USGC diesel shippers look for alternatives
US Gulf coast diesel shipments on the Colonial pipeline are shrinking rapidly, as the arbitrage into the Atlantic coast has become so poor that Gulf coast suppliers would rather export, store, or ship it to the midcontinent.
The Colonial pipeline said late last month it had no diesel input from Houston, Texas, after volume declines in already caused lengthy delays in shipping times on the pipeline.
Around 613,000 b/d of distillates moved from the US Gulf coast to the Atlantic coast via pipeline in January, the lowest level since August 2017 when Hurricane Harvey shut production and pipelines in the Gulf coast. Apart from the two months following Harvey, January distillates shipments were at their lowest level since 2012, data from the US Energy Information Administration (EIA) show.
January was the height of the winter heating season in the northeast. Since then, pipeline distillates movements have fallen further as the Atlantic coast market looked to imports from Europe.
The mid-February winter storm cut fuel production so much that Gulf coast refiners have still not returned to pre-storm rates as of early April. While the storm reduced availability for pipeline input through March, waterborne diesel exports held up in March and rose further in early April. Regional inventories in the Gulf coast grew during the same time, as did arbitrage shipments to the midcontinent. These Colonial pipeline alternatives have all proven more attractive than shipping to the Atlantic coast in recent weeks.
Alternatives abound
Mexico imported more waterborne diesel from the US Gulf coast in March, which helped offset a sharp drop in Gulf coast exports to Brazil. Brazil instead pulled supplies from India and floating storage off West Africa.
Brazil is reducing the biodiesel blend mandate to 10pc in May and June, down from 13pc. This mandate reduction could potentially shift about 28,000 b/d of demand to diesel, which is equal to about three mid-range vessel cargoes per month that could come from the US Gulf coast, sources say.
While movement restrictions aimed to limit the spread of Covid-19 have considerably cut into Brazil's gasoline demand, the country's diesel consumption has mostly held up from steady industrial, agricultural and trucking sectors.
Exports have picked up as fob prices have come off since February highs, widening arbitrage out of the region. Gulf coast Colonial pipeline ultra-low sulphur diesel (ULSD) has remained in the low $1.70/USG range in early April, including some of the lowest levels since the arctic storm lifted prices in mid-February.
Around 940,000 b/d of diesel has loaded out of the US Gulf coast so far this month, up from around 690,000 b/d in March and approaching the 1mn b/d that loaded in April 2019, Vortexa estimates show.
High renewable volume obligation (RVO) have also added considerable incentive to export road fuels.
Domestically, the midcontinent market has proven a more profitable outlet than the Atlantic coast in recent weeks amid heighted demand from the agricultural sector during spring planting season. Both Chicago, Illinois, and Tulsa, Oklahoma, have seen diesel prices well above Gulf coast levels, attracting an increase in arbitrage input into the Magellan and Explorer pipelines originating from the Houston area.
It also appears that putting diesel into storage is more attractive for some Gulf coast suppliers than shipping on the Colonial. US Gulf coast distillates inventories rose to 52mn bl during the week ended 2 April, a six-week high, EIA data show.
The contango in Nymex diesel futures averaged around 0.22¢/USG so far this month going from May to June, narrower than an average of 2.68¢/USG during the same period in 2019.
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East-west marine biodiesel spread near six-month low
East-west marine biodiesel spread near six-month low
London, 6 September (Argus) — The east-west marine biodiesel spread narrowed amid firm demand for the B24 blend in Singapore and lacklustre spot marine biodiesel demand in northwest Europe in recent sessions. The east-west marine biodiesel spread — the premium held by B30 used cooking oil methyl ester (Ucome) dob ARA to B24 Ucome dob Singapore — was marked at $47.50/t on 5 September, its narrowest since 19 March. The spread narrowed amid a noted increase in demand from Asian-based shipowners who embark on voyages to Europe ahead of the implementation of FuelEU Maritime regulations in Europe next year — according to market participants. The latter had also reported an increase in B24 demand in Singapore from containerships seeking scope 3 emissions rights that can then be passed on to cargo owners. Scope 3 emissions rights can be obtained on a mass-balance system, allowing shipowners flexibility with regards to the port at which a blend can be bunkered. Argus assessed B24 dob Singapore prices at an average of $720.70/t on 1 July–5 September this year, compared with $757.70/t on 8 February–28 June following the launch of the B30 Ucome dob ARA price on 8 February. Consequently, the east-west marine biodiesel spread was marked at an average of $95.34/t on 1 July–5 September, compared with $74.57/t on 8 February–28 June. A wider east-west spread would incentivise shipowners to opt for the B24 blend in Singapore rather than ARA, when operationally viable, to meet the voluntary scope 3 demand from their customers. Rising demand in the Singapore bunkering hub was further supplemented by higher sales of marine biodiesel blends at the port. According to official data released by the Maritime and Port Authority of Singapore, sales of marine biodiesel blends in the second quarter of the year were marked at about 161,400t — higher by 34,500t from the previous quarter. This was also higher by 52,600t from the second quarter of last year. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Pemex unbilled debts to suppliers climb
Pemex unbilled debts to suppliers climb
Mexico City, 5 September (Argus) — Service providers for Mexico's Pemex are unable to submit new invoices for services performed nearly a year ago even as the state-owned company also struggles to pay down past bills, sources say. These unsubmitted invoices do not appear in Pemex's financial records or in its monthly supplier debt reports, three Pemex suppliers who work mostly in the northern region of the Gulf of Mexico told Argus . Pemex provides vendors a system to submit bills for review and processing, leading to an invoice codifying payments and discounts (Copades). At this stage, Pemex certifies the pending invoice, making it part of the company's monthly supplier report —a transparency measure implemented in 2021. Pemex reduced its overdue debts to service providers by 6pc from May-July, with Ps126.4bn ($6.78bn) in unpaid invoices as of 31 July, down from Ps133.9bn in May. But a significant amount of unbilled work remains because Pemex has not issued the necessary Copades for vendors to begin the payment process, and some of the bills date back to work performed in September, according to two of the vendors. Without the Copades, companies must classify these debts as uncollectible, one vendor said. The issue is concentrated in Mexico's northeast maritime region, where Pemex produces about half of its crude and gas output, according to the vendors. This region includes the Cantarell and Ku-Maloob-Zap fields. Pemex has requested vendors to perform tasks in the area, but the company then claims there is no budget allocated for those bills, the vendors said. This unbilled work adds to Pemex's recognized debt to suppliers, but the size of this unrecognized debt is impossible to estimate, the vendors added. Pemex's unpaid invoices and short-term vendor debts stand at record-high levels, despite receiving over $70bn in government support since 2019. By Edgar Sigler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Roadblocks across Colombia cut LPG supply
Roadblocks across Colombia cut LPG supply
Bogota, 5 September (Argus) — Colombia's LPG shortages are worsening as a fourth day of protests and roadblocks over higher diesel prices are limiting production and distribution. Protesters have completely blocked roads to processing plants in the key Cusiana and Cupiagua fields, preventing trucks from moving supply. Those two fields along with the Ty Gas processing plant handle 41pc of the country's LPG supply, LPG association (Agremgas) director Sara Velez told Argus . Colombia uses about 60,000 metric tonnes (t)/month of LPG. The Cusiana plant that produces about 15,000t/month of LPG is flaring 100t/d of LPG that cannot be transported, Velez said. "If Cusiana is unable to move out the LPG, it may force it to shut in, affecting natural gas as well," Velez said. Blockades are also preventing LPG produced at the 250,000 b/d Barrancabermeja and the 200,000 b/d Cartagena refineries from reaching distributors. The refineries produce 24pc of the country's LPG supply, equivalent to 14,400t/month. Adding to troubles, multiple rebel attacks have put sections of the country's 220,000 b/d Cano Limon-Covenas and the 120,000 b/d Bicentenario crude pipelines out of service for repairs, restricting crude supply to the refineries. The smaller LPG field of Capacho controlled by Canadian oil company Parex shut in 5,000 b/d of oil equivalent (boe/d), or about 10pc of its Colombian output. That reduced LPG supplies to the Arauca department, the LPG association added. The departments of Caqueta, Cundinamarca and Valle del Cauca have inventories for four days. Another 28 departments have LPG inventory for one or two days. Velez has called on the government to create a safe corridor to help LPG reach consumers. The LPG shortage is also affecting industries. Fenavi, the country's poultry association, consumes 42mn kg/yr of LPG, which is equivalent to state-controlled Ecopetrol's monthly LPG production. The LPG is used to warm the poultry, but the association also said that blockades have also cut supplies of feed and could put the chickens at risk of starvation. The country produces 1.8mn tonnes/yr of chickens and 1.6bn eggs/yr. In Colombia 1.2mn families already still cook with wood, and the current shortage will likely increase that number. By Diana Delgado Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Idemitsu completes biofuel trial for bunkering vessels
Idemitsu completes biofuel trial for bunkering vessels
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