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California regulator floats future LCFS linkage

  • Market: Biofuels, Emissions, Oil products
  • 17/09/24

California would welcome bringing US low-carbon fuel standard (LCFS) programs together in a common market, one of the state's top regulators said on Tuesday.

Such a linkage is unlikely to occur in the near future, but California Air Resources Board (CARB) deputy executive director Rajinder Sahota said it is something worth pursuing.

"I totally think we should link our LCFS programs," she said at the Argus North American Biofuels, LCFS and Carbon Markets Summit in Monterey, California.

Sahota said California and other LCFS states are working on a system that could allow the trading of compliance credits between companies covered by each program, but did not provide any other details.

Her comments mark a change in tenor from CARB, which historically has said a linkage would be difficult given the differing starting points and carbon intensity targets of each program. Oregon's Clean Fuels Program (CFP) started five years after California's LCFS, while Washington launched its Clean Fuel Standard just last year. New Mexico is working on its own program that will begin by 2026.

Oregon and Washington regulators at the conference said there have not been any formal discussions about a linkage, but did not completely dismiss the idea, highlighting the close informal coordination between the states.

"All puzzles can be solved eventually," said Bill Peters, interim director of the CFP.


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07/10/24

Nigeria starts local currency crude sales to Dangote

Nigeria starts local currency crude sales to Dangote

Lagos, 7 October (Argus) — Nigeria's state-owned oil firm NNPC began selling crude to the country's 650,000 b/d Dangote refinery in the local currency on 1 October, as planned, the Nigerian government said. Co-ordinating minister of the economy Wale Edun said he has conducted "a post-commencement review" of the programme, where downstream regulator NMDPRA, NNPC and Dangote officials confirmed the start of sales in naira. "From 1 October, NNPC will commence the supply of approximately 385,000 b/d of crude oil to the Dangote refinery, which will be paid for in naira," Edun had said previously. The programme will also involve Dangote supplying gasoline and diesel of "equivalent value to the domestic market to be paid for in naira". The crude and product sales will be valued in dollars at prevailing international market prices, but financial settlements will be completed in naira at a fixed exchange rate that has so far not been disclosed. Maritime and port regulatory costs for coastal deliveries of crude and products under the programme, which are normally collected in dollars, "will also be paid for in naira", Edun said. The Nigerian Ports Authority's managing director, Abubakar Dantsoho, previously confirmed the set-up of a "one-stop shop that will co-ordinate service provision from all regulatory and security agencies", listing Nigerian ports, maritime, customs and tax authorities and the navy as participants. Dangote will sell diesel volumes under the programme "to any interested offtaker", the government said, but gasoline will only be sold to NNPC. "NNPC will then sell to various marketers for now," according to the government. "Since gasoline is still subsidised by the government, using discounted foreign exchange [available] only to NNPC, prices at wholesale and retail are still considerably below the market. That is why only NNPC can buy Dangote's gasoline today," said Bob Dickerman, the chief executive of local oil trader Pinnacle. Nigeria's diesel market has been deregulated since 2003 but efforts to remove the country's longstanding gasoline subsidy have stalled. Dangote started sales of gasoline to NNPC on 15 September under an older contract in which the national oil company pays the refiner in dollars. Argus tracking shows Dangote's crude receipts rose by 5pc on the month to 195,000 b/d in September. Dangote said it is aiming for a run rate of 350,000 b/d in its first phase of operations but has fallen short of that level in every month this year except for June. By Adebiyi Olusolape Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Global bio-bunker demand to pick up, US left behind


04/10/24
News
04/10/24

Global bio-bunker demand to pick up, US left behind

New York, 4 October (Argus) — Tightening vessel carbon intensity indicator (CII) scores and looming 2025 FuelEU marine regulation are expected to raise biodiesel demand for bunkering, but non-competitive US prices should continue to weigh down on US bio-bunker demand. Houston B30, a blend of used cooking methyl ester (Ucome) and very low-sulphur fuel oil (VLSFO), in September averaged at $821/t, a $45/t premium to B30 sold in Amsterdam-Rotterdam-Antwerp, and a $55/t premium to B24 sold in the west Mediterranean hub of Gibraltar and Algeciras (see chart) . Houston B30 was also priced at $115/t and $61/t premium to B24 sold in Singapore and Guangzhou, China, respectively. The price premium would continue to incentivize ship owners with global, ocean-going fleets to pick Asia first for their biodiesel bunker purchases, followed by northwest Europe and western Mediterranean. US demand for biodiesel for bunkering would continue to stagnate unless the US passes a legislation allowing Renewable Identification Number (RIN) credit under the US Renewable Fuel Standard (RFS) program be used by ocean-going vessels fueling with biodiesel in US ports. The legislation could level US' price playing field. Two bipartisan bills were put forward in support of renewable fuel for ocean-going vessels, one in the US Senate this year and one in the US House of Representatives last year, but they are currently dead in the water. Conventional marine fuels are priced cheaper than biodiesel and green varieties of LNG, ammonia, methanol, and hydrogen. But tightening International Maritime Organization (IMO) and EU regulations are forcing the hand of ship operators to consider green fuels to avoid hefty penalties and having their vessels suspended from trading. Ship owners whose vessels are outfitted with LNG-burning engines, are poised to have the lowest marine fuel expense heading into 2025, as fossil LNG is currently ship owners' cheapest low-carbon fuel option. But retrofitting a vessel to burn LNG could range from $5-$35mn, depending on the size of the vessel. Biodiesel, a plug-and-play fuel that does not require a vessel retrofit, is the second cheapest low-carbon fuel option after fossil LNG. IMO's CII regulation came into force in January 2023 and requires vessels over 5,000 gt to report their carbon intensity, which is then scored from A to E. The scoring levels are lowered yearly by about 2pc, so even a vessel with no change in CII could drop from C to D in one year. If a vessel receives a D score three years in a row or E score in the previous year, the vessel owner must submit a corrective actions plan. E scoring vessels could be prohibited from entering some ports' territorial waters, but this penalty is yet to be imposed on any E vessels. In 2023, the IMO reported that 40pc of the vessels scored A or B, 27pc scored C, 19pc scored D or E and 14pc were unresponsive. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. It imposes a penalty of €2,400/t ($2,629/t) of VLSFO equivalent energy for vessel fleets exceeding its GHG limits. By Stefka Wechsler Biodiesel blends* Houston less global ports $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Ocean Petro Gulf to operate Jafza bitumen terminal


04/10/24
News
04/10/24

Ocean Petro Gulf to operate Jafza bitumen terminal

Mumbai, 4 October (Argus) — Dubai-based trading firm Ocean Petro Gulf (OPG) has leased an oil products and bitumen storage facility terminal in the Jebel Ali Free Zone (Jafza) from energy logistics firm Tristar, and will be the operator, according to market sources. OPG is planning to expand by building a 10,000t bitumen storage facility at the terminal in the near term. OPG has agreed with Tristar to construct the bitumen storage tank on expectations of rising demand in that location. The terminal was previously owned by Shell and was acquired by Tristar in mid-2022. The terminal has been leased out to OPG as of October under a long-term operator arrangement, but the duration of the lease was undisclosed. The terminal currently has a bitumen storage capacity of 11,000t, and can import and export about 350,000 t/yr of oil products. The operatorship agreement also includes an integrated 90,000 t/yr polymer modified bitumen (PMB) plant, drums filling facility and an emulsion plant. The terminal also has a bitumen and PMB testing facility. By Sathya Narayanan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Nis steps up bitumen, restarts PMB output at Pancevo


04/10/24
News
04/10/24

Nis steps up bitumen, restarts PMB output at Pancevo

London, 4 October (Argus) — Serbian refiner Nis has stepped up bitumen production and supply at its 110,000 b/d Pancevo refinery after taking delivery of a cargo of bitumen-rich Iraqi Kirkuk crude. A market participant said the Kirkuk cargo was shipped from a Mideast Gulf loading point. A political stand-off since March 2023 has meant northern Iraq crude cannot be supplied into the Mediterranean region via the pipeline from Kirkuk to Ceyhan, southeast Turkey. The switch to the bitumen-rich crude, after lighter grades had been run through Pancevo in recent months, has also allowed Nis to restart its polymer-modified bitumen (PMB) manufacturing plant at Pancevo this week. The higher quality grade, which is produced by adding polymers like styrene-butadiene-styrene (SBS) in the initially produced bitumen mix, is increasingly used on some road, highway and airport projects. The PMB plant had been shut since June because the lighter crudes feeding the refinery failed to yield the right specifications and quality of PMBs after mixing with SBS. Nis plans to run another bitumen-yielding Iraqi crude, Basrah Medium, along with Kirkuk this month, helping significantly boost bitumen production for supply into the country's domestic and export markets — mainly Romania and Bosnia-Herzegovina. The heavier crudes will yield very high-sulphur grades of petcoke, the market participant said. By Keyvan Hedvat Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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UK confirms $28.5bn funding for two CCS, H2 clusters


04/10/24
News
04/10/24

UK confirms $28.5bn funding for two CCS, H2 clusters

Hamburg, 4 October (Argus) — The UK government has finalised a commitment to provide £21.7bn ($28.5bn) over the next 25 years to two planned clusters for carbon capture and storage (CCS) and connected projects, including for hydrogen production. The government has reached "commercial agreement with industry" for development of the clusters, it said today. The funding will go to the HyNet cluster in northwest England and the East Coast cluster in England's northeastern Humber and Teesside regions. The two projects were selected as "Track 1" priority clusters in 2021 and could together store some 650mn t of CO2. They could attract £8bn of private investment, the government said today. "The allocation of funding marks the launch of the UK's CCS industry," according to Italy's integrated Eni, which leads the development of HyNet's CO2 transport and storage system. Eni in February gave a start date of 2027 for HyNet. The East Coast cluster is led by the Northern Endurance Partnership, a joint venture between BP, TotalEnergies and Norwegian state-controlled Equinor. A range of projects will connect to the two hubs to transport and permanently sequester the carbon. These will include hydrogen production projects and supporting infrastructure. HyNet will involve projects developed by EET Hydrogen , a subsidiary of Indian conglomerate Essar, which is planning to bring a 350MW plant for hydrogen production from natural gas with CCS online by 2027 and another 700MW facility by 2028. The hydrogen will be partly used at EET Hydrogen's sister company EET Fuels at its 195,000 b/d Stanlow refinery but some will also be delivered to industrial consumers in the area. The HyNet cluster includes plans for 125km of new pipelines to transport hydrogen. The East Coast cluster involves Equinor's [600MW H2H Saltend] project and BP's 160,000 t/yr H2Teesside venture . German utility Uniper's 720MW Humber H2ub (Blue) project, UK-based Kellas Midstream's 1GW H2NorthEast plant and a retrofit facility from BOC , which is part of industrial gas firm Linde, could also connect to the cluster for CO2 storage. All the projects are due to enter into operation before the end of this decade. The funding confirmation for the CCS hubs "is a vital step forward, catapulting hydrogen towards long-term certainty we need in the UK", industry body the Hydrogen Energy Association's chief executive Celia Greaves said. The previous government last year picked two "Track 2" carbon capture clusters that are scheduled to start operations by 2030 — the Acorn facility in Scotland and the Viking project in northeast England. By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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