US issues Valero Jones Act waiver, open to more: Update

US President Joe Biden said the US is open to issuing additional Jones Act waivers to alleviate fuel supply disruptions along the US Atlantic coast stemming from the outage of the restarting Colonial Pipeline.

The US approved a "temporary and targeted waiver request to an individual company" last night, said Alejandro Mayorkas, secretary of the US Department of Homeland Security.

The US did not name the company that received the waiver, but shipping sources tell Argus it is US refiner Valero. Valero could not be reached for comment.

At least two companies provisionally booked product tankers with options to deliver US Gulf coast fuel to the US Atlantic coast before the waiver was granted.

Yesterday, US refiner Citgo booked the Hong Kong-flagged Forres Park medium range (MR) tanker for a US Gulf coast load with a US Atlantic coast discharge option, according to shipbrokers. Citgo did not immediately respond to a request for comment.

GE Warren booked the Malta-flagged Agioi Fanendes, for a similar move, but has since released the tanker, according to a shipbroker. GE Warren declined to comment.

Jones Act waivers have been granted in the past during times of crisis. This includes following 2017's Hurricane Harvey, which saw widespread damage to Gulf coast refineries and other infrastructure.

The waiver allows non-US flagged vessels to transport refined fuel products from the Gulf of Mexico to affected areas.

"And we'll grant additional waivers if necessary," said Biden today. "These steps are temporary, but they remain in place until full service is fully restored."

The Colonial Pipeline restarted late yesterday and expects every US southeast and Atlantic coast market it serves to receive fuel today.

The limited capacity of the Jones Act-compliant fleet to deliver fuel to the US southeast likely factored into the US decision to grant the waiver. A third of the fleet is laid up because of pandemic-related weak demand and a number of vessels that were available were chartered soon after news of the Colonial Pipeline's outage broke.

One shipbroker familiar with the Jones Act market does not expect the waiver to be expanded or another to be issued.

By Nicholas Watt