BREAKING NEWS

Iraq crisis: Key oil refinery 'seized by rebels'

Iraq's biggest oil refinery at Baiji, north of Baghdad, is reported to have been fully captured by Sunni rebels

BBC,

23 June, 2014, 22.45 GMT

The refinery had been under siege for 10 days with the militant offensive being repulsed several times.

The refinery supplies a third of Iraq's refined fuel and the battle has already led to petrol rationing.

Insurgents, led by the group Isis, are expanding their control of towns in the north and west and have captured all border crossings to Syria and Jordan.

They are also bearing down on a vital dam near Haditha.

A rebel spokesman said the Baiji refinery, in Salahuddin province, would now be handed over to local tribes to administer.

The BBC's Jim Muir in Irbil, northern Iraq, says the capture of the refinery is essential if the rebels are to keep control of the areas they have conquered and to supply the captured city of Mosul with energy

Like rats from a sinking ship

Not exactly “breaking” news – but it wasn't in the headlines either. Highly significant

Exxon carries out major evacuation from Iraq: Oil official

CNBC,

18 Jun 2014 | 8:38 AM ET

ExxonMobil has carried out a "major evacuation,'' and BP had evacuated 20 percent of its staff, the head of Iraq's state-run South Oil Company said Wednesday.

Dhiya Jaffar also said ENI, Schlumberger, Weatherford and Baker Hughes had no plans to evacuate staff from Iraq following the lightning advance of Sunni militants through the country. The companies, which are based in southern Iraq where the government is still in firm control, were not immediately available for comment.

"This message is not satisfactory for us. We are not convinced the work should not be done remotely. They should be here on the ground,'' Jaffar told Reuters.

"I assure the companies that the current developments in the country have not affected and will not affect in anyway the operations in the south,'' he said, adding that the export level for June will be 2.7 million barrels per day.

CNBC could not immediately confirm the evacuations.


Of course it wouldn't be anything to do with this, would it?

	Rami @RamiAlLolah
#Baiji Oil refinery few hours ago.. #Iraq #ISIS pic.twitter.com/Bp5paiQ1vD 2:39 p.m. Wed, Jun 18

BREAKING NEWS: Militants attack oil refinery

Iraq crisis: ISIS militants attack country's biggest oil refinery

Baghdad: The ISIS militants on Wednesday launched an attack on the country's main oil Baiji refinery in Salaheddin province and reportedly set some stored oil on fire.

Z News (India),

18 June, 2014

Clashes between the security forces and the militants took place soon after the attack.

The attack comes a day after the government shut down the refinery and evacuated the foreign staff.

Meanwhile, Iraqi Prime Minister Nouri Maliki has fired several senior officials for failing to contain the advance of the ISIS militants even as the Sunni Islamist rebels seized key cities in Iraq.

The Iraqi government dismissed four Army commanders who will be court martialled for failing to “perform their national duty,” the BBC reported.

The Army officials include commander of Nineveneh province which was the first capture by the militants and another who deserted the battle.

In the wake of the crisis in the country, Maliki held a meeting with the Sunni leaders on Tuesday evening and called for “national unity”.

The Islamic State in Iraq and the Levant (ISIS) militants seized the cities of Mosul and Tikrit last week.

They also captured strategic city of Baquba briefly before government troops regained control yesterday.

Army forces have been deployed and air strikes were carried out in the area as it is situated barely 60 kilometers from Baghdad.

The advance of the ISIS militants have sparked international concern with the US also deployed around 275 military personnel fearing safety of its staff at Baghdad embassy.

Profits tumble for European oil refineries

Europe to Shut 10 Refineries as Profits Tumble

Oil refiners in Europe will shut 10 percent of their plants this decade as fuel demand falls to a 19-year low.

Bloomberg,

4 April, 2013

Of the region’s 104 facilities, 10 will shut permanently by 2020 from France to Italy to the Czech Republic, a Bloomberg survey of six European refinery executives showed. Oil consumption is headed for a fifth year of declines to the lowest level since 1994, the International Energy Agency estimates. Two-thirds of European refineries lost money in 2011, according to Essar Energy Plc (ESSR), owner of the U.K.’s second-largest plant.

“Purely from the falling European demand point of view, one bigger refinery or two smaller plants would have to shut in Europe every year,” David Wech, who helps advise oil companies and governments as managing director at researcher JBC Energy GmbH, said in a phone interview from Vienna. “And it’s not even assuming any negative impact from more competitive refining markets in other regions.”

A 50 percent jump in three years in U.S. diesel exports coupled with waning demand for imports of European fuels, as well as two recessions in five years in the euro region, have curbed profit from oil products at companies from Italy’s Eni SpA (ENI) to Royal Dutch Shell Plc. (RDSA) Refining margins dropped to $7 this month, from a peak of about $20 a barrel in 2008, according to data compiled by Bloomberg.

The losses are being compounded by the configuration of Europe’s refineries. Most of the plants, more than 50 percent of which were constructed in the wake of World War II, are geared toward gasoline production, though diesel now accounts for 75 percent of the region’s motor fuel needs.

Legacy Sites

At the same time, newer facilities in the Middle East and Asia are refining cheaper crude grades into high-value fuels. Saudi Arabia, the world’s biggest oil producer, is building three refineries each the size of Shell’s Pernis plant in the Netherlands, Europe’s largest facility with a capacity of 400,000 barrels a day.

“Brand new Middle Eastern and Indian refineries are just shiny, beautiful, latest technology,” said Volker Schultz, chief executive officer of Essar Oil U.K., the British unit of Essar Energy that runs the Stanlow plant near Liverpool, England. They are “world class, world scale, you name it,” he said.

Refiners in Europe are also falling behind because U.S. competitors have access to cheaper crudes and natural gas, while Russian companies benefit from a more favorable export-tax regime, according to Schultz. European fuel demand is on course to drop to 13.6 million barrels a day this year, from 15.4 million in 2008, according to the IEA. Brent crude was trading today at $105.10 a barrel on the ICE Futures Europe exchange and is poised for a 4.5 percent drop this week.

No Money

“Not many companies have money to invest as the refining market has collapsed,” said Tomasz Kasowicz, a Warsaw-based analyst at Bank Zachodni Wbk SA who has sell recommendations on Polish refiners Polski Koncern Naftowy Orlen SA and Grupa Lotos SA. (LTS) “I don’t think current owners of European refineries will make decisions to invest in this circumstance, and they would probably rather exit” if their business can’t make profit.

Greece’s Hellenic Petroleum SA (ELPE), Portugal’s Galp Energia SGPS SA (GALP) and Grupa Lotos are among the few European refiners that invested more than 1 billion euros ($1.28 billion) each in boosting plant profitability. A three-year project that cost Grupa Lotos 1.5 billion euros turned its Gdansk facility into a “pro-diesel refinery,” according to Marek Herra, a Gdansk- based production director

Expensive Upgrades

Hellenic Petroleum spent 1.4 billion euros upgrading its Elefsina refinery, a multi-year project started before the recession.

Without that investment “we would be in trouble now, with only one refinery generating cash for the entire group,” Harry Panitsidis, a project director at Hellenic, said in an interview in Amsterdam on March 5. “And it’s a big question if people would start today” on a similar project, he said. “You need to be very big and very robust to do that now.”

Since 2008, refining capacity in northwest Europe has fallen in line with shrinking fuel demand, while a decline in consumption in the Mediterranean region outpaced a slide in capacity by 1.1 million barrels a day, according to Facts Global Energy’s Annual World Refining Outlook for 2013. This is five times the size of the Coryton refinery in the U.K., which closed last year after its Swiss-based owner, Petroplus Holdings AG, filed for bankruptcy.

Petroplus was among independent refiners that bought plants from major international oil companies including BP and Shell that were reducing their exposure to Europe’s refining industry.

Continental Drift

The Organization of Petroleum Exporting Countries, which controls about 40 percent of the world’s oil supply, also acknowledges the continent’s weakness.

“There’s no demand, Europe has been flat since 2005,” OPEC Secretary-General Abdalla el-Badri said yesterday at a conference in Paris. “The growth is minus 0.2 percent, so the European economy is the only risk we have in our forecast.”

Italy, where diesel demand dropped in February to the lowest level in almost 10 years, will probably see refinery closures, according to analysts and refiners surveyed by Bloomberg. There are no signs of recovery this year in the country’s fuel consumption, which may still decline by a further 10 percent, said Marco Schiavetti, director of supply and trading at oil-refiner Saras SpA. (SRS) “This is a very depressing situation,” he said.

Italy, France

The Mantova refinery in Italy, owned by MOL Hungarian Oil and Gas Plc (MOL), is among those at risk of closure, according to Kasowicz of Bank Zachodni. Domokos Szollar, head of international communications at MOL, said in an e-mail the company doesn’t plan to close any of its refineries and has initiated “a wide efficiency measure project.”

Petroplus’s Petit Couronne facility in France is struggling to find a buyer and remains closed for now. Other French refineries face a high risk of shutting permanently, according to the poll of refinery executives and analysts including Gemma Parker at Facts Global Energy.

Total SA (FP)’s Feyzin and La Mede plants, Exxon Mobil Corp. (XOM)’s Fos facility or the Lavera refinery part-owned by Ineos Group Holdings SA are all potentially at risk since they compete in the same market amid low demand for gasoline, Parker said.

An Exxon media official, who declined to be identified citing company policy, said the company had no comment. An Ineos official in Lavera didn’t return a phone call seeking comment.

Total Pledge

Total will honor its pledge, made when it decided to shut the Dunkirk plant in 2010, not to close any other refineries until 2015, Victoria Chanial, a Paris-based spokeswoman, said in an e-mail. “In the European market, our strategy is to adapt capacities to demand evolution and optimize the industrial system by focusing investments to position the best performing sites among the leaders and maximizing synergies,” she said.

Eastern Europe also has a substantial surplus of refining capacity, with several plants there already operating at low utilization rates, according to JBC Energy’s Wech. Ceska Rafinerska AS’s Litvinov plant in the Czech Republic is among those at risk of closure, Kasowicz said.

“This refinery should change the production mix, and a major shareholder may not do it this year,” Kasowicz said.

A Ceska Rafinerska official said the company isn’t authorized to comment on the refinery itself, saying questions should be posed to shareholders. Unipetrol AS (UNIP) is the majority shareholder. Mikulas Duda, Unipetrol’s press department manager in Prague, said in an e-mail that “despite the challenges, we believe that our refineries, including the Litvinov plant, will continue operations in the foreseeable future.”

Essar Energy’s Schultz said he was struck by the differing fortunes of cash-strapped European refiners versus their competitors elsewhere when he attended a conference in New York earlier this year. At that event, small U.S. refineries discussed multi-billion-dollar cash reserves and how they should invest, “and you just sit back and think ‘this is not real’,” Schultz said.

Lowest levels of gasoline stockpiles since 1990

Gasoline Supply Seen Down to 1990 Low on Sandy: Energy Markets

Gasoline stockpiles on the U.S. East Coast may sink to the lowest level since at least 1990 as Hurricane Sandy moves ashore, curtailing fuel production and distribution, based on Energy Department data.

Bloomberg,

31 October, 2012

Refineries accounting for 94 percent of regional processing capacity shut or reduced rates before Sandy, the largest tropical storm on record in the Atlantic, approached the East Coast yesterday. Colonial Pipeline Co., which operates the largest link between Gulf Coast refiners and East Coast distributors, planned to shut its main line delivering fuel to Philadelphia and New York Harbor late yesterday as customers shuttered operations.

Prices had jumped 5.9 percent in three days, breaking the longest losing streak since 1986, as the storm headed directly for the heart of East Coast fuel refining and distribution. Gasoline inventories in the central Atlantic area are already 16 percent below a year earlier. Sandy threatens to flood and disrupt power at refineries and terminals that account for one- third of U.S. finished gasoline production, according to BNP Paribas SA.

“Given that the hurricane is passing over the refining and terminal system and not just near them, it’s clear that supply concerns will outweigh concerns about reduced demand as people stay home,” Harry Tchilinguirian, BNP Paribas SA’s head of commodity markets strategy in London, said in an interview yesterday. “You’re going to have a run-up in prices that could be kept up.”

Gasoline Futures

Gasoline for November delivery fell 1.3 percent to $2.7221 a gallon at 1:48 a.m. in electronic trading today after rising 5.77 cents yesterday to settle at $2.7568 a gallon on the New York Mercantile Exchange, the third day of gains.

After surging 23 percent in the third quarter, gasoline has been the biggest loser in the Standard & Poor’s GSCI index of 24 materials this month. Prices have slid 19 percent so far this month as refineries restarted units after repairs and demand sank to the lowest level since March 16 in the week ended Oct. 19, according to Energy Department data.

Inventories in the central Atlantic, which includes Philadelphia and New York, were 22.9 million barrels as of Oct. 19, up from 20.4 million Sept. 28.

Supplies dropped 1.9 million barrels from Aug. 19, 2011, to Sept. 2 that year when Hurricane Irene swept along the East Coast. A similar decline would reduce supplies that at the end of September were at the lowest level since the Energy Department began publishing weekly figures in November 1990.

Refineries Shutting

The refineries shutting production ahead of the storm account for 1.22 barrels of the area’s 1.29 million-barrel-a-day capacity. In New Jersey, Phillips 66 shut its 238,000-barrel-a- day Bayway plant and Hess Corp. (HES) shut its 70,000-barrel-a-day refinery in Port Reading.

Philadelphia Energy Solutions said many of the process units at its 355,000-barrel Philadelphia refinery were shut. PBF Energy Inc. reduced rates at its 185,000-barrel Paulsboro, New Jersey, and 182,200-barrel Delaware City, Delaware, plants. The Energy Department reported that the 185,000-barrel-a-day Trainer refinery in Pennsylvania, run by Delta Air Lines Inc.’s Monroe Energy LLC subsidiary, is operating at reduced rates.

Colonial began shutting delivery lines along the East Coast as customers in Virginia, Maryland, New Jersey and New York halted operations. Line 3, an 825,000-barrel-a-day fuel pipeline running from Greensboro, North Carolina, to Philadelphia and Linden, was expected shut as of 7 p.m., Steve Baker, a company spokesman, said in an e-mail. Buckeye Partners LP (BPL) said its pipelines delivering fuel from Linden were shutting as of 4 p.m.

East Coast Blending

The East Coast received 1.42 million barrels a day of finished gasoline and fuel to be blended with ethanol at terminals in July, Energy Department data show. Imports to the region were 471,000 barrels a day in the week ended Oct. 19, department data show.

The storm threatens to reverse an increase in East Coast capacity over the past year as refiners processed less expensive oil from Texas and North Dakota shale formations instead of pricier imports. U.S. oil production reached 6.61 million barrels a day in the seven days ended Oct. 19, the most since 1995, department data show.

North Dakota Bakken crude sank $6.50 a barrel to a $10 discount to benchmark West Texas Intermediate yesterday, according to data compiled by Bloomberg as refiners shut production.

Shutting Terminals

Hess, Nustar Energy LP (NS), Phillips 66 (PSX), Citgo Petroleum Corp. and Kinder Morgan Energy Partners LP (KMP) said they closed fuel terminals. The East Coast is a major blender of gasoline and much of that blending occurs at terminals. New York, New Jersey and Delaware Bay ports were closed to vessel traffic by the U.S. Coast Guard, halting tankers that deliver gasoline to suppliers and also help supply the region’s refineries with crude oil.

“If there’s damage to these terminals and ports, if the ability to get product is compromised, that will be the real challenge,” said Sander Cohan, a global transportation fuels analyst and principal with Energy Security Analysis Inc. in Wakefield, Massachusetts. “You will see the largest demand region in the U.S. deprived of fuel.”

If the outages are short-lived, the market may focus its attention from supply to demand if the hurricane disrupts people’s ability to drive.

Dropping Demand

“The market is overlooking that we’re going to lose about 2 million barrels of demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Prices could rapidly fall if those still operating ride out the storm unscathed and return to normal operations on Wednesday and the market recognizes a significant amount of demand.”

The average nationwide price for regular gasoline at the pump declined 0.9 cent to $3.534 a gallon yesterday, AAA, the largest U.S. motoring organization, said on its website. That’s the lowest level since Aug. 1. Prices have fallen, or were unchanged, every day since Oct. 7, losing 7.4 percent. The pump price reached a 2012 high of $3.936 on April 4.

AAA expects that disruption to supply will be short-lived and that the bigger threat is to demand so it has not changed its projection that the national average will fall as low as $3.40 a gallon by election day, Avery Ash, a spokesman for AAA in Washington, said in an interview.

“You’ve got a slow-moving storm that is going to keep motorists off the road for a number of days in a very, very wide region,” said Ash. “We may see a short-term regional bump in prices but, once the storms move through, the national average will continue on its downward trend the rest of the year.”

Inventory Report

U.S. gasoline inventories probably fell by 600,000 barrels in the week ended Oct. 26 on a nationwide basis, according to the median estimate of eight analysts surveyed by Bloomberg.

The Energy Department’s weekly inventory report, which is normally published at 10:30 a.m. Washington time each Wednesday, will be postponed until at least Nov. 1 because of Sandy, Jon Cogan, a spokesman for the Energy Information Administration said in an e-mail today. Crude inventories are projected to have risen 1.475 million barrels, according to the analyst survey.

Oil refineries shut down

Hurricane Sandy forcing wave of oil refinery shutdowns

Forbes,

29 October, 2012

Hurricane Sandy is beginning to have a noticeable economic impact on the U.S., forcing major oil producers to cease operations in their refineries in the North East. With Sandy expected to traverse a path that hosts 6.5% of the nation’s total refining capacity, and tight supplies due to regulation, prices for refined products could surge to new highs. Amid thin trading and illiquid markets, prices for gasoline and heating oil are already on the rise and are expected to move higher.

Due to low inventories, the East Coast is “totally unprepared for this disaster,” explained economist Phil Verleger. The reality is that Hurricane Sandy has already forced refiners to shut down their operations, and this is coming in a time of thin inventories in the East Coast.

East Coast inventory numbers (PADD 1) aren’t too encouraging. Gasoline inventories hit a recent low at approximately 45.1 million barrels in the first week of October, compared to an average of around 55.8 million barrels for the corresponding weeks over the last couple of years. “For distillates, the drop is even more stunning,” explained John Kingston of The Barrel:

Stocks in the most recent report for PADD I were 39.5 million barrels. In the prior three years in the corresponding week they were 58.3, 75 and 74 million barrels. Even in 2008, when companies were dumping stocks like crazy in the wake of the fiscal crisis, they were 48.4 million barrels.

Refiners have already moved to cease their operations, which will put further upward pressure on prices. Phillips 66 will take 238,000 barrels per day offline as they shut down their Bayway Refinery in Linden, New Jersey, while Hess will be taking another 70,000 daily barrels of capacity off the market as it shuts down their operations at Port Reading, New Jersey. According to Trade the News, Philadelphia Energy will be operating its 330,000 barrel-per-day plant in Philadelphia (recently acquired from Sunoco) at reduced rates.

“The problem is that the US is already terribly short of refinery capacity on the East Coast and the refiners have little if any inventory on hand of products even as crude is moving toward them,” noted commodity expert Dennis Gartman. “With the refineries shuttered in, products are going to become uncommonly short supplied, while crude inventories likely back up and increase,” he added.

And the problem could get worse. Beyond the safety of its employees, refiners will have to deal with possible power outages and damages to equipment and infrastructure. Sam Stovall of S&P Capital IQ notes that estimated damages could hit $3.2 billion, but if the storm truly materializes as a “Frankenstorm,” then he sees no reason why it couldn’t top $10 billion (comparative damages estimates from the prior top 12 hurricanes all topped $10 billion).

Major utility Con Edison is already “bracing for Hurricane Sandy.” By 10 AM on Monday, ConEd reported just over 3,600 customers without electrical power, and indicated it could shut down underground equipment in Manhattan, Brooklyn, Queens, and elsewhere.

With major refiners like Chevron and Exxon Mobil having moved out of the North East, it will be a challenge for companies operating in the region to bring production back up in the aftermath of Hurricane Sandy. With supplies already tight, experts agree prices for gasoline and other distilled products are set to rise rapidly. While there may be a boost from construction and employment in the aftermath of the storm, the dire state of the U.S. economy could be further aggravated by Sandy.

Hurricane: Threat to refineries and nuclear plants

Northeast Oil Refineries And Nuclear Plants Brace For Hurricane Sandy

International Business Times,

28 October, 2012

As Hurricane Sandy bears down on the U.S. Northeast, two key industrial sectors have begun to steel themselves for the potential perfect storm expected to cause billions of dollars in damages: nuclear power and oil.

Electrical companies are bracing for heavy winds, rain, and potential flooding that could tear down power lines and even force their plants to shut down.

Excepting a New Jersey nuclear power plant already closed for repairs, no other energy facility has announced it will be shutting down operations yet.


More than a dozen nuclear power plants stand in Hurricane Sandy’s anticipated path through the mid-Atlantic and Northeastern regions, according to Reuters. At particular risk are key locations in New Jersey, Maryland, and Pennsylvania -- three states where the so-called Frankenstorm is expected to hit especially hard.

Neil Sheehan, a representative of the U.S. Nuclear Regulatory Commission, told the Star-Ledger of Newark that the hurricane is expected to “have a pretty good hit” on the newspaper's home state.

"These plants have to be able to withstand all sorts of natural phenomena: earthquakes, severe flooding, tropical storms, lightning storms, tornadoes. They need to be able to deal with all of that," Sheehan added. "We like to say they're very robust structures, they can deal with a lot of punishment, but at the same time they have procedures in place to guide them through this."

The Exelon Corp.’s (NYSE: EXC) Oyster Creek nuclear power plant in Forked River, N.J., has already been offline since Oct. 22, when it was first shut down for maintenance and refueling. No firm date was established for the plant to return to regular operations before the Hurricane Sandy alert, the Associated Press reported via Bloomberg Businessweek. The company said it had created a special “storm response team” to protect the plant and workers during the storm.

“Safety is our number one priority. We are prepared to protect our plant, our workers and the public no matter what this storm throws at us,” Michael Massaro, Oyster Creek vice president, said in a statement quoted by the Star-Ledger. “In its 42 years of operations, Oyster Creek has withstood its share of severe weather and our storm preparations this week will ensure our readiness.”

Other energy facilities in New Jersey, such as the two nuclear power plants in Salem County operated by a unit of Public Service Enterprise Group Inc. (NYSE: PEG), are planning to shut down if wind speeds reach 74 mph for more than 15 minutes at the site or if the water level of a nearby river rises to 100 feet from its standard 89 feet.

"We continue to monitor the weather conditions," PSEG Nuclear representative Joe Delmar said in a statement quoted by the Star-Ledger.

Six oil refineries on the East Coast also stand in the expected path of Hurricane Sandy, Reuters reported. Together, these refineries process about 1.19 million barrels of oil per day, or bpd, around 7 percent of the total U.S. capacity.

Like operators of nuclear power plants, those responsible for running the oil refineries in harm's way are monitoring weather conditions to determine whether they need to shut down or wait out the storm.

Phillips 66 (NYSE: PSX), owner of the Bayway Refinery in Linden, N.J., where it processes 238,000 bpd, told Reuters it is closely monitoring the Frankenstorm’s progress.

"All of our East Coast operations continue to operate normally while we prepare our facilities for the storm," said Rich Johnson, a representative of the company.

Beyond their private concerns over financial damages, energy companies face public worries about environmental hazards potentially associated with the effects of Hurricane Sandy.

Michael Karlovich, a representative of the privately held PBF Energy, a company with two refineries in Delaware and New Jersey that process about 370,000 bpd, told Reuters, "We are taking this seriously, monitoring the storm's progress and weather forecasts, with comprehensive preparedness plans in place."

Drop of demand for oil in Europe

Drop in European oil products demand menaces refineries: CONCAWE

Up to 40 small refineries in Europe could close over the next two decades, if they cannot tap growing export markets, because demand for oil products in the region is expected to drop, a study by industry association CONCAWE shows.

Reuters,

26 September, 2012

A total of 166 million metric tonnes (182.98 tons) will be lost from fossil fuel demand between 2005 and 2030, according to the study presented by Michael Lane, secretary general of CONCAWE, at the Platts European Refining Markets Conference in Brussels on Tuesday.

CONCAWE is the oil companies' European association for environment, health and safety in refining and distribution. Its members represent nearly 100 percent of European refining capacity.

"What is quite shocking is that this 166 million tonnes of demand decline is equivalent to the combined capacity of the nine biggest refineries in Europe or the 40 smallest, almost half of the 90 currently active EU mainstream refineries," Lane said, whilst noting that export demand could help offset this.

The study shows some 32 million tonnes being stripped from heating oil demand, 39 million tonnes from inland heavy fuel oil demand due to substitution by natural gas and improved boiler efficiency, and 43 million tonnes from road fuel demand.

LEGISLATIVE PRESSURES

Lane cited legislative pressures to reduce carbon emissions from passenger vehicles in the European Union, which will lead to some substitution of fossil fuels by renewables, as well as improved vehicle efficiency.

Total road demand for diesel and gasoline is expected to shrink by 81 million tonnes between 2005 and 2030, mainly due to a steep decline in demand for gasoline.

Middle distillates will therefore make up a greater percentage of the demand mix, accounting for 61 percent by 2030, up from 46 percent in 2000.

"It will be increasingly difficult for gasoline-oriented EU refineries to meet this changing demand ratio," Lane said.

Instead, refinery operating rates are expected to decline in line with demand trends, with utilization rates of crude distillation units (CDUs) - the central unit in a refinery - seen slumping to 74.5 percent by 2030 from 85.8 percent in 2008, the study showed.

The average EU refinery utilization rate is seen by the CONCAWE study falling to 82 percent in 2015, from 86 percent in 2008, in spite of the closure of 5 percent of refining capacity between 2008 and 2015 that has already been announced.

However, Europe will have to try to increase its production of diesel and jet fuel to make up the growing shortfall as demand patterns shift. The investment projects announced to date should boost European distillates hydrocracker capacity by 28 percent, Lane said.

"But the announced investments only address part of the total needs," he added, saying an estimated $51 billion in expansion would be required between 2008 and 2020, compared with the $30 billion in projects so far announced.

Refinery explosion in Venezuela

Death toll rises to 26 in Venezuela refinery explosion

A large explosion has struck Venezuela’s largest oil refinery, killing 26 people and injuring more than 80. The blast did significant damage to the plant as well as nearby houses and is thought to have been caused by a gas leak.

RT,

25 August, 2012

Among the dead include a 10-year-old boy, though 17 of the 26 who lost their lives were National Guard troops stationed at the refinery, Vice President Elias Jaua said after traveling to the afflicted area. He said authorities were working “to save the greatest number of lives.” At least 80 more were reported injured, nine of them seriously. Health Minister Eugenia Sader the other 77 had suffered light injuries and were released from hospital after receiving treatment.

President Hugo Chavez declared there would be three days of mourning and gave his condolences to the victims' families.

"This affects all of us," Chavez said while speaking on state television by phone. "It's very sad, very painful." He ordered a "deep" investigation to determine the cause of the blast.

The explosion occurred at approximately 1:07am local time (6:07 GMT) on Saturday, producing a tremor that was felt in nearby communities, smashing windows and damaging buildings. Massive balls of fire were seen over the refinery, with black plumes of smoke filling the sky.

"There was a gas leak," Energy Minister Rafael Ramirez told state TV. "A cloud of gas exploded … it was a significant explosion, there is significant damage to infrastructure and houses opposite the refinery."

Local official Stella Lugo told Venezuelan state news that the situation was now under control.

“There is no risk of another explosion. At the moment we are concentrating our efforts on helping the injured," said Lugo.

Local authorities have restricted access to the refinery and the surrounding area in response to the blaze.

Ivan Freites, secretary of the United Federation of Oil Workers told state news that at 12:30am local time (05:30 GMT) a propane-butane leak was reported at the plant.

“The senior staff at the plant said they had used foam to control the leak and eliminate the risk of a fire,” said Freites. He added that the explosion could have been triggered by a problem with a gas valve that led to a pressure buildup.

The Amuay refinery produces955,000 barrels a day, making it one of the largest in the world. Despite the refineries economic importance, Venezuela‘s Oil Minister Rafael Ramirez said the country’s current fuel supplies were sufficient to guarantee there would be no major disruption in meeting domestic needs or continuing exports despite the blast

Russian oil

Russia Invests in Diesel as Putin’s Oil Boom Peaks

Russia is cementing its status as Europe’s foremost diesel supplier as President Vladimir Putin seeks to shore up economic growth with record investment in the refining industry.

Bloomberg,

22 August, 2012

The nation will boost exports of premium, low-sulfur diesel by more than 50 percent next year, according to Facts Global Energy Inc., a Singapore-based researcher. Profits for European refiners may drop because of the increase in Russian shipments, JBC Energy GmbH said.

Russia is improving fuels quality to safeguard its Western export market and take advantage of crude output that’s risen to a post-Soviet record. As the government tries to allay a slowing pace of economic expansion, investment in refining will rise to 340 billion rubles ($11 billion) next year, up 93 percent on 2012, according to the nation’s energy ministry.

“There’s pent-up potential in the system and when the Russians switch it on, it will be a big threat to European refiners’ margins,” Gemma Parker, an analyst at Facts Global Energy in London, said by phone.

Putin, who began his first of three terms as president in 2000, has invested in infrastructure to guarantee access to European consumers without relying on neighboring countries for transit. Projects include a diesel pipeline to the Baltic Sea port of Primorsk that opened in 2008, handling shipments from the country’s biggest refineries including TNK-BP’s Ryazan facility and OAO Lukoil’s Nizhny Novgorod plant.

Baltic Pipeline

Rising production will increase flows through that link, known as Sever, to its 175,000 barrel-a-day capacity by the end of 2012, compared with about 100,000 last year, according to JBC Energy, a Vienna-based researcher. The Primorsk pipeline carries Euro-5 standard fuel, the strictest fuels category that contains no more than 10 parts per million of sulfur and fetches a higher price than other fuels.

OAO Transneft, Russia’s oil pipeline monopoly, may expand Sever to 245,000 barrels a day by 2015 and build a second 180,000 barrel-a-day line, dubbed Yug, to the Black Sea port of Novorossiysk by 2017, according to a June corporate magazine.

Russia’s crude output rose to a post-Soviet peak of 10.35 million barrels a day last year, Energy Ministry data show, as it vies with Saudi Arabia to be the world’s biggest producer. Russia’s economy is forecast to grow by 3.7 percent next year, the slowest rate since 2009, data compiled by Bloomberg show.

Russia produced 6.11 million tons of diesel in July, the most in 11 months, according to data e-mailed by the Energy Ministry’s CDU-TEK unit today.

Diesel for Europe

While Europe relies on imports to meet some of its diesel needs, the increased Russian supply coincides with stagnating demand in the region as economic growth sputters. European consumption of diesel and gasoil averaged 5.87 million barrels a day in the first five months of the year, the least since 2002, according to the International Energy Agency in Paris.

“By 2014 or 2015, Russian modernization will have a significant impact on European refining as the Russians seek to keep the premium for themselves,” Arsenije Dusanic, an analyst at JBC, said by phone on Aug. 16, referring to premium prices for higher-quality fuels.

Diesel in northwest Europe advanced 1 percent today to $1,018.50 a metric ton, according to data compiled by Bloomberg.

Low-sulfur diesel exports from Russia will rise to about 290,000 barrels a day next year, surpassing last month’s record of 190,000 barrels a day, according to an Aug. 3 report by Facts Global Energy.

Europe may experience a “glut” of diesel by 2016 as imports from Russia rise, Karen Kostanian, a Moscow-based analyst at Bank of America Corp., wrote in an Aug. 9 report.

European Plants Close

At least six European refineries have closed since the start of last year because of overcapacity, including ConocoPhillips’ Wilhelmshaven plant in Germany and a U.K. site run by Petroplus Holdings AG, data compiled by Bloomberg show.

Russia’s refineries suffered from years of underinvestment after the break-up of the Soviet Union, according to Dusanic, leaving them less flexible than competitors in the types of fuel they produce. The neglect resulted in low yields of premium diesel and gasoline compared with fuel oil, a more-polluting product for shipping and power generation that’s used mainly in Asia and the Middle East.

Fuel oil accounted for 38 percent of the Russia’s output last year, according to Energy Ministry data. That compares with less than 10 percent in Germany.

A government call for lower gasoline prices last year resulted in reduced supply, which led some retail stations to run out of fuel. Those shortages were followed by a July 8, 2011 warning from Putin, who was then prime minister, that companies might be fined if they put off upgrades, prompting refiners to accelerate work.