Thursday, September 24, 2020

Venezuela’s broken oil industry is spewing crude into the Caribbean Sea

 This satellite image released by Maxar Technologies shows the FSO Nabarima oil tanker off the coast of Trinidad and Tobago, Sunday, Aug. 9, 2020. The oil tanker listing off a remote Venezuelan coastline is triggering international calls for action. Critics of President Nicolas Maduro and maritime experts say the FSO Nabarima is taking on water and could sink. (Maxar Technologies via AP)

This satellite image released by Maxar Technologies shows the FSO Nabarima oil tanker off the coast of Trinidad and Tobago, Sunday, Aug. 9, 2020. The oil tanker listing off a remote Venezuelan coastline is triggering international calls for action. Critics of President Nicolas Maduro and maritime experts say the FSO Nabarima is taking on water and could sink. (Maxar Technologies via AP)

https://www.washingtonpost.com/world/the_americas/venezuela-oil-spills/2020/09/23/5613c996-f793-11ea-a275-1a2c2d36e1f1_story.html 

September 24, 2020 at 6:00 a.m. EDT

CARACAS, Venezuela — The sun had risen over the Caribbean Sea when Frank González spotted "the stain" — an oil slick on the water that stretched for miles.

“The sea looked like butter, because of the thickness of the water,” said González, a fisherman who saw the spill this month while working off the coast of Venezuela’s Falcón state. “It was painful to see.”

Venezuela’s once powerful oil industry is literally falling apart, with years of mismanagement, corruption, falling prices and a U.S. embargo imposed last year bringing aging infrastructure to the brink of collapse. As the government scrambles to repair and restart its fuel-processing capacity, analysts are warning that ruptured pipelines, rusting tankers and rickety refineries are contributing to a mounting ecological disaster in this failing socialist state.

Oil workers say the gushing crude soiling the coast of Falcón state this month came from a cracked underwater pipeline linked to attempts to restart fuel production at the aging Cardón refinery. Not far from the oil slick, fisherman say, is a jetting geyser of natural gas from a second broken pipeline.

“The gas leak looks like a boiling pot about to explode,” González said.

The leaks are the latest in a spate of oil industry troubles that have alarmed environmentalists here. They include a recent oil spill that has jeopardized corals and rare marine life off sensitive Morrocoy National Park, and a rusting vessel in the Gulf of Paria that observers call a ticking ecological time bomb. Analysts see a growing risk of more and larger spills in a country that has already suffered years of damage from broken wells and abandoned oil fields.

“Our fear is that as they try to fix and restart these refineries and oil centers, we’re only going to see more of this,” said Cristina Burelli, international liaison for SOSOrinoco, a nonprofit focused on environmental damage in Venezuela. “More underground oil pipelines are blowing up. The whole system is corroded and falling apart.”

A rash of gold mining — much of it illegal — has contributed to a surge of pollutants in the Venezuelan interior, endangering the important ecosystem at Canaima National Park, a UNESCO World Heritage site. And illicit logging has jeopardized rainforest. But in this OPEC nation that sits on world’s largest proven oil reserves, the biggest driver of environmental damage is the crumbling energy sector.

Particularly in recent years, a lack of spare parts, a brain drain of technicians and widespread corruption have crippled oil production and fuel refineries, making environmental accidents more common. Between 2010 and 2016, the state oil giant PDVSA was responsible for more than 46,000 spills of crude and other pollutants, according to the Caracas-based human rights group Provea.

In the Connecticut-sized Lake Maracaibo, thousands of wells now stand broken and useless, with raw crude and natural gas bubbling visibly to the surface. In 2016, the last year data was available, state engineers estimated that tens of thousands of gallons of oil were seeping into the lake each month.

The U.S. embargo on Venezuelan oil has deepened the industry’s woes. The country lacks the capacity to process much of its sludgy product. When it sent crude to the United States, it got back refined gasoline. The end of that system has worsened severe fuel shortages. The need to store extra crude that Venezuela cannot sell under the embargo, as well as the government’s attempts to revamp and restart old refineries to increase domestic fuel production, appear to be driving the recent spills, analysts and oil workers say.

The country’s diplomatic isolation has exacerbated the problem. The United States and more than 50 other countries consider President Nicolás Maduro a usurper; they recognize National Assembly President Juan Guaidó as the country’s rightful leader.

Unlike Mauritius, which recently called for international aid after a Japanese tanker spilled more than 1,000 tons of oil off its pristine coast, the Venezuelan government has few friends to turn to — and so has largely downplayed the spills.

“It breaks my heart,” said Julia Alvarez, a marine biologist here. “This is an ecological crime.”

Analysts began monitoring the first of the recent spills in August.

Eduardo Klein, director of the Remote Sensors Laboratory in the department of environmental studies at Simón Bolívar University, used satellite images to document a massive oil slick washing up on the beaches of Morrocoy National Park, a sensitive ecosystem of corals, sponges and sea turtles on the Caribbean coast. The images, he said, suggested the spill originated at refinery in Carabobo state.

“It can be seen without a doubt that there is a very large stain in front of El Palito refinery,” he said. “There is no way this stain had any other origin.”

Klein estimated the spill at 26,000 barrels of oil over 135 square miles, the largest in the area in at least 20 years.

According to local news reports, El Palito refinery suffered a failure at the end of July, when workers tried to reactivate it in an effort to refine fuel. Ivan Feites, an oil union board member, said the facility’s compressor pumps, turbines and pipes remain severely damaged.

“That’s what causes spills every time they try to restart the refinery,” Feites said. “The refinery doesn’t work and can’t produce fuel. It’s like a piece of cardboard that easily breaks.”

The Venezuelan government did not respond to a request for comment.

On the other side of the country, analysts and oil workers are growing increasingly concerned about the FSO Nabarima, a rusting vessel laden with 1.3 million barrels of crude that is taking on water in the Gulf of Paria. They fear the floating storage and offloading unit is at risk of sinking and creating a major environmental disaster in the Caribbean Sea.

Eudis Girot, head of the anti-government Unitary Federation of Petroleum Workers of Venezuela, posted photos on social media showing what he described as the ship’s already flooded engine room. In a video posted to social media, he begged Maduro to intervene.

“Take a helicopter,” he said. “Go out there. Do your own inspection.”

PDVSA confirmed the most recent oil spill, near its Cardón refinery. The oil giant said this month that the leak occurred in an underwater pipeline and cleanup was underway.

 

The Venezuelan government did not respond to a request for comment.

On the other side of the country, analysts and oil workers are growing increasingly concerned about the FSO Nabarima, a rusting vessel laden with 1.3 million barrels of crude that is taking on water in the Gulf of Paria. They fear the floating storage and offloading unit is at risk of sinking and creating a major environmental disaster in the Caribbean Sea.

Eudis Girot, head of the anti-government Unitary Federation of Petroleum Workers of Venezuela, posted photos on social media showing what he described as the ship’s already flooded engine room. In a video posted to social media, he begged Maduro to intervene.

“Take a helicopter,” he said. “Go out there. Do your own inspection.”

PDVSA confirmed the most recent oil spill, near its Cardón refinery. The oil giant said this month that the leak occurred in an underwater pipeline and cleanup was underway.

González, who grew up fishing with his uncle on the coast of Falcón, said he and other fisherman worry the spill will ruin their livelihoods. Environmentalists, meanwhile, say it could affect populations of dolphins, crocodiles, seabirds and green turtles.

“We have never seen a spill like this,” said González. “For years, no one has come to do maintenance on the refineries. Now it turns out that they are polluting everything with oil, and nobody seems to care.”

Faiola reported from Miami.

Wednesday, September 23, 2020

Oil Prices Rise After EIA Reports Crude Inventory Draw

https://oilprice.com/Energy/Crude-Oil/Oil-Prices-Rise-After-EIA-Reports-Crude-Inventory-Draw.html 

Crude oil prices reversed their decline today after the Energy Information Administration reported an oil inventory draw of 1.6 million barrels for the week to September 18. This compares with a draw of 4.4 million barrels for the previous week.

The report came a day after the American Petroleum Institute propped prices up temporarily by estimating a sizeable decline in gasoline stocks, coupled with a modest build in crude oil stocks. Analysts, on the other hand, had expected the EIA this week to report an inventory draw of 2.325 million barrels.

In gasoline, the EIA estimated an inventory draw of 4 million barrels for the week to September 18, compared with a decline of 400,000 barrels for the previous week. This also helped prices up.

Gasoline production averaged 9.3 million bpd last week, up on a week earlier, when gasoline output averaged just 8.8 million bpd.

In distillate fuels, which are giving refiners a headache as demand for them remains a lot more subdued than demand for gasoline, the EIA reported a draw in stocks of 3.4 million barrels. This compares to a build of 3.5 million barrels estimated for the previous week amid still severely limited air travel.

Distillate fuel production last week averaged 4.5 million bpd, compared with 4.4 million bpd a week earlier.

Oil prices were still down at the time of writing, with Brent crude trading at $41.69 a barrel and West Texas Intermediate trading at $39.70 a barrel. The decline is hardly a surprise: it came amid deepening worry about the future state of oil demand as economic reports from different parts of the world suggested that any recovery would be slow. It also came soon after the news broke that Libya was reopening some of its oil export terminals and boosting production.

OilX reported that plans were to raise production to 260,000 bpd, from currently below 100,000 bpd. In a precarious price environment, this production boost was bound to pressure prices despite OPEC+’s stated success with production cuts.

By Irina Slav for Oilprice.com

Tuesday, September 22, 2020

OPEC Turns 60

 3 times the number "60" High-Quality adhesive, Black, Waterproof, 10 CM High, High-Performance film with no background, numbers, number, Wheelie Bin Rubbish bins, Uahlenaufkleber, House Number, Letter Box Sticker

https://www.petroleumafrica.com/opec-turns-60/

The Fourteenth of September 2020 is a very special day for OPEC. This sees the Organization celebrate its 60th anniversary.

Few would have foreseen six decades ago that the Organization would have risen to the heights it has today in the global energy arena. Back then in Baghdad, the five Founding Fathers of OPEC, Juan Pablo Pérez Alfonzo of Venezuela; Abdullah al-Tariki of Saudi Arabia; Dr Tala’at al-Shaibani of Iraq; Dr Fuad Rouhani of Iran; and Ahmed Sayed Omar of Kuwait gathered together in the Al-Shaab Hall in Baghdad, to midwife OPEC into the world.

In the context of that time, when the oil industry was dominated by the major oil companies, which was reflected in its structure and behaviour, it was a heroic and pioneering act by the Founder Members to come together in the Iraqi capital.

The seminal ‘Baghdad Conference’, saw these five visionaries from the Founder Member Countries gather together around the premise of cooperation and with the need to write their own story. Pérez Alfonzo said after the meeting: “We are now united. We are making history.”  It would prove to be a profound statement.

In the 1960s, OPEC established itself with courage, persistence and diligence, through the development of its Statute that remains in place today, registering at the United Nations (UN) Secretariat on 6 November 1962, under UN Resolution No 6363, initiating a number of landmark decisions, such as the ‘Declaratory Statement of Petroleum Policy in Member Countries’ in 1968 and expanding its Membership.

Sixty years on, the Organization that is today 13 Member Countries is now an integral part of the international energy community and the multilateral system. It is widely consulted on oil industry affairs, remains firmly committed to secure and steady supplies and fair returns to investors, Member Countries run their own domestic oil sectors across the entire value chain, and the Organization has expanded its activities to champion issues affecting mankind as a whole.

In reflecting on this, Mohammad Sanusi Barkindo, OPEC Secretary General said: “I often think back to that day in 1960, the mood in Baghdad, how those visionaries envisaged the future of OPEC and the oil industry. What is clear is that what was set in motion has stood the test of time; OPEC still has the same core objectives, of order and stability in global oil markets, but its role has also broadened considerably, in terms of deeper cooperation with other producers, dialogue with a host of industry stakeholders, and an embrace of human concerns such as sustainable development, the environment and energy poverty eradication.”

The 60th anniversary is a time to reflect and appreciate the efforts of all those who have worked so hard throughout our history to make OPEC the resounding success it has become. This includes generations of Heads of State and Government, Ministers, Governors and other high-level experts from outside the Secretariat and, from within the Secretariat, Secretary Generals, Management and Staff of every relevant discipline.  They have all enriched the Organization, through commitment, perseverance and sacrifice, to cope with the many ups and downs experienced by OPEC and its Member Countries.

It is also an opportunity to, once again, extend the Organization’s gratitude to Austria and the City of Vienna, which have been warm and generous hosts to the Secretariat since OPEC moved to this grand, historic city 55 years ago.

To further celebrate the 60th anniversary, Iraq, the city of Baghdad and the Al-Shaab Hall plan to hold events, including music and cultural activities, albeit this is dependent on the COVID-19 pandemic. More details will be provided once available.

Looking ahead, the Organization stands ready to meet the many challenges we shall face as we enter the next 60 years of our history. We remain focused on a balanced and stable oil market, in the interests of both producers and consumers, as most recently exhibited through the Declaration of Cooperation and the historic production adjustments of 2020; further elevating dialogue and cooperation through the Charter of Cooperation; and providing options and solutions to some of the major challenges facing humankind, such as sustainable development and energy poverty alleviation.

Monday, September 21, 2020

Demand to Store a Glut of Diesel at Sea Is Rising Fast

vlcc-ship.jpg

Big oil traders are rushing to book tankers with a view to storing a glut of refined petroleum like diesel and jet fuel on the world’s oceans. The interest in floating storage of fuels, one of the clearest signs of oversupply, will be viewed with concern by many of the world’s oil refiners — especially those in Europe — who are dealing with the worst market in years for the two products because of the negative effect the coronavirus has had on demand.

Torm A/S, the world’s fifth largest owner of oil-products tankers, says inquiries for storage are increasing, while firms analyzing tanker movements say the amount of fuel being held at sea is rising. Glencore Plc, Vitol Group and Mabanaft Group booked tankers to store fuels. Trafigura Group hired about 12 supertankers with a view to possible storage last week. Most were for crude but some were for fuels.

“European demand is being weighed on by the threat of a second wave of Covid-19 across the continent,” said Jay Maroo, senior market analyst at Vortexa Ltd. “Interest for diesel floating storage looks set to rise.”

Covid Resurgence

The bookings come amid a resurgence in the number of new coronavirus cases which the International Energy Agency and OPEC expect will hit oil demand, serving as a reminder of chronic oversupply that led to traders storing millions of barrels of excess crude and fuels on tankers earlier in the year.

Torm says that interest in floating storage has centered on holding diesel in northwest Europe, and has the potential to tie up ships and support freight rates for vessels that would otherwise be competing to transport cargoes.

Likewise, tanker tracking data suggest some of the storage may well take place in northwest Europe. At least three U.S. diesel cargoes have been transferred to tankers floating in the North Sea this month instead of discharging into shore tanks.

Stockpiles of diesel-type fuel in land-based independent storage in Europe’s Amsterdam-Rotterdam-Antwerp trading hub have risen sharply in recent weeks to the highest in 13 months, according to Insights Global data. At the same time, inventories of distillate fuels including diesel in the U.S. Gulf are seasonally at their highest level since at least 1991, according to the Energy Information Administration.

Doing the Contango

Globally, the amount of diesel-type fuel held in floating storage jumped by about 10% in the first two weeks of this month, according to Vortexa. Jet fuel saw a similar increase, reaching 12.5 million barrels, the majority of which was being held off Europe’s coast.

Floating storage happens when the spot price of oil gets so depressed relative to later months that traders can buy cargoes, put them on ships, and sell them later at a profit — even after paying millions of dollars for vessel hire. That oil-market structure is called contango. For crude, contango-based floating storage often means hiring the industry’s biggest supertankers because they are typically cheapest on a per-barrel basis. For diesel — unless newly built carriers can be found — smaller tankers are more common.

The contango for diesel is deeper than it is for crude, according to ICE Futures Europe data compiled by Bloomberg. That means the incentive to store is likely greater. However, traders’ profits from doing so would probably be diminished by the relatively higher cost of booking smaller ships.

Even so, that’s not deterring some traders, adding to signs that the oil market continues to have a problem with diesel. The crack spread, the fuel’s premium to Brent, hit the lowest in at least nine years on Wednesday, according to ICE Futures data compiled by Bloomberg.

“Europe is still dealing with an oversupply of diesel,” Maroo of Vortexa said. “Tankers are still carrying product offshore, and the forward curve supports storage.”

https://tankterminals.com/news/demand-to-store-a-glut-of-diesel-at-sea-is-rising-fast/?utm_medium=email&utm_campaign=Newsletter%20Other%20-%20Week%2039&utm_content=Newsletter%20Other%20-%20Week%2039+CID_c586e5f39752a4c5ff575c6de84372ab&utm_source=weekly&utm_term=Read%20more

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.