Nigeria sees significant gasoline output by November
Nigeria's government said "significant production increases" of gasoline from the 210,000 b/d Port Harcourt and 650,000 b/d Dangote refineries are "expected from November", which would have ramifications for balances in the region and in northwest Europe.
First gasoline from Dangote is expected in September, said the office of Nigeria's co-ordinating minister of the economy.
Industry sources told Argus that Dangote obtained regulatory approval to start its 247,000 b/d fluid catalytic cracker and 27,000 b/d alkylation units in April and May, respectively, but that the refiner seems to have deliberately delayed start-up of these secondary units. This is because it plans to sell much of its gasoline to the domestic market, where government intervention through state-owned NNPC continues to curtail prices.
Sources at Port Harcourt told Argus that the restart of a 60,000 b/d section that has been delayed several times since April 2023 is on course to happen by 31 August. The refinery received 450,000 bl of domestic Bonny Light crude in the first half of July, the second supply of feedstock after 475,000 bl arrived between 28 December and 18 January.
Nigeria's downstream regulator approved the movement of the crude from tank to refinery at the end of July, sources said.
NNPC's trading subsidiary applied last week for permits to sell Port Harcourt kerosine and diesel domestically and permits to export naphtha and fuel oil, according to industry sources. The catalytic reformer and the reformer feed unit for the 60,000 b/d section will start early in October for upgrading of naphtha, sources said.
Italian engineering firm Maire Tecnimont won a $1.5bn contract in April 2021 to restore Port Harcourt to 90pc of its nameplate capacity. It said in June that the project was 84.6pc complete, with procurement at 99pc, engineering at 98pc and construction at 73pc.
The co-ordinating minister's office also said a programme for NNPC to sell crude to Dangote in the local naira currency will start on 1 October. NNPC has supplied Dangote with crude since the refinery started up in December 2023, but payments have so far been in dollars. The government said the programme will offer a "lifeline to Dangote refinery", which has complained about the dollar prices and available volumes of Nigerian crude grades it has been able to buy.
Sources told Argus that NNPC sold Dangote more than 3.6mn bl of crude in July, including a 720,000 bl cargo of Brass River — the first of that grade.
A government source told Argus today that details of the NNPC-Dangote programme will not be disclosed until after its implementation in September. But it could be structured as a crude-for-gasoline swap, denominated in US dollars and reflecting international market prices but settled in the equivalent naira amounts. This would allay Dangote's concerns about dollar expenditure, guarantee sales and ensure market value for gasoline sold domestically. It would also remove NNPC's need to import gasoline, with Dangote's capacity alone exceeding Nigeria's domestic demand.
NNPC has been Nigeria's sole importer of gasoline since 2017, with the exception of about eight cargoes received by independents in 2023. After years of crude-for-gasoline swap deals, NNPC has been importing on a cash basis since November 2023, mainly from the Amsterdam-Rotterdam-Antwerp (ARA) hub in northwest Europe. Nigeria is the largest consumer of gasoline in west Africa, and a key outlet for excess European production.
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Bulk carriers mostly score low CII in 2023
Bulk carriers mostly score low CII in 2023
New York, 20 August (Argus) — More than half of bulk carriers scored carbon intensity indicator (CII) grades of C or lower on an A-E scale in 2023, according to International Maritime Organization (IMO) data. About 61pc, or 9,127 of all bulk carriers sized 5,000 gross tonnes (gt) and over that reported their energy efficiency, scored C, D or E on the CII scale in 2023, according to the IMO data. IMO's CII regulation, which came into force in January 2023, requires vessels over 5,000 gt to report their carbon intensity, which is then scored from A to E. A and B vessel scores are regarded as superior energy efficiency, while C, D and E are considered moderate to inferior scores. The scoring levels are lowered yearly by about 2pc, so even a vessel with no change in CII could drop from from C to D in one year. If a vessel receives a D score three years in a row or E score in the previous year, the vessel owner must submit a corrective actions plan. To improve its CII score, a ship owner could reduce its speed and burn low-carbon fuels, among other solutions. Global marine fuel demand from vessels of 5,000 gt and above dropped by 1pc to 211.1mn t in 2023, down from 213.4mn t in 2022, according to the latest IMO data. The drop could be attributed to the global economic slow-down in 2023, as well as vessels employing slow steaming to reduce marine fuel consumption. Residual fuel oil bunker demand was down by 2pc to 170.9mn t in 2023 from the previous year, according to IMO data. The IMO does not report separately high-sulphur and low-sulphur fuel oil demand. Global marine gasoil (MGO) demand fell by 6pc to 26.6mn t. An increase in methanol and LNG for bunkering demand offset some of the conventional marine fuel declines. LNG for bunkering demand rose by 18pc to 12.9mn t and methanol increased by 2.6 times to 93,876t. In 2023, container ships, bulk carriers and tankers accounted for 31pc, 30pc and 21pc, respectively, of global residual fuel oil bunker demand. Containers ships and bulk carriers accounted for the majority of the MGO demand, 18pc and 15pc, respectively. Tankers accounted for 93pc, or 87,319t, of total methanol demand and LNG carriers accounted for 89pc of LNG for bunkering demand, or 11.5mn t. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US housing construction softens in July, flux steady
US housing construction softens in July, flux steady
Houston, 19 August (Argus) — Housing permits and starts both fell in July to four-year lows as persistently high borrowing costs continued to weigh on the housing market, and roofing flux prices remained unchanged. Total housing starts fell by 6.8pc to a seasonally adjusted annual rate of 1.238mn in July from June's revised numbers, according to the US Census Bureau and the Department of Housing and Urban Development. This is down 16pc from July 2023, the month the Federal Reserve hiked its target lending rate to its current level, the highest in 23 years. It represents the lowest rate of housing starts since 1.053mn in May 2020, when the Covid-19 pandemic closed down much of the US economy. Railed roofing flux prices remained unchanged in July even as production costs strengthened over June. WTI crude futures rose from $73.25/bl in early June to $83.88/bl on 3 July. Gulf coast flux values were flat at $495/st in July from June as were midcontinent flux prices at $477.50/st. Permits were issued at a rate of 1.396mn in July. This is down 4pc from June and 7pc down from July 2023. This was the lowest rate of permit issuance since June 2020. High borrowing costs appear to have a more acutely negative impact on the housing market the longer they remain elevated. Starts and permits were both at their lowest rate since the middle of 2020 when Covid-19 paralyzed a large portion of the US housing market and the economy was just emerging from a brief, sharp recession. Single-family starts extended their decline into a fifth month, down 14pc to a rate of 851,000 in July from the prior month and off by 15pc from July 2023. Starts on multifamily structures of five or more units climbed 12pc to 363,000 units started in July from the prior month but were down by 24pc from a year earlier Single-family housing permits were issued at a rate of 938,000 units in June, down 0.1pc from June marking the sixth straight month of decreases. This was 1.6pc lower than July 2023. Multifamily permits fell by 12.4pc on the month. The Federal Reserve is widely expected to start lowering borrowing costs at its policy meeting next month after holding its target rate at a 23-year high of 5.25-5.5pc since July of last year. Consumer inflation eased to an annual 2.9pc in July, the lowest in three years. The labor market has also shown signs of weakening among other softer data, including recent slides in stock prices, that triggered recession concerns. This has all led futures markets to give near certain odds of rate cuts beginning next month. They will be too late to shore up the housing market this year, but a sustained pace of rate cuts into 2025 may boost construction and sales next year. Construction industry expectations Construction materials companies noted mixed outlooks in second quarter earnings calls as housing starts and permits reached four-year lows. Owens Corning expects new construction to grow in the long-term as borrowing costs ease but sees near-term weakness. CRH expects new-build residential construction to remain weak on affordability constraints. Martin Marietta noted stronger single-family housing markets in the Carolinas and Georgia and expects recent inflation and employment data to support lower interest rates. By Aaron May and Cobin Eggers Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Massive Canadian rail disruptions move closer
Massive Canadian rail disruptions move closer
Washington, 19 August (Argus) — A Canadian rail workers union and two major Canadian railroads moved closer to a disruptive nationwide strike on 22 August, with the union issuing on Sunday a 3-day strike notice to Canadian Pacific Kansas City (CPKC) and fellow railroad Canadian National (CN) telling the union it will lock employees out that same day. A strike by workers from the Teamsters Canada Rail Conference would cause widespread disruptions to commodity deliveries across North America. The major carriers last week began to embargo shipments of hazardous materials between the US and Canada. Canadian National expects to issue new embargoes today. Its shutdown plan began last Monday. "Unfortunately, we have no choice but to keep moving forward with this plan which means that by Thursday morning, no goods will be moving on the railroad," the railroad said. CPKC similarly began to implement shutdown plans last week. Tomorrow it will begin embargoing all shipments originating in Canada and all US shipments headed to Canada. Contracts between the Teamsters and each railroad expired at the end of last year. Employees have continued to work under those agreements but that is nearing an end as the parties remain far apart on many issues including pay and work hours. The union and railroads' strategies differ. The Teamsters so far have only issued a strike notice at one carrier. Contract negotiations are occurring separately with each railroad. "The only reason we served strike notice at [Canadian Pacific Kansas City] is because the company was set to cancel our expired collective agreements," the union said. "This would have created a situation where our members had no rights or protections at work." The union claimed CPKC is pressuring it for concession that would make it " harder for workers to predict when they might be called for work, creating a fatigue-related safety risk." The union also said the carrier was trying to change work rules related to being held away from home, and undermining Canada Labour Code provisions. CPKC in turn told the Teamsters it will lock out employees on 22 August unless the two parties are able to come to either a negotiated agreement or agree to binding arbitration. The Teamsters said late Sunday that, at that time, it did not intend to issue a strike against Canadian National. But Canadian National said it will lock employees out "unless an agreement or binding arbitration is achieved" before before 12:01am ET on 22 August. "Despite negotiations over the weekend, no meaningful progress has occurred, and the parties remain very far apart," Canadian National said. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Algeria offers Lebanon fuel lifeline for power plants
Algeria offers Lebanon fuel lifeline for power plants
Dubai, 19 August (Argus) — Algeria said it will supply Lebanon with fuel for its power plants after the last operational unit was forced to shut down, leaving the country without electricity. But the initiative is at a preliminary stage and the full details are still to be thrashed out, sources said. Algerian president Abdelmadjid Tebboune commissioned the prime minister to inform his Lebanese counterpart of a decision to "immediately supply Lebanon with quantities of fuel to operate power plants and restore electricity supply in the country", Algeria's state radio announced on 18 August, without disclosing details on volumes or delivery dates. A Lebanese source with knowledge of the matter told Argus today that the initiative is still at a "diplomatic" level. "The prime ministers have spoken but the energy ministries have not gotten in touch yet," the source said. Lebanon's electricity ministry said on 17 August that the last operational unit at the country's Zahrani power plant was "forced to shut down... due to the complete depletion of the plant's fuel oil reserves, resulting in a total power outage across all Lebanese territories". The shutdown affects essential facilities including "the airport, port, water pumps, sewage systems and prisons", the ministry added. The Lebanese source clarified that Algeria's offer is a form of aid and not the prelude to a supply agreement. "This is not an agreement. Why would we have an agreement with Algeria if we already have one with Iraq?" the source said. Lebanon imported fuel oil under an agreement with Algeria's state-owned oil company Sonatrach for almost 15 years until 2020. But the deal was suspended following claims that a subsidiary of Sonatrach , sub-contracted to deliver fuel oil to Lebanon, had provided adulterated product. Sonatrach denied any wrongdoing and informed Lebanon that it would not renew the agreement after its expiry in December 2020. "This isn't the first time Algeria has offered to help Lebanon in recent years," the source said. "They have an interest in seeing the relationship take a turn after what happened," the source claimed. Iraqi connection Lebanon signed a rolling agreement with Iraq in July 2021 that allows Beirut to buy fuel oil from Baghdad and resell it for products it needs. Lebanon's power plants can run on certain grades of fuel oil and gasoil but not the sort of heavy fuel oil that Iraq provides. Lebanon sells the Iraqi fuel oil to private-sector companies, which in return provide on-spec spot cargoes for the Lebanese power sector. Lebanon said it would set up a fund at its central bank to pay Iraq. The agreement includes a deferred payment mechanism for one year from the date of receipt. Iraq agreed in May last year to continue supplying fuel oil for another year and to increase the quantity, in a bid to help alleviate an acute power shortage in Lebanon. The Iraqi government said at the time that it would increase supplies to 1.5mn t/yr (26,000 b/d) from 1mn t/yr, effective from October 2023. Baghdad also agreed to supply Beirut with 2mn t/yr (40,000 b/d) of crude. "The agreement between Lebanon and Iraq is an official one that was ratified by the Lebanese parliament," the Lebanese source said, adding that it is unclear why parliament has not addressed renewing the agreement in recent months. Lebanon's acting central bank governor Wassim Mansouri has been refusing to transfer funds to pay Iraq from emergency foreign currency reserves, saying such a move requires parliament's authorisation. "For now, the Lebanese government is looking to buy a spot cargo of 30,000t of fuel oil to address the current situation," the source said. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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