PdV soaking up condensate to sustain Merey output

Spanish Market: Condensate, Crude oil, Oil products
19/05/21

Venezuela's state-owned PdV is increasingly reliant on blendstocks to shore up its production of 16°API Merey, an export blend derived from the Orinoco extra-heavy oil belt.

One key input is condensate, which allows PdV to divert more of its limited light grades — 42°API Santa Barbara and 30°API Mesa — to its halting refinery operations rather than for blending. PdV sources about 10,000 b/d of 52°API condensate from the Cardon 4 offshore natural gas venture owned by Spain's Repsol and Italy's Eni and another 20,000 b/d of 45°API condensate from its once-thriving Furrial and Punta de Mata areas in Monagas state, a senior PdV upstream official in Caracas told Argus.

Cardon 4, a 50:50 joint venture between the two EU oil companies that operates the 350mn cf/d shallow-water Perla field, is the only 100pc private-sector hydrocarbons venture in Venezuela. While PdV is mandated by Venezuelan law to control oil joint ventures, it has no required role in gas ventures. The field's associated liquids, considered a legal gray area, are now critical to PdV's blending of 8°-10°API Orinoco crude to make Merey, the grade favored by Chinese refiners.

PdV loads up to 200,000 bl of Perla condensate per voyage from the 305,000 b/d Cardon refinery terminal to the Jose complex in Anzoategui state, where its Orinoco blending operations are located.

Repsol did not respond to requests for comment on Cardon 4 condensate. Eni declined to comment.

"It's only about 30,000 b/d of condensate, but the 45-52°API grades mean we can produce more Merey with less light crude," a PdV Orinoco division official told Argus.

PdV is also relying on naphtha produced at the partially operational 940,000 b/d CRP refining complex on Paraguana and the 190,000 b/d Puerto La Cruz refinery in Anzoategui as diluent to produce and transport the Orinoco crude. The company used to source naphtha from US refiners before the US imposed oil sanctions on Venezuela in January 2019.

The condensate, naphtha and light cracked product from Cardon's fluid catalytic cracker total around 60,000-70,000 b/d of diluent and blendstock that has enabled PdV to boost the Orinoco division's total crude output to around 345,000 b/d, according to daily operational reports obtained by Argus.

The condensate in particular has freed up the light grades for its newly restarted Puerto La Cruz refinery that currently is processing about 80,000 b/d at one distillation unit, yielding some diesel for the local transportation and electricity market, and naphtha.

The blendstocks go mainly to a handful of PdV's Orinoco joint ventures, including PetroMonagas in which PdV is partnered with Russian state investors, and the PetroIndependencia and PetroPiar ventures in which Chevron holds minority stakes.

PetroPiar had been producing around 80,000 b/d before a gas flow line blast yesterday downed operations.

Most of PdV's bitumen-rich Merey is exported via intermediaries to China, although Beijing's new taxes on blendstock could narrow Venezuela's oil export options starting in mid-June.

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25/11/24

Escalation in Ukraine fuels German oil product demand

Hamburg, 25 November (Argus) — Consumers in Germany stocked up on middle distillates in the past week because of escalations in the war between Russia and Ukraine. Sales of heating oil and diesel in Germany ramped up rapidly on 21 November after Russia fired an intercontinental ballistic missile into Ukraine. This reignited concerns among German traders and consumers about the possible effects on availability and pricing of oil products in Europe. Traded volumes of heating oil reported to Argus went up by 60pc day-on-day on 21 November, while diesel volumes more than doubled as traders and consumers sought to stock up, even as prices rose. Private heating oil tanks have held their levels throughout November having peaked at just above 62pc at the beginning of the month, two percentage points higher than last year's peak. Industrial diesel tanks dropped below 46pc on 10 November, the lowest in at least four years, although they have since begun to recover slightly. Diesel imports went up again in November even though imports are largely unprofitable because of high domestic refinery output and demand that is generally low. Low water levels on the Rhine river make imports by barge even less profitable. Barges that have to pass the Kaub bottleneck on their way to destinations along the Upper Rhine can only carry up to 80pc of capacity after water levels fell again at the weekend. By Natalie Müller Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump’s ‘drill, baby, drill’ risks industry pushback

25/11/24

Trump’s ‘drill, baby, drill’ risks industry pushback

New York, 25 November (Argus) — The biggest obstacle standing in the way of president-elect Donald Trump's campaign pledge to unleash the full force of the nation's oil potential could end up being some of his biggest cheerleaders in the industry. Top energy executives are broadly supportive of Trump's plans to slash red tape and adopt pro-fossil fuel policies, such as opening up more federal land to drilling and speeding up the permitting process for oil and gas projects. But his plea for producers to pump flat-out in order to help bring down energy costs might quickly bump up against reality. The industry is sitting tight against an uncertain macro-economic backdrop, with crude prices on the back foot and a global oil market that is forecast to be in surplus next year. Shale bosses that learnt the hard way the lessons of prior boom-and-bust cycles are in no hurry to repeat the mistakes of the past. "It's kind of hard to look at a world that has 4mn-6mn b/d of surplus capacity on the sidelines and try to think we can grow effectively into that," US independent Diamondback Energy chief executive Travis Stice says. For the time being, shareholders are in the driving seat and generating cash flow remains the rallying cry. "We're going to just stay conservative and let volume be the output of cash flow generation," Stice says, summing up the mood of many of his peers. As a result, Trump might have his work cut out for him trying to persuade US producers to open up the floodgates. Measures such as rolling back environmental regulations will only help at the margin. One difference from Trump's first term is that the industry is emerging from a frantic round of consolidation that has resulted in ownership of vast tracts of the shale patch falling into the hands of fewer but larger public operators, for whom capital discipline is sacrosanct. Last year's 1mn b/d boost to overall US crude production took market watchers by surprise, but the rate of growth is slowing even as output continues to hit new record highs. ExxonMobil and Chevron are deploying their vast scale and technology prowess to ramp up output from the Permian basin of west Texas and southeastern New Mexico, but the rest of the industry is playing it steady. Cycle path For the most part, public companies were hesitant to set out their stalls for 2025 during recent third-quarter earnings calls. Those that have outlined tentative plans indicate a desire to maintain the status quo, leading to expectations for little or minimal growth. "Nearly every company cited continued improvements in cycle times that are allowing for more capital-efficient programmes," bank Raymond James analyst John Freeman says. "Efficiency gains show no signs yet of ending." US independent EOG Resources forecasts another year of slower US liquids growth on the back of a lower rig count and dwindling inventory of drilled but uncompleted wells. "The rig count really hasn't moved in just about a year now," chief executive Ezra Yacob says. "That's really the biggest thing that's informing our expectation for slightly less growth year over year in the US." In the immediate future, weaker oil prices might translate into slower growth for the Permian, delaying the inevitable peak in overall US crude production, producer Occidental Petroleum chief executive Vicki Hollub says. But the top-performing US basin will continue to lead the way further out while other basins lose their edge. In a fast-maturing shale sector where the priority is to lower costs and maximise returns, that suggests a flat production growth profile going forward. "We see no change to the intermediate-term drilling path for oil set by the fundamentals," bank Jefferies analyst Lloyd Byrne says. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop 29 goes into overtime on finance deadlock

22/11/24

Cop 29 goes into overtime on finance deadlock

Developing countries' discontent over the climate finance offer is meeting a muted response, writes Caroline Varin Baku, 22 November (Argus) — As the UN Cop 29 climate conference went into overtime, early reactions of consternation towards a new climate finance draft quickly gave way to studious silence, and some new numbers floated by developing nations. Parties are negotiating a new collective quantified goal — or climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. The updated draft of the new finance goal text — the centrepiece of this Cop — proposes a figure of $250bn/yr by 2035, "from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources". This is the developed country parties' submission, the Cop 29 presidency acknowledged. Developing nations have been waiting for this number for months, and calling on developed economies to come up with one throughout this summit. They rejected the offer instantly. "The [$250bn/yr] offered by developed countries is a spit in the face of vulnerable nations like mine," Panama's lead climate negotiator, Juan Carlos Monterrey Gomez, said. Negotiating group the Alliance of Small Island States called it "a cap that will severely stagnate climate action efforts". The African Group of Negotiators and Colombia called it "unacceptable". This is far off the mark for developing economies, which earlier this week floated numbers of $440bn-600bn/yr for a public finance layer. They also called for $1.3 trillion/yr in total climate finance from developed countries, a sum which the new text instead calls for "all actors" to work toward. China reiterated on 21 November that "the voluntary support" of the global south was not to be counted towards the goal. A UN-mandated expert group indicated that the figure put forward by developed countries "is too low" and not consistent with the Paris Agreement goals. The new finance goal for developing countries, based on components that it covers, should commit developed countries to provide at least $300bn/yr by 2030 and $390bn/yr by 2035, it said. Brazil indicated that it is now pushing for these targets. The final amount for the new finance goal could potentially be around $300bn-350bn/yr, a Somalian delegate told Argus . A goal of $300bn/yr by 2035 is achievable with projected finance, further reforms and shareholder support at multilateral development banks (MDBs), and some growth in bilateral funding, climate think-tank WRI's finance programme director, Melanie Robinson, said. "Going beyond [$300bn/yr] would even be possible if a high proportion of developing countries' share of MDB finance is included," she added. All eyes turn to the EU Unsurprisingly, developed nations offered more muted responses. "It has been a significant lift over the past decade to meet the prior goal [of $100bn/yr]," a senior US official said, and the new goal will require even more ambition and "extraordinary reach". The US has just achieved its target to provide $11bn/yr in climate finance under the Paris climate agreement by 2024. But US climate funding is likely to dry up once president-elect Donald Trump, a climate sceptic who withdrew the US from the Paris accord during his first term, takes office. Norway simply told Argus that the delegation was "happier" with the text. The EU has stayed silent, with all eyes on the bloc as the US' influence wanes. The EU contributed €28.6bn ($29.8bn) in climate finance from public budgets in 2023. Developed nations expressed frustration towards the lack of progress on mitigation — actions to cut greenhouse gas emissions. Mentions of fossil fuels have been removed from new draft texts, including "transitioning away" from fossil fuels. This could still represent a potential red line for them. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Opinion: Bridging the divide

22/11/24

Opinion: Bridging the divide

Cop summits put the gap between developed and developing countries in stark relief and demand a strong moderator Baku, 22 November (Argus) — The UN's Cop climate summits always involve a high-stakes test of multilateralism. But the Cop 29 gathering that is crawling towards its conclusion in Baku this week has pushed this concept to its limit. The summit faced serious challenges even before it kicked off. Azerbaijan took on the presidency relatively late in the day and the country's president, Ilham Aliyev, irritated some delegates with an opening speech that lauded oil and gas as a "gift from God" and railed against "western fake news". His comments on European nations' Pacific island territories prompted France's energy minister to boycott the talks, while the Cop chief executive was caught on film trying to facilitate fossil fuel deals. And the broader geopolitical background for the gathering was, of course, "grim", as EU climate commissioner Wopke Hoekstra noted, even before delegates tackled the summit's key discussion topic — money. At the heart of this year's Cop is the need to agree a new climate finance goal — a hugely divisive subject at the best of times. Discussions start with countries' wealth, take into account historical responsibility for emissions, and often end up with accusations of neocolonialism and calls for reparations. Figuring out who pays for what is crucial to advancing any kind of meaningful energy transition — and is hence a regular Cop sticking point. Developing countries have long argued that they are not able to decarbonise or implement energy transition plans without adequate financing, and they are prepared to hold other issues hostage to achieve this. Equally, developed countries will not budge on finance until stronger emissions cuts are pledged. Cop summits throw the developed/developing world divide into stark relief as well as shine an unforgiving light on weak management and oversight of Cop debate — an event where every country has an equal vote and needs a strong moderator to bridge that deepening developed and developing world division. This year's summit falls between two much more heavily-hyped Cops, and next year's host Brazil has already taken centre stage, boosted by also holding the G20 presidency. Cop 29 president Mukhtar Babayev asked Brazil and 2021 host the UK to help ensure a balanced outcome, while a strong focus on climate at this week's G20 summit in Rio de Janeiro lent some support to discussions in Baku. More challenges loom. US president-elect Donald Trump has threatened to pull the US — the world's second-largest greenhouse gas emitter — out of the UN Paris Agreement for a second time, and there are fears that fellow G20 member Argentina might quit too. But the Cop process has dealt with some of these challenges before — it is built to withstand a term or two of an unsympathetic world leader, and any exits from the Paris accord could galvanise others to step up their policy commitments, several delegates in Baku suggest. And the issue overshadowing it all — and the reason nearly 200 countries still turn up each year — is not going away. The world has already warmed by around 1.3°C above pre-industrial levels and this year is set to smash last year's record as the hottest. Leaders from both developed and developing countries spoke of catastrophic floods, droughts, heatwaves and storms. It has become a truism, but when it comes to the tricky issue of money, the only thing more daunting than the cost of tackling climate change is the cost of ignoring it. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Brazil eyes $300bn/yr for climate finance goal

22/11/24

Cop: Brazil eyes $300bn/yr for climate finance goal

Baku, 22 November (Argus) — Brazil has set out a suggestion of "at least" $300bn/yr in climate finance to be provided by developed countries to developing nations. Brazilian representatives set out their proposal today, in response to a draft text on a new climate finance goal. Brazil's proposal of $300bn/yr in climate finance by 2030 and $390bn/yr by 2035 are in line with the recommendations of a UN-mandated expert group. Negotiations at Cop are continuing late into the evening of the official last day of the conference, with no final texts in sight. Discussions centre around the new collective quantified goal (NCQG) — the climate financing that will be made available to developing countries in the coming years to help them reduce emissions and adapt to the effects of climate change. The presidency draft text released this morning put the figure at $250bn/yr by 2035, with a call for "all actors" to work towards a stretch goal of $1.3tn/yr. Representatives of developing countries have reacted angrily to the figure put forward in the text, saying it is far too low. Brazil's proposal appears to call for all of the $300bn-$390bn to be made up of direct public financing, which could then mobilise further funding to reach the $1.3tn/yr. It was inspired by the findings of a UN report, Brazil said. The UN-backed independent high-level group on climate finance today said that the $250bn/yr figure was "too low," and recommended the higher $300bn-390bn/yr goal. Brazil's ask would be a significant step up in the required public financing. The $250bn/yr target includes direct public financing and mobilised private financing, and potentially includes contributions from both developed and developing countries. Wealthier developing countries have been hesitant to see their climate financing fall in this category, which they say should be made up exclusively of developed country money, in line with the Paris Agreement. But $300bn/yr would represent an increase in ambition, Brazil said, while the $250bn/yr called for in the draft text would be very similar to the $100bn/yr goal set in 2009, after taking into account inflation. Delegates at Cop look set to continue discussions into the night. A plenary session planned for late in the evening, which would have allowed parties to express their positions in public, has been cancelled, suggesting groups still have differences to hammer out. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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