Updates from the months of July, 2013
• Sonatrach starts development of Tinrhert gas fields – Scheme moves to front-end engineering and design phase.
• Trans-Adriatic Pipeline (TAP) AG has announced that it has won a pipeline contract to supply gas from the Shah Deniz 2 gas field in Azerbaijan to Europe – TAP AG is now expected to provide 10bn cubic metres of gas to Europe per annum via an 800km line partly running subsea. Kjetil Tungland, managing director of TAP, said, “This is an important step in opening up the Southern Gas Corridor and it will have a major role to play in Europe’s energy security and ensuring the diversification of gas supplies to western and south eastern European markets.” The shareholders in project comprise of Axpo Switzerland and Norway’s Statoil with 42.5 per cent interest each and Germany’s E.ON with 15 per cent stake.
• Shell Lubricants Named A Supplier Of The Year By Chrysler Group.
• Russian oil duty set increase 2.9 pct in August 2013.
• The Ice gasoil futures market moved deeper into backwardation, with prompt-month values trading at a premium to the months ahead. July traded at a $7.00/t premium to August, compared with a $2.50/t premium last week, while August traded at a $4.00/t premium to September, against $0.50/t last week. The backwardation in the Ice gasoil market discouraged trading firms from buying jet fuel to put into storage.
• Jet fuel stocks held in independent storage in the Amsterdam, Rotterdam and Antwerp (ARA) trading hub remained higher than a year earlier. Jet fuel stocks fell by 32,000t, or about 8.3pc, over the week to 352,000t as airline demand picked up because of the summer holiday season. But stocks remained about 20pc above the 293,000t level seen during the same week last year.
• The east-west spread stayed positive for July, which is the prompt month, although it narrowed to about $0.90/t from $4.50/t in the previous week. The spreads for August and September moved deeper into the negative at -$4.80/t and -$5.65/t, against -$0.80/t and -$4.40/t respectively in the previous week. The spreads typically have to move deeper into negative territory for the arbitrage to work from the Mideast Gulf to Europe.
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• But the regrade, or the spread between jet fuel and gasoil prices in Asia-Pacific, remained negative as summer gasoil demand remained strong in the region and in the Mideast Gulf. The Asia-Pacific prompt-month regrade has averaged about -$0.80/bl in April-June compared with about +$0.60/t in the year-earlier period and about +$0.30/bl in January-March. This could tighten jet fuel supplies in the region in the months ahead.
• There were no fresh offers from sellers in the region. KPC is likely to have committed the bulk of its production to term supplies, leaving little for spot sales. The refiner has increased term supplies to its Q8 Aviation subsidiary this year. KPC’s last sale was of a 40,000t jet fuel cargo for 1-2 April loading, possibly to Vitol, at Mopag +$2.15/bl.
• Availability remained steady from India, where state-controlled refiner MRPL sold a 40,000t (315,000 bl) jet fuel cargo for loading during 1-3 August from its 300,000 b/d New Mangalore refinery at about Mops -$1.30/bl, possibly to Vitol. The differential was weaker compared to its previous deal with trading firm Mercuria that was done at a discount of $0.90- 1.00/bl to Mops for a similar volume for loading during 24-26 July.
• MRPL issued a new tender to sell a 40,000t (315,000 bl) jet fuel cargo for loading during 11-13 August from New Mangalore. The tender closes on 3 July with validity until 4 July. MRPL exports two or three medium-range size jet fuel cargoes a month. Indian private-sector refiner RIL also exports jet fuel, but mostly to Europe.
• State-owned IOC has a tender to sell 35,000t of naphtha for 28-30 July loading from Chennai. The tender closes on 3 July and has a single day’s validity. These cargoes are likely to head east.
• ONGC’s subsidiary MRPL offered 35,000t of naphtha through a tender for 6-8 August loading from New Mangalore. The tender closes on 4 July with same-day validity. MRPL last sold a similar cargo to Japanese trading firm Marubeni at about $25-26/t above Mopag for 28-30 July loading from the same port. That was MRPL’s fifth cargo for loading during July. MRPL has restarted a 120,000 b/d crude distillation unit at its 300,000 b/d Mangalore refinery, which had been shut since second-half May for maintenance lasting around a month (see news).
• RIL sold 55,000t of naphtha to Chinese trading firm Unipec at a premium of $21-22/t to Mopag for 24-28 July loading from Sikka. It earlier sold another 55,000t cargo to trading firm Vitol at a similar level for 5-10 July loading.
• High prices of LPG, an alternative cracking feedstock, provided some buying support for naphtha. But Asia-Pacific might have difficulty fully absorbing surplus European cargoes. LPG can replace up to 15pc of naphtha in some advanced South Korean and Taiwanese crackers.
• The Mideast Gulf naphtha premium fell by $0.50/t to $24/t as of 1 July as heavy arbitrage inflows enabled buyers to insist on lower premiums.
• Naphtha premiums slipped slightly as ample availability weighed on crack spreads.
• Lower Asia-Pacific demand sent the regional crack spread, or 92R gasoline’s margin relative to Brent crude, down by $2.90/bl or about 26pc to $11.35/bl on 1 July from $14.25/bl on 24 June. The product’s premium to naphtha also edged down by about $0.10/bl over the week to $21.05/bl.
• Acceptance of ‘green’ lubricants growing. Re-refining industry will see a robust growth to an estimated 1.39 million MT by 2016
• Anglomoil’s Synthetic Food Grade (SFG) lubricants range has been awarded ISO 21469 certification NSF International.
Updates from the months of July, 2013