'Iraqi' cargo rejected twice on origin, quality concern

  • Market: Crude oil
  • 21/06/19

Following the publication of this article, Napag has stated via its lawyers that all business it conducts complies with all applicable laws and regulations and that it denies - as noted in our article - in the strongest possible terms that the transaction referenced by this story involved oil originating from a sanctioned country. Napag is disputing that allegation in legal proceedings not involving Argus Media.

A contentious crude cargo that was stranded for a few weeks near the Italian port of Milazzo has been rejected by two buyers in the sale chain, amid concerns over its origin and quality.

The Suezmax White Moon departed Milazzo for the Suez Canal earlier this week, after lingering at the Sicilian terminal for around three weeks without being allowed to discharge. It was intended for the 235,000 b/d Milazzo refinery, which is jointly operated by Italian integrated firm Eni and Kuwaiti state-owned KPI.

An Italian press report alleged that the tanker may have been banned from discharging over suspicions it was carrying Iranian oil. But Eni told Argus earlier this week that it rejected the cargo over quality concerns. Loading documents suggest that the shipment was from Iraq, Eni said. The firm refused to take delivery of the shipment because its "chemical-physical specifications are different from those established contractually to an extent that makes them incompatible" with the quality of Iraq's Basrah Light, it said today.

This has been backed up by Nigerian firm Oando, the company that sold the crude to Eni. The two firms inspected the cargo "at the port of loading in Basrah... and the results were consistent with the contractual agreement between the parties", Oando said today. Eni undertook further tests at its Milazzo refinery and rejected the shipment after discovering that "certain parameters were not consistent with the agreed specifications", it said. Oando has also rejected the cargo and returned it to "our supplier... [Italy's] Napag Trading UK".

Napag Trading has yet to respond to requests for comment. "Napag Trading UK expressly represented that the cargo was not from a sanctioned country. This claim was further supported by the set of documents delivered to us clearly showing the origin of the cargo as Basrah, Iraq," Oando said.

Tracking data from analytics firm Vortexa indicate the White Moon may have taken on its cargo through a ship-to-ship transfer from the very large crude carrier (VLCC) New Prosperity in waters outside of Iraq's Basrah Oil Terminal (BOT). The New Prosperity, in turn, received its cargo from the Abyss, whose initial loading point is not clear. The Abyss previously carried shipments of Iranian crude and fuel oil prior to the expiry of Iran sanctions waivers in early May.

Meanwhile, Iraq's state-owned marketer Somo has said in a statement that none of Iraq's exported crude cargoes have been refused by any of its customers. The White Moon's shipment "has no link whatsoever to Iraqi crude oil exports", it said. Furthermore, a senior Iraqi official told Argus that Iraq is certain that the shipment is not a retraded free-destination cargo. "We know every single vessel loaded and where it is destined," the official said.

Somo has been cracking down on the resale of term Basrah cargoes since October, leaving only a handful of shipments — representing equity supply or volumes sold on a spot retradeable basis by Iraq — that can change hands freely.

The quality of Basrah Light can fall significantly short of the official specifications, but the differences typically relate to crude gravity. Somo contractually pays quality compensation for Basrah Light below 34°API, with shipping data showing the average gravity of cargoes exported in March-May at 28.87°API. Somo does not supply compensation for sulphur content, and market participants have seldom referenced volatility in Basrah sulphur content in the past.

Three market participants have told Argus they have received and refused offers to purchase crude advertised as Basrah oil or "Iraqi blend" from third-party companies, which they suspected to be mixes of sanctioned Iranian oil.

The volumes are offered at heavy discounts to official Basrah prices and do not load from BOT. Other traders said they refused offers for suspect "Oman blend" and "Iraqi blend" during the previous sanctions regime against Tehran in 2012-15.

The White Moon's disputed shipment comes against a backdrop of escalating tensions between Iran and the US, which has persisted in its strategy to drive Iranian crude exports to zero. "We are seeing historic records of compliance with US sanctions, especially oil sanctions. We have now zeroed out exports of Iranian crude oil. And we are confident that nations will comply with that," the US State Department's Iran special envoy, Brian Hook, said this week.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
27/03/24

Baltimore bridge collapse to raise retail fuel prices

Baltimore bridge collapse to raise retail fuel prices

Houston, 27 March (Argus) — The collapse of the Francis Scott Key Bridge in Baltimore, Maryland, is more likely to increase regional gasoline prices than diesel due to additional freight costs and certain route restrictions. Suppliers in the region have so far signaled that the effect on broader markets will be minimal, but regional prices will likely rise, especially as peak summer demand season begins with Memorial Day weekend in late May. The bridge closure could pose more problems for gasoline supply than diesel, since gasoline cannot be transported through the Fort McHenry (I-95) and Baltimore Harbor (I-895) tunnels — the two other major roads that cross the Patapsco River at Baltimore — while there are no restrictions on diesel, according to the Maryland Transportation Authority (MTA). Fuel wholesaler Global Partners said yesterday that it would like to see hours of service waivers for trucking in the region to minimize fuel supply disruption to customers, but the Federal Motor Carrier Safety Administration (FMCSA) is yet to issue one. Elevated retail prices are likely to be limited to the immediate Baltimore area but could spill over into neighboring markets should trucking markets remain tight due to rerouting, market sources told Argus . Fuel markets in eastern Maryland can be supplied by PBF's 171,000 b/d Delaware City, Delaware, refinery and two further plants in Pennsylvania — Monroe Energy's 190,000 b/d Trainer refinery and PBF's 160,000 b/d Paulsboro refinery. To the north, United Refining runs a 65,000 b/d plant in Warren, Pennsylvania, and along the Atlantic coast Phillips 66 operates the 259,000 b/d Bayway refinery in Linden, New Jersey. PBF, Monroe and United did not immediately respond to a request for comment on whether the bridge collapse is affecting refinery operations. Phillips 66 declined to comment on commercial activities. Still, the five nearby refineries — representing all the Atlantic coast's 850,000 b/d of crude processing capacity — are unlikely to see their operations curtailed by limits in shipping products to Maryland. With no refinery in the state of Maryland, most fuels are delivered to Baltimore by Gulf coast refiners on the Colonial Pipeline. Global Partners, which operates a terminal just west of the collapsed bridge, said yesterday it is primarily supplied by the pipeline and expects product flows to continue. Several terminals in the Baltimore Harbor and the nearby Port Salisbury can also receive small vessels and barges of road fuels from Delaware and Pennsylvania, according to the Maryland Energy Administration (MEA). The Port of Baltimore — which remains closed since the collapse — took delivery of 24,000 b/d of gasoline and under 2,000 b/d of distillates from barges and small vessels in 2019, about three percent of the Atlantic coast's refining capacity. "A closure of the Port of Baltimore while the Colonial Pipeline is open would not significantly disrupt fuel supply," the MEA wrote in a 2022 analysis of liquid fuels supply in the state. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read more
News

US breaks $79/bl ceiling in latest SPR purchase


27/03/24
News
27/03/24

US breaks $79/bl ceiling in latest SPR purchase

Washington, 27 March (Argus) — President Joe Biden's administration has exceeded a price ceiling that has guided when the US government would buy crude to refill the US Strategic Petroleum Reserve (SPR), with the latest crude purchase hitting a price of $81.32/bl. The US Department of Energy (DOE) six months ago adopted a new strategy for replenishing the SPR, with a plan to use consistent monthly purchases to replace some of the 180mn bl of crude that Biden sold from the reserve in 2022 after the start of the Russia-Ukraine conflict. For months, DOE has said it would continue to buy crude so long as it was a "good deal for taxpayers," which the agency defined as a purchase price not to exceed $79/bl. But the agency's latest crude purchase, for nearly 2.8mn bl of sour crude for delivery in September, came at a cost of $225.6mn, an average price of $81.34/bl, according to data DOE recently published on its website. The crude contracts went to Macquarie Commodities Trading, Sunoco Partners Marketing & Terminals and Total's Atlantic Trading & Marketing. DOE, asked for comment about why it purchased crude in excess of its price target, said there would "likely be news coming later today." Before this week, the administration had largely adhered to its $79/bl price target to buy 24.7mn bl of crude for delivery to the SPR from January through August, with the exception of a $79.10/bl purchase for January delivery. DOE reiterated the price ceiling on 14 March, when it announced a new solicitation to buy crude, and last year had called off multiple crude solicitations when prices came in too high. DOE has previously increased its price ceiling based on shifts in the oil market. DOE in 2022 had initially targeted a purchase price of $67-$72/bl, resulting in the purchase of 6.3mn bl of crude last summer at an average price of $72.67/bl. But after rising prices put that target out of reach, DOE raised its price ceiling to $79/bl. The SPR held 363mn bl of crude as of 22 March, according to federal data. By the end of this year, as a result of crude purchases, the reserve is expected to "be back to essentially where we would have been had we not sold during the invasion of Ukraine," US energy secretary Jennifer Granholm said on 20 March, after accounting for the cancellation of 140mn bl of congressional mandated crude sales that were scheduled through 2031. With the latest crude purchase, DOE will have signed contracts to buy 32.4mn bl of crude at an average price of nearly $77/bl, of which more than 19mn bl has yet to be delivered to the SPR. Another 20mn bl of crude that oil companies and traders borrowed from the SPR in 2022 is set to be returned by year-end, which would push inventories in the reserve to above 400mn bl. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

South Sudan crude output halves on pipeline blockage


27/03/24
News
27/03/24

South Sudan crude output halves on pipeline blockage

London, 27 March (Argus) — South Sudan's crude production has almost halved to around 80,000 b/d because of a blockage at a pipeline in war-torn Sudan, South Sudan's oil ministry undersecretary William Anyak Deng told Argus today. A blockage along the Chinese-led Petrodar Pipeline is currently preventing around 100,000 b/d of South Sudan's heavy sweet Dar Blend grade from reaching Sudan's Bashayer terminal on the Red Sea for export, Deng said. But production of South Sudan's medium sweet Nile Blend grade has not been impacted, as this is transported to Bashayer through the separate Greater Nile oil pipeline which remains online, he said. His comments come after Sudan earlier this month warned major oil exporting companies in South Sudan that his country could no longer carry out its obligation to transport their crude . Dar Petroleum Operating Company (DPOC) — a consortium including China's state-controlled CNPC and Sinopec and Malaysia's state-owned Petronas — produces Dar Blend but has had to all but cease output, Deng said. Nile Blend production is split between the South Sudan-based firms Sudd Petroleum Operating Company (SPOC) and Greater Pioneer Operating Company (GPOC) and currently running at around 80,000 b/d, he added. South Sudan's crude production stood at around 150,000 b/d in February, according to Argus estimates. The blockage is a result of gelling issues — solidifying crude — in the Petrodar Pipeline, which Sudanese and South Sudanese engineers are struggling to resolve. This is because of a lack of diesel that is used to heat the crude or dilute it to help it flow, Deng said. "We are working to resolve the problem right now. There is mechanical work that is ongoing, we are trying to flush out the oil," he added. But the pipeline has been suffering from leaks and pressure drops for months, with repairs complicated by the ongoing civil war in Sudan between the army and the paramilitary Rapid Support Forces. Deng said it was becoming increasingly difficult to get permission from the warring parties in Sudan to move workers, equipment and spare parts to maintain infrastructure. He also said South Sudan has been sending diesel to Sudan to help with repair work given the closure of Sudan's 100,000 b/d Khartoum refinery which has come under repeated fire since the civil war began last year. Sudan also typically produces around 50,000 b/d of mostly Nile Blend crude, but this is thought to have been impacted by the civil war. Crude exports from Sudan's Bashayer port averaged 130,000 b/d in 2023 and hit 168,000 b/d in January, according to Kpler. But exports have only averaged about 75,000 b/d since February. Landlocked South Sudan is entirely reliant on Sudan to export its crude and depends on oil sales for more than 90pc of government revenues. Any prolonged disruption to exports would put the country's economy in a precarious position. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Grupo Carso expande su huella en energía


27/03/24
News
27/03/24

Grupo Carso expande su huella en energía

Mexico City, 27 March (Argus) — En los últimos años Grupo Carso, dirigido por Carlos Slim, ha expandido sus operaciones en el sector de petróleo y gas natural, destacándose como uno de los pocos operadores que han fortalecido su presencia a pesar de las restricciones del presidente mexicano Andrés Manuel López Obrador a la inversión del sector privado. A medida que los independientes y las grandes empresas petroleras han empezado a cerrar sus negocios en medio de la falta de nuevas oportunidades en subastas de la fase de exploración y producción, el Grupo Carso ha adquirido dos de los mayores contratos de aguas someras en los últimos 12 meses y ha expresado interés en hacer nuevas adquisiciones. Durante una conferencia de prensa de cuatro horas en febrero, Slim confirmó el interés de la empresa en desempeñar "un papel más importante en el sector de los hidrocarburos y, finalmente, participar en los productos petroquímicos." Slim, la persona más rica de México y director de un conglomerado que abarca desde las telecomunicaciones hasta la minería, también expresó su interés por "ser socio de alguien con experiencia" y por aumentar la participación de la empresa en el operador independiente estadounidense Talos Energy. La división de energía de Grupo Carso, Carso Energy, tenía un papel marginal en el sector aguas arriba de México antes de esta administración, con derechos de producción y exploración de dos bloques terrestres asegurados tras la reforma energética de 2014. A pesar de que los contratos se adjudicaron en 2017, los bloques 12 y 13 de Veracruz siguen en fase de exploración en medio de la falta de equipos de perforación disponibles y la presencia del crimen organizado en la zona, que ha impedido el acceso al emplazamiento, el operador informó al regulador de petróleo CNH el pasado diciembre. Pero los dos bloques terrestres son pequeños en comparación con los bloques de aguas poco profundas que Grupo Carso compró el año pasado. En septiembre, Grupo Carso completó la compra por $124 millones de una acción de 49.9pc en la filial mexicana de Talos Energy, involucrada también en el mega yacimiento de aguas superficiales de Zama que se está desarrollando con la paraestatal Pemex. Con un pico pronosticado de producción de 180,000 b/d de crudo para 2026, el yacimiento sería el segundo campo de producción de crudo más importante de México según las cifras de enero. El pasado diciembre, Carso Energy llegó a un acuerdo de $530 millones para adquirir el bloque de aguas someras 4 del conglomerado mexicano Petrobal en la cuenca sureste. El bloque es el tercer contrato de producción de crudo más alto, con una producción de 11,784 b/d en enero, según la CNH. Inversiones en gas En el sector del gas, Carso Energy también opera el gasoducto de gas natural Sasabe-Samalayuca de 472mn cf/d y es socio en las líneas estadounidenses de interconexión Waha-Presidio y Waha-San Elizario. Pero mientras que la mayoría de las empresas del sector de la energía han visto un colapso de las oportunidades de inversión durante la administración de López Obrador, el Grupo Carso parece ser una de las pocas empresas del sector privado con las que el presidente permitirá que las empresas estatales Pemex y CFE hagan negocios. CFE adjudicó directamente un nuevo contrato de gasoducto al operador en diciembre del año pasado, con un acuerdo para ampliar la línea de gas Sasabe-Samalayuca de 416km y 472mn cf/d de Sasabe, Sonora a Mexicali, Baja California. López Obrador, a menudo crítico de las empresas del sector privado dentro del sector de la energía, incluso ha elogiado el papel creciente de Slim en el mercado del petróleo y el gas, celebrando su adquisición del contrato Petrobal por permitirle "permanecer en manos mexicanas." Mirando hacia el futuro, los profundos bolsillos del Grupo Carso podrían convertirlo en un socio potencial para desarrollar el campo de gas de aguas profundas de Lakach tras la decisión de New Fortress Energy de retirarse el pasado mes de noviembre. Pero el entorno de bajos precios del gas podría complicar el proyecto en el que Pemex ya ha invertido $1.4 mil millones, mientras que la falta de experiencia de Carso en aguas profundas plantea preguntas sobre su viabilidad como socio. Carso Energy representó sólo 1.6pc de los Ps55.4 mil millones ($3.29 mil millones) totales de ventas del Grupo Carso durante el cuarto trimestre del año pasado, pero la estrategia de adquisición del grupo y el estatus favorecido frente a la administración podrían ver esa cuota aumentar en los próximos años. Por Rebecca Conan Proyectos de energía de Carso Proyecto Tipo de proyecto Tamaño/capacidad Bloque 12 E&P en tierra Fase de exploración Bloque 13 E&P en tierra Fase de exploración Zama E&P en aguas someras 180,000 b/d crudo en 2026 Bloque 4 E&P en aguas someras 11,784 b/d crudo en enero Sasabe-Samalayuca Gasoducto 472mn cf/d Waha-Presidio Gasoducto 1.4 Bcf/d Waha-San Elizario Gasoducto 1.1 Bcf/d Grupo Carso Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Serica CEO warns on UK offshore investment


27/03/24
News
27/03/24

Serica CEO warns on UK offshore investment

London, 27 March (Argus) — The lack of a stable offshore fiscal regime is creating shareholder pressure on UK-focused independent oil and gas operators to invest abroad, according to outgoing Serica Energy chief executive Mitch Flegg. "The feedback I get from shareholders and from banks is: 'What are you doing in the UK? We want you to invest in other parts of the world'," Flegg told attendees at a meeting of industry group Offshore Energies UK (OEUK) today. "That's the elephant in the room. We can't ignore that." The UK government introduced an Energy Profits Levy (EPL) windfall tax on oil and gas profits in summer 2022 in response to the jump in energy prices resulting from Russia's invasion of Ukraine. Initially the levy meant profits were taxed at 65pc, but by the start of last year this was 75pc. In February, UK finance minister Jeremy Hunt extended the duration of the EPL for a year to 2029. Flegg said the offshore oil and gas sector is "not whining about the levy itself" but it is concerned about "the continual changes in the fiscal regime and it's the instability, rather than the rate, that we're worried about". Serica, which in recent months has averaged production of 45,500 b/d of oil equivalent (boe/d) in the UK offshore, is now facing pressure to look at other countries, such as Norway. While that country has always had a 78pc tax rate, "that doesn't put us off at looking at working [there]", Flegg said. "What makes it more attractive is that it's been stable and the allowances that go with that are well thought through and have been there for years and years," he said. Flegg said another concern is offshore regulator NSTA's new emissions reduction plan, announced today , which could see the authority require operators to cease production of assets with high-emissions intensity as part of an increased drive for electrification at offshore facilities. Flegg acknowledged the industry has needed encouragement "to move in the right direction" on emissions, but said some elements of the NSTA plan "have gone too far" and that important infrastructure could be lost if facilities shut down because of a lack of electrification. "This is a fragile industry. We all depend upon each other and we've built upon the supply chain," he said. "The supply chain depends on operators and operators depend upon the infrastructure that's out there. "If the infrastructure doesn't exist then we're not going to be able to tie back new discoveries." Flegg, who will step down as Serica chief executive in mid-April, was speaking at the launch of OEUK's Business and Supply Chain Outlook report. This said UK offshore oil and gas production will continue to decline at double-digit rates if measures are not taken to improve the investment environment. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more