Friday, April 9, 2021

Iran likely to release seized S. Korean tanker, captain as early as next week: source

This photo, captured from DM Shipping's website, shows South Korean oil tanker MT Hankuk Chemi, which was seized by Iran on Jan. 4, 2021. (PHOTO NOT FOR SALE) (Yonhap)

This photo, captured from DM Shipping's website, shows South Korean oil tanker MT Hankuk Chemi, which was seized by Iran on Jan. 4, 2021. (PHOTO NOT FOR SALE) (Yonhap) 

SEOUL, April 2 (Yonhap) -- Iran is likely to release a seized South Korean oil tanker and its captain as early as next week, a diplomatic source said Friday, noting "considerable progress" in the negotiations to end nearly three months of the seizure.

In early January, Iran's Islamic Revolution Guards Corps seized the vessel, MT Hankuk Chemi, and its 20-member crew over alleged oil pollution. In February, the Iranian authorities agreed to set free all sailors except for the captain for the ship's management.

"I understand that there has been considerable progress in negotiations with Iran over the seizure issue," the source told Yonhap News Agency on condition of anonymity. "MT Hankuk Kemi and its captain are likely to be released in the near future."

At the time of the seizure, the vessel was carrying 20 crewmembers -- 11 Myanmarese, five Koreans, two Indonesians and two Vietnamese.

Of them, only the South Korean captain remains in custody while the others are still in Iran for the maintenance of the vessel or have left the country.

It remains unknown why Iran agreed to release the ship and its captain, but speculation has emerged that Seoul and Tehran might have made headway in addressing the Middle Eastern country's call to unlock its funds -- worth US$7 billion -- frozen in Korea under U.S. sanctions.

The two countries have been consulting over how to release part of Iran's funds through a Swiss humanitarian trade arrangement designed to facilitate the flow of humanitarian goods to the Iranians.

Speculation has persisted that the seizure is linked to Iran's anger over the frozen funds. Tehran denies the speculation, stressing that it was purely a technical issue.

Thursday, April 8, 2021

China Started More Coal Plants Than The Entire World Retired In 2020


Smoke belches from a coal-fired power station near Datong in northern China's Shanxi province, Nov. 19, 2015. 

Despite commitments to become a net-zero emission economy by 2060, China—the world’s biggest carbon emitter—commissioned more coal-fired capacity last year than the rest of the world retired, a new report showed this week.

China’s coal boom in 2020 more than offset the retirements in coal capacity in the rest of the world, leading to the first increase in global coal capacity development since 2015, a report led by Global Energy Monitor (GEM) found.

China commissioned 38.4 gigawatts (GW) of new coal plants in 2020, offsetting the record-tying 37.8 GW of coal capacity retired last year, the report showed.

China’s coal boom accounted for 76 percent of the global 50.3 GW new coal capacity. Globally, commissioning of new plants plunged by 34 percent annually in 2020 due to difficulties obtaining financing and delays due to the pandemic. India, which continues to rely on coal, saw coal power capacity increase by just 0.7 GW in 2020, with 2.0 GW commissioned and 1.3 GW retired, according to the report.

China also has 88.1 GW of coal power under construction. Another 158.7 GW is proposed for construction. Meanwhile, the rest of the world is retreating from coal capacity and is announcing coal retirements.

Last year, the retirements were led by the U.S. with 11.3 GW and the EU with 10.1 GW of retired coal capacity.

“President Trump’s promised coal boom was a bust as U.S. coal plant retirements during Trump’s four-year term rose to 52.4 GW, exceeding the 48.9 GW retired during President Obama’s second term,” Global Energy Monitor said.

Related: OPEC+ Was Wise To Ease Output Cuts Despite Demand Concerns

Commenting on China’s coal boom, Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air (CREA), said: “Dozens of new coal power projects, equal to the total coal power capacity of Germany and Poland combined, were announced last year in China.”

“Cancelling them would put the country on track to the low-carbon development the leadership says it wants to pursue,” Myllyvirta noted.

China’s coal-fired power generation increased last year as growing electricity demand outpaced the installations of new clean power capacity, making China the only G-20 country with rising coal generation, climate and energy think tank Ember said in a separate report last month.

By Tsvetana Paraskova for

Wednesday, April 7, 2021

Iran tankers with 3M barrels of crude oil head to Syria, defying US sanctions 

Millions of crude oil barrels are on their way to Syria from Iran, violating U.S. sanctions.

According to a civilian naval intelligence firm, there are four vessels with more than 3 million barrels combined on their way to the Baniyas oil refinery, near the Mediterranean coast.

A satellite photo captured two days ago over the southern section of the Red Sea shows four vessels: Arman 114, Sam 121, Daran and Romina.

The Arman 114 is formerly known as the Adrian Darya 1, a vessel in the center of the U.S.-Iran standoff in the summer of 2019. It was sanctioned by the Trump administration in August 2019, following its attempts to transfer the oil to Syria.


Syria has been struggling with an oil shortage, relying primarily on Iranian help. However, with the burdening sanctions on the two countries, the shortage has turned into a crisis, causing power outages and rationing petrol.

Once the vessels arrive, analysts believe they will supply Syria with enough oil for three weeks.

"Currently, one of four Iranian tankers has traversed the Suez Canal carrying crude oil for Syria's refinery in Baniyas," Samir Madani, co-founder of Tanker Trackers, told Fox News. The Romina has switched off its AIS, a familiar move by the Iranian tankers to avoid tracking.


"Only the first 900,000 barrels are now in the Mediterranean and could reach Syria by Wednesday at the soonest. The recent delays in the Suez Canal due to the EVER GIVEN as well as today's mishap have exacerbated the crisis for a population of 17 million," Madani said.

FILE - An Iranian flag flutters on board the Adrian Darya oil tanker, formerly known as Grace 1, off the coast of Gibraltar on August 18, 2019. (Photo by JOHNNY BUGEJA/AFP via Getty Images)

FILE - An Iranian flag flutters on board the Adrian Darya oil tanker, formerly known as Grace 1, off the coast of Gibraltar on August 18, 2019. (Photo by JOHNNY BUGEJA/AFP via Getty Images) 

Saeed Khatibzadeh, the spokesman of the Iranian foreign ministry, told reporters in his weekly press briefing on April 5 that Iran has already been able to sell crude oil in defiance of the sanctions. "As for taking back Iran's share in the oil market, we have never waited, and you can see it in the official and unofficial statistics," he said.


Iranian Press TV reported on Monday, according to an unnamed source, that Iran will agree to return to commitments under the nuclear deal only if the U.S. removes all sanctions imposed against it.

"Iran will start its measures to return to JCPOA commitments only after the removal of all US sanctions and verifying it," the report said.

Talks resumed Tuesday in Vienna.

Tuesday, April 6, 2021

Copper Prices Jump After Leading Producer Chile Closes Its Borders

Copper wire 

Copper price jumped on Monday as investors assessed the decision by Chile to close its borders during April due to a spike in covid-19 cases.

Copper for delivery in May was up nearly 4% in afternoon trade, with futures at $4.1390 per pound ($9,125 a tonne) on the Comex market in New York.

The world’s top exporter of the metal closed its borders for a month as reported a daily record of 7,830 infections last week, an all-time high for occupied hospital beds, and a nationwide positivity rate of 11%.

Chilean citizens and foreign residents are forbidden from entering or leaving the country. All truck drivers are required to present a negative PCR test carried out in the 72 hours before entering the country.

The stepped-up border restrictions may disrupt mining activities by delaying equipment replacement.

Chile’s copper mines produced 430,100 tonnes in February, a decline of 4.8% compared to the same period of 2020.

Last week, Codelco clinched a deal with workers at its Radomiro Tomic mine after they accepted a new contract offer, defusing worries about a potential strike.


Monday, April 5, 2021

Abu Dhabi Makes a Bold Bid to Create New Global Oil Benchmark

 Adnoc Drilling completes first Umm Lulu offshore oilfield well

Abu Dhabi started trading futures contracts for Murban crude, its biggest oil grade, in a bid to create a benchmark for the energy market.

The aim is “to make sure that Murban is a globally freely traded commodity and allows everybody around the world to use it either for pricing or hedging their risk,” Khaled Salmeen, executive director of supply and trading at government-run Abu Dhabi National Oil Co., said in an interview with Bloomberg Television. “It provides an additional tool that the market has been looking for.”

The start of Murban trading on an Abu Dhabi exchange on Monday marked the first time a Persian Gulf OPEC member has allowed its oil to be freely sold and shipped anywhere in the world. Atlanta-based Intercontinental Exchange Inc. is operating the platform known as ICE Futures Abu Dhabi.

Establishing a benchmark isn’t immediate as traders want to see a sufficient volume of deals over time that lead to prices investors deem fair. Creating a forward curve, or bids and asks for crude in future months, will also be a key test for the new Murban exchange.

On its first trading day, volume in Murban for June, the first month for which cargoes will be available, and for July both exceeded 2,200 lots, with more than 1,100 August contracts changing hands and several hundred for September. Each lot represents 1,000 barrels. The contract for June delivery traded at $63.78 a barrel as of 2:50 p.m. in Abu Dhabi.

Murban’s first trading day has “been a real success so far,” Stuart Williams, president of ICE Futures Europe, said in a Bloomberg Television interview. “We have greater aspirations for this contract,” Williams said of the ambition to establish Murban as a regional benchmark. Once trading volumes and liquidity are established, ICE and Adnoc will seek to advance talks with other national oil companies in the region about adopting Murban futures as a pricing reference for their sales.

The region’s main producers, including Saudi Arabia, Iraq and the United Arab Emirates, of which Abu Dhabi is the capital, tend to stop buyers from reselling their oil. They also use benchmarks from outside the Middle East to price much of their crude.

In attempting to make its mark, Murban faces competition for regional benchmark status. S&P Global Platts publishes widely used price assessments for Dubai oil and the Dubai Mercantile Exchange trades futures for Omani crude. Both act as benchmarks for Middle Eastern shipments to Asia.

What’s more, oil traders dislike change, especially when they believe markets already do a good job matching supply and demand. Platts backed away from plans to revamp its Dated Brent contract after comments from traders earlier this year.

Adnoc can produce about 2 million barrels of Murban crude a day and has pledged to guarantee at least 1 million barrels of daily exports to support trading on the exchange.

Murban’s available volumes mean supply will be “enough to establish this benchmark, and then you will see other crude in this region being benchmarked against it,” Patrick Pouyanne, chief executive officer of French oil major Total SE, said in an interview in Abu Dhabi Monday.

Total is a partner with Adnoc in Abu Dhabi’s onshore fields where Murban crude is produced and is a partner in the new exchange. Brent’s declining output means Murban is “serious competition” and the Middle Eastern grade could one day become as famous as its European counterpart, Pouyanne said.

Adnoc CEO Sultan Al Jaber said at a ceremony for the start of trading in Abu Dhabi that the company now sells Murban to more than 60 customers in 30 countries, a leap from its “humble” beginnings in the late 1950s when just 4,000 barrels were pumped daily from one well. Trading Murban will help Abu Dhabi and the UAE get more value out of its barrels, he said.

The UAE is the third-largest producer in the Organization of Petroleum Exporting Counties, which cut supplies last year as the pandemic crushed energy demand.

OPEC+, a broader group including countries like Russia, meets this week to discuss whether to further ease the production cuts that began last May. Those supply curbs and the rollout of vaccines have caused the established global benchmark, Brent crude, to surge roughly 65% since the start of November to about $63.50 a barrel. Still, the rally has faded this month amid a new wave of virus cases, which may push some members of the producer group to argue that the cartel can’t raise output just yet.

Price levels in the range of $60 a barrel are “a sustainable average,” Salmeen said.

Last week’s closing of the Suez Canal after the Ever Given container ship ran aground won’t cause major issues for oil markets, he said. Markets are well supplied and buyers can draw from high inventories to avoid any shortages, he said. 

Mexico Moves to Strip Fuel Market Permits


Mexico’s government has proposed legislation that would allow the energy ministry and energy regulatory commission (CRE) to more easily strip fuel market participants of their operating permits.

The move is the latest manifestation of the government’s rollback of a 2014 energy reform package that opened Mexico’s long-cloistered oil industry.

The bill, presented to congress yesterday, is likely to pass because President Andrés Manuel López Obrador’s Morena party holds the simple majority in the legislature required for approval.

Under the proposed legislation, an expanded group of holders of permits issued under the 2014 hydrocarbons law for fuel imports, exports, marketing, distribution, retail, transport and storage of fuels, crude and natural gas would be required to prove compliance with a minimum fuel storage policy. The existing law mandates that most participants have inventories for gasoline and diesel equivalent to five days of sales.

The government can currently sanction companies that do not comply with the storage policy but allows them to keep operating. Under this proposal, the permits would be revoked almost immediately. The proposal also expands this obligation to fuel transporters, while it currently only applies to fuel traders, importers, distributors and retailers.

The wording of the bill is ambiguous, as “all permits” could include crude and gas permits, while only gasoline, diesel and jet fuel have a stated minimum storage policy.

Because of the nature of the regulated activities, some existing permits would be unable to comply with the requirement, said Diego Campa, partner at Campa and Mendoza, a Mexico City-based law firm specialized in energy and natural resources.

As the bill is currently drafted, on the first day of the legislation’s approval, the energy authorities could revoke all permits from firms that are out of compliance. Under current requirements, some companies have already been struggling to comply with the minimum storage mandate because of ambiguities in existing regulations, and the government has also delayed permits to build new storage infrastructure.

One safe harbor for companies to provide proof of its storage could be to show storage credits bought from other companies, known as tickets. The bill presented yesterday does not indicate if that would be allowed.

The bill also does not address the current exemptions of certain permit holders from the storage mandate, in light of Mexico’s prohibition on retroactive application of laws.

The bill adds a new article to the hydrocarbons law (Article 59 Bis) to include, define and state the cause of a permit suspension. With this addition, the energy ministry and CRE can “suspend permits temporarily when foreseeing an imminent danger to the country’s national security, energy security or the national economy.”

If a permit is revoked, the bill would give state-owned oil company Pemex and utility CFE exclusive access to the associated infrastructure. If the permit of a privately owned fuel storage terminal is suspended, for example, only Pemex or CFE could use it. Authorities do have to justify the suspension for a valid cause in writing, and if the permit holder modifies the reason under which the permit was suspended, authorities must reinstate the permit.

The bill also proposes to include smuggling and illicit traffic of hydrocarbons, refined products and petrochemicals as immediate cause to revoke a permit, as well as any second offense to the hydrocarbons law.

If the controversial government-sponsored electricity bill serves as a guide, the fuel permitting bill could be swiftly passed through the congress without any major changes, with lawmakers following party lines and the president’s instructions. But it could also be challenged in Mexican courts, which have stopped the electricity bill through a wave of injunctions.

Friday, April 2, 2021

God Bless Everyone Today!

‘It’s going to hurt us’: Heating oil industry fights effort to eliminate Mass. Rebates

 Michael Mcgrath Inc

Michael Mcgrath Inc



$2.50 / 4/2/2021


The proposal from the council, chaired by the State Energy Resources Commissioner, follows a series of recommendations made by the Baker administration in December for Massachusetts to achieve a “net zero” carbon emissions standard by 2050. The changes are also in line with aggressive greenhouse gas emission reduction targets contained in a comprehensive new climate bill passed by lawmakers and signed by Governor Charlie Baker last week. A provision in this law would enable municipalities to issue net-zero building regulations for new buildings that could, for example, block fossil fuel integration in these projects.

In order to achieve this ambitious target for 2050, significant changes would have to be made in the heating of buildings. State officials and environmentalists hope to encourage the introduction of electric heat pumps into households and cut fossil fuels. The consequences could be enormous for the 700,000 plus homeowners in the state who use heating oil and the businesses that serve it. Massachusetts electricity tariffs are now among the highest in the United States, almost twice the national average.

With this in mind, the Massachusetts Energy Marketers Association, which represents the state’s 400 or so fuel oil dealers, faces the loss of Mass Save discounts of between $ 400 and $ 800 per installation, as well as access to the popular, uninteresting HEAT loans to subsidize Oil systems. (The Council recommends studying the impact on low-income households before changing their incentives.)

Heating oil companies argue that their customers should pay surcharges on their electricity bills to the Mass Save program and get discounts for upgrading their heating systems. Ferrante said he feared the utilities working with state officials to design the program have no incentive to support his industry. He said his association intends to challenge the changes in court when they are final.

“We are under the microscope to be erased from the card,” said Ferrante.

Ferrante noted that many heating oil suppliers have taken steps to address the environmental impact by switching to biofuel blends with much lower carbon emissions. For example, nearly 80 dealerships are participating in a government program to encourage the use of biofuel, mostly discarded cooking oil, that can be blended with standard heating oil. They receive incentives funded by penalties that electricity companies pay for failing to meet renewable energy targets.

Among the participants: Cubby Oil & Energy. President Charlie Uglietto said nearly all of the Wilmington company’s approximately 6,000 customers burn a 50/50 blend of petroleum and used cooking oil. Uglietto said it costs homeowners about $ 50 more a year than unblended heating oil. Some customers use fuel made entirely from discarded cooking oil.

John Alefantis works for the heating oil company Cubby Oil in Boston.David L. Ryan


From Uglietto’s point of view, biodiesel is a more cost-effective method of combating emissions than heat pump systems, which, according to state authorities, should be prioritized in the new Mass Save Plan.

“Neither the state nor Mass Save nor many people recognize the value of liquid renewable fuels,” said Uglietto. “Why are we getting people to buy $ 25,000 worth of heat pump equipment when we can just switch the fuel that goes into people’s oil burners and get greenhouse reductions for pennies on the dollar today? I just do not understand. “

Caitlin Peale Sloan, Massachusetts director of policy efforts for the Conservation Law Foundation, said there is not enough discarded cooking oil from restaurants to rely solely on for the fuel oil industry to rely on as a solution.

The elimination of oil discounts is one of many proposed changes to the Mass Save program, which is regulated by the state and funded by surcharges on electricity and natural gas bills. They are now being used by the state’s major electricity and natural gas suppliers to formulate a new plan for the next three years with the aim of taking the climate benefits into account.

“We are carefully reviewing all of our fossil fuel incentives and will be careful about which fossil fuel incentives are retained in the next plan. This is not just about heating oil, ”said Patrick Woodcock, the state commissioner for energy resources. “We believe heat pumps should be integrated across the state. … It is a technological breakthrough that Massachusetts is about to seize. It’s only a matter of time. We believe the time is now. “

Amy Boyd, a member of the Efficiency Council, said the panel and utilities will have a final version out by the end of October. She notes that heating oil customers could continue to use mass save funds for other efficiency measures, such as insulating their homes.

“Using Ratepayer money to buy things that will keep fossil fuels around longer is wasting Ratepayer money,” said Boyd, policy director at Acadia Center, a climate think tank. “I am really happy that the EEAC is taking a stand on the need for electrification.”

However, Emerson Clauss, co-owner of Allegiance Construction & Development in Northbridge, said the switch to electrical heat is still heavily reliant on natural gas, the most widely used fuel source for New England power plants. Clauss said he was also concerned about the net-zero language of the new climate law for new buildings because it could exclude heating oil, propane and natural gas as a heat source.

“More than half of our electricity comes from natural gas,” said Clauss, president-elect of the Massachusetts Home Builders and Remodelers Association. “It sounds like we’re doing a great thing and we’re moving in the right direction. But aren’t we just moving to where the smoke burned? “

Jon Chesto can be reached at Follow him on Twitter @jonchesto.

Thursday, April 1, 2021

Oil Traders Made A Killing Last Year

Oil traders in Houston. Creative Commons photo/Oil Industry News.

Retail investors with long positions in crude oil markets had to endure one of the most volatile years on record in 2020 thanks to the Saudi-Russia oil price war, oil price crash, and a global pandemic that dealt a massive blow to energy demand.

However, it was yet another annus mirabilis for large oil traders who took full advantage of the choppy markets and a massive spike in volatility to make a killing on oil trades.

Bloomberg reported that dozens of large oil traders made billions of dollars in profits in 2019, with many posting record earnings thanks to a rocky oil market. 2020 was more of the same, only better this time after top oil and commodity traders posted record profits mostly by leveraging the famous contango plays.

Dutch energy and commodity trading company Vitol LLC netted record profits of ~$3 billion in 2020 as per Bloomberg.

Vitol is the world’s largest independent oil trader, moving ~8 million barrels of petroleum products each day to meet the needs of the UK, Germany, France, Spain, and Italy.

Record profits

Vitol made a significant chunk of its oil fortunes during the tumultuous second quarter when global lockdowns due to Covid-19 sent oil prices crashing to historic lows, allowing traders with ample storage, including floating storage and underground caverns, to capitalize.

Vitol has yet to close its 2020 accounts, and the final profit figure may still change if, for instance, the company decides to use some of last year’s earnings for writedowns, thus lowering the final net income figure. Still, the company is expected to report a net income of ~$3B for FY 2020, considerably higher than the FY 2019 figure of $2.3B.

Vitol’s independent trading peer Trafigura reported record profits of $1.6 billion for FY 2020, which ended in September, while Glencore Plc is also said to have had a bumper year.

But it’s not just independent traders who were laughing all the way to the bank as the majority of oil companies teetered on the brink of bankruptcy. In-house trading houses of public oil companies such as Royal Dutch Shell Plc (NYSE:RDS.A), BP Plc (NYSE:BP), and Equinor ASA (NYSE:EQNR) also proved their mettle in the game.

Shell doubled its crude and refined products trading profits in 2020, with earnings from the Oil Products division rising to nearly $2.6 billion from $1.3B the previous year. Shell managed to stay in the black despite an 87% plunge in profits thanks to the juicy trading profits.

Meanwhile, BP’s trading arm made nearly $4 billion in 2020, almost equalling the record trading profit in 2019. The profits were able to provide some support to the company’s full-year results, with BP reporting a net loss of $5.7 billion, excluding writedowns.

Contango plays

Norwegian National Oil Company (NOC), Equinor ASA, also stood out for its ability to leverage high volatility during the second quarter.

Equinor has reported a surprise adjusted net income of $646M for the second quarter, trouncing Wall Street’s expectations for a loss of $250M thanks to huge trading profits despite a 53 percent plunge in revenue to $8.04B.

Equinor’s marketing division delivered record-high results, with Q2 adjusted earnings for the company’s marketing, midstream and processing division clocking in at $696M vs. just $74M a year ago.

Equinor’s impressive quarter can be squarely chalked up to the perfect execution of the so-called contango oil plays.

When oil prices tanked in April, the price difference between a Brent contract for six-month forward contract and one for immediate delivery– a key measure of the degree of contango–plunged to a record of nearly -$14 a barrel, surpassing the last major contango witnessed during the 2008-09 financial crisis.

Equinor pounced on the opportunity and started storing millions of barrels of the commodity; filling its oil tankers with crude, turning them into floating storage facilities and renting onshore storage elsewhere. The company did this in anticipation that it would be able to flip its oil inventory at a profit when prices later recovered in the famous contango play.

And recover they did.

After averaging a multi-year low of $18.38/barrel in April, Brent prices have staged a significant recovery, averaging $29.38 in May and later crossing and holding above the $40/barrel mark in late June. Equinor took advantage of the oil price bounce to sell its inventories which, combined with other oil trading activity, helped deliver a record of about $1.16 billion in pre-tax adjusted earnings in just a single quarter.

“The increase was mainly due to the contango market during the quarter and good results from liquids trading,” the company said during its Q2 2020 earning report.

Obviously, a key component of a successful contango play is access to ample storage. Luckily, Equinor is well endowed in that department, with its Mongstad, Eldar Saetre underground caverns capable of holding nearly 9.5 million barrels. The company also said it had rented storage capacity in Korea for years and also used floating storage extensively.

Unfortunately, lack of storage space is the key reason why prices dipped into negative territory in April–and the reason why many other traders will continue being locked out of the juicy contango profits.