Somo issues first gasoil export tender: Correction

  • Spanish Market: Oil products
  • 23/05/24

Corrects sulphur content in paragraph 2

Iraq's state-owned Somo issued its first gasoil export tender, likely because additional volumes are coming from its new 140,000 b/d Karbala refinery.

Somo is offering 82,000t (612,000 bl) of gasoil with a maximum sulphur content of 0.9pc over a three-month period from the date of signing the deal, with an option to extend the agreement upon Somo's approval. Somo indicates gasoil is to load from North Company refineries. The bids are to be submitted by 26 May.

This is the very first gasoil export tender issued by Somo as Iraq has historically been heavily dependent on gasoil imports to satisfy its domestic demand. Market participants suggest Iraq can now afford to export gasoil because it has ramped up its new 140,000 b/d Karbala refinery south of Baghdad.

Karbala refinery began commercial operations in April last year and primarily supplies oil products to domestic market, but in doing so it creates gasoil surplus in the northern part of the country.

Iraq has also recently reopened its 150,000 b/d North refinery — part of Iraq's largest downstream facility the 290,000 b/d Baiji complex. The refinery was running at around 70,000 b/d in March, according to market sources.

Additional production potentially caused Iraq to stop importing gasoil this year. Iraq's gasoil imports dropped to zero in February and March, show the latest data from Joint Organisations Data Initiative (Jodi). This is compared with around 24,500 b/d gasoil imports in 2023.


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12/06/24

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


12/06/24
12/06/24

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.

Nueva presidenta de México: ¿AMLO 2.0?


11/06/24
11/06/24

Nueva presidenta de México: ¿AMLO 2.0?

Mexico City, 11 June (Argus) — La resonante victoria de Claudia Sheinbaum en las elecciones presidenciales mexicanas del 2 de junio llegó después de que prometiera seguir el programa de energía de su mentor, el presidente saliente Andrés Manuel López Obrador. Pero la victoria también le da un mandato lo suficientemente grande como para considerar cambiar el rumbo. La presidenta electa se ha pronunciado a favor de las políticas estatales centristas de López Obrador, conocido como AMLO, que en los últimos seis años han revertido muchos aspectos de la apertura del mercado energético luego de la reforma de 2014. La refinación y las emisiones han aumentado, a pesar de que la producción de crudo y gas natural ha disminuido. El presidente detuvo las subastas de derechos de producción de crudo, y algunas de sus políticas energéticas han generado quejas de Estados Unidos por prácticas anticompetitivas bajo el acuerdo de libre comercio entre Estados Unidos, México y Canadá. Según la secretaría de economía, la inversión extranjera directa en el sector de la energía cayó de $3,890 mil millones en 2018, cuando AMLO asumió el cargo, a $286 millones de inversión el año pasado. Sheinbaum se comprometió en su discurso de victoria a promover "la inversión nacional y extranjera que respalde el bienestar social y el desarrollo regional, garantizando el respeto al medio ambiente", también prometiendo apoyar la "soberanía energética". Pero los mercados son pesimistas sobre una mejora en el clima de inversión. El peso, una de las divisas de los mercados emergentes con mayor rentabilidad este año, cayó después de las elecciones, antes de recuperarse parcialmente dos días después. Existen preocupaciones de que Sheinbaum use la abrumadora mayoría de su partido Morena capturada en la cámara de diputados, y cerca de conseguirlo en la de senadores, para impulsar reformas que AMLO no pudo pasar. Una de ellas podría incluir la reversión de la reforma energética de 2014, lo que haría mucho más difícil volver a abrir el sector a más inversiones externas. En teoría, la reversión podría ocurrir bajo el mandato de AMLO, ya que el último mes de su sexenio y el primer mes del nuevo congreso coincidirán, pero el tiempo sería ajustado y hacerlo podría socavar el mandato de su sucesora. Código verde Pero también existen razones para pensar que la presidenta electa podría optar por el pragmatismo. Como científica climática, Sheinbaum apoyó la expansión de las energías renovables durante su tiempo como jefa de gobierno de la Ciudad de México, mientras que AMLO ha bloqueado mucha inversión del sector privado en este sector. Sheinbaum prometió impulsar el nearshoring, que ya ha ayudado a sostener la economía de México, pero esto requerirá más electricidad limpia, así como más gas natural, en lo que México depende en gran medida de las importaciones desde Estados Unidos. Hacer todo esto requerirá mucho más de lo que el gobierno puede hacer por sí mismo, especialmente porque se ha comprometido a continuar con el apoyo financiero para la deuda de $101,500 millones de la empresa estatal de petróleo Pemex. Además, México se enfrenta a una grave escasez de agua a corto y largo plazo, lo que demandará mayores gastos gubernamentales y podría perjudicar el crecimiento económico. También, la violencia azota el país y el robo de combustible es creciente. Durante su discurso de victoria, Sheinbaum prometió evitar subidas en los precios del combustible, lo que requiere que el gobierno aumente los subsidios en tiempos de precios más altos. La bajada de los precios del petróleo ha aliviado esa presión este año, pero siempre puede volver. La refinería Olmeca de 340,000 b/d de Pemex, el muy retrasado proyecto de energía insignia de AMLO para ayudar a México a reducir las importaciones de combustible, podría comenzar operaciones a finales del año próximo, según previsiones externas, pero también requerirá de más gasto. Un segundo mandato del presidente estadounidense Joe Biden después de las elecciones de noviembre podría presionar a Sheinbaum para impulsar el desarrollo renovable, aunque en caso de que el ganador sea el expresidente Donald Trump, podría buscar cooperación en las energías convencionales. No está claro lo bien que Trump interactuará con Sheinbaum, pero tuvo una relación extrañamente productiva con AMLO. En los siguientes cuatro meses previos a que Sheinbaum asuma el cargo de presidente el 1 de octubre, las cosas quedarán más claras. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Airlines face jet fuel shortage at Japanese airports


11/06/24
11/06/24

Airlines face jet fuel shortage at Japanese airports

Tokyo, 11 June (Argus) — Airline companies are grappling to secure jet fuel at Japanese airports partly because of labour shortages in the country's logistics sector, and some foreign airlines have abandoned plans to open up new routes to Japan. Korean Airlines (KAL) in May scrapped its plan to launch a new flight route from Seoul, South Korea to Obihiro airport in Japan's northern Hokkaido province, according to an Obihiro city official that spoke to Argus on 11 June. The city had anticipated an increase in tourists from South Korea with the opening of this new route, under which there was supposed to be two flights a week. KAL scrapped the plan mostly because the airline cannot procure enough jet fuel at the airport on the back of limited domestic transportation, the Obihiro official added. Logistics have been affected by a driver shortage,which has been a major economic issue in Japan, especially after the country in April introduced a new law imposing an upper limit of 360 overtime working hours/yr for the land transportation industry. Jet fuel is carried by lorry to the Obihiro airport after it arrives at a nearby major port, an official from the country's ministry of land, infrastructure, transport, and tourism (Mlit) told Argus . Obihiro had already been facing a driver shortage as the region's population is shrinking, the Mlit official added. This is also part of a wider labour shortage problem in Japan as there is lack of fuelling staff at domestic airports nationwide. Domestic vessels are also facing crew shortage problems as the aforementioned law was also imposed in 2022 on the maritime transportation sector, according to Mlit. The number of voyages by domestic vessels carrying jet fuel between refineries and the country's major Haneda airport in Tokyo has fallen to around 15/month, down by 40pc after the country imposed the law, the Mlit official added. The law initially did not have such a significant impact on jet fuel demand as the country was still under Covid-19 restrictions, with air travel limited at that time. But jet fuel demand is likely continue rising, following an increase in foreign tourists visiting Japan after the pandemic. The number of foreign arrivals surged to 11.6mn during January-April, according to the Japan National Tourism Organisation, up by 72pc from the same period a year earlier. Airlines are also becoming increasingly concerned as domestic vessels are also supposed to carry kerosine to Hokkaido around this time of year, as residents in the coldest part of the country will stockpile the fuel for the upcoming winter season. Using domestic vessels to transport jet fuel instead of kerosene is a controversial issue, the Mlit official added. But there is enough jet fuel supply domestically, said the country's minister of trade and industry (Meti) Ken Saito on 11 June, reiterating that Meti along with Mlit and domestic refiners have been tackling the issue since March. Japan's jet fuel stocks on 1 June totalled 5.18mn bl, according to the country's industry group Petroleum Association Japan, up by 6.4pc from the previous month. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Opec keeps demand, supply forecasts unchanged again


11/06/24
11/06/24

Opec keeps demand, supply forecasts unchanged again

Edinburgh, 11 June (Argus) — Opec has again kept its global oil supply and demand forecasts unchanged for this year and 2025. The group still expects demand to rise by 2.25mn b/d to 104.46mn b/d in 2024 and by a further 1.85mn b/d to 106.31mn b/d next year, according to its latest Monthly Oil Market Report (MOMR) . For this year's forecast, downward adjustments to demand in OECD countries, Latin America and Africa in the first and second quarters were offset by better-than-expected consumption in China, the Middle East and India. Demand in the US, the world's largest oil consumer, contracted in March on the back of lower diesel consumption as a result of a milder winter. A decrease in diesel consumption also weighed on demand in OECD Europe. In OECD countries, "diesel requirements are anticipated to be subdued by softer economic and manufacturing activity. Moreover, demand for naphtha may be pressured by declining petrochemical margins", Opec said. For non-OECD countries, Opec expects China, the world's largest oil importer and second-largest oil consumer, to be the main driver of oil demand growth this year, supported by rising jet fuel and gasoline consumption and new petrochemical capacity additions. Opec expects supply from non-Opec+ countries to grow by 1.23mn b/d to 52.96mn b/d in 2024 and by another 1.1mn b/d to 54.06mn b/d in 2025, unchanged from its previous forecast. The group expects the US, Canada, Brazil and Norway to drive non-Opec+ supply growth in both years. For 2025, "the main decline is expected in Angola", Opec said. The unchanged supply and demand projections leave the call on Opec+ crude at 43.2mn b/d this year, rising to 44mn b/d in 2025. Opec+ production remained steady at 41mn b/d in May, according to an average of secondary sources that includes Argus. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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