An oil spill on an onshore pipeline in Scotland in early January forced Chinese-UK venture Petroineos to take Forties grade crude for its 150,000 b/d Grangemouth refinery, and this has pushed the Atlantic basin benchmark higher.
It is unclear if the pipeline, which connects Grangemouth with the Finnart import terminal, has restarted since the spill was detected on 2 January. Nearly 120,000 b/d of crude arrived at Finnart in 2023, according to Vortexa, all of which would go to Grangemouth.
The plant's alternative supply source is directly from the Ineos-operated Forties Pipeline System. Tracking data and loading programmes for Forties grade crude suggest up to 35,000 b/d went to Grangemouth last year.
But in January only four Forties cargoes left the grade's loading terminal at Hound Point, of eight shipments scheduled for the month. The remainder, equivalent to around 90,000 b/d, must have headed to Grangemouth.
This undermined Forties' liquidity and drove its price higher, with other companies still bidding the grade in the afternoon trading window. But Forties still set North Sea Dated as the cheapest of the benchmark grades on 11 out of the 22 sessions in January, partly because US WTI — which set Dated 47pc of the time in December and 75pc of the time in November, on a delivered-Europe basis — was supported by high transatlantic freight rates.
These rates have begun to ease, but the effect of the pipeline outage could extend into February. Traders said Petroineos bought at least three of the eight February-loading Forties cargoes in the February export plan.
The Scottish Environment Protection Agency said it has no updates on the situation at Finnart, and Petroineos declined to comment. Even if the pipeline has been fixed, Grangemouth would struggle to secure supplies from its regular sources this month. In 2023 the plant took 42pc of its feedstock from the US and almost 25pc from Nigeria, with shipping time from both countries being over two weeks. Tracking data show a cargo of Nigerian CJ Blend discharged at Finnart on 3 February, although it is unclear if this cargo would immediately be delivered to Grangemouth.
No shipments are currently on route to the port.
Forties was the cheapest of the six benchmark grades on three of the first four trading sessions in February. In the most recent session, on 6 February, it was the lowest-value grade at the front half of the Dated curve, while the end of the curve was set by WTI.
