First LNG-Fueled Vessel to Bunker at Rotterdam in w/c Aug 8

The Port of Rotterdam is to carry out its first LNG bunkering operation next week, according to a statement from the company on August 3. The vessel to be fueled will be the Ternsund, a dual-fuel product tanker belonging to Swedish shipping line Terntank.

The vessel is currently on its maiden voyage, and is expected to deliver a shipment of naphtha at Vopak Botlek in Rotterdam the weekend of August 6. After the delivery, the ship is expected to dock at the Willem Alexander Terminal where it will be bunkered via truck using LNG from the Gate terminal.

The procedure is expected to last approximately three days, as the vessel is currently running on marine gas oil and the on-board fuel tanks need to be cooled before they can be loaded.

The Port of Rotterdam is working towards establishing itself as a major LNG bunkering hub, and is currently offering 10% discount on port tariffs to vessels that bunker LNG to encourage utilization of the service.

Plans are also currently underway to open an LNG breakbulk terminal at Yukonhaven by the end of 2016. And from 2017 a dedicated LNG bunkering vessel should be operational -- both of which are expected make bunkering at the port more streamlined.

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U.S. Crude Inventories Rise Unexpectedly as Distillate Stocks Grow

U.S. crude stocks rose unexpectedly for a second week last week as distillate inventories jumped, while gasoline stocks sank more than expected, the U.S. Energy Department said Wednesday.

Crude inventories rose by 1.4 million barrels in the last week, compared with analysts' expectations for a decrease of 1.4 million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.12 million barrels, said the Energy Information Administration, the department's statistical arm.

"You should be seeing draws across the board at this time of year," said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in New York. "With spot prices getting under $40 yesterday, we are not surprised to see spot prices rebounding on the gasoline draw."

WTI crude futures for September delivery rose 36 cents to $39.87 a barrel, at 11:06 a.m., a 0.9 percent gain. Brent crude futures for October delivery rose 31 cents to $42.11 a barrel, a 0.7 percent gain.

Refinery crude runs rose by 266,000 barrels per day, EIA data showed. Refinery utilization rates rose by 0.9 percentage point.

Gasoline stocks fell by 3.3 million barrels, compared with analysts' expectations in a Reuters poll for a 200,000-barrel drop.

"The 3.3 million barrel draw to gasoline stocks is likely a welcomed surprise for refiners," said Troy Vincent, analyst at New York-based oil cargo tracker and energy data provider ClipperData. "But an unexpected, greater-than-1-million barrel build to crude stocks despite refinery utilization ticking higher by 0.9 percent should be cause for concern."

Distillate stockpiles, which include diesel and heating oil, rose by 1.2 million barrels, versus expectations for a 500,000-barrel drop, the EIA data showed.

U.S. crude imports rose last week by 301,000 barrels per day.

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Suez Canal cuts VLCC tolls

http://www.tankeroperator.com/ViewNews.aspx?NewsID=7850

The Suez Canal Authority has reduced transit tolls for VLCCs sailing in ballast from America and heading for the Arabian Gulf, according to GAC Egypt.

 

According to a circular released by the Suez Canal Authority, the vessels originating from the Gulf of Mexico, the Caribbean and the North Coast of South America would receive a 45% reduction from the applicable Suez Canal transit tolls, excluding other services dues.

In order to receive the reduction, a company will have to submit a request before the transit through its agency, subject to forwarding a certificate from the port of origin and a certificate from the port of arrival after transit.

Furthermore, in case of a vessel calling between the port of origin and the destination, a certificate stating the reason for the call is to be submitted, as well as an undertaking from the shipping agency confirming the payment of the whole transit dues without any rebates in case of changing port of origin or port of arrival.

The documents should be submitted a maximum of 60 days from the date of transit, GAC Egypt added.

According to the Suez Canal, the circular came into effect on 24^th July for an experimental period.

Tankers: Asia VLCC freight plummets to 7-year low on vessel oversupply

http://www.platts.com/latest-news/shipping/singapore/tankers-asia-vlcc-freight-plummets-to-7-year-27636816

Benchmark Asian VLCC freight rates from the Middle East sank to a seven-year low Thursday, with a build-up of available tonnage following a flurry of newbuild deliveries pushing down on rates, according to market sources.

Platts assessed Thursday the key PG-Japan rate down 4.5 points to Worldscale 35.75, basis 265,000 mt, equivalent to $6.95/mt.

The rate was last below this on May 15, 2009, when the PG-Japan rate was $6.76/mt, basis 250,000 mt.

In 2009, the year's low for VLCCs on the PG-Japan route was $6.26/mt basis 250,000 mt, seen on May 13, according to Platts data.

This week, three VLCC fixtures were put on subjects at w35 for a PG-South Korea voyage.

Among the deals heard, SK Energy placed the Newton -- a modern well-approved VLCC -- on subjects for a PG-South Korea voyage loading August 14-16 at w35, basis 270,000 mt.

"There is more competition for a voyage like PG-Singapore than PG-Far East as owners would prefer to take lower earnings per day on shorter voyages," said a Singapore-based VLCC owner.

Market sources said the premium for shorter voyages had diminished, as owners were keen to take shorter voyages in a weak market, hoping the market dynamic would change after the vessel completes its voyage.

Meanwhile, owners of well-approved modern vessels had been resisting giving into rates below the psychological barrier of w40, but there was stiff competition from the number of handicapped vessels in the market.

Handicapped vessels -- defined in the market as those built more than 15 ago or lacking approvals -- accept discounted rates.

"If VLCC rates go too low then owners would employ ultra-slow steaming or just wait -- waiting is cheap at these bunker levels, about a loss of w0.4 per day," said a VLCC shipowner. According to industry estimates, there will be about six newbuild VLCCs per month coming for the rest of the year, and in total for 2016 there are 60 such deliveries slated.

The smaller Suezmax segment, a sometime competitor to VLCCs for cargoes, is expected to see a total of 40 newbuild deliveries this year.

Newbuild vessels lack full approvals and typically discount on their first voyage, sources said.

The heavy addition to tonnage coupled with a lack of vessel scrapping saw fleet growth outpace demand, and sources said that demand for VLCCs had been robust.

According to industry estimates, 132 VLCC fixtures were counted for June and 137 for July, compared to April and May which both saw 128 cargoes.

"Charterers are taking advantage of the low rates and rushing through their program as quickly as stem dates are available. About 65 stems in August are covered," said a broker.

VLCC owners' earnings on Persian Gulf to North Asia routes are less than $20,000/day, according industry estimates.

A broker said that for a Ras Tanura-Ulsan voyage at w36.5, basis 270,000 mt, the time-charter equivalent earnings would be $18,300/day.

--Wanda Wang, wanda.wang@spglobal.com
--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com

New Products, LPG Terminal Project in Heart of Mexico Faces Slight Delay

Howard Energy Partners' new products terminal at San Jose Iturbide in the heart of Mexico is expected to be ready to receive first products in September, about two months later than previously expected, some industry sources in Mexico told OPIS on Tuesday.

The slight delay is attributed to slower-than-expected construction of storage tanks at the new terminal. The project was initially expected to come onstream as early as May.

Delay in project timing may not be uncommon in Mexico, which is seeing several new products terminals being built. At least one terminal is being built at San Luis Potosi. Apart from San Jose Iturbide, some other new terminals projects are also facing similar delays.

Sources said that new rail and terminal projects, for both oil products and LPG, in the heart of Mexico make "a lot of economic sense" due to the arbitrage economics and supply requirements in that area.

Since the Mexican oil market was open to unrestricted imports earlier this year, incremental products flow from the U.S. and other supply sources into Mexico have been limited by logistics constraints. Several Mexican government officials had highlighted the stronger need for energy infrastructure in Mexico than extra oil products imports from private companies.

Meanwhile, OPIS reported earlier this year that the first product to be shipped to Howard Energy Partners' new products terminal at San Jose Iturbide from Texas via rail was expected to be propane. It is noted that the San Jose Iturbide terminal was initially expected to receive diesel as its first product.

Shipping economics for propane and gasoline via rail on unit trains from Port Arthur to the heart of Mexico are expected to be favorable due to the long distance and economies of scale, but propane profit margin was significantly higher than gasoline. This terminal is expected to accommodate both oil products and LPG.

However, Mexico's Pemex slashed its LPG prices by more than 25%, taking the market by surprise. This reduced the private companies' profit margin for delivering LPG into Mexico.

The Mexican LPG market has been open to all imports since Jan. 1. Pemex is seen stepping up to compete aggressively against private companies to defend its domestic market share by slashing prices.

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First-Ever LNG Vessel Transits the Expanded Panama Canal

The Panama Canal marked another milestone with the transit of the first-ever liquefied natural gas (LNG) carrier through its expanded locks, the Panama Canal Authority said in a press release.

Shell-chartered Maran Gas Apollonia-measuring 289 meters in length and 45 meters in beam-arrived Monday from the Sabine Pass LNG Terminal on the U.S. Gulf Coast, signaling the arrival of the highly-anticipated segment to the waterway.

The Expanded Canal can accommodate 90 percent of the world's LNG tankers, which will have a major impact on global LNG flows and offer numerous benefits to shippers.

For example, with the United States poised to become one of the world's top LNG exporters in the next five years, the Canal will allow vessels departing the U.S. East and Gulf Coast for Asia to enjoy significant reductions in voyage times (up to 22.8 days roundtrip), making U.S. gas deliveries to major Asian importers very competitive. Vessels departing the U.S. Gulf Coast for the West Coast of South America will similarly experience generous time savings.

In addition, LNG ships from the production plants in Trinidad and Tobago could head to Chile where LNG is regasified and distributed for energy-producing purposes. For this route, the Expanded Canal provides savings of 6.3 days in transit time compared to the Magellan Strait.

Providing further advantage, the Canal instituted a new tolls structure to offer substantial cost savings to LNG vessels conducting roundtrip voyages. The new tolls reduce ballast fees for LNG customers who use the same vessel for a roundtrip voyage as opposed to using an alternate route, so long as the transit in ballast is made within 60 days after the laden transit was completed.

In addition to today's LNG transit, the Expanded Panama Canal has welcomed 53 vessels since its June 26 Inauguration, including 22 liquefied petroleum (LPG) vessels, 28 containerships and two vehicle carriers. And the number of reservations that the Canal has received thus far from various types of Neopanamax vessels is more than 229, and growing by the week. This increasing demand is further evidence of the maritime industry's continued trust in the Expanded Canal and the impact it will have on the future of global maritime trade.

The Green Connection Award has been awarded to Maran Gas Apollonia, Shell International Trading & Shipping Company in acknowledgment to their commitment to emissions reductions by using the Panama Canal route and in accordance with its contribution to the protection and conservation of the environment. By transiting the Panama Canal Green Route, Shell-chartered Maran Gas Apollonia contributes to the environment by using a shorter route, reducing CO2 emissions from the shipping industry.

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Mexico’s Pemex logs 15th straight quarterly loss

 

http://www.ft.com/fastft/2016/07/28/mexicos-pemex-logs-15th-straight-quarterly-loss/

Mexico’s state oil company Pemex posted a $4.4bn loss in the second quarter as crude production continued to slip and global oil prices stayed low. It’s the 15th straight quarterly net loss for Mexico’s largest company.

Pemex’s revenues fell 17.2% from the second quarter of 2015 on a combination of lower gasoline prices in Mexico and lower exports revenues. Crude production fell 2.2% on the year to 2.18m barrels per day, writes James Fredrick.

However, Pemex’s overheads are moving in the right direction and its cost-cutting strategies are finally bearing fruit: operational expenditures fell 54.4% year-on-year. Pemex’s mammoth tax burden also fell year-on-year by 37.5%, thanks in part to an adjustment by the federal government which allows Pemex to pay lower taxes when oil prices are lower.

Pemex’s debt increased in the quarter by 21.8% after new issuances and sustained peso weakness compared to the dollar. Total debt is now $96.2bn.

Still, company executives are optimistic about the future despite the beating they’ve taken since energy reform was passed in 2014.

“Pemex is actively exploring new options provided by energy reform,” said Juan Pablo Newman, the company’s CFO.

At the top of that list is the announcement on July 27 of the farm-out of a stake in the deepwater Trion block. Pemex will be farming-out a 55% stake in the undeveloped deepwater field which holds 485m barrels of 3P reserves. Mexico’s energy ministry expects $11bn is needed to develop the field.

Winners of the auction, which is expected to draw the world’s top international oil companies, will be announced in December.