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PdV suspends PetroPiar blending, storage replete

  • Market: Crude oil
  • 16/09/19

Venezuela's national oil company PdV has suspended crude blending at its 210,000 b/d PetroPiar joint venture with Chevron because of storage constraints, according to multiple Venezuelan oil industry officials.

PetroPiar, one of four Orinoco upgraders built in the late 1990s to produce sweet synthetic crude mainly for the US market, had been producing around 130,000 b/d of 16ºAPI Merey since 27 July and was expected to reach 170,000 b/d around the end of August. But production was averaging less than 100,000 b/d in early September before the shutdown, an oil union official at PetroPiar said.

The plant had been blending Orinoco extra-heavy crude with light domestic grades Mesa and Santa Barbara to produce the Merey grade traditionally favored by Indian and Chinese refiners.

The suspension is tied to an export backlog and a lack of operational storage capacity. PdV has been struggling to market its heavy sour crude, offering cargoes at steep discounts, in the face of US sanctions that have alienated many buyers, with the notable exception of Russia's state-controlled Rosneft. Even the Chinese have temporarily paused liftings in an apparent commercial tactic related to Beijing's wider trade dispute with the US.

PetroPiar's shutdown comes ahead of the 27 October expiry of a US sanctions waiver that has allowed Chevron to continue operating in Venezuela in spite of the US oil restrictions that were imposed in late January.

It is unclear if the US major, which is one of PdV's last active foreign partners, will be allowed to carry on or will be forced to pull out along with a handful of oil services companies. The 14 September attacks in Saudi Arabia that have driven up oil prices today could strengthen a moderate approach that would keep Chevron on the ground for now.

PetroPiar had been the only one of the four upgraders in operation at the Jose terminal. PdV's 140,000 b/d PetroMonagas joint venture with Rosneft and the 200,000 b/d PetroCedeno project with European partners Total and Equinor have been in recirculation mode for months as PdV retrofits key units at both facilities to prepare them for blending instead of upgrading. They had been scheduled to start producing Merey in August.

PdV's wholly owned 102,000 b/d Petro San Felix upgrading plant has been mothballed since late 2017 and its core infrastructure is deteriorated for lack of maintenance, another oil union official at the Jose complex tells Argus.

After the sanctions cut off the US market, PdV decided to convert the upgraders into blending units in order to better align production with the Chinese and Indian markets.

But PdV's exports to China and India have slowed since the US escalated its Venezuela sanctions on 5 August, prompting buyers in both countries to downgrade their oil relations with Venezuela to minimize the potential risks implicit in the expanded sanctions, the Venezuelan officials said.

China's state-owned CNPC suspended planned cargo loadings at Venezuelan terminals in August and September, and shipments to India have declined both months. But CNPC remains a stalwart PdV partner at the PetroSinovensa crude blending plant, which is now the sole operating oil-processing plant at Jose.

Although Rosneft, which owns the Nayara refining system in India, has picked up part of the export slack, it has not absorbed all of the supply that had been going to China.

Part of PdV's shipments to Rosneft and CNPC are booked as payment on oil-backed loans from Moscow and Beijing.

The lower Merey shipments to China and India have backed up blend production in Venezuela where PdV's onshore and floating storage is filled to capacity.

"We're running out of storage capacity and have to cut output as a result," said an oil union official who works at PetroPiar.


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11/10/24

Feds probing fatal Pemex Deer Park accident

Feds probing fatal Pemex Deer Park accident

Houston, 11 October (Argus) — The US Chemical Safety and Hazard Investigation Board (CSB) and Occupational Safety and Health Administration (OSHA) are both launching independent investigations into this week's fatal accident at Pemex's 312,500 b/d Deer Park, Texas, refinery. A hydrogen sulfide (H2S) release that killed two workers and injured dozens more occurred on Thursday evening at the plant located near Houston. It also led to shelter-in-place orders for surrounding communities, which have since been lifted. The CSB will investigate the causes of the fatal release, the agency said Friday. The CSB is responsible for investigating industrial accidents in the US, such as the deadly 2022 explosion at BP's Toledo refinery in Ohio and a probe into operations at Marathon's Martinez renewable diesel plant after several fires earlier this year . A representative for CSB was not immediately available for comment. OSHA — charged with enforcing compliance with federal workplace safety laws — is also investigating the incident, and has "up to six months" to complete the investigation, according to an OSHA representative. OSHA would not stop company operations during the duration of the investigation, but "could not speak for other agencies at the site," an OSHA official told Argus. The Harris County Sheriff's department has also opened an investigation into the incident. The release occurred as workers began planned maintenance on a unit. An H2S leak was detected, resulting in several units being shut down as staff sought to secure the leak. The Deer Park refinery had previously been damaged in a February 2023 fire, resulting in two weeks of repairs. A slew of accidents at Deer Park and several other Mexican state-owned Pemex's refineries in part led Fitch Ratings to downgrade Pemex's credit rating in July 2023 . By Gordon Pollock Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Opec+ cuts hit 4mn b/d


11/10/24
News
11/10/24

Opec+ cuts hit 4mn b/d

London, 11 October (Argus) — Opec+ has reduced its crude production by 4mn b/d since it started cutting output almost two years ago, Argus' latest output survey shows. Crude output by members subject to cuts fell by 220,000 b/d in September to 33.52mn b/d, driven by reductions in Iraq and Nigeria (see table). This compares with 37.52mn b/d in October 2022, when the alliance announced what would prove to be the in a series of production cuts. September output was not only the lowest since April 2021, but also 330,000 b/d below the group's collective production target. But even with the removal of such a vast amount of crude from the market, oil prices remain $11-15/bl below where they were when Opec+ announced its October 2022 cut. This is partly because production from non-Opec members such as the US, Guyana and Brazil has surged. The US alone has boosted production by 830,000 b/d over the past two years. The lower prices are also partly down to lower-than-expected oil demand, particularly in China. The IEA has made and sees global oil demand growing by under 1mn b/d this year and next, well below the 2.1mn b/d increase seen in 2023. Despite the gloomy demand picture, eight Opec+ members are scheduled to start unwinding 2.2mn b/d of production cuts from December — two months later than initially planned. This is not a foregone conclusion — the group has said this could change depending on market conditions — but a decision to push ahead would only widen an expected supply surplus next year. The eight members are expected to decide on whether to start returning production in early November. Opec+ will be keenly watching how the conflict between Israel and Iran plays out over the coming days and weeks. Rising tensions propelled Atlantic basin benchmark North Sea Dated above $81/bl on 7 October. There are fears that Israel could strike Iran's oil infrastructure in retaliation for . This would put Iranian production — which rose to 3.37mn b/d in September — at risk. Any attack on Iran's oil sector could conceivably see Tehran disrupt regional oil flows through the strait of Hormuz , through which more than 15mn b/d of crude and products are exported. Compensation questions Another factor that could influence Opec+ policy in the coming weeks is the extent to which serial overproducers Iraq, Kazakhstan and Russia can show they are for exceeding their targets. In an effort to start complying with its commitments, Iraq reduced its production by 130,000 b/d in September, Argus estimates. But this was still 70,000 b/d above its Opec+ target of 4mn b/d, and 170,000 b/d above its effective target in September under its compensation plan. Kazakhstan's output rose by 40,000 b/d to 1.48mn b/d in September, 10,000 b/d above its Opec+ quota and 40,000 b/d above the effective target in its compensation plan. All eyes are now on the country's October output, when it is due to deliver the largest chunk of its compensation commitment, which has been designed to coincide with maintenance at its Kashagan field . Russia's production edged down by 10,000 b/d to 8.97mn b/d, in line with its target. Libya's output fell by a hefty 370,000 b/d to 550,000 b/d in September as an oil blockade declared in late August took its toll. But with the blockade lifted in early October, production has already returned close to the country's normal level of about 1.2mn b/d. Venezuela's production rose by 20,000 b/d to 900,000 b/d — the highest since February 2019. Both Venezuela and Libya are exempt from production targets. Opec+ crude production mn b/d Sep Aug* Target† ± target Opec 9 21.18 21.45 21.23 -0.05 Non-Opec 9 12.34 12.29 12.62 -0.28 Total 33.52 33.74 33.85 -0.33 *revised †includes additional cuts where applicable Opec wellhead production mn b/d Sep Aug* Target† ± target Saudi Arabia 8.92 8.96 8.98 -0.06 Iraq 4.07 4.20 4.00 +0.07 Kuwait 2.46 2.40 2.41 +0.05 UAE 2.95 2.98 2.91 +0.04 Algeria 0.91 0.91 0.91 0.00 Nigeria 1.36 1.45 1.50 -0.14 Congo (Brazzaville) 0.24 0.26 0.28 -0.04 Gabon 0.21 0.23 0.17 +0.04 Equatorial Guinea 0.06 0.06 0.07 -0.01 Opec 9 21.18 21.45 21.23 -0.05 Iran 3.37 3.33 na na Libya 0.55 0.92 na na Venezuela 0.90 0.88 na na Total Opec 12^ 26.00 26.58 na na *revised †includes additional cuts where applicable ^Iran, Libya and Venezuela are exempt from production targets Non-Opec crude production mn b/d Sep Aug* Target† ± target Russia 8.97 8.98 8.98 -0.01 Oman 0.76 0.76 0.76 +0.00 Azerbaijan 0.49 0.48 0.55 -0.06 Kazakhstan 1.48 1.44 1.47 +0.01 Malaysia 0.32 0.31 0.40 -0.08 Bahrain 0.16 0.15 0.20 -0.04 Brunei 0.09 0.09 0.08 0.01 Sudan 0.02 0.02 0.06 -0.04 South Sudan 0.05 0.06 0.12 -0.07 Total non-Opec 12.34 12.29 12.62 -0.28 *revised †includes additional cuts where applicable Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Pemex Deer Park refinery H2S leak kills 2: Update


11/10/24
News
11/10/24

Pemex Deer Park refinery H2S leak kills 2: Update

Adds comment from Mexican energy minister, context from regulatory filings. Houston, 11 October (Argus) — A hydrogen sulfide (H2S) leak at Pemex's 312,500 b/d Deer Park, Texas, refinery on 10 October killed two workers and injured 35 more. The leak occurred accidentally during maintenance, according to a regulatory filing submitted by Pemex this morning. Several units, including an amine unit, an alkylation unit, a hydrocracker and a sulphur recovery unit were promptly shut and flaring was initiated so the leak could secured. Mexican energy minister Luz Elena Gonzalez said in a press conference in Mexico City Friday morning that the refinery was expected to restart operations later today. Deadly accidents at US refineries usually require extensive regulatory investigations by federal agencies, however, which require facilities or certain units at a plant to remain shut down. H2S is an extremely hazardous gas commonly produced as a byproduct of refining, which can be processed into pure sulphur in a sulphur recovery unit (SRU) or removed by hydrotreating. Shell's Deer Park petrochemical facility, located adjacent to Pemex's refinery, said it was doing a "controlled slowdown" of its operations as of 8:52pm yesterday in response to the accident as a precaution. A flaring event was initially reported by a Deer Park Office of Emergency Management (OEM) social media account at 6:23pm ET on 10 October. A shelter in place advisory was issued for all Deer Park residents in a follow-up notice and Texas State Highway 225 running adjacent to the refinery was also closed to traffic. Areas of nearby Pasadena were also placed under a shelter in place advisory. The Deer Park shelter in place was lifted at 10pm ET. The Pemex refinery had previously reported an aromatic concentration unit (ACU) leak on 6 October. Amine units strip H2S from methane gas generated by hydrotreaters. Alkylation units produce high-octane blendstocks used in gasoline. Hydrocrackers use hydrogen, pressure, and catalyst to produce distillates and gasoline low in contaminants like sulphur. SRUs help to remove sulphur and other impurities from refinery products and gas streams. By Gordon Pollock Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Iran slows oil exports as it braces for Israeli attack


11/10/24
News
11/10/24

Iran slows oil exports as it braces for Israeli attack

Dubai, 11 October (Argus) — Iran's crude exports have slowed down dramatically this month as the country braces for a possible strike on its oil facilities in retaliation for its large-scale missile attack against Israel on 1 October. Although US president Joe Biden has suggested Israel should think about an alternative response , potential strikes on Iranian oil facilities have been up for discussion and the Israeli government appears to be still weighing up its options. In the meantime, there has been a noticeable drop off in Iranian exports. Crude loadings from Iran only averaged about 600,000 b/d in the first 10 days of October, around a third of the amount it has exported in the past few months, according to Armen Azizian, senior oil risk analyst at trade analytics firm Vortexa. "The first 10 days has been very slow compared to what we usually see," Azizian said. "Normally, over this period, we see an average of 5-8 tankers load ꟷ a mix of VLCCs and Suezmaxes. But so far, we have only seen just 3-4 load." A VLCC typically carries 1.9mn-2.2mn bl, while a Suezmax can carry 800,000-1mn bl. Of the three VLCCs that have loaded this month, two did so at Iran's Kharg Island terminal in the Mideast Gulf and the third co-loaded between Kharg Island and the Soroush terminal, also in the Mideast Gulf. An Aframax also loaded at Kharg this month but it is a tanker that typically engages in domestic trade. The Kharg terminal is Iran's largest and most important by some distance, handling more than 90pc of Iranian crude and condensate exports. All of the vessels that have loaded at Iranian terminals this month have been sanctioned. "It seems like the operators of the non-sanctioned tankers are being more cautious," Azizan said. "The thinking being that the value of the sanctioned tankers is so low anyway, that they are more worth taking a risk with." The slowdown in exports coincides with Iran moving many of its empty tankers away from Kharg Island. "It was likely done as a precaution, in the event of an Israeli retaliation," said Homayoun Falakshahi, senior oil analyst at trade analytics firm Kpler. Iran's crude exports have been rising in recent years, notably since the start of 2023. Vortexa puts them s at 1.7mn b/d in July-September, while Kpler's estimate is slightly higher at 1.75mn b/d. September was a particularly strong month — 1.83mn b/d according to Kpler and 1.75mn b/d according to Vortexa. Kpler's September estimate is the highest since the fourth quarter of 2018 and Vortexa's is just 50,000 b/d short of a six-year high of 1.8mn b/d in June. This month's exports will be much lower. Even if Iran's loading activities were to return to normal for the rest of October, it would struggle to breach the 1.35mn b/d mark for the full month, a level it has surpassed consistently since the fourth quarter of last year. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Mexico’s Sep inflation slows with energy prices


10/10/24
News
10/10/24

Mexico’s Sep inflation slows with energy prices

Mexico City, 10 October (Argus) — Lower energy prices supported an easing in Mexico's consumer price index (CPI) in September for a second consecutive month. The CPI slowed to an annual 4.58pc in September, down from 4.99pc in August, Mexico's statistics agency Inegi said on 9 October. This was lower than both Mexican bank Banorte's own 4.59pc estimate and its analysts' consensus estimate of 4.61pc. Energy inflation eased for a second month, dropping to 6.9pc from 7.9pc in August and 9.2pc in July, with LPG prices — the largest component — slowing to 14.7pc in September from 16.8pc in August and 25.6pc in July. Seasonal rains, now ending, have largely reversed the price spikes in farm goods caused by extreme drought earlier this year, with fruit and vegetable inflation slowing to 7.65pc in September from 12.6pc in August, making it the first single-digit rate since November 2023. "Despite the positive performance of agricultural items since August, lingering risks could turn them negative again," Banorte said in a note, emphasizing that above-normal rainfall will be needed in the coming months to avoid a return to drought and price spikes next year. For now, Mexican weather agency Conagua still estimates relatively heavy rains in October, but "more adverse" conditions for November and December, with no state forecast to exceed the upper range of historical rainfall. Core inflation, which strips out volatile food and energy, eased in September to 3.9pc from 4pc, moving within the central bank's 2pc to 4pc target range for the first time since February 2021. Inside core, said Banorte, packaged and manufactured goods continue to improve, standing at 2.9pc from 3pc in August. Services also moderated, adjusting to 5.1pc from 5.2pc. "A downward trend in the latter is needed to corroborate additional gains for the core," Banorte said. "This will still take some time, especially given that the margin for additional declines in goods may be running out." The Mexican bank added that within this context, it maintains its estimate for full-year 2024 core inflation to hold to 3.9pc. Though less weighted than core inflation, the bulk of September's easing in the headline was due to non-core inflation, including prices on more volatile items such as fuels and farm goods. Inegi reported non-core moving to 6.5pc in September from 8pc in August. Despite two months of better-than-expected price improvements, Banorte warned that "risks remain," with energy prices susceptible to gains amid "geopolitical tensions in the Middle East and economic stimulus in China." Still, there is "room to adjust gasoline subsidies" to cushion these effects, it added. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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