August 13, 2020:

Oil refiners are permanently closing processing plants in Asia and North America and facilities in Europe could be next, as fuel demand recovery seems uncertain after the coronavirus pandemic triggered losses, Reuters reported. Royal Dutch Shell PLC is shutting its Tabangao facility, which produces 110,000 barrels per day, in the Philippines, while Switzerland-based Gunvor Group Ltd. is considering shuttering its 110,000 bpd refinery in Antwerp, Belgium.

By Businessinsurance.com

August 13, 2020:

State-run oil marketing company Bharat Petroleum Corp Ltd (BPCL) is planning to add 1,000 fuel stations in the current financial year 2020-21 even as it expects to be privatised by the end of the current fiscal. State-run oil marketing company Bharat Petroleum Corp Ltd (BPCL) is planning to add 1,000 fuel stations in the current financial year 2020-21 even as it expects to be privatised by the end of the current fiscal. PSU oil marketing major BPCL expects that its privatisation procedure will take place by March 2021, Reuters reported citing an unidentified company official. BPCL has also reduced its capex target to Rs 8,000 crore from the earlier target of Rs 12,500 crore, the executive added. The coronavirus pandemic has affected virtually all the businesses and has caused BPCL’s sales to fall to 90% of the year ago level in August.

The company has also declared its quarterly results for the quarter ending June. Privatisation-bound BPCL on Thursday reported nearly doubling of its net profit in the June quarter. While there has been a decline in refining margins and fuel sales, the same was offset after inventory gains. BPCL’s standalone net profit in April-June stood at Rs 2,076.17 crore as against Rs 1,075.12 crore a year back in the same comparable period, the company said in a regulatory filing on Thursday. The outbreak of coronavirus in the country has not fared well for BPCL. The company said that the COVID-19 pandemic and the resultant lockdown in many countries, including India from March 25, had an impact on its business. “Consequently lower demand for crude oil and petroleum products has impacted prices and therefore, refining margins globally. Since petroleum products are covered under essential services, the refining and marketing operations of BPCL were continued during the lockdown period,” the company said. Meanwhile, the third-biggest oil refiner had offered VRS to employees ahead of its privatisation. BPCL, which has about 20,000 employees, has offered Voluntary Retirement to all of its employees who have completed 45 years of age.The government is looking to divest 100% of its stake in the second-largest fuel retailer. The government owns over half of BPCL’s stakes at 52.98%.

By Financial Express

July 18, 2020:

U.S. refineries have sustained fewer mechanical outages as production has fallen because of the coronavirus pandemic in 2020, according to data from energy intelligence service Industrial Info Resources. Average unplanned mechanical maintenance for crude units resulted in 95,000 barrels of capacity offline in April, May and June, compared with 254,000 barrels offline on average in the prior-year period. Because of reduced travel caused by the COVID-19 pandemic, U.S. refinery utilization fell from record highs to 68% of 19 million barrels per day in April. Utilization rose to 78.1% by the first week of July. “Running units at higher capacity for many years requires more maintenance,” said Sandy Fielden, energy analyst at financial services firm Morningstar.

Prior to the pandemic, U.S. energy and chemical production was at an all-time high, and increasingly complex refineries had been running full-tilt, sometimes eschewing planned downtime to try to boost profits. John Auers, executive vice president with Dallas-based Turner, Mason, said most U.S. refiners operate their plants reliably and safely and brought production down quickly when demand took a dive in March. “More than anything you can say it shows how good refiners were reacting to this crisis,” Auers said. Unexpected refining outages have soared in recent years, surpassing 2,000 incidents in 2019, quadruple 2015 levels. This year, some refiners took advantage of the unexpected downtime to perform routine maintenance. Others have delayed projects because of concerns the coronavirus could spread among refinery workers if the maintenance goes ahead. But the reduced production rates may be affecting refiners’ financial ability to make repairs.

“Refiners are piling overhead onto fewer barrels of oil refined, restricting cash flow that could be used for maintenance,” Fielden said. (Reporting by Laura Sanicola and Erwin Seba; Editing by Leslie Adler) .

By Reuters

July 18, 2020:

The oil refinery of Indian Oil Corporation Ltd (IOCL) at Paradip in Odisha’s Jagatsinghpur district will remain shut for 22 days from July 25 for maintenance work, a senior official said on Saturday. Nearly 800 workers from nearby areas will be engaged for carrying out the maintenance activity at the refinery plant, while adhering to COVID-19 safety protocols, Jagatsinghpur District Collector Sangram Keshari Mohapatra said.

Prohibitory orders under Section 144 of CrPC will be imposed around the IOCL refinery premises to prevent any ongregation in the area, he said. The decision to undertake the annual maintenance work in the plant has been taken by IOCL authorities and the district administration, Mohapatra said. “Periodic maintenance work of the refinery is essential for ensuring operational safety and efficiency,” Paradip IOCL refinery PRO, S S Patra, said. The last such maintenance activity was undertaken in March 2018, he added. Commissioned in 2016 and considered as the energy gateway to eastern India, the refinery has a capacity of 15 million tonnes per annum.

By PTI

July 17, 2020:

(John Kemp is a Reuters market analyst. The views expressed are his own)

Fuel traders and refiners are becoming more pessimistic about the outlook for the global economy and transportation for the rest of this year, even as the crude producers in OPEC+ try to push oil prices higher. OPEC+ is anxious to see higher crude prices as soon as possible but its ambition is likely to be thwarted in the short term by the renewed softness in fuel consumption. Price premiums for gasoline and diesel over crude have been flat or falling for almost four weeks since June 23 amid growing anxiety about a resurgence in the coronavirus and a new round of lockdowns. Futures for U.S. gasoline delivered in September fell yesterday to less than $8 per barrel over Brent for delivery in the same month, down from more than $11 in late June. Gasoline margins have been trending lower since June 23, after rebounding strongly over the previous three months as the major economies emerged from lockdown. Diesel margins have been steadier throughout the pandemic but the modest uptrend has fizzled out in recent weeks (tmsnrt.rs/3fyzwRP). Earlier expectations of a quick and complete V-shaped recovery are giving way to fears about an extended period of below-trend output and employment.

U.S. gasoline consumption has been broadly flat for the last three weeks as the emergence from lockdown has run into a new wave of coronavirus cases. Even before the latest bout of weakness, refiners in the United States had been forced to restrain crude processing to allow excess fuel inventories inherited from the lockdown to be absorbed. The renewed weakness in gasoline and diesel prices is signalling to refiners that they may need to trim processing rates to avoid a new build up in stocks. Refiners are trapped between OPEC+, which wants to drain excess crude inventories as quickly as possible and drive oil prices higher, and sluggish consumption of gasoline and diesel. Benchmark Brent futures prices and calendar spreads have also been essentially flat over the last four weeks as the crude market has run into a refinery wall. Brent prices, calendar spreads and gasoline margins started to soften around June 20, when the number of confirmed coronavirus cases in the United States rose again.

Until the crisis has been brought under control and/or the transportation system resumes its return towards normal, oil prices will struggle to rise sustainably.

By Reuters