BP, Shell tighten up on their Russian oil restrictions

Spanish Market: Oil products
27/04/22

BP and Shell have tightened up their self-imposed restrictions on purchases of Russian-origin oil products.

The companies showcased their tougher policies today through bids on a trading platform to book jet fuel cargoes. In a bid for a 2,000-4000t jet fuel barge, BP stipulated a condition "that the goods shall not be, in whole or in part, produced" in Russia. Shell had a similar clause in a bid for a 27,000t jet fuel cargo.

"It is a condition of this bid that the goods sold and delivered by [the] seller will not be of [Russian Federation] RF origin, nor have blended with any product that was produced in RF, nor will the transport of the goods sold commence from or involve transit through RF," Shell said.

The clauses mark a tightening of restrictions imposed by the two companies in response to the war in Ukraine. BP previously operated a more relaxed policy in which it refused to conduct oil trades involving a Russian company, ship or port, but up until now it made no specific stipulations on the origin of the oil.

Meanwhile, Shell's previous position was to avoid buying oil products of Russian origin and products loaded or transported through Russia. But the firm defined Russian origin as either wholly produced in Russia or at least 50pc produced in Russia, meaning that it would accept up to 49pc Russian blend products.

The new clauses bring Shell and BP in line with the position adopted last month by their peer TotalEnergies. "We are working to phase out Russian oil and gas from our supply chain while protecting the energy and fuel supplies that millions of people rely on every day," Shell told Argus today. "We are making good progress and have taken a further step to tighten our trading terms to help achieve this."

Transparency problems

The new restrictions may prove challenging to implement on all transactions though, as it can be difficult to obtain full transparency on all the components that enter an oil product blend. Shell may also have to make isolated exceptions in order to meet supply commitments in Europe.

Russia does not export much jet fuel to European markets, but Shell and BP have previously implemented the same buying restrictions across all trades, and it is possible that they will mirror the new jet fuel restrictions across other oil products — including Russian diesel, which Europe relies heavily on.

Both companies have been taking steps to distance themselves from Russia since the war in Ukraine began. On 8 March, Shell announced it would end its involvement "in all Russian hydrocarbons" in a phased manner, starting with an immediate halt to spot purchases of Russian crude. It came after the company received a backlash for buying a Urals crude cargo from trading firm Trafigura on 4 March. BP is understood to have stopped new oil contracts with Russian entities in early March. It is also exiting its 19.75pc shareholding in Russian oil giant Rosneft.

EU sanctions against Moscow have yet to target Russian oil imports directly, although a bloc-wide ban is under consideration and some European countries are pledging to phase out imports by the end of the year. In the meantime, self-imposed embargoes and uncertainty over pending EU legislation have seen a spate of Europe-based firms pull back from Russian oil trade.

By Benedict George, Bea O'Kelly, Jon Mainwaring and Ruxandra Iordache

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12/11/24

Algerian bitumen importers eye resumed Spain flows

London, 12 November (Argus) — Algerian bitumen importers are getting ready to resume cargo imports from Spain after the Algerian government signalled last week that trade can restart for the first time in more than two years. The government's decision in June 2022 to suspend a friendship and co-operation treaty with Spain, linked to Madrid's public recognition of Morocco's autonomy plan for Western Sahara, led to the immediate cancellation of previously agreed bitumen cargo movements from Spain to Algeria. In a notice issued by the Bank of Algeria on 6 November, Algerian firms were told they could resume trade with their Spanish counterparts under the usual transaction rules, and both state-owned and private Algerian bitumen importers say they are now free to discuss deals to buy and bring Spanish cargoes to their facilities for supply into the domestic market. No such deals are understood to have been concluded yet, but private importers into western Algerian import terminals like Ghazaouet, Oran and Arzew are well placed because of their relative proximity to Spanish export terminals at Tarragona, Huelva and Cadiz compared with existing supply sources in Italy and even more so when compared with cargoes shipped from Greece or Turkey. Ship brokers said freight rates for standard 5,000t bitumen tanker cargo movements from Tarragona — site of a 1.2mn t/yr Asesa bitumen refinery held in a 50-50 joint venture by Repsol and Moeve, formerly Cepsa, — to Ghazaouet are around $35/t, compared with around $50/t for the Augusta, Italy, to Ghazaouet route. Spanish and international bitumen trading and supply firms are still examining the Algerian developments and seeking clearance "on all sides", as one said today, before resuming bitumen cargo discussions with their Algerian counterparts. That could mean the actual restart of Spain-Algeria flows takes until early 2025. Demand for now may be hindered by a pre-winter slowdown in Algerian road construction and bitumen-consuming activity as weather conditions gradually worsen. Algerian state-owned Sonatrach, which imports cargoes into a raft of bitumen terminals along the country's Mediterranean coast, is largely dependent on substantial term flows from Sonatrach Raffineria Italiana's (SRI) 170,000 b/d refinery and export terminal at Augusta, Sicily, and occasionally takes Greek cargoes from Motor Oil Hellas' Agioi Theodoroi refinery and export terminal at Corinth. Sonatrach is less likely than private Algerian buyers to seek Spanish cargoes, on which it had been highly reliant until 2020 before it switched in a big way to Augusta after it bought the refinery there from ExxonMobil in 2018. Algerian market participants said the recent slippage in bitumen cargo prices linked to Mediterranean high-sulphur fuel oil (HSFO) declines and seasonally weakening bitumen cargo differentials to the regional HSFO cargo prices — coupled with a late season slippage in cross-Mediterranean freight rates over the past few weeks — are all factors conducive to resumed imports from Spain. Spanish fob cargo premiums to Mediterranean HSFO cargoes have dropped from around $10/t in mid-October to $2-3/t last week, while outright prices for Spanish bitumen exports have slipped from $498-499/t fob to $458/t over the same period. By Keyvan Hedvat Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Negotiators positive on remaining Article 6 talks

12/11/24

Cop: Negotiators positive on remaining Article 6 talks

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Cop: Carbon credit standards key step, work continues

12/11/24

Cop: Carbon credit standards key step, work continues

Baku, 12 November (Argus) — The adoption of new standards for creating carbon credits under the Paris Agreement on the first day of the UN Cop 29 climate summit yesterday is a key step, but work continues on Article 6. Cop parties agreed yesterday on standards that will cover credits for greenhouse gas (GHG) emissions removals under Article 6.4 of the Paris accord. The new standards set requirements for developing and assessing projects and establish rules covering carbon removal projects. Article 6 of the Paris accord aims to help set rules on global carbon trade. Cop 29 lead negotiator Yalchin Rafiyev said the decision is a critical step towards concluding Article 6 negotiations. "This will be a game-changing tool to direct resources to the developing world and help us save up to $250bn/yr when implementing our climate plans," Rafiyev reiterated. "[The] centralised UN mechanism for markets looks at the projects that are not financially feasible currently and how it can help in providing some stream of revenue," chair for the supervisory body Maria al-Jishi said. UN climate body UNFCCC chief Simon Stiell said that yesterday's breakthrough was a good start but pointed out that this was "the product of over 10 years of work within the process" and that more work remains to be done. Cop parties must reach a deal on other aspects of implementing 6.4 and 6.2, which together govern how countries can use carbon credits to meet their GHG emissions-reduction pledges, known as nationally determined contributions (NDCs). Remaining issues include the nature of credit registries, the guidance for inclusion of removals and a solution for dealing with reporting inconsistencies and credit authorisations. Overlapping articles 6.4 and 6.2 elements are still under discussion and will require a decision at Cop 29, including on how governments and host parties choose to interact with 6.4 on credit authorisation and how national credit registries can interact with the 6.4 registry, al-Jishi said. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Azerbaijan president criticises ‘petrostate’ label

12/11/24

Cop: Azerbaijan president criticises ‘petrostate’ label

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Lower Mississippi draft restrictions lifted

11/11/24

Lower Mississippi draft restrictions lifted

Houston, 11 November (Argus) — The US Coast Guard (USGC) removed draught restrictions from the lower Mississippi River on 8 November, after several rain washed across much of the Midwestern US. Draft restrictions were completely lifted for north and southbound barges on the lower Mississippi River between Tiptonville, Tennessee, to Tunica, Louisiana. Approximately 2-8 inches of rain were reported in Illinois and Missouri in the last seven days, adding around 14 inches to the lower Mississippi River, according to the National Weather Service (NWS). St Louis, Missiouri was at a high of 11.5 inches above baseline on 11 November, up from a low of -1.5ft on 1 November. The USGC has had draft restrictions in place since August, with the river system receiving a short reprieve in early October after rain from Hurricane Helene poured into the US river system. But low water levels and restrictions returned about two weeks later. Prior to recent precipitation, drafts were restricted to 10-10.5ft for southbound barges and tows could not not be greater than 6-7 barges wide. Northbound barges could not draft greater than 9.5ft, tows could not be more than six barges wide, and only four barges could be loaded. High water levels are expected to remain through November, according to NWS but barge carriers have said that water levels will slip quickly if no additional rain falls along the upper Mississippi River. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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