Asia demand lifts US VLCC rates to 4-month high

  • Spanish Market: Crude oil, Freight
  • 21/05/24

Rates for 2mn bl very large crude carriers (VLCCs) on the US Gulf coast reached four-month highs on 17 May amid elevated Asia-Pacific demand for US crude, especially in China.

The rate to ship 270,000t of crude from the US Gulf coast to China, including $250,000 Corpus Christi, Texas, load-port fees, climbed by 11.6pc from 7-17 May to $10.1mn lumpsum, or $4.85/bl for WTI, the highest level since 12 January, according to Argus data. A surge of demand in the first half of May reduced tonnage in the Atlantic basin as Chinese refiners eye the end of a heavy refinery maintenance season.

Over that span, the time-charter equivalent (TCE) rate, which reflects daily earnings for shipowners, for a scrubber-fitted VLCC hauling crude from Corpus Christi to Ningbo, China, increased by about $9,150/d to $50,613/d, according to Argus data.

Similarly, the US Gulf coast-Rotterdam VLCC rate on 17 May matched its highest level since 11 January, reaching $4.95mn lumpsum, or $2.38/bl for WTI, including load-port fees, after Asia-Pacific demand limited the amount of VLCCs available for shipments to Europe.

The rally comes amid rising onshore inventories of crude in China. Stocks increased to 924mn bl in the week ended 19 May, the most in nearly five months, according to data from analytics firm Vortexa.

"An expected increase in refinery utilization during the third quarter justifies inventory building during (the second quarter), while the current import trend and ongoing refinery maintenance may imply less sharp inventory builds during May-June compared to last year," shipbroker BRS said.

Last year, Chinese inventories of crude shot up to 1.02bn bl at the end of July from about 925mn bl at the end of April, Vortexa data show.

A slower pace of inventory builds may create a less volatile environment for VLCCs compared to last year, BRS said.


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24/06/24

US Supreme Court to weigh Utah railroad permit

US Supreme Court to weigh Utah railroad permit

Washington, 24 June (Argus) — The US Supreme Court will consider reviving a Utah shortline project permit that federal rail regulators had approved but that an appeals court found lacked sufficient environmental review. The Surface Transportation Board (STB) approved construction of the Uinta Basin Railway in December 2021. Opponents said STB failed to meet the requirements of the National Environmental Policy Act and took STB to court. The US Court of Appeals for the District of Columbia agreed with the opponents and overturned the STB decision in August 2023. The US Supreme Court said today it will hear the case. The proposed 88-mile railroad would originate at two locations in the Uinta Basin near South Myton Bench, Utah, and Leland Bench, Utah, and connect to western Class I railroad Union Pacific near Kyune, Utah. The project originally was expected to transport about 80,000 b/d of waxy crude as well as other cargo, but demand for waxy crude has picked up, Seven County Infrastructure Coalition executive director Keith Heaton said. The line also would provide a new transportation option for the region. Local mining and manufacturing businesses have to rely on trucks to ship out of the basin. The type of review envisioned by the appeals court would be unable to encompass the potential environmental impacts from everything that would be shipped by rail, Heaton said. The government must avoid regulatory overreach that "could put into jeopardy projects that might be necessary in helping to strengthen our nation's supply chain", National Industrial Transportation League executive director Nancy O'Liddy said. Wendy Park, a senior attorney for the Center for Biological Diversity, called the lower court's ruling on "this destructive project" legally sound. Development of the project is on hold pending a decision in the litigation. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trinidad considers offers for shut oil refinery


24/06/24
24/06/24

Trinidad considers offers for shut oil refinery

Kingston, 24 June (Argus) — Trinidad and Tobago is again seeking an operator for the mothballed state-owned 165,000 b/d Guaracara refinery, and will decide by the end of August on several offers for the facility, prime minister Keith Rowley said on Sunday. The government has received eight expressions of interest from domestic and foreign companies to purchase or lease the refinery at Pointe-a-Pierre on the southwest coast that was closed six years ago, government officials told Argus . Rowley did not name the potential operators. But Indian steel producer Jindal Steel and Power "is interested in the potential of the refinery," Rowley's office said last week after he met in Port of Spain with the company's chairman Naveen Jindal. Trinidad shut the refinery in 2018 after a steady decline in crude production forced increases in imported feedstock, sending up refining costs that the government said were "unsustainable." A new owner would likely face similar challenges in obtaining feedstock as the country's crude production has moved from 144,400 b/d in 2005 to average 49,880 b/d in January-March of this year. A restart of the refinery "will be feasible only if there are arrangements for access to competitively priced imported crude that will allow profitable operating margins," a government official told Argus today. The government is making "very good progress" in efforts to offload the refinery, energy minister Stuart Young said on 21 June. But the company that would take over the plant "would have to be able to address several issues including asset management and the financial capability to operate the refinery," Young said. The government has failed since 2018 to reach an agreement with domestic and foreign interests for reopening the refinery. It renewed efforts to offload the facility following the late 2020 collapse of a sale agreement with area labour union-owned company PET that made a $700mn offer, outbidding US private equity firm Beowulf Energy and German refiner and trader Klesch. The government and California-based electrical contractor Quanten failed to reach an agreement in December 2022 for the takeover of the refinery. Growing oil producer Guyana rejected a proposal from Trinidad in February that it should supply crude to allow the Guaracara plant to be reopened. By Canute James Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

MVP start-up shows permitting troubles in US


24/06/24
24/06/24

MVP start-up shows permitting troubles in US

Washington, 24 June (Argus) — The start-up of the Mountain Valley Pipeline (MVP) after a delay of over five years highlights the difficulty the US gas industry faces in building greenfield pipelines under current permitting rules — which are unlikely to change any time soon. The 500km natural gas pipeline began commercial operations on 14 June, at a $7.85bn price tag that was more than double the cost expected when the project was first proposed in 2015. The 2bn ft³/d (20bn m³/yr) pipeline will move shale gas from a mountainous region in West Virginia to demand centres in Virginia, with the possibility for future expansions. MVP is expected to run at just 35-40pc of its nameplate capacity until downstream bottlenecks are removed, according to analyst groups RBN Energy and East Daley Analytics. The pipeline offers the promise of eventually easing price pressure in markets in southeastern US and increasing Appalachian gas output that would otherwise remain constrained. The pipeline — soon to change ownership once US independent EQT closes its $5.5bn all-stock acquisition of operator Equitrans Midstream — is the sole survivor of a round of eastern US pipeline cancellations in 2020-21 caused by permitting issues. MVP was also delayed by permitting lawsuits that forced construction crews to repeatedly halt work, adding billions of dollars to project costs as inflation increased the price of both labour and materials. Construction on the project resumed last year only after extraordinary intervention from the US Congress, which approved all remaining pipeline permits as part of an unrelated law that raised the limit on federal debt. The permitting obstacles for pipelines in the eastern US show no signs of fading, despite smaller changes to speed permitting negotiated through legislation last year. Retiring US senator Joe Manchin, a Democrat from West Virginia, is circulating a comprehensive permitting package he says would fast-track the approval process for pipelines and renewable energy projects. Gas groups say any meaningful permitting bill will have to revise the judicial process and limit the ability of states such as New York to continue using water permits to veto new pipelines. In exchange, renewable energy projects could follow a faster permitting schedule for electricity transmission. But that is a deal many progressive Democrats are reluctant to take, particularly as they face the prospect that former president Donald Trump will win in US presidential elections in November. Far-right Republicans are hesitant to give President Joe Biden a permitting win when they believe they can get a better deal if Trump is elected. But without legislative changes industry officials expect permitting delays to continue whoever is in the White House. "This is not a left or right thing," EQT chief executive Toby Rice says. Sticky red tape Trump's campaign says if he is elected he will speed up approval of gas pipelines serving the Appalachian basin by removing "all red tape". But his regulatory changes when in office failed to make a material difference in permitting timelines, and he repeatedly failed to broker a legislative deal to hasten permitting. Gas industry officials say they want to expedite permitting regardless of the election results, and believe momentum could occur when voters start feeling the effects of delays. "The motivation for pipeline reform I think will increase when the American consumers believe that their energy needs are impacted by the lack of infrastructure," Iowa-based Berkshire Hathaway Energy's gas transmission president, Paul Ruppert, says. The difficulty and time required to permit large greenfield pipelines in the eastern US has led developers to focus on adding capacity to existing pipelines or pursuing shorter expansions instead. By Chris Knight Mountain Valley and its peers Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Yemen’s Houthis hit another bulk cargo carrier: Update


24/06/24
24/06/24

Yemen’s Houthis hit another bulk cargo carrier: Update

Adds Houthi spokesperson comments Singapore, 24 June (Argus) — Yemen-based Houthi militants have struck a Greek-owned and operated bulk cargo carrier in a suspected uncrewed aerial system attack on 23 June, said US Central Command (Centcom) today. This marked the Houthi's fourth attack on the Liberian-flagged Transworld Navigator , which reported moderate ship damage but has continued under way. The vessel most recently docked in Malaysia and was headed to Egypt, according to Centcom. The incident happened near Yemen's Al Hudaydah, according to the UK Maritime Trade Operations (UKMTO). The Transworld Navigator is currently in ballast and last discharged about 133,000t of thermal coal in China in late May, according to global trade analytics platform Kpler. The UKMTO later on 23 June received a separate report of a distress call from a vessel near Yemen's Nishtun. The merchant vessel "suffered flooding that cannot be contained", which forced the crew to abandon the ship, said UKMTO. The Houthis took responsibility for the attacks on the two vessels. The Transworld Navigator had been targeted in the Red Sea using "an uncrewed surface boat" which led to a direct hit against the ship, Houthi spokesperson Yahya Saree said on 23 June. The Stolt Sequoia , which Houthis identified as an oil product tanker, was attacked in the Indian Ocean with a number of cruise missiles. The ships belonged to companies that "violated the ban on entering the ports of occupied Palestine", Saree said in a televised speech. The Stolt Sequoia was expected to arrive in Belgium on 9 July to discharge about 36,000t of base oils, according to Kpler. The Iran-backed Houthis began attacking ships in the Red Sea six weeks after the Israel-Hamas war broke out last year in what they claim is an act of solidarity with Palestinians in Gaza. They have stepped up their attacks in recent days, prompting countermeasures by US and UK military forces deployed in the area. The Red Sea is one of the world's most important shipping lanes, serving as a vital trade link between Europe and Asia. The recent spate of attacks prompted the International Chamber of Shipping to last week call for urgent action to stop the Houthis' "unlawful attacks" on commercial shipping in the Red Sea. This came after the sinking of a second bulk carrier , the Greek-owned and operated Tutor , since November last year. Oil prices were mostly steady despite escalating tensions in the Red Sea. The Ice front-month August Brent contract was at $85.15/bl at 03:43 GMT, down by 0.06pc from the previous settlement. The front-month July WTI crude contract was at $80.66/bl, down by 0.09pc. By Tng Yong Li and Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Yemen’s Houthis hit another bulk cargo carrier: Centcom


24/06/24
24/06/24

Yemen’s Houthis hit another bulk cargo carrier: Centcom

Singapore, 24 June (Argus) — Yemen-based Houthi militants have struck a Greek-owned and operated bulk cargo carrier in a suspected uncrewed aerial system attack on 23 June, said US Central Command (Centcom) today. This marked the Houthi's fourth attack on the Liberian-flagged Transworld Navigator , which reported moderate ship damage but has continued under way. The vessel most recently docked in Malaysia and was headed to Egypt, according to Centcom. The incident happened near Yemen's Al Hudaydah, according to the UK Maritime Trade Operations (UKMTO). The Transworld Navigator is currently in ballast and last discharged about 133,000t of thermal coal in China in late May, according to global trade analytics platform Kpler. The UKMTO later on 23 June received a separate report of a distress call from a vessel near Yemen's Nishtun. The merchant vessel "suffered flooding that cannot be contained", which forced the crew to abandon the ship, said UKMTO. The Houthis took responsibility for the attacks on the two vessels and identified the second vessel as oil product tanker Stolt Sequoia , which Houthis attacked with missiles, according to Yemen's state-run Saba news agency. The tanker was expected to arrive in Belgium on 9 July to discharge about 36,000t of base oils, according to Kpler. The recent spate of attacks prompted the International Chamber of Shipping to last week call for urgent action to stop the Houthis' "unlawful attacks" on commercial shipping in the Red Sea. This came after the sinking of a second bulk carrier , the Greek-owned and operated Tutor , since November last year. Oil prices were mostly steady despite escalating tensions in the Red Sea. The Ice front-month August Brent contract was at $85.15/bl at 03:43 GMT, down by 0.06pc from the previous settlement. The front-month July WTI crude contract was at $80.66/bl, down by 0.09pc. By Tng Yong Li Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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