Australia’s Viva seeks state funds for refining margins

Spanish Market: Crude oil, Oil products
22/10/24

Australian refiner Viva Energy said today it will apply for taxpayer aid after margins at its 120,000 b/d Geelong refinery in Victoria fell by a third in July-September.

Viva expects to receive about A$24mn ($16mn) in federal government support under Canberra's Fuel Security Services Payment (FSSP). It will draw on the payment for the , when it received A$12.45mn in subsidies.

The funds will raise the Geelong refining margin (GRM) by $1.50/bl to $7.90/bl for July-September, putting it above breakeven levels, Viva said on 22 October. But the payment must still be confirmed by the government.

The FSSP compensates refiners during lossmaking periods. It was established as part of a .

Refiners become eligible for the FSSP when margin markers fall to A$10.20/bl, with a maximum of A1.8¢/litre available when the marker drops to a floor of A$7.30/bl.

The government established the FSSP after BP closed its 146,000 b/d Kwinana refinery near Perth, Western Australia in March 2021, and ahead of ExxonMobil's shutdown of its 90,000 b/d Altona refinery in Melbourne, Victoria in August of the same year.

Australia only has two remaining refineries — Geelong and Australian firm Ampol's 109,000 b/d Lytton refinery in Brisbane, Queensland — which together can produce enough to meet about 22pc of Australia's oil product demand.

Viva's total sales in July-September fell by 2pc on the quarter but rose on the year. Sales volumes increased by 4pc year on year in the firm's commercial and industrial fuel division and by 1pc in its convenience and mobility sector.

Viva commissioned three 30mn l (189,000 bl) diesel fuel storage tanks in September, which were funded under Canberra's to help meet its IEA strategic reserve commitments. The tanks have enough storage capacity to supply Victoria state's diesel demand for one week, Viva said on 4 October.

Viva also commissioned a bitumen export line during the quarter and recently completed the first locally produced bitumen shipment from Geelong to Sydney.

Refining is expected to remain challenging for the rest of 2024, Viva warned, echoing comments from . Run cuts and maintenance could rebalance global refining capacity and provide some support, Viva said.

By Tom Major

Viva Energy results					(b/d)
	Jul-Sep '24	Apr-Jun '24	Jul-Sep '23	q-o-q % ±	y-o-y % ±

Refining intake	110,000	114,000	66,000	-4	66
Sales	285,000	291,000	276,000	-2	3
GRM ($/bl)	6.4	9.6	8.5	-33	-25
Source: Viva Energy

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

25/10/24

Pemex budget cuts freeze vendor orders

Mexico City, 25 October (Argus) — Mexico's state-owned company Pemex stopped requesting or receiving new work orders from vendors in the past three to four weeks, likely linked to the company's plan to cut its budget by about $1bn in the last quarter, three industry sources and a Pemex source. "Upper management has issued clear instructions: No new projects until 2025," one Pemex source told Argus . Vendors report that these reductions are affecting all Pemex regions, with significant impacts on major well maintenance — such as pipeline renewals, valve replacements and secondary recovery techniques — essential for safe and efficient oil production. Without these services, oil service companies may need to shut down wells, risking oil spills or even explosions. The halt in work orders took effect in late September and has primarily hit orders related to maintenance in Pemex's exploration and production (E&P) operations. According to vendors, Pemex issued an internal directive on 11 October, instructing units to implement budget reductions across all E&P activities to save an estimated $1bn. Despite these cuts, vendors claim Pemex's new administration has not formally notified them about the halt — a pattern they say has become typical over the last six years. Adding to vendors' worries is Pemex's ongoing payment backlog. As of 2 October, Pemex's upstream division (PEP) owed Ps99bn ($5bn) to suppliers, with Ps81bn related to 2024 projects, Ps10.5bn from 2023 and Ps1.9bn from 2022, according to an internal document. Pemex's overall overdue payments peaked at Ps126.4bn in July. "The current situation is extremely worrisome," one Pemex supplier told Argus . "And there is no indication thatthere will be any new payments to vendors this month." Some top vendors, including Protexa, Marinsa, Naviera Integral and Solar Turbines, are weighing partial or complete work stoppages by early November unless payment issues are resolved. Drilling company Opex recently announced a "temporary adjustment" in its services because of payment delays, two other vendors said. A year ago, Pemex vendors discussed a general halt over similar payment delays, with some major suppliers like SBL, Halliburton, Weatherford and Baker Hughes eventually securing payments and continuing work. Now, with budget cuts looming into 2025, vendors are increasingly concerned that continued cuts and payment delays will severely impact Pemex's oil production, which hit a 40-year low of 1.45mn b/d in September. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Pennsylvania drilling drops to 17-year low

25/10/24

Pennsylvania drilling drops to 17-year low

New York, 25 October (Argus) — Pennsylvania oil and natural gas drilling this week fell to the lowest in 17 years, signaling dimming producer sentiment in the second-largest US gas producing state. The number of rigs drilling for oil and gas in Pennsylvania this week fell to 12, the lowest since July 2007, as the state's rig count lost one from a week earlier and fell by 10 from a year earlier, according to oil field services company Baker Hughes. There were 101 gas-directed rigs in the US this week, down by 16 from a year earlier, implying that the majority of the gas-rig decline was due to the drop in Pennsylvania, where wells produce plentiful dry gas but little crude and natural gas liquids (NGLs). The 17-year-low rig count in the regional gas-producing powerhouse, home to the prolific Marcellus shale, is due to three factors: expectations of lower US gas prices after the 2024-25 winter heating season, a lower share of currently more profitable crude and NGLs in Pennsylvania's output compared to nearby West Virginia and Ohio, and the June start-up of a new gas pipeline in West Virginia , where some Pennsylvania production may have shifted. Rig counts reflect expected prices roughly six months in the future, accounting for the lag between when the drilling of a well begins and when its production is sold. The April 2025-March 2026 strip price at the Leidy Line trading hub, a bellwether for Marcellus shale output in northeast Pennsylvania, was $2.63/mmBtu, according to Argus forward curves. Prices for crude and NGLs in 2024 have been more resilient than US gas prices, which have languished after a warmer-than-normal 2023-24 winter left the US gas market oversupplied. This price dynamic may be why the other two main Appalachian gas producing states have not mirrored Pennsylvania's drilling slowdown. The Ohio rig count rose by one this week to 10, the same number as a year earlier, while the West Virginia rig count was unchanged at 10, up by three from a year earlier. Drilling productivity has also improved dramatically in the past 17 years, surging to 21 Bcf/d (595mn m³/d) in July from 471mn cf/d in July 2007, according to the US Energy Information Administration. Above-average temperatures were expected to blanket the US from November to January, according to the National Weather Service, portending another winter with lower gas demand. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

B24 bunker demand in Asia, Middle East to rise in 2025

25/10/24

B24 bunker demand in Asia, Middle East to rise in 2025

Singapore, 25 October (Argus) — B24 bunker demand in the key ports of Singapore, Zhoushan and Fujairah will likely rise in 2025, because of increased demand ahead of the implementation of the EU's FuelEU maritime regulation. Regional demand for B24 — which consists of 24pc used cooking oil methy ester (Ucome) and 76pc very low sulphur fuel oil (VLSFO) — is expected to rise as shipowners prepare to meet more stringent mandates set by the EU and the International Maritime Organisation (IMO) from next year, said market participants. FuelEU Maritime aims to raise the share of renewable and low-carbon fuels in the fuel mix of maritime transport within the EU, and will set requirements for greenhouse gas emission reductions against a 2020 baseline level, starting with 2pc in 2025. The use of B24 is a relatively low-cost way to help meet the new mandate and is available at key ports globally. Competition for B24 is rising in Asia and the Middle East as port authorities revisit local rules and permits. The Zhoushan Port Authority will obtain the domestic blend permit by the end of the year, it said recently at a local conference,which will pave the way for key local refiners to blend and sell B24 to local and international shipowners. The quota is likely to be divided among Chinese majors like PetroChina (CNPC), Sinopec, and CNOOC. The port authorities further mentioned that CNPC and Sinopec are expected to each receive a blending quota of 200,000t of B24, while CNOOC will receive a blend quota of 100,000t in 2025. There were no further details available or any other formal announcement. But regional traders and shipowners, which have been waiting for the lifting of restrictions by the Chinese government, expect the move will allow shipowners more options to bunker B24 in this region. European market participants expect this B24 blending permit, if allocated, may pull some marine biodiesel demand towards Zhoushan and away from shipowners operating on east-west routes between Singapore and Europe.B24 blends in Zhoushan could end up pricing very competitively against VLSFO when EU emission trading system (ETS) costs are accounted for, given easing prices for Chinese-origin biodiesel, participants added. And FuelEU Maritime's pooling mechanism, which allows shipowners to pool different vessels together to achieve overall compliance across the pool, will enable shipowners that operate east-west routes to pool those vessels with other vessels that operate only within the EU — opening the door for marine biodiesel bunkered in Zhoushan to help meet FuelEU compliance. Singapore B24 consumption has been on the rise in Singapore, the world's largest bunkering hub, through 2024 because of demand from regional and international shipowners for refuelling of this blended marine fuels. B24 consumption touched 470,300t between January to September, according to data from the Maritime and Port Authority of Singapore (MPA). Demand for B24 is expected to near 800,000t by the end of 2024, up from 518,000t in 2023. Zhoushan remains competitively priced versus Singapore for VLSFO, with Singapore's delivered on board (dob) prices for the past year showing a $3/t premium versus Zhoushan on average, based on Argus data. But Singapore-based traders remain confident that the city-state will continue to lead the region in terms of B24 bunkering demand into 2025. "I think both ports will co-exist and there will be price competition…also it doesn't replace Singapore as the main port, do note," said a key global trader and refiner. Singapore is also the cheapest in terms of B24 pricing, compared with other key ports like Rotterdam and Fujairah. The spread between Singapore versus Rotterdam since 24 April shows a $94/t discount for bunkering in the former port, while the discount for Singapore with Fujairah stood at an average of $39.4/t, based on Argus data. Middle East Bunkering B24 has been picking up in the Middle East since the end of 2023, with sporadic demand trickling in this year. "We receive enquiries for B24 once or twice a month, sometimes even less than that for small volumes of 150-200t," one Fujairah-based trader said. But this could change following the implementation of the EU's FuelEU Maritime regulation from January 2025 . The EU is an important market and a regular destination for much of the maritime traffic passing through Fujairah, so the new regulations are likely to be a trigger for change, market participants said. "Many vessels refuel in Fujairah before calling at EU ports," one trader says. "They already have to comply with the EU ETS, [Carbon Intensity Index], and will need to also comply with FuelEU." By Mahua Chakravarty, Hussein Al-Khalisy and Elshan Aliyev Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US charges Venezuelan in PdV money-laundering scheme

23/10/24

US charges Venezuelan in PdV money-laundering scheme

Houston, 23 October (Argus) — A US federal grand jury has indicted a fugitive Venezuelan television news network owner for allegedly participating in a scheme to launder $1.2bn in funds from Venezuelan state-owned oil company PdV. Raul Gorrin, 56, and his co-conspirators allegedly paid millions of dollars in bribes to high-level Venezuelan officials to obtain foreign currency exchange loan contracts with PdV over a period ranging from 2014-2018, the US Attorney's Office for the Southern District of Florida said today. They are then alleged to have laundered the proceeds of about $1bn through means including buying real estate, yachts and other luxury items in southern Florida. The group used shell companies and offshore bank accounts, the US Department of Justice investigation found. Gorrin, owner of pro-government network Globovision, is charged with one count of conspiracy to commit money laundering and could face up to 20 years in prison. Gorrin is a fugitive in a separately charged matter and remains at large. The case comes as fallout continues from Venezuela's own scandals over PdV funds. Venezuela again recently arrested a former oil minister , alleging that Pedro Tellechea passed key information to US intelligence services over PdV operations. Tellechea, in turn, took over the role in the wake of allegations that his predecessor, Tareck El Aissami, had been involved in billions in missing PdV cryptocurrency funds. By Carla Bass Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

TotalEnergies Feyzin refinery issue hits bitumen supply

23/10/24

TotalEnergies Feyzin refinery issue hits bitumen supply

London, 23 October (Argus) — Bitumen production at the 109,300 b/d Feyzin refinery near Lyon, France has been hit following an issue with its sulphur recovery unit. Bitumen production is limited while the issue is resolved, according to sources. A market participants told Argus they had seen no bitumen production or supply available from Feyzin for the past week as a result of the issue. Feyzin previously had a reformer unit out due to a fire at the refinery in late August. By Fenella Rhodes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more