India's SPR, MRPL sign crude storage deal

Market: Crude oil
03/12/24

Indian Strategic Petroleum Reserves Limited (ISPRL) has signed an agreement with state-owned refiner MRPL to store and manage crude at the former's Mangalore facility.

ISPRL plans to lease around 750,000t of its 1.5mn t (11mn bl) Mangalore storage site in the southern Karnataka state to MRPL for 3-5 years, an official told Argus.

Iraqi Basrah Heavy and Basrah Medium are likely to be stored in the cavern, another source close to the matter said.

Abu Dhabi's state-controlled Adnoc has held around 5.86mn bl of crude at the Mangalore facility since a deal signed in 2018, and is the only foreign company to do so. Adnoc received permission from the Indian government in March 2024 to export crude from its stocks at the Mangalore facility, but has not done so.

ISPRL has also leased out 300,000t at its 1.33mn t Visakhapatnam facility to state-controlled refiner HPCL for 2024-27.

ISPRL has underground crude oil storages of 1.33mn t at Visakhapatnam in Andhra Pradesh state, 1.5mn t at Mangalore and 2.5mn t at Padur in Karnataka state, putting the total capacity at 5.33mn t. ISPRL is responsible for maintaining India's crude oil reserve for emergency use in case of a shortage.

India's 5.33mn t storage capacity can provide for about 9.5 days of crude oil requirements, according to a government document. Oil marketing companies have storage facilities for crude oil and petroleum products for 64.5 days, which brings the current total national capacity for storage of crude oil and petroleum products to 74 days.

India is the world's third-largest consumer of crude oil and depends on imports to meet around 90pc of its requirements. Given its heavy reliance on imported crude, the country is looking to expand its strategic petroleum storage to mitigate any supply disruptions.

The continuing Middle East conflict has raised worries about any impact on supply and prices. Indian oil and gas minister Hardeep Singh Puri has said that global crude oil supply from traditional and non-traditional producers remains ample despite the conflict and that India is confident of navigating any challenges this may pose.

The deal also comes as India focuses on diversifying its crude sources, having ramped up imports from Brazil and Venezuela in November.

By Roshni Devi and Rituparna Ghosh

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26/12/24

Viewpoint: US tariffs may push more Canadian crude east

Singapore, 26 December (Argus) — Canada may divert crude supplies from the US to Asia-Pacific via the Trans Mountain Expansion (TMX) pipeline in 2025, should president-elect Donald Trump impose tariffs on Canadian imports. Trump has declared that he will implement a 25pc tax on all imports originating from Canada after he is sworn into office on 20 January. This will effectively add around $16/bl to the cost of sending Canadian crude to the US, based on current prices, and impel US refiners to cut their purchases. The US imported 4.57mn b/d of Canadian crude in September, according to data from the EIA. Canadian crude producers are expected to turn to Asian refiners in their search for new export outlets. This is especially after Asian refiners gained easier access to such cargoes following the start-up of the 590,000 b/d TMX pipeline in May. The new route significantly shortens the journey to ship crude from Canada to Asia. It takes about 17 days for a voyage from Vancouver to China, compared with 54 days from the US Gulf coast to the same destination. China has become the main outlet for Asia-bound shipments from Vancouver, accounting for about 87pc of the 200,000 b/d exported over June-November, according to data from oil analytics firms Vortexa and Kpler (see chart). But even if the full capacity of the TMX pipeline is utilised to export crude to Asia from Vancouver, it will still only represent a fraction of current Canadian crude exports to the US. Vancouver sent just 154,000 b/d via the TMX pipeline to US west coast refiners over June-November, Vortexa and Kpler data show. Meanwhile, latest EIA figures show more than 2.63mn b/d of Canadian crude was piped into the US midcontinent in September, while US Gulf coast refiners imported 469,000 b/d. This means Canadian crude prices will likely come under downward pressure from higher costs for its key US market, should Trump's proposed tariffs come to pass. This will further incentivise additional buying from Chinese customers, as well as other refiners based elsewhere in Asia-Pacific. India, South Korea, Japan, and Brunei have already imported small volumes of Canadian TMX crude in 2024. A question of acidity But other Asian refiners have so far been reluctant to step up their heavy sour TMX crude imports because of concerns over the high acidity content. China has been mainly taking Access Western Blend (AWB), which has a total acid number (TAN) as high as 1.6mg KOH/g. Acid from high-TAN crude collects in the residue at the bottom of refinery distillation columns where it can corrode units, which deters many refineries from processing such grades. But Chinese refiners have been able to dilute the acidity level by blending their AWB cargoes with light sweet Russian ESPO Blend, allowing them to save costs compared to buying medium sour crude from the Mideast Gulf. Cold Lake, the other grade coming out of the TMX pipeline, has a lower TAN and is currently popular with refiners on the US west coast. But higher costs from potential tariffs could prompt Cold Lake exports to be redirected from the US to buyers in South Korea, Japan, and Brunei — which had all bought the grade previously. Canadian crude appears to have so far displaced medium sour grades in Asia-Pacific, and this trend is expected to continue should TMX crude flows to the region climb higher in 2025. More Canadian crude heading to Asia may displace and free up more Mideast Gulf medium sour supplies to buyers in other regions, including US refiners looking for replacements to their Canadian crude imports. This will also limit the flows of other arbitrage grades like US medium sour Mars crude to Asia-Pacific, which has already seen exports to Asia dwindle in 2024. Opec+ is also due to begin unwinding voluntary production cuts in April 2025, which means Canadian producers will likely have to lower prices sufficiently to attract buyers from further afield. By Fabian Ng TMX exports from Vancouver (b/d) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Crude production resumes at Karoon’s Brazil Bauna field

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24/12/24

Crude production resumes at Karoon’s Brazil Bauna field

Sydney, 24 December (Argus) — Australia-listed oil producer Karoon Energy has restarted its Bauna project offshore Brazil, the firm said today. Output resumed late on 22 December local time, Karoon said. This followed the repair of one of two mooring chains tethering its floating production, storage and offloading (FPSO) vessel, which failed on 11 December , leading the company to cut its 2024 guidance to 27,600-28,100 b/d of oil equivalent (boe/d), down from an earlier 28,700-29,500 boe/d. The second mooring chain is expected to be repaired by mid-January, Karoon said. An investigation into the failure will be jointly undertaken with FPSO owner and operator Ocyan, and its joint-venture partner Altera Infrastructure. Bauna production was about 24,500 b/d before the shutdown, with Karoon expecting to reach this level again in the coming days. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Viewpoint: Europe’s refiners eye support from closures

23/12/24

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23/12/24

Viewpoint: Europe’s refiners eye support from closures

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US House votes to avert government shutdown

20/12/24

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US government agencies set to shut down

20/12/24

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