Record loadings in Vancouver lift USWC Aframax rate

Spanish Market: Crude oil, Freight
05/11/24

Record high crude exports in Vancouver have lifted short-haul Aframax rates in the region, pressuring the Vancouver-US west coast rate to its highest level since before the Trans Mountain Expansion (TMX) came online in May.

The rate to ship 80,000t of crude, or about 550,000 bl of Cold Lake, from Vancouver to the US west coast climbed to Worldscale (WS) 182.5, equivalent to $2.39/bl, on 29 October, the highest since 21 March. It sustained that level through 4 November before inching lower to WS180 on 5 November, according to Argus data.

The seven-month high came after a record 24 Aframaxes loaded at Vancouver's Westridge Marine Terminal in October, according to shipowner Teekay Tankers and ship-tracking data from Kpler. The previous record was 21 in July.

October's loadings coincided with a record 413,000 b/d of crude exported from the expanded Trans Mountain pipeline system the same month. Of the 24 Aframaxes, nine went directly to Asia-Pacific ports while five went to the Pacific Area Lightering zone (PAL) to discharge onto very large crude carriers (VLCCs). The remainder traveled to ports on the US west coast.

A recent shift in charterers' preferences to ship crude directly from Vancouver to destinations in Asia-Pacific, rather than via PAL, has contributed to the upward pressure in rates to the US west coast since September. Direct transpacific shipments remove vessels from the west coast North America market for about 45 days.

October's high number of Aframax loadings has had less of an impact on the rate for Vancouver-China shipments, which tend to load later in the loading window and open the number of potential vessels to ships in the east Asia market. Aframaxes hired for Vancouver-US west coast runs often are provisionally booked about five to 10 days in advance of loading, compared with 15-20 days in advance for Vancouver-China shipments.

The Vancouver-China Aframax rate was $2.8mn lumpsum, or $5.13/bl for Cold Lake, on 5 November, according to Argus data. That rate had been rangebound between $2.8mn and $2.9mn between 26 September and 5 November.

By Tray Swanson

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05/11/24

South Africa plans to upgrade Sapref to 600,000 b/d

Cape Town, 5 November (Argus) — The South African government plans to repair and expand the closed 180,000 b/d Sapref refinery in Durban, in the KwaZulu-Natal province, creating a facility with at least 600,000 b/d of capacity, according to the Central Energy Fund (CEF). State-owned CEF struck a deal in May to acquire Sapref from BP and Shell. The government wants to upgrade the refinery to ensure that South Africa has security of supply, CEF group chair Ayanda Noah told delegates at the Africa Energy Week underway in Cape Town. "Nowadays, a refining capacity of 600,000 b/d upwards is more economical, and that is what South Africa is aiming for," Noah said. "We are very ambitious." Sapref was South Africa's largest oil refinery with around 35pc of the country's refining capacity before it was shut in 2022 . That followed the closure of Engen's 105,000 b/d Durban refinery in 2020. Only three of South Africa's refineries remain operational — Astron Energy's 100,000 b/d Cape Town refinery, Sasol and TotalEnergies' 107,000 b/d Natref refinery and Sasol's 150,000 b/d coal-to-liquids plant at Secunda. South Africa now only has 35pc of its original refining capacity left, which means it has to import the balance, according to Noah. "You cannot outsource security of supply," she said. "There are many other variables that are outside our control. Look at the geopolitical tensions up north that affects supply chains negatively." Importing around 65pc of oil products is not efficient, especially given South Africa's high unemployment rate, Noah said. "Essentially, what we've done, is export downstream jobs." There is also a negative impact on the balance of payments and the economy, because South Africa cannot control prices, Noah added. It is the role of the CEF as a state-owned company to assist when there are market failures, she said. BP and Shell each owned a 50pc stake in the refinery and were looking to sell the facility after halting operations in 2022. But these plans were set back after extensive flood damage at the plant in April of that year, only two months after it was shut indefinitely. Four years ago, UK-based consultancy Citac estimated it would cost around $15.7bn to upgrade all of Africa's refineries to Afri-6 clean fuel standards, its chief executive Gary Still said in an interview. But those calculations were made before Sudan's 100,000 b/d Khartoum refinery was shut and Ghana's 120,000 b/d Sentuo refinery came online, Still said. It is also likely that the cost of refinery upgrades has increased substantially as goods and services became more expensive after the Covid-19 pandemic, while engineering firms and personnel with the necessary expertise are less available, Still said. By 2030, the African Refiners and Distributors Association (ARDA) wants African countries to meet Afri-6, which imposes a 10ppm sulphur limit on gasoline and diesel, in line with Euro 5 fuel specifications. ARDA's executive secretary Anibor Kragha, described the Sapref acquisition as "phenomenal," because South Africa is "claiming its energy independence through it," he said. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US attorneys cast light on Venezuela oil trade

05/11/24

US attorneys cast light on Venezuela oil trade

Washington, 5 November (Argus) — The next US president will have to decide how to continue to apply economic penalties against oil-producing countries such as Russia, Iran and Venezuela — but the sanctions regime is hardly a barrier for some determined sellers and buyers. A US federal indictment, unveiled on Monday, accused Turkish national Taskin Torlak of trading Venezuelan oil in 2020-23 despite US sanctions against Caracas. Torlak allegedly relied on individuals and companies operating in Ukraine, China, Turkey, Russia and other countries to access US banks, insurers and freight companies to transport Venezuelan oil to China. US sanctions cut off Venezuela from the US financial system under the threat of economic and criminal penalties. Torlak's methods included re-naming and re-flagging oil tankers, covering tanker names with paint or blankets, and turning off the AIS transponders and obtaining fake bills of lading, according to the US criminal indictment. Venezuela state-owned PdV allegedly paid tens of millions of dollars to Torlak to facilitate shipment of oil. But the US indictment also cites frequent complaints from Torlak about PdV's arrears for such services. "We would like to emphasize our satisfaction in operating our fleet under the commercial interest serving the Bolivarian Republic of Venezuela and [PdV] for nearly 2.5 years, with strong technical management and continuous validation from charterers", an associate of Torlak wrote to PdV in July 2023 to complain that the Venezuelan company was late in making a $32.5mn payment. President Joe Biden's administration lifted sanctions against PdV in October 2023, only to reimpose them six months later as Caracas reneged on its promise to hold a free and fair presidential election. The US backs the Venezuelan opposition's claim that its candidate Edmundo Gonzalez defeated incumbent president Nicolas Maduro in July. But Washington has backed away from adding more sanctions against Venezuela. Most Venezuelan crude heads to China, where many independent refiners rely on networks such as Torlak's alleged organization to access discounted crude from countries under US sanctions. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Phillips 66 Calif shutdown to shift tanker flows

05/11/24

Phillips 66 Calif shutdown to shift tanker flows

Houston, 5 November (Argus) — Phillips 66's plans for a late 2025 shutdown of its 139,000 b/d refinery in Los Angeles, California, will likely lead to more trans-Pacific refined products tanker shipments into the US west coast while having a more muted effect on crude tankers. Phillips 66 said it would likely shut the refinery in the fourth quarter of 2025, citing the high regulatory costs of operating in California. While it is unclear what will become of the facility, Phillips 66 said it still plans to supply the region with road fuels in the future. The closure will reduce California's refining capacity by 8.6pc to about 1.48mn b/d and removes about 14pc of refining capacity in the Los Angeles area. Tankers hauled about 160,000 b/d of refined products to California in January-October, with about 95,000 b/d going to Los Angeles, according to data from analytics firm Vortexa. About 27pc of the deliveries to Los Angeles came from refiners on the US Gulf coast and elsewhere on the US west coast on Jones Act-compliant vessels, which must be US-built, US-flagged and US-crewed. But the relatively small Jones Act fleet is already fully utilized, with no additional ships on order, shipbroker Poten said. This means replacement supplies of refined products will need to come from farther afield, likely Asia-Pacific. South Korea is Los Angeles' biggest source of waterborne refined products so far this year, shipping about 33,000 b/d in January-October, Vortexa data show, followed by other US sources (25,000 b/d), China (9,000 b/d), India (9,000 b/d) and Canada (8,500 b/d). Taiwan, Singapore and Japan also have supplied marginal cargoes to Los Angeles this year. An increase of California-bound shipments from these countries would create additional demand for voyages lasting a range of 19-35 days, boosting ton-mile demand and tanker employment in the Pacific basin. Medium range (MR) and long range 1 (LR1) refined product tankers would benefit the most from these increased trade flows, with MRs accounting for 67pc of the current market share and LR1s 33pc, according to Vortexa data. Tanker demand for exports from the US west coast is unlikely to be affected. Phillips 66 Los Angeles exported just 2,000-4,000 b/d of products in January-October, data from Kpler and Vortexa show. Limited impact on crude tankers Because Phillips 66's Los Angeles refinery was designed to process domestic California crude, the impact on the regional crude tanker market likely will be much more limited — and offset by increased tanker demand on Canada's Pacific coast. With available domestic — albeit declining — California crude production, the 139,000 b/d refinery imported 64,000 b/d of crude in January-August 2024, mostly from short-haul sources in the Americas, the latest data from the US Energy Information Administration (EIA) show. The trade was dominated by 1mn bl Suezmaxes and 500,000-700,000 bl Aframaxes. The refinery imported 15.52mn bl of crude in January-August 2024, according to the EIA. Canada was the largest international supplier (4.84mn bl) in that span, boosted by the Trans Mountain Expansion (TMX) pipeline start-up in May, followed by Guyana (3.48mn bl) via the Trans-Panama Pipeline, Mexico (2.98mn bl), Brazil (2.92mn bl) and Ecuador (1.3mn bl). Because of the refinery's use of domestic crude supplies, the complex's imports are equivalent to just two Suezmax shipments or three Aframax shipments per month. For the regional tanker market, that is more than offset by the burgeoning TMX flows on Canada's Pacific coast, which in October loaded a record 24 Aframaxes , destined to refineries in China and the US west coast. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Port of Vancouver grinds to halt as picket lines form

05/11/24

Port of Vancouver grinds to halt as picket lines form

Calgary, 5 November (Argus) — Commodity movements at the port of Vancouver have halted as a labour dispute could once against risk billions of dollars of trade at Canada's busiest docks. The International Longshore and Warehouse Union (ILWU) Local 514 began strike activity at 11am ET on 4 November, following through on a 72-hour notice it gave to the BC Maritime Employers Association (BCMEA) on 1 November. The BCMEA subsequently locked out workers hours later that same day, 4 November, which the union says is an overreaction because the union's job action was only limited to an overtime ban for its 730 ship and dock foreman members. Natural resource-rich Canada is dependent on smooth operations at the British Columbia port of Vancouver to reach international markets. The port is a major conduit for many dry and liquid bulk cargoes, including lumber, wood pellets and pulp, grains and agriculture products, caustic soda and sodium chlorate, sugar, coal, potash, sulphur, copper concentrates, zinc and lead concentrate, diesel and renewable diesel liquids and petroleum products. These account for about two-thirds of the movements through the port. Canadians are also reliant on the port for the import of consumer goods and Asian-manufactured automobiles. The two sides have been at odds for 19 months as they negotiate a new collective agreement to replace the one that expired in March 2023. Intervention by the Canada Industrial Relations Board (CIRB), with a hearing in August and September, followed by meetings in October with the Federal Mediation and Conciliation Service (FMCS), failed to culminate in a deal. The BCMEA's latest offer is "demanding huge concessions," according to the ILWU Local 514 president Frank Morena. The BCMEA refutes that, saying it not only matches what the ILWU Longshore workers received last year, but includes more concessions. The offer remains open until withdrawn, the BCMEA said. A 13-day strike by ILWU longshore workers in July 2023 disrupted C$10bn ($7.3bn) worth of goods and commodities, especially those reliant on container ships, before an agreement was met. Grain and cruise operations are not part of the current lockout. The Westshore coal terminal is also expected to continue operations, the Port of Vancouver said on 4 November. The Trans Mountain-operated Westridge Marine Terminal, responsible for crude oil exports on Canada's west coast, should also not be directly affected because its employees are not unionized. In all, the port has 29 terminals. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU contributed $31.2bn public climate finance in 2024

05/11/24

EU contributed $31.2bn public climate finance in 2024

Edinburgh, 5 November (Argus) — The EU has contributed €28.6bn ($31.2bn) in climate finance from public sources in 2024 to help developing countries cut their greenhouse gas emissions (GHG) and adapt to climate change, according to the European Council. Around half the funding went to climate adaptation or to cross-cutting action, which involves both mitigation — reducing GHG emissions — and adaptation. Almost 50pc took the form of grants, according to the EU. The €28.6bn includes €3.2bn from the EU budget, including from the European Fund for Sustainable Development Plus, and €2.6bn from the European Investment Bank. The EU said it also mobilised €7.2bn of private finance last year, and it "seeks to extend the range and impact of sources and financial instruments and to mobilise more private finance". The figures were released ahead of the UN Cop 29 climate talks, which open on 11 November in Baku, Azerbaijan. Finance will be a key topic at this year's summit as parties to the Paris deal will seek to agree on a new finance goal for developing nations, following on from the current, but broadly recognised as inadequate, $100bn/yr target. EU negotiators have signalled willingness to support "a stretched goal" with a public finance core, but have yet to provide a figure. Developed countries in general have yet to commit to a number for climate finance, while developing nations have for some time called for a floor of at least $1 trillion/yr. By Caroline Varin Europe's contribution to climate finance €bn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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