Friday, November 20, 2020

Desperate for fuel, Venezuelans steal PDVSA crude and make their own gasoline

hortages of gasoline in Venezuela in March 2017. Reference photo from Wikimedia Commons.

https://www.reuters.com/article/venezuela-pdvsa-gasoline/feature-desperate-for-fuel-venezuelans-steal-pdvsa-crude-and-make-their-own-gasoline-idUKL1N2GV067

MARACAIBO, Venezuela (Reuters) - Venezuelans, desperate for fuel after months of shortages, have begun stealing crude from idled fields owned by state oil company Petroleos de Venezuela [PDVSA.UL] and distilling homemade gasoline, according to two PDVSA workers and a half dozen people familiar with the practice.

The amount of crude stolen is a tiny fraction of Venezuela’s output. But the activity is testament to the crises at PDVSA, which can no longer supply the country’s population with fuel.

Venezuela’s once-formidable 1.3 million barrels per day (bpd) refining network has collapsed, oil and refining installations have little security or maintenance, and the firm is unable to retain qualified workers as salary values erode.

The company has hit a new low this year. Under pressure from U.S. sanctions - part of Washington's effort to oust President Nicolas Maduro - Venezuela's crude output fell to just 397,000 bpd in September, down from 1.2 million bpd before the sanctions were imposed in January 2019 and the lowest level since the 1930s. PRODN-VE

The sanctions have targeted gasoline imports, forcing Venezuelans to wait in snaking lines outside gas stations. Many citizens regard that as a bitter indignity in an OPEC producer, which has, by some measures, the world’s largest crude reserves.

The supply chain for the so-called “artisanal gasoline” begins at oil fields such as La Concepcion in the western state of Zulia, which produced more than 12,000 bpd of high-value light crude 15 years ago.

The field has been idled for two years as PDVSA, once one of the top 10 oil companies in the world by crude output and a major exporter, has collapsed into a shell of its former self.

DEMANDING ACTIVITIES

Small tubes now jut out of holes drilled into pipelines that were built to carry La Concepcion’s crude to storage tanks and export facilities. The tubes bring the oil to rudimentary refineries in backyards of a nearby town, according to Danny, a PDVSA worker who asked to be identified by his first name.

PDVSA employees, earning just a few U.S. dollars per month, accept small bribes to turn a blind eye to the theft, Danny said. Security forces barely bother to guard the dormant facilities, a pattern replicated across Venezuela, where equipment theft from oil fields has become common during the country’s six-year economic collapse.

“It is obvious that people are stealing the oil, which is the only source of wealth we have,” Danny said.

PDVSA did not respond to a request for comment. A former company executive estimated that less than 1,000 bpd of crude is stolen, less than 1% of total output.

PDVSA has spent months trying to fix refineries that have fallen into disrepair due to a lack of funding for maintenance and to buy spare parts. The efforts and have been plagued by oil spills, gas leaks, and fires that have injured workers.

The company managed to restart gasoline output at its 310,000 bpd Cardon and 146,000 bpd El Palito refineries in June and July, respectively, but both have suffered multiple unplanned outages in the months since, resulting in intermittent fuel output.

“We cannot perform such demanding activities if we’re hungry,” said Freddy Camacho, an engineer who has worked on the effort to restart the Cardon refinery, and repairs refrigerators for extra cash.

Maduro blames sanctions for the gasoline shortages, but says Venezuela must boost fuel production.

THE SKINNY

Until this year, Venezuelans had no need to steal crude to make their own fuel.

Similar activities have long been common in Nigeria, where dozens of illegal refineries process crude stolen from pipelines. In other Latin American oil producers, such as Mexico and Brazil, it is common for criminal gangs to steal fuel from pipelines coming out of refineries, rather than take the raw material.

In Venezuela, abundant fuel had for decades been essentially free thanks to subsidies. But that situation was a distant memory by early August, when Jaime - a dairy farmer in Zulia - needed to send cheese to market in state capital Maracaibo, but could not find any gas to drive there.

A neighbor suggested he call a man named “El Flaco” - Spanish for “The Skinny Guy” - in the nearby town of La Concepcion. Jaime did not ask ‘El Flaco’ where the gasoline came from, but he was aware of the growing crude theft and makeshift refining taking place in Zulia.

“They get it out of oil wells here in La Concepcion. They boil it and pass it through copper tubes, and then sell you the liquid that drips out,” Jaime told Reuters on the condition his last name not be published.

Danny, as well as another PDVSA worker and several people whose relatives are engaged in the activity, described the process to Reuters.

At the field, thieves puncture pipelines, and, holding a blowtorch below the pipe, heat up the crude so it flows into smaller tubes they insert into the punctured hole.

Videos of the clandestine refineries have circulated on social media here. In one, a small fire is seen burning under two black canisters held in a rusted barrel, with a series of small tubes transporting clear liquid into buckets. A larger tube, buried underground, transports that liquid into white gas cans.

Jorge Leon, an engineer specializing in industrial security for the oil industry, said the fluid the makeshift refiners were extracting was chemically volatile and lacked the additives normally added to gasoline to ensure safety for car engines.

“Not only can it damage the engine, but it could cause explosions,” Leon said.

The artisanal gasoline Jaime bought from El Flaco did not turn out to be a viable solution.

“The truck drove fine for a couple days, but three days after, the engine started to sputter,” Jaime said. “Now it won’t turn on.”

Reporting by Mariela Nava in Maracaibo, Venezuela and Luc Cohen in New York; Additional reporting by Mircely Guanipa in Maracay, Venezuela; Editing by Simon Webb and Marguerita Choy

Thursday, November 19, 2020

Largest VLEC ever constructed delivered on time and built to ABS Class

The very large ethane carrier (VLEC) Ethane Topaz Photo: Ed Carr

http://www.tankeroperator.com/ViewNews.aspx?NewsID=11982 

First of 12 Vessels Ordered to Service Trade Between U.S. and China.

The first of an order of 12 Very Large Ethane Carriers (VLECs) now being built to ABS Class has been delivered to Zhejiang Satellite Petrochemical (STL) by Samsung Heavy Industries (SHI).

The Seri Everest, the largest VLEC ever built with more than 98,000 cbm capacity, is the first of a phase-one order by STL which was subsequently sold to MISC Berhad (MISC). A second phase of the order also includes six vessels, bringing the total to 12, scheduled for trade from the U.S. to China to support STL’s Ethane Cracker facility in Jiangsu province.

This is the first VLEC to be delivered with the LNG Cargo Ready notation that was released by ABS in 2019. The notation provides assurance to owners and charterers that the VLEC can be upgraded to trade LNG cargoes in the future.

“As part of the shale gas revolution, shipping of liquefied ethane is developing into a significant new market. At ABS we have supported this development from the early stages and are happy to see that this leadership role is being recognized in the current VLEC market,” said Christopher J. Wiernicki, ABS Chairman, President and CEO.

Mr. Yee Yang Chien, President and Group Chief Executive Officer of MISC, said: “We are proud to welcome Seri Everest, our first VLEC into MISC’s existing fleet. With this first delivery, our VLEC has set a new benchmark in the ethane market. Seri Everest has the capacity of transporting large scale ethane over long distance while ensuring the highest level of safety and reliability. We hope to continue to capitalize on this opportunity as we are confident that we will gain a strong foothold to cater to the increasing demand in this niche segment. We are also pleased that Seri Everest is delivered according to schedule amidst the disruption caused by the global COVID-19 pandemic.

“This successful delivery reflects the industry’s resilience in picking up its momentum with the commitment to safety by all parties. I would like to thank everyone who has contributed to this achievement.”

Hohyun Jeong, SHI Executive Vice President, Engineering Operations, said: “It has big implications to have the VLEC delivered successfully on time during the pandemic as well as the good performance with the newly introduced ABS notation ‘LNG Cargo Ready’ applied. The VLEC has been built with a cargo containment system for dual cargo loading and the cargo handling system can be converted for LNGC at any time, as needed. It has been all thanks to the close cooperation with ABS, STL and MISC working from anywhere, regardless of location, based on non-face-to-face technologies well-prepared in advance.”

ABS is the leader in provision of classification services to VLEC owners. ABS was the classification society of choice for the very first order of the six dedicated VLECs by Reliance Industries in 2014. The 87,000 cbm VLECs have been successfully trading and laid the foundation for the next generation of larger VLECs.

Wednesday, November 18, 2020

Oil prices poised for highest finish since early September on latest vaccine prospects

 

Johannes Eisele/Agence France-Presse/Getty Images

https://www.marketwatch.com/story/oil-surges-on-vaccine-prospects-after-pfizer-says-candidate-is-95-effective-11605704841

January Brent crude BRNF21, 2.08% BRN00, 2.08%, the global benchmark, added 72 cents, or 1.7%, to $44.47 a barrel on ICE Futures Europe.

Both WTI and Brent crude prices, based on the front-month contracts, were on track to mark their highest settlements since early September, FactSet data show.

The Energy Information Administration reported Wednesday that U.S. crude inventories rose by 800,000 barrels for the week ended Nov. 13.

That was bigger than the 100,000-barrel climb forecast by analysts polled by S&P Global Platts, but the American Petroleum Institute reported on Tuesday a much larger 4.2 million-barrel increase.

January Brent crude BRNF21, 2.08% BRN00, 2.08%, the global benchmark, added 72 cents, or 1.7%, to $44.47 a barrel on ICE Futures Europe.

Both WTI and Brent crude prices, based on the front-month contracts, were on track to mark their highest settlements since early September, FactSet data show.

The Energy Information Administration reported Wednesday that U.S. crude inventories rose by 800,000 barrels for the week ended Nov. 13.

That was bigger than the 100,000-barrel climb forecast by analysts polled by S&P Global Platts, but the American Petroleum Institute reported on Tuesday a much larger 4.2 million-barrel increase.

The EIA data also showed crude stocks at the Cushing, Okla., storage hub edged up by 1.2 million barrels for the week.

Gasoline supply, meanwhile, rose by 2.6 million barrels, but distillate stockpiles dropped by 5.2 million barrels. The S&P Global Platts survey had shown expectations for a supply climb of 300,000 barrels for gasoline and decline of 1.8 million barrels for distillates.

On Nymex Wednesday, December gasoline RBZ20, 1.92% rose 1.1% to $1.1657 a gallon and December heating oil HOZ20, 2.71% tacked on 2% to $1.2641 a gallon.

December natural gas NGZ20, 0.93% traded at $2.722 per million British thermal units, up 1.1%.

Traders also continue to weigh developments around the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+. A committee on Tuesday failed to announce a recommendation on output curbs for the OPEC Conference on Nov. 30 and OPEC and non-OPEC ministerial meeting on Dec. 1.

“The delay in guidance on production policy wasn’t a surprise” and there will be “more clarity” at the end of the month, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch.

OPEC+ is scheduled to ease up on curbs beginning Jan. 1, but speculation has grown for a delay on worries the continued rise in COVID-19 cases will allow a surge in supplies barring further restraint.

“OPEC is leaving all doors open to see how much demand does get hit in the weeks ahead,” said Zahir. “It is also worth noting Libya oil production continues to increase with no restrictions on them until they hit their previous production levels.”

For now, energy prices “will continue to see weakness as further [COVID-related] restrictions are implemented here in the U.S.,” he added.