US Group II base oil margins rise on higher prices
US Group II base oil margins over feedstocks and competing fuels rose during the week ended 3 May as spot prices continued to rise on a more balanced supply/demand situation.
The Argus domestic spot US Group II N100 premium to four-week average low-sulphur vacuum gas oil (VGO) rose to $1.03/USG, up from 92¢/USG the previous week. Margins remained below year-earlier levels of $1.08/USG.
The Argus domestic spot US Group II N100 premium to four-week average US Gulf coast (USGC) diesel rose to 89¢/USG, up from 79¢/USG the previous week. Margins remained below year-earlier levels of 90¢USG.
Margins over VGO are at their highest since February, and margins over diesel are at their highest since January.
Group II base oil spot prices have risen each of the past three weeks on rising demand and tighter supply, particularly for low-viscosity grades.
Key Group II refiner Motiva is taking a partial turnaround at its 40,000 b/d Group II/III base oil unit in Port Arthur, which is affecting its low-viscosity output.
Demand for base oils are also rising as blenders are seeing increasing finished lubricant consumption and are also building limited stocks to get ahead of potential higher prices in the peak summer months.
Base oil margins are also being supported by declining values for feedstock and competing fuels. Supplies of VGO are increasing as imports from Europe are being discussed amid an open arbitrage.
Diesel prices are also falling, to their lowest since January, on lower demand and ample supplies.
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Q&A: Phillips 66 to balance fossil and renewable fuels
Q&A: Phillips 66 to balance fossil and renewable fuels
Houston, 14 June (Argus) — With Phillips 66's Rodeo, California, refinery expected to ramp up to over 50,000 b/d of renewable fuels production by the end of this quarter, all eyes are on the refiner for what is next. Zhanna Golodryga , executive vice president of emerging energy and sustainability for Phillips 66, talked to Argus at the refiner's Houston headquarters about how the company looks at investments, its focus on sustainable aviation fuel (SAF) production and why Texas might be the Silicon Valley of the energy transition. The conversation has been edited for clarity and length. When Rodeo reaches full capacity, it will represent about 3pc of your overall output. What will your fleet look like longer-term and what will be the renewables/petroleum split? Not all the refineries in our portfolio are created equal, and when we look at them what I call them is "lower-carbon energy hubs". Not low, lower, because it's going to be a combination of everything. We're looking at the assets we have in the portfolio and what we can do to help bring in lower carbon solutions and what can we build out. Our focus is going to continue to be SAF. We understand the limitations of feedstocks and we have a very strong commercial organization that is now working on providing feedstocks just for Rodeo. But we're also thinking about what we can do to bring in different feedstocks. Energy transition opportunities aren't going to replace our traditional fossil fuel refining. It's an "and", not an "or". You've highlighted a future focus on SAF. Does that mean a move away from renewable diesel (RD)? I think we have flexibility to do both and it will be market driven going forward. We have to look at demand but there is demand for SAF globally, not just in the US. Demand for gasoline is not as strong as demand for diesel and sustainable aviation fuel. That is what our focus is and then we want to diversify the feedstock. What is your outlook for RD? I think RD is here for quite some time. It's hard to predict what's going to happen by 2050 but I think we will have the demand. It's going to take a long time to electrify all future transportation. I think we have a much better opportunity for now to focus on what we're really good at. That's fuels, renewable fuels. You have faced activist investor pressure calling for Phillips 66 to focus on its core refining business. How do investors feel about the Rodeo conversion and your future plans? We have taken a pragmatic approach to the energy transition. We have criteria that we follow prior to taking any projects over the line, specifically the energy transition type projects. They must meet five key prerequisites: the right returns, the right technology that has been proven at scale, the right regulatory environment, preferably involve a partnership and be done at the right time. We have to prove with Rodeo that this is, as I call it, our license to continue to grow the business. This is our license to operate additional energy transition business. This one is going to be done extremely well. What are the policy tailwinds and headwinds to your renewables investments? When we look at our opportunities in our energy transition portfolio, we are building our economic model for them to produce the right returns without any incentives. That is our starting point. On the other hand, the IRA [US Inflation Reduction Act] has been a bipartisan initiative and we think it's going to stand for the greater good of the planet. We have to think globally, as we have the Humber refinery in the UK. It's interesting for us to see what's possible in the US with the IRA incentives, versus more of a stick in Europe. But the challenge for us is permitting and timing. We probably could have brought Rodeo online sooner if we didn't have to wait for some permits. Our headquarters are in Texas and Texas is the "energy transition Silicon Valley". I'm repeating someone's words and those are the words of Bill Gates. But I believe that. We're perfectly positioned on the Gulf coast to go to the next phase and build something here. You've mentioned Phillips 66's 265,000 b/d Sweeny refinery in Old Ocean, Texas, as a low carbon energy hub. Does that mean it is a candidate for renewable fuel conversion or co-processing? It could be an option, maybe not at Sweeny, but in the Gulf coast, maybe Lake Charles. It's driven by our hardware, just like what we've done at Rodeo. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
S Africa's ANC, DA agree to form government
S Africa's ANC, DA agree to form government
Cape Town, 14 June (Argus) — South Africa's African National Congress (ANC) and Democratic Alliance (DA) political parties today agreed to form a government while the first sitting of the new parliament was underway. The agreement, which includes the Inkatha Freedom Party (IFP), paves the way for ANC leader Cyril Ramaphosa to be re-elected president. The parties will assume various positions in government broadly in proportion to their share of seats. The government of national unity (GNU) agreement is the result of two weeks of intense negotiations after the ANC lost its long-held majority in the national election on 29 May. It secured 40.2pc of the vote, and the centre-right, pro-market DA retained its position as the official opposition with 21.8pc. The deal scuppers the possibility of an alliance between the ANC and the two largest left-wing parties, MK (uMkhonto weSizwe) and the Economic Freedom Fighters (EFF), which credit ratings agency Fitch warned could pose risks to macroeconomic stability . MK party unseated the EFF in the election to come third, winning 14.6pc of the vote. The EFF secured 9.5pc, and the IFP came a distant fifth with 3.85pc. The MK and EFF are populist parties that campaigned on agendas including wide-scale land expropriation without compensation, nationalisation of economic assets — including mines, the central bank and large banks and insurers — halting fiscal consolidation and aggressively increasing social grants. The GNU parties agreed the new administration should focus on rapid economic growth, job creation, infrastructure development and fiscal sustainability. Other priorities include building a professional, merit-based and non-partisan public service, as well as strengthening law enforcement agencies to address crime and corruption. Through a national dialogue that will include civil society, labour and business, parties will seek to develop a national social compact to enable South Africa to meet its developmental goals, they said. The GNU will take decisions in accordance with the established practice of consensus, but where no consensus is possible a principle of sufficient consensus will apply. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Competing US farm bill drafts boost SAF
Competing US farm bill drafts boost SAF
New York, 12 June (Argus) — Republicans and Democrats say they still have work to do to negotiate a final agreement around this year's US farm bill, although proposals from both parties include provisions to boost production of sustainable aviation fuel (SAF). Senator John Boozman (R-Arkansas) released the latest proposal on Tuesday, which represents the view of the minority Republicans on the Senate Committee on Agriculture, Nutrition, and Forestry. The bill clarifies that SAF is an eligible technology under a federal program that offers loan guarantees for the construction and retrofitting of biorefineries. Similar language appeared in the Republican-backed farm bill draft that passed the House Committee on Agriculture last month and in Senate committee chair Debbie Stabenow's (D-Michigan) Democratic-backed farm bill framework. The Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program currently offers support to producers of "advanced biofuels," a category that does not explicitly include alternative jet fuels and specifically limits fuels derived from corn starch. A revised definition of "advanced biofuels" could also allow SAF to benefit from other US Department of Agriculture (USDA) programs, including one that pays companies to expand production of renewable fuels. Corn growers and ethanol producers, which could benefit from Inflation Reduction Act tax credits for low-carbon fuels, are among the groups calling for the farm bill to include such SAF provisions. The White House has set a 2030 goal for US SAF production to reach at least 3bn USG/yr (200,000 b/d), although the types of fuels that can qualify for federal support are still up in the air. Some environmentalists have backed restrictions around crop-based feedstocks while biofuel and airline groups support more flexibility. The similar SAF language in the three proposals is notable given rifts between Democrats and Republicans over other elements of the farm bill, a major five-year agriculture policy package set to expire after September this year. While a handful of Democrats crossed party lines to advance the House proposal out of committee, others have criticized it for cutting food assistance and removing "climate-smart" requirements included in the Inflation Reduction Act for USDA conservation programs. Stabenow said that key differences remain between her proposal and Republican bills but that she was looking forward to working with lawmakers to "finish our work by the end of the year." Full legislative text is not yet available for the Stabenow and Boozman proposals, and it is unclear when the Senate committee will mark up a final bill. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Dangote sets new ULSD, gasoline output dates
Dangote sets new ULSD, gasoline output dates
London, 12 June (Argus) — Nigeria's 650,000 b/d Dangote refinery will start production of 10ppm sulphur diesel (ULSD) in the week commencing 17 June and gasoline production will follow as early as 10 July, refinery head Aliko Dangote told Nigeria's Channels Television on 11 June. The dates suggest a slight delay from most recent guidance of diesel exports and local gasoline sales this month, as made by the company's vice president for oil and gas Devakumar Edwin in May. Dangote said the offshore Lome diesel market had not been providing good quality diesel, and that west Africa had been used as a dumping ground for poor quality oil products, with 2,000ppm-3,000ppm sulphur content products previously being imported into Nigeria. In the same interview the president of Nigeria's Senate, Godswill Akpabio, praised the Belgian government's decision to ban the export of low quality fuels . Belgium supplied just 9pc of Nigeria's seaborne gasoil and diesel imports this year, down from 22pc last year, according to Vortexa. But Belgium has increased its share of the Nigerian finished-grade gasoline import market, supplying 35pc of its seaborne imports so far this year, up from 29pc in 2023. The Dangote refinery has until now been producing around 680-700ppm gasoil for supply to local and internationals markets. Gasoil loadings of at least 20,000t fob Dangote were last week offered at discounts of $35/t-$30/t against front-month Ice gasoil futures, according to sources. These levels are very low compared with the northwest European market, where 30,000t fob ARA cargoes were assessed at a discount of $1/t against front-month Ice gasoil futures. The heavy discount on gasoil loadings fob Dangote reflect stricter pricing terms, according to a local marketer, including upfront payment in lieu of letters of credit, and the payment for product in dollars and not the local naira currency. The Dangote refinery will start producing gasoline between 10-15 July, Aliko Dangote told Channels Television. The absence of gasoline production since Dangote started crude processing in January has meant its exports of naphtha — a key gasoline blending component — have so far totalled 720,000t, according to Kpler. The refinery hosts three straight-run naphtha tanks with a combined capacity of 90,000m³, three hydrotreated heavy naphtha tanks of a combined 90,000m³, and three hydrotreated light naphtha tanks with total capacity of 30,000m³, according to sources. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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