation of its sanctions.

https://www.aljazeera.com/ajimpact/sanctions-11-foreign-firms-helping-iran-export-petroleum-200903165942631.html 

The United States on Thursday imposed sanctions on 11 foreign companies, accusing them of helping to facilitate Iran's export of petroleum, petroleum products and petrochemicals in violation of American sanctions.

The Treasury said it slapped sanctions on six companies based in Iran, the United Arab Emirates and China that it said enable the shipment and sale of Iranian petrochemicals and support Triliance Petrochemical Co Ltd, a Hong Kong-based company blacklisted by the US.

Triliance, a Hong Kong-based broker, was hit with sanctions in January over accusations it ordered the transfer of the equivalent of millions of dollars to the National Iranian Oil Co as payment for Iranian petrochemicals, crude oil, and petroleum products.

The Treasury also blacklisted UAE-based Petrotech FZE and Trio Energy DMCC, Hong Kong-based Jingho Technology Co Ltd and Dynapex Energy Ltd, as well as China-based Dinrin Ltd, accusing them of being front companies for Triliance and Zagros.

"The Iranian regime uses revenue from petrochemical sales to continue its financing of terrorism and destabilizing foreign agenda," Treasury Secretary Steven Mnuchin said.

Tensions between Washington and Tehran have spiked since Republican President Donald Trump unilaterally withdrew in 2018 from the Iran nuclear deal struck by his Democratic predecessor, Barack Obama, and began reimposing sanctions that had been eased under the accord.

SOURCE: Reuters news agency

Triliance, a Hong Kong-based broker, was hit with sanctions in January over accusations it ordered the transfer of the equivalent of millions of dollars to the National Iranian Oil Co as payment for Iranian petrochemicals, crude oil, and petroleum products.

The Treasury also blacklisted UAE-based Petrotech FZE and Trio Energy DMCC, Hong Kong-based Jingho Technology Co Ltd and Dynapex Energy Ltd, as well as China-based Dinrin Ltd, accusing them of being front companies for Triliance and Zagros.

"The Iranian regime uses revenue from petrochemical sales to continue its financing of terrorism and destabilizing foreign agenda," Treasury Secretary Steven Mnuchin said.

Tensions between Washington and Tehran have spiked since Republican President Donald Trump unilaterally withdrew in 2018 from the Iran nuclear deal struck by his Democratic predecessor, Barack Obama, and began reimposing sanctions that had been eased under the accord.

SOURCE: Reuters news agency

WTI Drops Below $40 Amid Stock Market Rout

A trader works on the floor of the New York Stock Exchange.

https://oilprice.com/Energy/Oil-Prices/WTI-Drops-Below-40-Amid-Stock-Market-Rout.html 

Oil prices tumbled on Friday morning, preparing to finish out the week $3 per barrel less than last Friday’s level. It is the largest weekly drop since June.

U.S. oil futures were already at their lowest point since July on Wednesday.

At 11:00 am EDT, the WTI spot price was $40.26 (-2.68%), nearly $3 under last week’s level. Brent crude was trading $43.04 (-2.34%), roughly $2 per barrel less than last week.

The fall can likely be attributed to the strong dollar, after earlier reports that the U.S. unemployment rate dropped to 8.4%--as well as reports of faltering domestic gasoline demand in the United States.  A strong dollar makes U.S. oil more costly for other countries to purchase, and therefore typically has an inverse relationship with crude.

The drop comes despite a significant draw in crude oil inventories this week, but the hurricane-related nature of the draws dampened the enthusiasm for the inventory draw.

The price drop comes on the same day that Russia’s energy minister Alexander Novak predicted that oil prices would stay in the $50-$55 per barrel range next year, as the world continues to grapple with the pandemic and as an emphasis on renewables factors more into the energy landscape.

WTI futures for October were trading down $1.25 on Friday, at $40.12.

Further dents to crude oil demand are expected over the next month, as the driving season comes to a close and refinery maintenance season fast approaches.

By Julianne Geiger for Oilprice.com

Thursday, September 3, 2020

SEA-LNG Chairman explains why LNG is the “only viable fuel” to reduce shipping’s GHG footprint

http://www.tankeroperator.com/ViewNews.aspx?NewsID=11812 

Peter Keller, Chairman of SEA-LNG, the multi-sector industry coalition advocating for LNG as a marine fuel throughout the entire value chain, has published a new report which offers an in-depth insight into LNG as a marine fuel and its clear pathway for the shipping industry’s decarbonisation.

The report outlines how LNG as a marine fuel is the only viable option for shipping to reach IMO 2030. It argues that LNG-fuelled vessels are “zero-emissions on the water today” as they offer a clear route to IMO 2050 thanks to carbon-free liquefied bio-methane which can be easily adopted by LNG-fuelled vessels and LNG infrastructure.
 
As the debate is fast descending into “my solution versus your solution”, Keller comments that waiting for a “utopian solution” risks locking the maritime industry into the highly polluting conventional oil-based marine fuels for years, if not decades, to come.
 
The report offers an insight into the state of play regarding LNG as a marine fuel. It also highlights the promising role that modern dual-fuel engines’ ability to accelerate decarbonisation while countering the points surrounding methane slip.
 
To read the full report from SEA-LNG chairman Peter Keller, please click here.

Wednesday, September 2, 2020

Tuesday, September 1, 2020

Report: Venezuelan FSO is Taking on Water

corocoro oil field pdvsa fso

 FSO Nabarima

By The Maritime Executive 08-31-2020 12:33:13

An FSO off the coast of Venezuela is taking on water and threatening to sink, according to Eudis Girot, the head of the Unitary Federation of Petroleum Workers of Venezuela (FUTPV).

SE HUNDE NABARIMA es una plataforma de almacenamiento tiene 1300000 bls de petroleo a bordo a punto de derramarse y causar una terrible catástrofe mundial desde golfo de Paria y el Caribe. Condiciones paupérrimas y profundo deterioro, cubierta inferior y equipos 3 mts bajo agua
 

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In a social media post Sunday, Girot warned that the FSO Nabarima has about 1.3 million barrels of crude oil on board. She in "very poor condition," he said, and she has about nine feet of water in her lower decks. Gidot appended photos showing flooding in the interior of a large vessel.

María Gabriela Hernández, a member of the opposition National Assembly (AN), said in a press conference last week that the vessel is listing and that crewmembers report no efforts to transfer the cargo to a tanker to minimize risk. 

PDVSA has not yet commented publicly on any developments aboard the FSO. 

The Nabarima is permanently moored at the Corocoro oil field in the Gulf of Paria, the semi-enclosed body of water between Trinidad and Venezuela. The field was originally developed by ConocoPhillips in the early 2000s, but the government of former Venezuelan President Hugo Chavez expropriated it without compensation in 2007. For the past 13 years, it has been operated by the PDVSA/Eni joint venture Petrosucre.

The field's production was historically purchased by PDVSA-controlled refiner Citgo; with the recent imposition of U.S. sanctions this arrangement has ceased, and in early 2019 Petrosucre was forced to shut in a portion of the field's capacity due to limited storage, according to Bloomberg.

Venezuela’s PDVSA Sued for Missed Payments at Curacao Refinery

The La Isla Refinery in Curacao off Venezuela’s northern coast can process up to 335,000 barrels per day. It is currently seeking a new operator after ending its contract with Venezuela’s PDVSA. (Argus Media) 

 The La Isla Refinery in Curacao off Venezuela’s northern coast can process up to 335,000 barrels per day. It is currently seeking a new operator after ending its contract with Venezuela’s PDVSA. (Argus Media)

The state-run oil firm is also being asked to relocate crude deposits at Bonaire’s BOPEC storage facility due to the risk of accidents caused by poor maintenance.

https://venezuelanalysis.com/news/14982

Mérida, August 31, 2020 (venezuelanalysis.com) – The owner of Curacao’s La Isla refinery, Refineria di Korsou (RdK), is suing Venezuela’s state-run oil company PDVSA for US $51 million.

RdK claims that PDVSA missed service payments on the leased out facility between February 2018 and December 2019, when the Venezuelan firm’s contract was terminated.

The lawsuit was lodged last Wednesday in a New York State court after local efforts to collect on the debt failed in March. Earlier this year, a Curacao court ruling spurred RdK to attempt to seize PDVSA stocks at the nearby Bonaire Petroleum Corporation (BOPEC) oil terminal as payment for the debt before backtracking on the move.

La Isla refinery is located 140 kilometres off Venezuela’s northern coast, and has been leased out by PDVSA since 1985. Last December, RdK abruptly cut short a year-long lease extension, citing the lack of a “reasonable offer” from the Venezuelan state entity. The refinery is currently idle after a lease deal between RdK and European industrial conglomerate Klesch Group fell through earlier this year. PDVSA’s total production at La Isla stood at 235,000 barrels since February 2018, well below the refinery’s 335,000 daily capacity, according to RdK.

At the time of writing, neither PDVSA nor the Maduro government have responded to RdK’s legal action.

The RdK lawsuit is the latest of a number of legal actions against the Venezuelan government, including settlement debt collection efforts from US oil giants Exxon Mobil and ConocoPhillips, Canadian mining firm Crystallex, and US glass firm O-I Glass. Caracas is also using the courts to contest the seizure of foreign based state assets, such as PDVSA’s US subsidiary CITGO and US $1.4 billion of gold stored in the Bank of England.

‘Unacceptable’ lack of PDVSA maintenance at Bonaire terminal

PDVSA also faced problems at the BOPEC oil terminal in the nearby island of Bonaire last week, with local authorities accusing the Venezuelan firm of a prolonged and “unacceptable” lack of maintenance on Wednesday, ordering Caracas to withdraw its crude stocks to a different location “in order to take away risks.”

According to BOPEC spokespersons, PDVSA has failed to meet Bonaire’s Environment and Transport Inspectorate safety limits, citing examples including a leaking “floating roof” in an oil tank and “unusable” docks.

PDVSA and other state-run entities have been forced to make extensive spending and investment cuts as seven years of recession and tightened US sanctions have greatly reduced foreign currency income. Analysts have linked state underinvestment to a vast array of deteriorated infrastructure in the country and the recent spill of an estimated 20,000 barrels of oil close to PDVSA’s El Palito refinery in Carabobo State.

The BOPEC relocation adds to a variety of problems in PDVSA’s Caribbean-based refining and logistics network in recent months, with many third parties chased off by the threat of US secondary sanctions and a number of Venezuelan supertankers seized as collateral on international settlement deals.

PDVSA uses the BOPEC site to alleviate crude oil storage bottlenecks, which have been recently exacerbated by sanction- and COVID-induced contractions in international demand.

Starting with financial sanctions in August 2017, Washington has successively imposed unilateral measures against the Venezuelan oil industry, including an embargo, a blanket ban on all dealings with Venezuelan state entities, and secondary sanctions against Russian energy giant Rosneft. Output in July stood at a decades-low of 339,000 bpd.

US sanctions have likewise hurt the country’s refining capacity and generated severe fuel shortages. According to Reuters, fuel production is currently around 30,000 bpd, well short of the pandemic lockdown demand level estimated to be around 180,000 bpd.

Recent Iran-backed efforts to restart production at PDVSA’s El Palito and Cardon refineries have had mixed results, with Reuters reporting that production once again had to be stopped at the latter this week after a fluid catalytic cracking unit failed. The adapted naphtha reformer at the Cardon refinery allegedly has a capacity to produce 25,000 bpd of fuel, and production is expected to restart in the coming days, according to union leader Ivan Freites.