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Mexican energy sector regulator CRE has implemented a sweep of inspections in the retail fuel sales market, leading to new actions against Valero and Bulkmatic de México. 

US officials have complained about inspections that have involved the national guard.

Private firms have been subject to inspections for months, aimed at squeezing them out of the local fuel sales market and quashing the rollout of private gasoline stations that began with the implementation of the 2013-2014 energy reforms.

Former CRE commissioner Montserrat Ramiro told BNamericas CRE’s strategy “is negative for the development of the country” and “bad news” for consumers.

“Not only is it placing an excessive burden on the Mexican state and public finances, it’s hanging up a sign to show the world just how unwelcome private investment is in Mexico,” she added. 

According to daily Reforma, CRE seized 480,000b, or 73.6Ml, of fuel planned to be sold at ExxonMobil and Marathon service stations. The fuel was stored at a hydrocarbons facility owned by logistics firm Bulkmatic. 

If the fuel is not released, some Exxon and Marathon stations would run dry during the week, Bulkmatic México president Alejandro Doria said in a statement. 

Ramiro said the restricted supply will lead to rising prices. “The role of the regulator is to protect consumers and citizens and that is not happening now.”

CRE inspected various private fuel import terminals Friday and Saturday, also closing Valero’s rail terminal and storage facility in Nuevo León state, according to local outlet Oil & Gas Magazine.

The site is a key distribution center for fuel arriving to the Monterrey area and critical for Valero’s US$1bn plan to boost its fuel distribution and sales network.

These two incidents follow similar ones in August and September with CRE shutting down privately owned hydrocarbons storage terminals in Tuxpan, Veracruz, in Puebla state, and in Hermosillo, Sonora state. 

Investments in those storage terminals are estimated at US$1.5bn, as reported by energy news outlet Energía a Debate.

CRACKDOWN RATIONALE

Government officials have framed the crackdown as part of efforts to halt the illegal fuel market trade. 

However, it comes after 18 months of slowed permitting for sales, transportation, distribution, and storage fuel retailers. Also, legislation, albeit mostly challenged in the courts, is looming that would make it more difficult to compete with national oil company Pemex and its stations.

Consultancy eServices estimated that 1,000 such permits remain pending CRE approval, of which 50% correspond to gas stations, adding that the lack of permitting has cost the industry roughly US$100mn.

Critics are already framing the latest moves as a broad effort to use the regulators, who arrived at sites backed by national guard troops, to generally undermine private sector participation, given President Andrés Manuel López Obrador’s (AMLO) statist vision. 

CONSEQUENCES

In response to the closure of the Bulkmatic terminal in Salinas Victoria, Doria told Reforma that litigation is underway. “Right now, while the search is in progress, nothing is moving, because it is exhaustive, they’re checking under the rug.”

Bulkmatic’s Salina Victoria 2, also located in Nuevo León state, typically stores 87 and 92 octane gasoline and diesels.

Reforma quoted IHS data service OPIS as reporting that the CRE audits are coming just as Mexico is implementing actions to reduce illegal fuel imports and Pemex is losing market share.  

Even the US market is concerned because the crackdown could imply the suspension of operations at US refineries, whose products are sold in key markets such as Monterrey. “Big companies like Exxon and Valero are not going to import fuel illegally or off-spec,” OPIS cited one fuel broker as saying. 

US ANGER

On November 17, Louisiana senator John Neely Kennedy sent a letter to US energy secretary Jennifer Granholm, pressing for action to halt threats to US energy firms’ operations in northern Mexico. 

Kennedy, a ranking member of the US senate appropriations energy and water subcommittee, urged her to address the shutdown of US fuel storage facilities in Mexico.

“Recent reports indicate that AMLO is using a militarized police force to prevent the operation of US businesses … AMLO’s strategy includes undermining other privately-owned, American renewable energy facilities,” the letter said.

“It is obvious what is going on here – AMLO’s shutting down all foreign competition for his state-owned company, Pemex, and so far he’s getting zero resistance from US officials in the Biden Administration,” Kennedy wrote. 

Texas governor Greg Abbott sent a letter to President Joe Biden the same day, saying Mexico’s actions to curtail competition for Pemex have steadily escalated, He cited recent reports that Mexico was using national guard troops to shut down fuel storage assets owned by Texas-based Monterra Energy.

“Other American companies face similar operational threats,” wrote Abbott. “Despite these companies’ continued efforts to work with Mexican regulators, multiple facilities remain closed and under the supervision of the militarized police force, leaving Texas companies and their employees in an untenable situation.” 

Abbott urged Biden to “immediately engage” with Mexico and facilitate the “immediate withdrawal of the Mexican military from US-owned business interests and convey that no further actions to undermine energy development, production, or transmission activities will continue.”

AMLO met Biden and Canada’s Prime Minister Justin Trudeau in Washington DC for a USMCA summit on November 18, but it is not known if the matter was discussed.

By BNAmericas, November 30, 2021

Asian oil refiners are starting to see a recent resurgence in profitability go into reverse, eroding a source of demand strength that helped drive crude prices to a seven-year high last month.

Margins from processing crude across Asia slipped from recent highs this month as the return of some Covid-related travel curbs in China hit jet-fuel consumption, undermining progress made in opening up travel between countries with high vaccination rates. 

At the same time, an early rush for back-up winter heating fuels including diesel has eased as concerns over natural gas and coal shortages abate, and panic over energy crises in China and India ebbs. As the fuel-buying frenzy — backed by anticipated gas-to-oil switching — gives way to a more moderate pace of consumption, Asian refiners are taking a hit to their profits. 

Those dynamics offer another headwind to oil prices that are already faltering because of concerns about governments dropping strategic petroleum reserves into a market in which supplies are soon expected to pick up anyway.

“The market overreacted to the whole gas-to-oil switching, assuming a cold winter and reduced refinery supplies,” said Sri Paravaikkarasu, Asia oil lead at FGE. “Refineries globally are returning from maintenance and a big switch to oil hasn’t happened yet.”

FGE sees profits from converting crude to oil products for complex refiners in Asia at $4.25 a barrel in November, coming off from October when they stood at $5.10. The industry consultancy expects them to dip to $3.20 in December, before sliding further in January and February.

Last month, the region’s margins received a boost from a strong diesel market as China raced to produce and hoard more of the fuel that’s used in heavy vehicles, industries as well as in small-scale power generation sets. Skyrocketing coal and natural gas prices had prompted the rush, amid a near-crisis situation that China eventually averted through a series of initiatives to halt exports, boost imports, raise refinery output and ration pump sales.

Total exports of gasoline, diesel and jet fuel from China in October at about 564,000 barrels a day were a third lower than the average shipments in the previous nine months, according to Vortexa. Outbound diesel shipments saw the biggest decline as the country sought to preserve supplies for winter. The world’s largest oil importer also ordered an aggressive ramp up of coal production, which took more pressure off diesel. 

Chinese fuel-export policy is the wild card, Bloomberg Intelligence analysts Horace Chan and Henik Fung said in a note on Thursday. The Asian refining giant’s presence in regional gasoline and diesel markets has faded since July, but overseas shipments may increase if fuel cracks rise and the country’s domestic power shortage eases, they said.

A cold winter could turn things around for refiners again, said Paravaikkarasu. Asia’s total oil product demand is likely to rise by 5.8% next year, the firm estimates. On top of that, regional fuel margins are likely to find some support since China slashed exports of diesel and gasoline.

“As manufacturing and industrial activity gathers more pace, we expect regional gasoil demand to recover to pre-pandemic levels in the first quarter of 2022,”she said.

Rigzone by Saket Sundria, November 25, 2021

When President Joe Biden ordered the release of 50 million barrels of oil from America’s strategic reserve to help reduce energy costs, he was taking aim at a growing burden for millions of Americans.</h4>

The step announced Tuesday, done in a rare coordination with several other nations, is among the few things a presidential administration can do to try to lessen the squeeze — and the political threat — of rising inflation. The likelihood of providing meaningful relief in the near future, however, is probably low. Still, any help in easing fuel prices, even modestly, would be welcomed by many Americans.

Here is a look at what’s involved:

What is the oil reserve?

America’s Strategic Petroleum Reserve holds about 605 million barrels of oil in underground salt caverns in Texas and Louisiana. It was created following the 1970s Arab oil embargo to store oil that could be tapped in an emergency. But the dynamics of the global oil industry changed dramatically in recent years: Now the U.S exports more oil than it imports.

There’s a limit to how much can be released at once. In the past the government has released about 1 million barrels per day. At that rate, the promised influx of 50 million barrels of crude could last about two months.

Why tap the reserve?

The idea is that by putting more oil on the market, prices will fall. That hasn’t happened yet. But depending on what happens in the rest of the world, there’s still a chance it could work.

Oil prices rose slightly after the announcement. Traders were anticipating the news, and may have been underwhelmed by the details, said Claudio Galimberti, senior vice president for oil markets at Rystad Energy.

“The immediate price reaction is not the final judgment on the effectiveness of this effort,” said Jim Burkhard, vice president at IHS Markit. “It will really be in the months ahead.”

Whether the move is effective depends on several factors.

What about OPEC?

The OPEC oil cartel and its allies will be meeting in about a week to decide whether to increase production or to hold back, a strategy the group often employs to boost prices. Earlier this month, Biden had hoped OPEC nations, led by Saudi Arabia, would agree to significantly boost production. But they only made modest increases.

If OPEC decides next week that it wants higher prices, its members could take oil off the market. “Just overnight, they could just offset it,” Burkhard said. “So that’s a big question mark, is how they react to this.”

The coalition Biden assembled — bringing together India, China, Japan, South Korea and the U.K. to tap their strategic oil reserves — is unprecedented, Galimberti said. Altogether, the group could be adding 70 million to 80 million barrels of oil onto the market, he estimates.

“It’s kind of a coalition of oil importers,” he added. “But can they really supplant, or can they really represent a rival to OPEC-plus? The answer is absolutely not.” That’s because the group of importers are using their strategic petroleum reserves, which are limited. On the other hand, OPEC and its allies have oil reserves that can last for decades. “So there is no comparison between the two,” Galimberti said.

Cheaper gas?

What many consumers want to know is what’s going to happen to gasoline prices at the pump. Many factors go into the price of gasoline. Refineries buy crude oil in advance, so they’re still working with more expensive oil, and states have differing tax rates that impact the price. Nevertheless, if OPEC doesn’t respond by curtailing production, the influx of oil could lead to a gasoline price decrease of 10 cents to 15 cents per gallon, said Kevin Book, managing director at Clearview Energy Partners. Even if the price drop doesn’t happen, Biden can make the case that he tried.

“Really, what we’re talking about are the most price-sensitive consumers in the economy,” Book said. “They may not show up in GDP numbers or recessions, but they show up in vote counts as marginal voters, who may or may not respond in the next election cycle, and I think if we get down to it that’s really what this is about.”

Why does oil matter?

The future of oil and gas in the U.S. is a political flashpoint and source of tension, especially as companies and government agencies grapple with climate change and the transition to cleaner sources of energy.

On the one hand, the U.S. oil and gas industry has been praised by some political leaders for creating energy independence. Where the U.S. once relied heavily on imports, other nations now rely on the U.S. for oil. It’s also a job supplier: The oil and gas industry employs more than 10 million people in the U.S. and contributes about 8% of the nation’s gross domestic product, according to the American Petroleum Institute. Any impact resulting from Biden’s release of oil from the strategic reserves “is likely to be short-lived unless it is paired with policy measures that encourage the production of American energy resources,” the API said in a statement.

Companies that supply oil benefit from higher prices. But consumers don’t like it when those higher prices trickle down to the pump.

“The broader drama is this new variable in the oil market: It’s the tension between aspirations to decarbonize and the practical concern to have low gasoline prices,” Burkhard said. “And there there’s a conflict between those two forces. And that’s why we’re going to continue to see dislocations between demand and supply.”

Longview News-Journal, November 25, 2021

In the Port of Rotterdam, the first companies are busily preparing for the storage, processing and transit of hydrogen: a promising energy carrier that will allow companies to make the transition to climate neutrality.

Tank terminals at Europoort

This is one of the findings of a study conducted by the Port Authority into the development of hydrogen import terminals in Rotterdam. The Port Authority held consultations with a large number of Rotterdam-based companies and asked several research agencies to carry out sub-studies into the necessary preconditions in the fields of navigation, safety, the environment and space.

Good starting position

The Port of Rotterdam is in an excellent position to embark on the import, transit and transhipment of this new energy carrier:

• By 2050, demand for this relatively clean energy carrier is expected to increase to 20 Mtonnes, around 18 Mtonnes of which will be imported.
• Rotterdam is already familiar with hydrogen in industry and the transhipment of hydrogen carriers such as ammonia. In addition, the port has experience in the transhipment of cold energy carriers such as LNG and chemicals such as methanol. This experience can be applied to the new forms of hydrogen that are anticipated: liquid hydrogen, ammonia and LOHCs. Rotterdam’s extensive, existing tank storage and infrastructure for hydrogen and hydrogen carriers add to the port’s appeal as an import location. Companies will be able to develop existing fossil energy assets for hydrogen and hydrogen carriers.
• All port areas – from Pernis to Maasvlakte 2 – have the potential to import hydrogen. Depending on the volumes, the import of hydrogen is possible in all of these port areas, both in terms of space and safety, and from an environmental and navigational point of view. Four companies working in refining, energy and tank storage are actively preparing to import hydrogen. It looks like they will have both the physical space and the licences to import, process and export hydrogen in various forms by 2025. In addition, several companies are preparing to free up physical and/or environmental space by restructuring their existing product portfolio.
• The unique navigational access means there are no restrictions to the safe shipment of hydrogen in Rotterdam.

By HellenicShippingNews, November 23, 2021

A release of oil from the U.S. Strategic Petroleum Reserve would likely have only a short-lived impact on oil markets, the acting head of the U.S. Energy Information Administration said on Tuesday.

The Biden administration has considered tapping the reserve to cool rising oil prices that are helping to fuel inflation. But Stephen Nalley, the acting EIA chief, told a Senate hearing: “Ultimately the amount of impact would be relatively short-lived, and would depend on how much was released.”

Nalley said the impact on oil markets could last only a few months and that other dynamics in the market would overtake any decrease in prices.

An EIA analysis showed that a release of 15 million to 48 million barrels from the reserve could bring prices down about $2 a barrel and push gasoline prices at the pump down about 5 cents to 10 cents per gallon for a short period of time, Nalley said.

U.S. oil prices hit a seven-year high in late October of nearly $85.50 a barrel. They were trading at about $80.60 a barrel on Tuesday as forecasts for an increase in global production in coming months put pressure on the market.

Reuters by Timothy Gardner, November 22, 2021

Time for US to use its reserves

THIS was the simple reply sent to the US administration in response to a letter sent to the White House by the Federal Trade Commission (FTC), in which the major US oil companies were accused of fixing or manipulating the oil prices, particularly the gasoline prices. Today the gasoline price is around $3.42 per gallon, which is an increase of up to 60 percent compared to last year.

This is the main reason for the US oil companies being hit hard. The US administration is fully aware that they themselves are the cause for the high gasoline prices. They are the culprit as they have been threatening and pushing the oil industry, and keeping them on the fast track to move away from fossil oil and focus more on clean energy, wind and solar power.

This had caused havoc in the industry with pressure coming from the shareholders to switch, without giving any chance to the people in charge of the oil companies.

The US administration is eyeing next year’s elections, and is concerned about losing the majority vote in the house and some senator seats. It feels the need to show its final consumers that it is doing something to soften the oil prices. The administration is not coming out to clearly state that the US oil production is down by one million barrels from last year, to reach 11.5 million barrels per day.

In addition, it did not indicate that the Ida hurricane, which is on the US coast, has curtailed the supply and production process. It instead attacked OPECPlus, and demanded it to increase oil production and not to keep the extra oil in store.

It called on Saudi Arabia and the United Arab Emirates to increase production, and ignore the fully committed OPEC-Plus accord that was agreed on. The US must start from home and persuade its ExxonMobil and Chevron companies to invest more in oil and gas, instead of buying its own stocks from the huge cash that they are making so far.

The same message should go to shale oil producers, instead of just rewarding their shareholders with cash, ignoring the fact that US gas consumers are in need of more oil today than before and in the future. Therefore, it should continue investing, and not rip off and benefit from OPECPlus’ disciplined and committed quota system, which is benefiting the shale oil producers more.

Perhaps, it is time for the US to try to use its strategic reserve of 700 million barrels to test the market, even though it is not advisable as it may backfire soon. Oil prices are subject to global supply and demand, as per FTC’s reply to the White House. Maybe the coming months will witness the easing of the oil prices.

arabtimesonline by Kamel Al-Harami, November 22, 2021

The times; they are changing…especially in the energy arena.

Two of the largest, international oil companies announced major changes this week, and OPEC+ tells the President of United States of America thanks, but no thanks, for his suggestion to increase oil production.

ExxonMobil said it will sell all of its petroleum production in the Barnett Shale in North Texas, and Royal Dutch Shell announced it will change its name (dropping Royal Dutch) to just Shell.

The shale revolution began in the geological formation called the Barnett Shale in the 1990s, which includes about 20 counties surrounding Fort Worth. ExxonMobil got a late start, but became a big player when it acquired independent XTO.

ExxonMobil has 2,700 wells across some 182,000 acres, and the properties are valued around $400 million. The company also is selling assets in Europe, Africa and Asia. It lost $22.4 billion in 2020.

Exxon has been the target of radical environmental groups as they have filed numerous lawsuits alleging it is responsible for global warming. Two enviromentalists won seats on Exxon’s Board of Directors recently.

Shell also has been targeted by extremists losing a court case in May, which it is appealing, regarding emissions, and battling an activist investor who wants to split Shell into two companies because of environmental concerns.

In addition to changing its name, Shell decided it is time to leave the Netherlands and move its headquarters to London. The Dutch Minister for Economic Affairs and Climate Policy said, “We are unpleasantly surprised by this news. The government deeply regrets that Shell wants to move its head office to the United Kingdom.”

Meanwhile, President Joe Biden and his administration pleaded with the members of OPEC+ to increase oil production over current levels in an effort to bring down oil prices and eventually gasoline prices.

Officials from Saudi Arabia and United Arab Emirates indicated this week they will support keeping the previously scheduled  increase to 400,000 barrels per day in place when they meet on Dec. 2.

“That should be enough,” UAE Energy Minister Suhail Al Mazrouei told Bloomberg. “All what we know and what all the experts in the world are saying is that we will have a surplus (in 2022). So we need not panic. We need to be calm.”

However, as gasoline prices rise in the U.S., the Biden administration becomes very nervous about the impact rising energy prices will have on the economy, inflation and opinions of voters.

Biden’s request is a big change from the previous administration, which encouraged U.S. production of petroleum to replace foreign oil imports.

For ExxonMobil and Shell, changes became critical as time marched on.

Times Record News by Alex Mills, November 22, 2021

About $160 billion should be spent on projects in Iran’s oil and gas sectors, the country’s Oil Minister Javad Owji said, Trend reports, citing Shana News Agency.

He made the remark in a meeting with the chairman of the Plan and Budget Organization of Iran, Masoud Mirkazemi, in the framework of consultations on Tehran’s budget for March 21, 2022, through to March 20, 2023.

The minister noted that the necessary funds have not been spent in the oil and gas sector in recent years. If the investments are not made, Iran will become an importer of oil and gas products in the coming years.

During the meeting, Mirkazemi said that some Iranian ministries should make plans that are effective in economic development. After funds are allocated for the plans, they will be monitored to ensure that the facilities are put into operation and have a positive impact on economic development.

There are currently 74 oil and 22 gas fields in Iran. Thirty-seven of these are operating in the territory of the National Iranian South Oil Company (NISOC),.

Iran’s total hydrocarbon reserves are estimated at 836 billion barrels. With the available technology and equipment, Iran has the potential to extract 239 billion barrels. Thus, 29 percent of the country’s hydrocarbon reserves are recoverable, while 71 percent remain underground.

Yenisafak by Nurshaan Ural, November 19, 2021

The entry into force of the Global Sulphur Cap on January 1st catalysed a monumental shift in the types of fuel bunkered by the international shipping fleet. Since the start of this year, an industry that was once heavily reliant on one type of fuel and one type of cylinder oil lubricant, had to adjust to burning new types of fuel with squeezed sulphur content and selecting the right lubricant became more vital than ever before.

Although a small percentage of ships have continued to bunker heavy fuel oil (HSFO), by using a scrubber, in the first few months of this year the vast majority of ships bunkered low sulphur fuel oil (LSFO) blends and distillates such as marine gas oil (MGO).

At the end of February, Argus Media reported that LSFO sales rose sharply in Rotterdam in the quarter leading up January 1. 0.5% sulphur content marine fuel oil became the fuel of choice at that port, making up 62% of total marine fuel sales in December, and 48% of all sales in the fourth quarter. Sales of a 0.1% sulphur content marine fuel oil, launched as an alternative to distillate fuels, made up 13% of total marine fuel sales in the fourth quarter.

Sales of other IMO-compliant distillate fuels, such as MGO and Marine Diesel Oil (MDO) also increased. As the biggest LNG bunkering port in Europe, Argus media revealed that Port of Rotterdam LNG bunker sales more than tripled from 9,500t to 32,000t and biofuel bunker sales made up 2% of combined residual fuel oil and distillate sales.

This sudden shift from ships burning fuel with a sulphur content of 3.5%m/m to burning fuel with a sulphur content of 0.5% m/m or less, or opting for an alternative fuel, has big implications for engine lubricant use. As the lifeblood of an engine, lubricants help ensure smooth running and engine cleanliness.

One of their dominant roles is to protect cylinders from acidic corrosion that occurs when sulphur-containing fuels produce oxides of sulphur (SOx) during combustion. In the presence of water, SOx forms sulphuric acid which causes an acidic corrosive environment in the engine, known as cold corrosion.

Since sulphur is the central component of sulphuric acid formed in the engine, a fuel that is higher in sulphur content requires a lubricant with greater alkalinity and therefore, higher neutralising power. This neutralising power is denoted by the lubricant’s Base Number (BN). The higher the sulphur content, the higher the BN required.

Too low alkalinity in the cylinder oil for the fuel sulphur content and cold corrosion will occur, too high alkalinity in the cylinder oil for the fuel sulphur level and abrasive ash deposits can be formed on the piston crown top lands, ultimately leading to increased liner wear and scuffing.

The range of engine oils from Chevron Marine come with BN’s compatible with virtually every 2020 compliant fuel, including alternatives, and those using scrubbers which could potentially be burning fuel with a sulphur content higher than 3.5% m/m. Whatever the fuel choice, it is advisable to review the lubricant product selection and consumption when switching fuel, and seek advice from a technical specialist.

For those ship operators exploring the use of ultra-low sulphur and alternative fuel types such as methanol, liquified natural gas (LNG), liquified petroleum gas (LPG), and ethane, lubricants suppliers should be consulted to ensure engine performance is not compromised due to the wrong lubricant being applied for the fuel type.

Chevron Marine have published a series of white papers focused on future fuels, most recently ‘Lubricating dual fuel engines: a practical approach’ which address the operating conditions faced by ship owners lubricating LNG powered engines.

As Chevron Marine Field Technical Specialist Rik Truijens notes, “The challenge for some operators is that they may not know what fuel their vessels will use on a long term basis”.

“They could shift from operation on gas to using marine diesel oil, right up to full operation on heavy fuel oil. This means operators also face uncertainty about which lubricant they should be using with which fuel”.

An increasingly diverse marine fuels market adds complexity for ship operation, and owners are looking for simplified solutions to optimise engine performance.

In 2019, Chevron Marine helped customers prepare for the new legislation with the launch of the Taro® Ultra range, cylinder oil lubricants that cover virtually all fuel options and combinations, comprising products from 25BN to 140BN. By applying years of experience gathered developing high-performance lubricating oils, Chevron Marine has created Taro® Ultra Cylinder oil products with a formulation that is fully compatible with most fuels available and suitable for multi-fuel use.

Visit Chevron Marine to find out more about Taro Ultra and the range of products and services that are helping customers achieve a smooth transition to future fuels.

By Motorship.com, November 19, 2021