June 7, 2012:

The closing of Petroplus Holdings AG’s Coryton refinery, the second facility to shut in the U.K. since 2009, has boosted fuel imports to the most this year. Traders bought 150,000 metric tons of jet fuel, 100,000 tons of diesel and 80,000 tons of gasoline last month for delivery to the U.K. in the Platts pricing window. In total, 18 cargoes were purchased compared with 10 in April, five in March, three in February and one in January, data from the news and pricing unit of McGraw-Hill Cos. show. The shutdown of Coryton was confirmed on June 6. “You can certainly attach the rise in imports to Coryton coming slowly out,” Olivier Jakob, managing director of Switzerland-based consultant Petromatrix GmbH, said by phone yesterday. “Europe has a continual problem of surplus refining capacity so in the short-term, the closure will translate itself as more imports into the U.K. as there is a re-balancing of regional flows. Overall though, it is not going to have a significant impact as the U.S. needs to export product.”

Britain is the third-largest consumer of oil in the European Union at 1.59 million barrels a day in 2010, according to BP Plc’s Statistical Review. The country has lost 292,000 barrels a day of refining capacity since 2009, according to data compiled by Bloomberg, with the Coryton plant catering for 20 percent of fuel demand in the south-east.

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European processors have struggled to make money in the past few years as competitors in Asia, such as Reliance Industries Ltd. in India, owner of the world’s largest refining complex, and the U.S. are able to produce oil products profitably because of cheaper feedstock and as the economic crisis on the continent crimps demand. “The reason Coryton has closed is basically due to the pressure from product volumes from foreign markets,” David Wech, managing director at Vienna-based JBC Energy GmbH, said by phone yesterday. “You have Russia exporting at record levels, Reliance sending large volumes into Europe and on the gasoline side, you have European refiners who are struggling to get rid of volumes.”

Deliveries into the U.K. of gasoline rose 2.6 percent in March and diesel imports increased 4.5 percent, according to data from the Department of Energy and Climate Change. European refiners may still have to reduce capacity by 2.3 million barrels a day to boost processing rates to 83 percent, the International Energy Agency said in its May 11 monthly report. Plants in the region operated at 75.2 percent of capacity in March, compared with 83.7 percent in North America, according to the IEA.

“I think there will be more European refineries closing,” Jakob said. “What we have seen with the other Petroplus refineries in Petit Couronne, Cressier and Ingolstadt, is that they were closed down and bought by other entities. So in the end, not that much capacity has been taken away.” The Coryton unit became the sixth refinery to close in Europe since last year, following Shell’s Hamburg plant in Germany; ConocoPhillips’s Wilhelmshaven facility, also in Germany; Tamoil SA’s Cremona plant in Italy; Petroplus’s Reichstett plant in France; and OMV AG’s Arpechim in Romania.

By Bloomberg

June 7, 2012:

Chicago gasoline and diesel differentials rallied on Thursday after ExxonMobil Corp, (XOM.N) which operates the 238,600 barrels-per-day (bpd) refinery in Joliet, Illinois, started buying products, traders said. Chicago CBOB gasoline jumped by 10.00 cents a gallon to 26.00/27.00 cents over the July RBOB gasoline futures contract on the New York Mercantile Exchange , while ultra-low sulfur diesel rose 6.00 cents a gallon to 20.00 cents over July heating oil futures.

Traders said Exxon experienced an operational glitch at the Joliet refinery. The company declined to comment on its operations at the plant. They added the Midwest products market did not react to the shutdown of Enbridge Inc.'s (ENB.TO) 609,000 bpd 6A crude line, which supplies Canadian crude oil to refiners in the Chicago area. Enbridge, which shut the line on Wednesday, said it expected no impact on deliveries but declined to provide a restart date.

In related news, Marathon Petroleum said it had started planned work at its 206,000 barrels-per-day (bpd) refinery in Robinson, Illinois on Thursday. On the Gulf Coast, M2 conventional gasoline differentials rose by 2.00 cents per gallon to 8.00 cents under July RBOB futures on the NYMEX as its latest five-day lifting cycles scheduled to move on the Colonial Pipeline. A2 CBOB formulated for blending with 10 percent ethanol gained 1.50 cents per gallon to 10.00 cents under early in the day, but retreated to finish down slightly from Wednesday's levels at 11.65 cents under, traders said.

Gulf jet fuel differentials slipped on pipeline scheduling, ending the day down by a penny per gallon at 3.50/4.50 cents over July NYMEX heating oil futures. In the New York Harbor, gasoline differentials rose slightly, with F2 RBOB gasoline for delivery on the 20th of the month up a quarter cent at 6.20 cents over July RBOB futures. CBOB gasoline gained a half cent a gallon to 1.50 cents over the July gasoline futures. RBOB gasoline for any-month delivery also rose a quarter cent to 2.75/3.00 cents over in earlier trading but fell back to 2.75 cents over, flat to late Wednesday levels.

By Reuters

June 7, 2012:

In December 2011, before the spin-off of Phillips 66 (NYSE: PSX) from ConocoPhillips (NYSE: COP), Conoco was believed to be trying to sell its 247,000 barrel/day Belle Chase, Louisiana, refinery for $700 million to $1 billion. Selling refineries was all the rage in the second half of last year and so far this year. But that may be about to change. Phillips 66 did sell a 147,000 barrel/day Pennsylvania refinery to Delta Air Lines Inc. (NYSE: DAL) last month. Sunoco Inc. (NYSE: SUN) did not sell its refineries to Energy Transfer Partners L.P. (NYSE: ETP) when the two companies merged, hoping instead for a deal for the refineries with The Carlyle Group LP (NASDAQ: CG). Chevron Corp. (NYSE: CVX) sold its 220,000 barrel/day UK Pembroke refinery to Valero Energy Corp. (NYSE: VLO) for about $1.7 billion, and Exxon Mobil Corp. (NYSE: XOM) sold virtually all of its Japanese refining assets for $3.9 billion in January. BP plc (NYSE: BP) and CVR Energy Inc. (NYSE: CVI) are also trying to sell refineries.

The Belle Chase refinery may be coming off the sale table, though, according to a report in The Wall Street Journal, which says that the company will decide this summer whether or not to try to sell the refinery. The WSJ suggests that there are few buyers for the plants because US gasoline consumption is falling and that lower crude prices are making the economics of refining attractive again.

Refining is, and always has been, a cyclical business and profitability depends largely on the cost of crude. Louisiana Light Sweet crude prices (LLS) have tracked Brent prices, making the feedstock for the Belle Chase refinery anywhere from about $14/barrel to $25/barrel higher than other domestic crudes based on WTI pricing. In order for Phillips 66 — or anyone else — to make money on refining either the price spread between WTI and Brent must narrow significantly, or the refiner must develop an export market. Phillips 66 has little control over the price spread, but it could find an export market by the end of the summer for its refined products that would make the refinery worth keeping. It could happen. Shares of Phillips 66 are up 1.65% today at $32.05 in a post-IPO range of $28.75-$37.45.

 By 247wallst.com

June 7, 2012:

Phillips 66 may decide that now is not such a great time to sell a refinery after all.  The Houston-based company said it may hold on to its 247,000 barrel-a-day Alliance refinery in Belle Chasse, La., the same one it said in December it was trying to sell. Phillips 66 CEO Greg Garland said Tuesday that the company would decide this summer whether to pursue a sale of the refinery.

It’s not difficult to see why Phillips 66 may pull back. BP Plc., Sunoco Inc., CVR Energy and other refineries all have assets on the chopping block, but in a world where domestic fuel sales are in long-term decline, potential buyers are in short supply. Phillips 66 is in the process of closing a sale on its Trainer refinery in Pennsylvania to Delta Airlines.

Another factor is that there may be a gleam of hope for Gulf Coast refiner profitability. Exports are growing and Gulf Coast crude economics are getting better. The surge in domestic crude production could bring down the cost of regional oil benchmark Light Louisiana Sweet, giving refines in the region a distinct advantage, refiners and analysts have said. “Selling it may make less sense than it did a year ago,” Morningstar analyst Allen Good said of the Alliance refinery.

By The wall Street Journal

June 6, 2012:

ALMATY - KazMunaiGas, Kazakhstan's state oil and gas company, secured a $1.13 billion Chinese loan on Wednesday to complete an upgrade that will enable its Atyrau oil refinery to produce cleaner fuels. The loan from China's Export-Import Bank will be repayable over 13.5 years, KazMunaiGas said. The loan will finance a large part of a $1.68 billion project to build a new facility at Atyrau, Kazakhstan's oldest refinery, which will be capable of processing 2.4 million tonnes per year of fuel oil and vacuum gas oil. "The new complex will allow us to increase production of high-octane gasoline, jet fuel and diesel that will meet Euro-5 emissions standards," Talgat Baitaziyev, general director of the Atyrau refinery, said in a statement. Kazakhstan, which holds 3 percent of the world's recoverable oil reserves, has doubled crude production over the past decade to become the second-biggest producer in the former Soviet Union after Russia.

The country has three refineries, two of which are owned by KazMunaiGas. Ownership of the third refinery, Shymkent, is shared between KazMunaiGas and China National Petroleum Corp. China has invested around $15 billion into Kazakhstan, roughly a tenth of the total foreign investment attracted by the former Soviet republic since independence in 1991. Most of this investment has been in the past few years. "In the crisis years, our companies received access to Chinese investment in the region of $10 billion," Kazakh President Nursultan Nazarbayev said in comments published on the presidential website, www.akorda.kz. Around 20 percent of Kazakhstan's oil and gas exports are destined for China, Nazarbayev said. Nazarbayev, along with other Central Asian leaders and Russian President Vladimir Putin, was in Beijing for a meeting of the Shanghai Cooperation Organisation regional security forum. Annual trade turnover between China and Kazakhstan is around $25 billion, Nazarbayev said. Official data show Kazakhstan exported goods worth more than $16 billion to its neighbour last year, more than 18 percent of its total export revenues.

Chinese company Sinopec Engineering is overseeing the Atyrau deep refining project as part of a consortium that also includes Japan's Marubeni Corp and Kazakh firm KazStroiServis. The facility is scheduled for completion in 2015.

By Reuters