Total starts biojet production at La Mede biorefinery

Spanish Market: Biofuels, Oil products
08/04/21

Total said today that it has begun producing sustainable aviation fuel (SAF), or biojet, at its La Mede biorefinery in southern France.

The SAF will be produced from used cooking oil (UCO) and other waste and residues and will be delivered to French airports starting this month. The firm said it will not use vegetable oils as feedstock. France banned the use of palm oil from 2020 and has capped the use of soybean oil at 0.7pc from 2021.

Total's decision to ramp up SAF production follows France's introduction of a SAF mandate of 1pc in 2022, to increase to 2pc by 2025 and 5pc by 2030.

Total converted La Mede into a 500,000 t/yr hydrotreated vegetable oil (HVO) plant in July 2019. It said last year that the plant had capacity to produce up to 100,000 t/yr of SAF, but that it had been focusing on road fuels production.

Total also plans to produce up to 170,000 t/yr of SAF at its Grandpuits refinery near Paris once it has converted the facility into a biorefinery by 2024.

EU biojet production is currently around 35mn l/yr — around 123,000 t/yr — from various feedstocks. This accounts for around 0.05pc of the region's total jet fuel consumption. Output could rise to 1.5mn-1.7mn t/yr by 2030, amounting to 2-10pc of total pre-Covid jet demand, according to an industry policy paper.

SAF demand will largely be driven by national and EU-wide mandates. France's mandate follows the introduction of a 0.5pc biojet blending mandate in Norway in 2020, which will rise to 30pc by 2030. In Sweden, the government is evaluating an emissions reduction of 0.8pc from jet fuel used in the country from July 2021, increasing to 27pc by 2030, and Germany is mulling the introduction of a 0.5pc synthetic SAF mandate by 2026 that would increase to 1pc by 2028 and 2pc by 2030.

The European Commission has postponed proposals aimed at tackling aviation emissions until mid-2021, including the introduction of a 1-2pc EU-wide blending quota as well as the revision of the 1.2x multiplier component for SAF under the recast Renewable Energy Directive (RED II).

By Giulia Squadrin

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03/01/25

Viewpoint: India bitumen demand growth prospects mixed

Singapore, 3 January (Argus) — Prospects of India's 2025 bitumen consumption growth are mixed, as state governments' delayed disbursement of project funds are likely to persist and weigh on demand while the many incomplete projects could boost consumption. India is a net bitumen importer and the biggest consumer of Middle East origin bitumen, especially from Iran. India's bitumen consumption had touched record highs in 2022 and 2023 and surpassed 8mn t/yr, despite prolonged payment delays, as importers had offered atypically longer credit terms to road contractors. All importers and traders are "struggling with payment recovery", an Indian importer said. Many contractors are demanding credit as several state governments have not released funds, the importer added. "Demand is not bad, but it really depends on funding. Demand won't increase by a lot [next year], but it should be quite stable [to 2024]." High inventory pressure forced importers to offer atypically bigger discounts to liquidate cargoes, which squeezed their profit margins, especially as import costs increased given a supply crunch in Iran. But there is no dearth of projects as many were delayed because of funding constrains, importers said. Some state-controlled refiners anticipate consumption to grow next year, albeit marginally. Refiners were previously forced to offer larger discounts against listed values to attract more customers, which weighed on their profit margins this year. This could continue into 2025 would ultimately pressure refiners to reduce bitumen output and increase production of other higher valued oil products. Indian refiners typically produce around 5mn t/yr, which accounts for around 55-60pc of total bitumen consumption. "We are only expecting a 3-4pc increase in demand on year as no new major road projects have been announced, so it is hard to see a larger growth," a source close to a state-refiner said. "But imports will increase if we reduce production, given growth will still be in [the] positive. So next year will not be that fantastic in comparison and there would not be any capacity augmentation for bitumen." This indicates that the central government's expectation that Indian bitumen consumption will rise by 14pc on the year to 10mn t during the ongoing financial year ending March 2025 could be at risk. Limited Middle East exports Vacuum bottom feedstock supply has been erratic in Iran, and feedstock transportation from national refineries to private bitumen producers has also been delayed this year, which market participants expect to persist in the coming year. This will limit feedstock availability and in turn bitumen output, increasing export cost especially for higher priced VG40 grade, which is imported by India. Tight supply has also increased congestions at the Bandar Abbas port, forcing vessel owners and importers to incur higher demurrage, increasing costs and weighing on import appetite. There are also fears that the new Trump administration may impose more sanctions and other political measures on Iran next year, further clouding the export outlook. Iranian central bank's recent announcement to phase out the Nima foreign exchange platform has increased uncertainty on the rials' value against the US dollar as importers and exporters will now have to trade based on mutually agreed exchange rates, with the free market rate still depressed. Meanwhile, Baghdad's recent directive to stop oil and other oil products from entering Iran, unless the exports are licensed by state-owned Somo, could also limit drummed bitumen exports as bitumen producers do not typically possess a Somo licence. Iraqi drums are generally transshipped out of Bandar Abbas. The recent upgrade of Bahrain's state-owned Sitra refinery to 380,000 b/d from 267,000 b/d will primarily boost middle distillate and naphtha output, weighing on bitumen production. Middle East cargoes are also typically exported to southeast and east Asia during low demand periods in India. Seaborne prices in Asia rose to multi-year highs in 2022 and import appetite for relatively cheaper Middle East-origin bulk cargoes increased, which continued in 2023. Appetite from Asia this year was mostly from China and Vietnam, as other buyers preferred Asia-origin cargoes because of compatible specifications and proximity. "The Middle East-Asia arbitrage is closed, and we will see very little-to-no cargoes from the UAE to Asia," a southeast Asia-based trader said. This is because Middle East-origin cargo cfr prices are not likely to be competitive to Asian cargoes, with supply and loading constraints in Iran adding to the uncertainties. By Maedeh Mazinani, Sathya Narayanan and Chloe Choo Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: Road auctions may buoy Brazil asphalt demand

02/01/25

Viewpoint: Road auctions may buoy Brazil asphalt demand

Sao Paulo, 2 January (Argus) — Demand for asphalt in Brazil is expected to remain elevated in 2025, boosted by a number of highway projects planned to be tendered this year. The Ministry of Transportation expects to seek tenders in 15 auctions this year . Overall, the Brazilian Association of Highway Concessionaires looks for 3,000km worth of roadway projects to be awarded at the federal level, along with another 4,000km at the state level. That is up from 10 auctions for projects covering 4,000km of paving work at the federal and state level last year. This anticipation of such an active paving year is upending the conventional wisdom that a year without elections means less asphalt demand. Typically, paving work on public streets and highways is more concentrated during election years, when mayors and governors focus their public budgets on infrastructure work to appease voters. President Luiz Inacio Lula da Silva's administration has asked lawmakers to allocate R$12.8bn for the National Department of Transportation Infrastructure in 2025, up by nearly R$240mn from the amount approved for 2024. The National Congress is expected to take up the annual budget law in February, after the parliamentary recess, and may make considerable changes. State-controlled Petrobras expects to sell around 2.7mn t of asphalt in 2025, or 1pc more than its 2024 projections. This past year was record-breaking for the Brazilian asphalt market, with more than 2.76mn tons of asphalt sold through October, according to oil regulator ANP. This was 10pc more than what was sold in the same period in 2023, in a year in which asphalt demand reached its highest level since 2014. Asphalt imports increased in 2024 as a result. Brazil's asphalt sales exceeded local production by an average of 18pc, boosting the purchase of imported material earlier in the year. US Gulf coast exports to Brazil reached an all-time high in October , according to data from Kpler. During the first 11 months of 2024, Brazil imported 300mn t of asphalt, also primarily from the US Gulf. By Julio Viana Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: European jet may struggle to find support

02/01/25

Viewpoint: European jet may struggle to find support

London, 2 January (Argus) — European jet fuel prices weakened over the course of 2024, and support is difficult to see in the coming year. Outright jet fuel values in Europe averaged $802/t between January and November, with the highest prices between February and April. In the second half of 2024 prices fell, to average $721.50/t in November, down by almost 18pc from January and even more compared with the November 2023 average of $921.50/t. In December, values for delivered jet fuel cargoes often dropped to below $700/t ( see graph ). Jet fuel supply to Europe ramped up in 2024, and was consistently strong throughout the year . This peaked in August-September, coinciding with the fall in prices. Large developments in Middle Eastern refinery capacity caused the increases in supply. Refining margins for jet fuel in Europe are likely to remain underwhelming. Argus Consulting estimates jet fuel premiums to North Sea Dated to average around $13/bl in 2025, compared with $20.53/bl in the first 11 months of 2024 and $29.30/bl in 2023. Weaker overall refining margins have led to capacity closure plans in 2025, so imports will probably compose a greater proportion of European jet fuel supply in the coming years. Eurostat data for January-July 2024 show a 0.7pc year on year rise in EU jet fuel demand. Argus Consulting calculates European jet fuel demand was 1.5pc up on the year for all of 2024. Flights across the Eurocontrol network totalled more than 9.44mn in January-November, higher by more than 10pc from the same period in 2023. Most areas in Europe have now equalled or surpassed pre-pandemic flight levels. Yet strong supply seems to have outstripped rising demand in 2024, and market participants expect the same in 2025 even though Middle East and Indian refiners now say arbitrage economics to Europe are closed . With northwest European jet fuel holding its narrowest premium to Singaporean jet fuel in three years, more jet has been shipped east in recent months. Since late November, Singaporean values have even surpassed those in Europe. But market participants do not expect serious tightness in European supply. Even air traffic growth may not proportionally raise European jet fuel demand in the coming year, as sustainable aviation fuel (SAF) mandates now require at least 2pc blending in the EU and UK, as of 1 January. European SAF prices fell by more than 30pc between January and November ( see graph ), as SAF supply and refining capacity grew ahead of the mandate. Increasing mandates in the coming years may weigh further on fossil jet demand. Crucially, however, suppliers only need to include 2pc SAF in all jet fuel over the course of the year, not immediately. This means many European suppliers will continue to use 100pc fossil jet fuel until the early part of 2025 at least. Some market participants have confirmed they intend to do this, while the relevant SAF infrastructure, logistics and administration are finalised. Fossil jet fuel balances may therefore be little changed early in 2025 — although if suppliers blend less than 2pc SAF at first, they would need to blend more than that later in the year, using accordingly less fossil jet at that point. Increasing fuel efficiency of aircraft has been pressuring European jet fuel demand. But Boeing and Airbus are heavily delayed in their delivery of newer, fuel-efficient aircraft. Boeing had 4,750 unfulfilled orders of its 737 MAX aircraft as of late October, while Airbus lowered its commercial aircraft delivery targets earlier this year . Aviation analytics firm OAG has forecast supply of aircraft will remain tight until at least 2026. This led fuel efficiency in Europe to improve by only 1.1pc in 2024 compared with 2023, according to Argus Consulting . By Amaar Khan Jet/kerosine NWE cif $/t RED SAF fob ARA $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Q&A: EU biomethane internal market challenged

02/01/25

Q&A: EU biomethane internal market challenged

London, 2 January (Argus) — The European Commission needs to provide clearer guidance on implementing existing rules for the cross-border trade of biomethane to foster a cohesive internal market as some EU member states are diverging from these standards, Vitol's Davide Rubini and Arthur Romano told Argus. Edited excerpts follow. What are the big changes happening in the regulation space of the European biomethane market that people need to watch out for? While no major new EU legislation is anticipated, the focus remains on the consistent implementation of existing rules, as some countries diverge from these standards. Key challenges include ensuring mass-balanced transport of biomethane within the grid, accurately accounting for cross-border emissions and integrating subsidised biomethane into compliance markets. The European Commission is urged to provide clearer guidance on these issues to foster a cohesive internal market, which is essential for advancing the EU's energy transition and sustainability objectives. Biomethane is a fairly mature energy carrier, yet it faces significant hurdles when it comes to cross-border trade within the EU. Currently, only a small fraction — 2-5pc — of biomethane is consumed outside of its country of production, highlighting the need for better regulatory alignment across member states. Would you be interested in seeing a longer-term target from the EU? The longer the visibility on targets and ambitions, the better it is for planning and investment. As the EU legislative cycle restarts with the new commission, the initial focus might be on the climate law and setting a new target for 2040. However, a review of the Renewable Energy Directive (RED) is unlikely for the next 3-4 years. With current targets set for 2030, just five years away, there's insufficient support for long-term investments. The EU's legislative cycle is fixed, so expectations for changes are low. Therefore, it's crucial that member states take initiative and extend their targets beyond 2030, potentially up to 2035, even if not mandated by the EU. Some member states might do so, recognising the need for longer-term targets to encourage the necessary capital expenditure for the energy transition. Do you see different interpretations in mass balancing, GHG accounting and subsidies? Interpretations of the rules around ‘mass-balancing', greenhouse gas (GHG) emissions accounting and the usability of subsidised biomethane [for different fuel blending mandates] vary across EU member states, leading to challenges in creating a cohesive internal market. When it comes to mass-balancing, the challenges arise in trying to apply mass balance rules for liquids, which often have a physically traceable flow, to gas molecules in the interconnected European grid. Once biomethane is injected, physical verification becomes impossible, necessitating different rules than those for liquids moving around in segregated batches. The EU mandates that sustainability verification of biomethane occurs at the production point and requires mechanisms to prevent double counting and verification of biomethane transactions. However, some member states resist adapting these rules for gases, insisting on physical traceability similar to that of liquids. This resistance may stem from protectionist motives or political agendas, but ultimately it results in non-adherence to EU rules and breaches of European legislation. The issue with GHG accounting often stems from member states' differing interpretations of the IPCC Guidelines for National Greenhouse Gas Inventories. Some states, like the Netherlands, argue that mass balance is an administrative method, which the guidelines supposedly exclude. Mass balancing involves rigorous verification by auditors and certifying bodies, ensuring a robust accounting system that is distinct from book and claim methods. This distinction is crucial because mass balance is based on verifying that traded molecules of biomethane are always accompanied by proofs of sustainability that are not a separately tradeable object. In fact, mass balancing provides a verifiable and accountable method that is perfectly aligned with UN guidelines and ensuring accurate GHG accounting. The issue related to the use of subsidised volumes of biomethane is highly political. Member states often argue that if they provide financial support — directly through subsidies or indirectly through suppliers' quotas — they should remain in control of the entire value chain. For example, if a member state gives feed-in tariffs to biomethane production, it may want to block exports of these volumes. Conversely, if a member state imposes a quota to gas suppliers, it may require this to be fulfilled with domestic biomethane production. No other commodity — not even football players — is subject to similar restrictions to export and/or imports only because subsidies are involved. This protectionist approach creates barriers to internal trade within the EU, hindering the development of a unified biomethane market and limiting the potential for growth and decarbonisation across the region. The Netherlands next year will implement two significant pieces of legislation — a green supply obligation for gas suppliers and a RED III transposition. The Dutch approach combines GHG accounting arguments with a rejection of EU mass-balance rules, essentially prohibiting biomethane imports unless physically segregated as bio-LNG or bio-CNG. This requirement contradicts EU law, as highlighted by the EU Commission's recent detailed opinion to the Netherlands . France's upcoming blending and green gas obligation, effective in 2026, mandates satisfaction through French production only. Similarly, the Czech Republic recently enacted a law prohibiting the export of some subsidised biomethane . Italy's transport system, while effective nationally, disregards EU mass balance rules. These cases indicate a deeper political disconnect and highlight the need for better alignment and communication within the EU. We know you've been getting a lot of questions around whether subsidised bio-LNG is eligible under FuelEU. What have your findings been? The eligibility of subsidised bio-LNG under FuelEU has been a topic of considerable enquiry. We've sought clarity from the European Commission, as this issue intersects multiple regulatory and legal frameworks. Initially, we interpreted EU law principles, which discourage double support, to mean that FuelEU, being a quota system, would qualify as a support scheme under Article 2's definition, equating quota systems with subsidies. However, a commission representative has publicly stated that FuelEU does not constitute a support scheme and thus is not subject to this interpretation. On this basis, FuelEU would not differentiate between subsidised and unsubsidised bio-LNG. A similar rationale applies to the Emissions Trading System, which, while not a quota obligation, has been deemed to not be a support scheme. Despite these clarifications, the use of subsidised biomethane across Europe remains an area requiring further elucidation from European institutions. It is not without risks, and stakeholders require more definitive guidance to navigate the regulatory landscape effectively. By Emma Tribe and Madeleine Jenkins Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: USGC diesel exports may get European boost

02/01/25

Viewpoint: USGC diesel exports may get European boost

Houston, 2 January (Argus) — US Gulf coast (USGC) diesel exports were on pace to rise in 2024, and growing demand from Europe could sustain the trend into 2025 as Brazil demand may falter. US Gulf coast diesel exports rose to an estimated 242mn bl, or 661,000 b/d in 2024, up by 9.5pc from 2023, according to oil analytics firm Vortexa. Figures are still subject to revisions as more information about cargoes and destinations in the final weeks of December become known. Exports strengthened in the second half of 2024 despite headwinds. From July through December, exports rose to 728,000 b/d, up from 593,000 b/d in the first half of the year. Europe was the top destination for US Gulf coast diesel exports in 2024, receiving 216,000 b/d, or 33pc, of the region's exports, up from 135,000 b/d, or 22pc, in 2023. South America was the second biggest destination for US Gulf coast diesel exports in 2024, even as the continent's share fell to 29pc from 35.5pc in 2023. Central America and Mexico received 24pc of US Gulf coast diesel exports in 2024. US Gulf coast diesel exports to Mexico dropped to 103,000 b/d during the second half of the year, down by 21pc from the first half of 2024, according to Vortexa. Mexico's energy policies aim to drive the country closer to energy independence, and Pemex's new 340,000 b/d Dos Bocas refinery is one tool to achieve that goal. The refinery was scheduled to fully be on line in 2024 but operated only intermittently during the year. It is expected to run more steadily in the first quarter 2025, according to market sources. This could further reduce shipments from the US Gulf coast to Mexico. But demand in other markets may mitigate this loss. While the total volume of diesel shipped to Mexico, Central and South America dropped by 12.2pc in 2024, diesel exports to the regions are expected to remain resilient in 2025, despite a traditional slowdown in the first two months of the year. Typically, US Gulf coast diesel exports in January and February slow as winter weather clips European demand while South American demand drops after the main summer planting season concludes and as summer holidays reduce the number of trucks on the road. Exports will likely pick up in March and continue to increase as the soybean harvest in Brazil, Argentina and Paraguay boosts demand. Warmer weather in Europe will also increase demand as driving increases while European refiners undergo maintenance turnarounds in March and April. EU diesel demand was strong in 2024 even as the energy transition advances renewable diesel and cleaner fuel sources. Among newly registered heavy trucks in the EU, 96.6pc run on diesel and 67pc of buses run on diesel, according to the European Automobile Manufacturers' Association. European lawmakers plan to phase out sales of new diesel trucks and cars by 2040 and 2035, respectively, delayed from a prior 2030 deadline. This will ensure demand remains stable, if not higher, for 2025. Russia's lower-priced diesel exports fulfilled Brazil's external needs for diesel in the first half of 2024. But in June, Russian refiners were unable to produce enough diesel to meet the country's demand, boosting US Gulf coast exports to Brazil to 43,000 b/d in the second half of the year, almost five times higher than the first half. Still, total US Gulf coast export volumes to Brazil for full-year 2024 were down by half when compared with 2023, as Russian exports to Brazil grew by 17pc to 150,000 b/d in 2024. Slowing growth in Brazil is also likely to curb diesel demand next year. Brazil's central bank forecasts economic growth to slow to 2pc in 2025 from 3.5pc in 2024 on expectations for higher borrowing costs, as the depreciation of the real currency accelerated at the end of the year. Even so, US Gulf coast exporters will be poised to fill whatever demand Brazil can offer next year. Going into the new year, US Gulf coast refiners seeking to export diesel will face challenges, but enough demand remains to keep volumes on track or even higher than 2024 levels. By Carrie Carter Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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