January 16, 2021:

Canadian province Newfoundland and Labrador will give North Atlantic Refinery Limited C$16.6 million ($13.05 million) to keep its 135,000 barrels per day Come-by-Chance plant idled as the owner seeks a new capital partner, the provincial government said on Friday. The funding agreement will cover 75% of eligible labor costs of refinery employees and 50% of eligible non-labor costs in Newfoundland and Labrador to keep the refinery warm in case of a future restart, according to a release from the government. “Part of this agreement includes a commitment by NARL LP and its owners that it will continue its ongoing buyer/investor search for the refinery,” said Andrew Parsons, minister of industry, energy and technology. The plant has been idle since early April, with about 100 workers operating the plant, down from the 400 full-time employees the refinery employed prior to the shutdown.

It supplied major U.S. East Coast harbors including New York and Boston, but was the first North American refinery to idle as fuel demand collapsed during the coronavirus pandemic. Approximately 200 workers will be employed at the facility as a result of the new funding agreement. “Currently, maintenance of the refinery requires North Atlantic to incur significant monthly financial losses. This funding will offset labour and operational costs related to maintaining the refinery in idle mode,” North Atlantic Refinery said in a statement. Come-by-Chance has been looking for a new owner after Irving Oil backed away from a purchase and share agreement in October shortly before it was set to close on acquiring the company. The company also received interest from U.S.-based energy company Origin International in restarting fuel processing there in “a more environmentally sustainable model.”

Parsons told Reuters in a phone interview that conversations with entities interested in buying Come-by-Chance were continuing this year. He also said the provincial government had discussed buying the plant itself, but had concerns about its lack of expertise in refining. In December Newfoundland and Labrador announced it would give C$41.5 million to the idled West White Rose offshore oil project, now owned by Cenovus Energy. That money came from the federal government’s C$320 million Oil and Gas Recovery Fund, launched last year to support Canada’s struggling offshore oil industry. The funding for Come-by-Chance came from a contingency fund in the provincial government’s budget, Parsons said.

By Reuters

January 14, 2021:

There was a larger than usual flame at the top of Limetree Bay Refinery’s flare stack and louder than usual noise from the flare over the last week, which the company says is part of the normal startup process and will quiet down when the refinery restarts.  In a release, Limetree officials said gases are sometimes routed to the flare system, where they are safely burned. Steam is also routed to the flare to promote complete combustion of the gases and eliminate smoke. “The executive management of Limetree sincerely apologizes for any concern or inconvenience this flaring activity has caused to our neighbors, and we can assure you that we are working diligently to keep the noise levels as low as possible,” company officials said in the statement. The refinery emitted a plume of steam “containing light hydrocarbons” in December, causing a noxious odor. Flares and plumes are par for the course at oil refineries, and similar incidents occurred periodically at the Hovensa refinery, which closed in 2012. Limetree Bay is working to restart a portion of the former Hovensa refinery.

On a number of occasions, steam and hydrocarbon sprays resulted in odor complaints, oil on cars and houses and, on at least one occasion, significant hydrocarbon contamination of residential water cisterns in surrounding neighborhoods. When the company entered into a deal with the V.I. government to buy the former Hovensa refinery on St. Croix, they told the Legislature they planned to restart in January 2020, to take advantage of a temporary edge over other refineries in producing low-sulfur ship fuels as new regulations took effect. The company has no timeline for when the restart may occur, although work is visibly ongoing. “We’re still working toward a starting date,” refinery spokeswoman Erica Parsons said on Thursday. Asked if it would be in the next month or the next six months, Parsons said she has no date at present. In October of 2019, the Reuters news service reported that Limetree Bay might lose BP’s crude oil supply if it does not start running by December. The report by Laura Sanicola cites “two people familiar with the matter.”

If all goes well with the reopening, the refinery is expected to generate up to 700 permanent jobs and tens of millions of dollars in tax revenue.

By The St. Thomas Source

January 14, 2021:

The U.S. Environmental Protection Agency said on Thursday it would propose to extend deadlines for refiners to prove compliance with biofuel laws, but signaled it would not decide on a slew of pending waiver requests submitted by the industry. The agency’s proposal represented mixed news for refiners hard hit by slumping energy demand during the coronavirus pandemic and eager to sidestep regulatory costs associated with U.S. biofuel blending policy. It also marks one of the last actions from President Donald Trump’s EPA before he leaves office on Jan. 20. The agency said it is proposing to extend the compliance deadline for 2019 biofuel blending obligations to Nov. 30, 2021, and an associated deadline for submission of attest engagement reports to June 1, 2022. The EPA is also proposing to extend the 2020 deadlines to Jan. 31, 2022, and June 1, 2022. Refiners must hand in credits to the EPA each year to prove they complied with their annual biofuel blending obligations for the previous year.

The agency also said it was not taking a position on the availability of 2019 small refinery waivers, which can exempt oil refiners from biofuel blending obligations. The agency said the decision was related to pending litigation regarding the waiver program. EPA could not be reached by Reuters to clarify whether that meant the agency was not issuing any additional waivers before Trump leaves office. The proposal was outlined in a document seen by Reuters that is scheduled to be posted on the Federal Register on Friday. Under the U.S. Renewable Fuel Standard, refiners must blend billions of gallons of biofuels like corn-based ethanol into their fuel mix, or buy credits from those that do. Refiners can apply for exemptions if they can prove the obligations would cause them financial harm. Because of the coronavirus pandemic, EPA had not enforced compliance for some refineries for the 2019 compliance year. “While we don’t agree that EPA needs to wait as long as it is proposing, particularly for the 2020 compliance year, we do agree with EPA that the outgoing administration should refrain from any further action on the pending small refinery petitions,” said Geoff Cooper, president of the Renewable Fuels Association. U.S. senators including Joni Ernst and Chuck Grassley of Iowa urged EPA Administrator Andrew Wheeler in a letter dated Thursday not to grant small refinery exemptions until ongoing litigation is resolved. Renewable fuel (D6) credits for 2020 traded at 90 cents each on Thursday, up from 79 cents in the previous session, traders said.

By Reuters

January 15, 2021:

Swiss trading house Gunvor will resume trading in large volumes of Russian oil products this year after winning a big tender from Russia’s largest oil firm Rosneft for the first time in eight years, five industry sources told Reuters. Gunvor won the rights to lift 9 million tonnes of Rosneft’s oil products, the sources said. Rosneft also chose Trafigura and BP as the other big lifters of products for 2021, the sources added.  Gunvor and Trafigura declined to comment for this report. BP and Rosneft did not respond to requests for comment. Gunvor had worked closely with Rosneft when businessman Gennady Timchenko, one of Russian President Vladimir Putin’s closest allies, was among the biggest shareholders in the Swiss firm.

Timchenko sold his Gunvor stake in 2014 after the United States imposed sanctions on him over Moscow’s role in the Ukraine crisis. Since his departure, Gunvor changed strategy, expanding its global presence by buying several oil refineries in Europe and becoming one of the world’s largest gas traders. Gunvor also sold most of its Russian assets and its trade in Russian fuels fell to 5% of its total volumes in 2020 from 7% in 2019. Gunvor’s deal to lift 9 million tonnes of products included the right to lift up to 1.5 million tonnes of naphtha and alkylates from the Baltic Sea port of Ust-Luga, the sources said. It would also load diesel and marine fuel from Russia’s Far East, as well as up to 3.5 million tonnes vacuum gasoil from Tuapse and other Black Sea’s ports, they added. The sources said Gunvor was probably seeking to buy Russian products to meet its orders after losing a major source of supplies when it mothballed its 110,000 barrel-per-day Antwerp oil refinery in Belgium. Gunvor’s rival Trafigura took the biggest share of Rosneft’s oil product tenders for 2021, winning the right to handle 15 million to 18 million tonnes of oil products, according to Reuters estimates. BP will lift more that 5 million tonnes of fuel oil. Trafigura secured new deals after agreeing to buy a 10% stake in Rosneft’s flagship Vostok Oil project in Russia’s East Siberia and Arctic, where Rosneft estimates there are 6 billion tonnes of oil and gas condensate resources.

Three sources said Gunvor might also seek a role in the Vostok projects but details were not clear.

By Reuters

January 15, 2021:

Pakistan and Bangladesh are rationing gas and buyers across South Asia are seeking alternative fuels after spot liquefied natural gas (LNG) prices surged to record highs, government and industry officials told Reuters. Spot LNG prices LNG-AS have nearly tripled since early November as freezing temperatures across North Asia boosted demand and depleted inventories. Since July, prices are up a dizzying 1,000%. Gas-fired power plants and industries across the region are scrimping on gas, with the scramble for other fuels driving up demand for liquefied petroleum gas (LPG) and residue oil. In Pakistan, which is more reliant on spot LNG imports for its winter needs, gas use for industry is being limited to certain hours and industry executives have warned the situation has become critical. A recent power blackout was partly caused by a gas shortage after buyers who snapped up record-cheap LNG earlier in the year balked at paying up during the recent price surge. “The current gas crisis being faced by the industry includes disconnection of gas supply to industries as well as low gas pressure,” said Saleem Uz Zaman, president of the Trade and Industry Association of Karachi. Sui Southern Gas Company, the gas distributor for the southern half of Pakistan, said in a letter to industry associations that it faces an “emergency situation” and pegged the daily supply gap at about 200 million cubic feet.

In Bangladesh, the government has cut gas supplies to power plants due to lower electricity demand during winter, while maintaining steady gas flows to industries, a senior official at the state-run Petrobangla said.

IMPORT TENDERS CANCELLED

Soaring prices have led to cancelled orders from state-owned buyers Indian Oil Corp, Pakistan LNG and Bangladesh’s Rupantarita Prakritik Gas Co. “LNG prices have gone crazy... For the last few tenders, we didn’t get any response from suppliers,” said Rafiqul Islam, general manager at Rupantarita Prakritik. “We are continuing our efforts to buy from the spot market ... But it is very unlikely to get competitive prices in this highly volatile market,” he said. Reliance Industries, operator of the biggest refining complex in western India, has almost halted LNG imports and switched to cheaper alternatives, industry sources said. Reliance did not respond to a Reuters request for comment. South Asia has been a critical growth market for LNG, with imports by India, Pakistan and Bangladesh climbing 8% in 2020 to a record 50.48 billion cubic metres (BCM) despite the coronavirus pandemic’s hammering of the region’s economies, according to Refinitiv ship-tracking data. That growth rate was second only to China’s 11.5% expansion in LNG imports in 2020.

ALTERNATIVES SOUGHT

Tile makers from Morbi, the hub of the ceramic industry in India, have sought permission from local authorities to switch to alternative fuels such as LPG, Morbi Ceramics Associations wrote in a letter to officials on Jan. 9. “Fuel is a significant input cost for us, accounting for 30% of the total production cost,” it said. India’s fuel oil consumption has also increased after gas prices spiked. “Whatever fuel oil we are producing is getting consumed here. We have not been able to build inventory of furnace oil,” said an official at refiner Bharat Petroleum Corp who declined to be named. “Situation is completely different from what it was after COVID-19 outbreak... No one can afford LNG at this rate.” India could see 2 or 3 cargoes less in February and March than it normally would, said E.S. Ranganathan, head of marketing at India’s largest gas transmitter GAIL (India) Ltd. He however expects the impact on supplies to customers to be minimal. GAIL is due to receive 32 cargoes this year under its long term deal with Gazprom compared to 24 last year, he added.

By Reuters