Guaido team promises fuel surge in Venezuela
Venezuela's US-backed political opposition is promising to restore stable fuel supply in two weeks if it takes power, kicking off with crude-for-products swaps.
In an initial stage, such swaps would be carried out with Citgo, the US refining arm of Venezuela's US-sanctioned national oil company PdV. Gasoline and diesel could also come from neighboring Colombia or other suppliers with storage in nearby Caribbean islands Curacao and Aruba, where PdV used to lease assets.
According to the opposition's rough fuel supply blueprint, called Plan Pais, 100,000 b/d of gasoline and 40,000 b/d of diesel, plus 1.4mn bl of inventory, would be reestablished through a monthly contingent of 13 tankers holding 340,000 bl apiece, for approximately $140mn. An addition four tankers would replenish stocks, worth another $50mn at an indicative price of around $30/bl.
One challenge to the plan is the volume of crude that Venezuela would be able to offer in the short term. At a nominal price of $30/bl for Venezuela's 16°API Merey crude, a swap for the products would require around 420,000 b/d of production, which is close to the Opec country's current average of 500,000-600,000 b/d. PdV is already committed to servicing a number of oil-backed loans, mainly to China.
In a supplier-to-pump logistics timeframe outlined in the blueprint, the imports would take 6-7 days from the US Gulf coast or 2-3 days from Curacao or Aruba. Internal distribution would need another 5-7 days. The supply would tide over Venezuela until PdV's main refineries, the 635,000 b/d Amuay and the 305,000 b/d Cardon, are repaired. Pump prices would be gradually raised, with targeted subsidies for the most vulnerable.
Plan Pais would be implemented after the departure of President Nicolas Maduro, who has steadfastly resisted US sanctions and opposition efforts to force him out.
The thrust of the strategy was presented today by former PdV board member and Plan Pais technical team member Jose Toro Hardy and National Assembly deputy Elias Matta, who heads the body's oil commission.
The Maduro government is currently in the second choppy week of a rationing and pricing system for gasoline that was recently delivered by Iran. On paper, subsidized gasoline is offered at most retail stations, with about 200 earmarked for sales at international prices. The rollout has been chaotic, although supply in Caracas appears to be stabilizing for now, with shorter or no lines and swifter payment.
For the opposition, the current system is prone to corruption and will soon collapse because Venezuela will run out of Iranian supply and PdV's barely functioning refineries are still not producing usable fuel.
Citgo to court
Houston-based Citgo, which has 750,000 b/d of capacity in three refineries in Texas, Louisiana and Illinois, used to absorb a large share of Venezuela's crude production. But since the US imposed oil sanctions on Venezuela in January 2019, the company has turned to other suppliers such as Colombia.
Citgo is nominally administered by the opposition led by Juan Guaido since early 2019. The US Treasury Department controls its revenue and is protecting the assets from Venezuela's myriad creditors, including Tenor Capital Management which inherited a $1.2bn arbitration award from defunct Canadian gold mining firm Crystallex.
Next week in a Delaware district court, lawyers for Tenor and Guaido are scheduled to file proposals to sell shares in Citgo's parent company, PdV Holding, to satisfy the Crystallex claim.
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US Gulf oil shut-ins drop as Helene nears landfall
US Gulf oil shut-ins drop as Helene nears landfall
New York, 26 September (Argus) — US Gulf of Mexico oil production shut-in levels fell today as Hurricane Helene bore down on Florida's west coast as a category 3 storm, bringing the threat of dangerous storm surge and winds. Around 441,923 b/d of US offshore oil output, or 25pc, was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE). That is down from 29pc on Wednesday as the eastern Gulf path of the storm took it farther away from most offshore production facilities. About 363.39mn cf/d of natural gas production, or 20pc of the region's output, was also off line today, up from 17pc on Wednesday. Operators have evacuated workers from 27 offshore platforms. Helene was last about 145 miles west-southwest of Tampa, Florida, packing maximum winds of 120mph, according to a 4pm ET advisory from the US National Hurricane Center. Further intensification is likely and Helene could approach the coast at category 4 strength, with winds of at least 130mph. Landfall is expected near Port Leon on Apalachee Bay Thursday evening before Helene is forecast to turn northwestward and slow down over the Tennessee Valley on Friday and into the weekend. Earlier this week, offshore operators including BP, Equinor and Chevron took the precaution of suspending some operations and evacuating workers from offshore facilities in advance of the hurricane. Some facilities have since started back up as the hurricane's track shifted away from the main oil and gas hub in the region. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Opec+, Saudis have no target oil price: sources
Opec+, Saudis have no target oil price: sources
Dubai, 26 September (Argus) — Neither Saudi Arabia nor the wider Opec+ group have any specific target for oil prices, and no member of the producers' alliance is about to abandon output discipline in favour of chasing market share, multiple Opec+ sources have told Argus . Oil prices fell earlier on Thursday following unconfirmed press reports that Saudi Arabia may be willing to tolerate lower oil prices as part of a plan to increase crude output to regain market share. Sources within Opec+ have since dismissed those assertions outright, insisting that the basis for the group's collective decision-making will always be market fundamentals, and in particular the five-year average of crude inventories, rather than targeting any particular oil price. "Neither Opec+, Opec nor the Saudis have any price target, let alone $100/bl," one source said, in response to a Financial Times report that stated Saudi Arabia is ready to "abandon its unofficial price target of $100/bl". A second source said the $100/bl figure being reported is not a target but is more likely to refer to a recent estimate issued by banks and other financial institutions of Saudi Arabia's "so-called break-even oil price" — that is, the price the kingdom needs to cover its spending plans. In April, the IMF estimated Saudi Arabia's breakeven oil price at $96.20 for 2024, almost 20pc above the previous year and around a third higher than current Ice Brent futures. "The breakeven is, at best, indicative, but does not tell the full story," the source said. Focusing on it "is totally devoid of the idea that a government has a host of other tools to manage an economy — issuing bonds, borrowing, adjusting one's budget". Eight Opec+ producers, led by Saudi Arabia and Russia, were due to begin a phased return of around 2.2mn b/d of "voluntary" output cuts from the start of next month. But mounting concerns over the strength of the global economy, and in turn oil demand, prompted the group to defer the plan by two months to December. With worries around oil demand not going away, and the market looking likely to flip into a surplus from the start of next year, some observers are questioning whether there will be any need for an increase in Opec+ supply from December. And if the eight members go ahead with unwinding the cuts regardless, whether that would signal a shift in the group's focus to chasing market share. But a third source rejected that view, as the group would "only be reversing what we have cut". "As a group, we have said time and time again that these cuts were both voluntary and temporary, and always stressed that they could be paused or reversed," the source said. "And earlier this month, that's exactly what we did with the two-month deferral to December." December or bust? The rationale to delay the increase in production to December was twofold, according to Opec+ sources. It not only reflected the uncertainty around the global economy, the US and Chinese economies, interest rates and demand. But more importantly, the decision was made to allow Opec+ members that have overproduced this year ꟷ namely Iraq, Kazakhstan and Russia ꟷ more time to show they are serious about compensating for exceeding their output targets. "There is so much uncertainty today which we, as Opec+, have no control over," one of the sources said. "But what we do control is our own affairs." Iraq and Kazakhstan have been under intense pressure in recent months to not only adhere to their pledged targets, but also compensate for past overproduction. While Kazakhstan did manage to produce below its target in August, Iraq continued to struggle. All eyes will be on how these countries do in September. "The overproduction is impacting our credibility, and we need to tackle that. Discipline is paramount," the source said. Reports that Saudi Arabia is committed to start unwinding cuts from December, come what may, are wide of the mark for several reasons, another source said. "First, this is not a decision for Saudi Arabia to make. It is for all eight to decide," he said. The group also still has several weeks before it has to decide whether to proceed with the plan, or defer again, the source added. A decision is due in the first week of November, by which time the group should have better visibility on market fundamentals and Iraqi and Kazakh compensation efforts. "How could we make a decision now when we don't even have September production figures?" the source said. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Hurricane Helene shuts in 29pc of US Gulf oil
Hurricane Helene shuts in 29pc of US Gulf oil
New York, 25 September (Argus) — Hurricane Helene, which is forecast to intensify as it heads for a late Thursday landfall in Florida, has shut in about 29pc of US Gulf of Mexico oil output. Around 511,000 b/d of US offshore oil output was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE), while 313mn cf/d of natural gas production, or 17pc of the region's output, was also off line. Operators have so far evacuated workers from 17 offshore platforms. Helene was last about 110 miles north-northeast of Cozumel, Mexico, according to a 2pm ET advisory from the US National Hurricane Center, with maximum sustained winds of 80 mph. Helene is expected to be a major hurricane, with winds of at least 111mph, when it reaches the eastern Florida coast on Thursday evening. "A turn toward the north and north-northeast with an increase in forward speed is expected later today through Thursday, bringing the center of Helene across the eastern Gulf of Mexico and to the Florida Big Bend coast by Thursday evening," the center said. Shell restarting some production Although the hurricane will largely pass to the east of most offshore oil and gas production areas, companies have taken precautionary measures. Given a shift in the forecast track, Shell said late Tuesday that it had started to ramp up production at the Appomattox platform to normal levels, and was in the process of restoring output at the Stones facility, both off the coast of Louisiana. It paused some drilling operations. Chevron said earlier it was shutting in production at company-operated facilities in the Gulf of Mexico, and evacuating all workers. Equinor said it was shutting down the Titan oil platform. BP had earlier this week started to shut in production at its Na Kika and Thunder Horse platforms, southeast of New Orleans, and was curtailing output from its Argos and Atlantis facilities, as well as removing non-essential staff. US offshore production was disrupted earlier this month when Hurricane Francine made landfall, with up to 42pc of production was offline at one point. The offshore Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US trucking index at 18-month high in August: ATA
US trucking index at 18-month high in August: ATA
Houston, 25 September (Argus) — US trucking freight volumes rose in August to the highest level since February 2023, the American Trucking Association (ATA) said. The ATA's seasonally adjusted Truck Tonnage Index (TTI) rose in August by 1.8pc from a month earlier and by 0.7pc from a year earlier. The index has increased on a monthly and yearly basis only twice in the past 18 months, last doing so in May 2024 . August's "robust gain" indicates freight levels are rebounding from a bottom, according to ATA economist Bob Costello. The TTI's month-to-month movement so far this year also shows the freight market is "at an inflection point," Costello said. The US trucking industry contracted in 2023 and initially got off to a slow start this year. Last week, the Federal Reserve cut its target lending rates for the first time in four years , suggesting the worst inflationary pressures may be over. The TTI is calculated monthly using a survey of ATA membership to estimate seasonally-adjusted trends in the value of US truck freight. Trucking comprises roughly three-quarters of tonnage carried by all modes of transportation in the US, and so can serve as an indicator of the health of the transportation sector and the economy at large. By Gordon Pollock Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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