Author: Ricardo Perez

Eni Advances Refinery-to-Renewables Transformation at Livorno Refinery

Eni SPA has approved a proposed project to convert its existing 84,000-b/d conventional crude oil refinery in Livorno, Tuscany, into the country’s third biorefinery.

Eni SPA has approved its previously proposed project to convert its existing 84,000-b/d conventional crude oil refinery in Livorno, Tuscany, on Italy’s northwestern coast, into what will become the country’s third biorefinery following the transformation.

As part of the decision to move forward with the conversion project, Eni has stopped importing crude oil and initiated the shutdown of the Livorno refinery’s lubricants production lines and topping plant, the operator said on Jan. 29.

With preparatory work for construction of three new biorefining plants at the site now under way, Eni said it will begin formal construction following final regulatory approvals for anticipated completion and commissioning of the refinery’s transformation by 2026.

Once in operation, the three new plants will process various biogenic feedstocks—mainly vegetable waste and residue—to produce hydrotreated vegetable oil (HVO) diesel, HVO naphtha, and bio-LPG, according to the operator.

As phased shuttering of the Livorno’s conventional refining operations progresses, Eni will guarantee fuel distribution in the area via imports of finished and semi-finished products, the company said.

The planned Livorno biorefinery will become Eni’s third refinery-to-renewables location following transformations of its former 80,000-b/d Venice refinery at Porto Marghera, Italy, and 105,000-b/d Gela refinery on the southern coast of Sicily into biorefineries in 2014 and 2019, respectively.

Confirmation of the Livorno transformation follows the operator’s recent announcement that it has also formed an official partnership with LG Chem Ltd. to proceed with joint development of a proposed grassroots biorefinery to be built at LG Chem’s integrated petrochemical complex in Daesan, Chungcheong Province, South Korea, 80 km southwest of Seoul.

Project details

The Livorno conversion forms part of Eni’s broader decarbonization strategy to achieve carbon neutrality by 2050 in line with the global energy transition, as well as targets increasing current 1.65-million tonne/year (tpy) biorefining capacity of its system to more than 5 million tpy by 2030.

Intended to help secure the site’s future as a competitive production and employment hub, the Livorno transformation project will involve construction of three new plants, including:

A biogenic feedstock pretreatment unit to transform waste raw materials, residues, and waste resulting from the processing of vegetable products and oils from crops that do not compete with the food chain into renewable feedstock.

A 500,000-tpy plant for production of sustainable aviation fuel (SAF) based on the Eni-Honeywell UOP LLC codeveloped proprietary Ecofining technology for flexible processing of 100% biofeedstocks.

A plant for producing hydrogen from methane gas.

Additional biorefining expansions

In late 2023, Eni told investors it will also complete an expansion at its Venice biorefinery in 2024 to lift the site capacity to 560,000 tpy from its current 360,000 tpy with the addition of a new steam reformer, as well as an upgrade of the site’s Ecofining technology.

A separate project to enhance the Venice biorefinery’s flexibility to process a wider array of biomass feedstocks was also due for commissioning by yearend 2023, with Phase 2 of that project to be completed in 2027.

Additional projects involving implementation of new degumming sections in renewable feedstock pretreatment units to expand HVO diesel and SAF production were also under way in 2023 at the Venice and Gela biorefineries, both of which are scheduled for startup between 2024-25.

The Gela project will increase that biorefinery’s production capacity by 40,000 tpy to 740,000 tpy, the operator said.

Eni also previously confirmed the Gela biorefinery will begin producing SAF by third-quarter 2024.

By OGJ / Robert Brelsford , February 02, 2024

LNG Terminal Market Estimated to Experience a Hike in Growth by 2033

LNG Terminal (or Liquefied Natural Gas Terminal) is a facility that is used for the storage and loading or unloading of liquefied natural gas (LNG). These facilities are typically located at ports or along coastlines and are used to transfer LNG from ships to storage tanks, and then to pipelines for distribution to customers.

LNG terminal technology has experienced significant advances in recent years, driven by the need to meet the growing demand for liquefied natural gas (LNG) as a fuel source. The technology has evolved from simple storage tanks to sophisticated terminals that are capable of receiving, storing, and regasifying LNG. The key trends in LNG terminal technology that are driving this evolution include increased safety, efficiency, and flexibility.

Safety is a key consideration in the design of any LNG terminal. To ensure the highest levels of safety, terminals must be designed with robust containment systems that are able to protect against leaks, fires, and explosions. This is achieved through the use of advanced materials such as stainless steel and special insulation, as well as by incorporating a range of safety features such as pressure relief systems, fire suppression systems, and emergency shutdown systems.

Efficiency is also an important consideration in the design of LNG terminals. To maximize efficiency, terminals must be designed to minimize energy losses during the liquefaction, storage, and regasification processes. This is achieved through the use of technologies such as advanced heat exchangers, vaporizers, and insulation. In addition, terminals must be designed to minimize the amount of time needed for loading and unloading LNG, as well as to minimize the cost of the process.

Flexibility is another important trend in LNG terminal technology. To meet the changing needs of the market, terminals must be designed to be able to quickly and easily adapt to different types of LNG. This requires the use of advanced automation and control systems that are capable of handling different types of LNG with minimal human intervention. In addition, terminals must be designed to be able to receive LNG from a variety of sources, including ships, barges, and pipelines.

These key trends in LNG terminal technology are driving the evolution of the technology and allowing terminals to become more efficient, safe, and flexible. This is enabling terminals to better meet the growing demand for LNG as a fuel source, while also reducing the costs associated with the process. As the technology continues to evolve, it is likely that these trends will continue to be important drivers of the development of LNG terminals.

The global Liquefied Natural Gas (LNG) terminal market is driven by a number of factors, including an increasing demand for natural gas, a growing need for energy security, and the emergence of new technologies. As the world’s population continues to grow, so does the need for energy. As a result, natural gas is becoming increasingly important, as it is a more efficient and cleaner burning fuel than other fossil fuels. This has led to an increased demand for LNG terminals, as they are the primary means of transporting natural gas from one place to another.

The need for energy security is another key driver of the LNG terminal market. With the rise of geopolitical tensions, and the increasing prevalence of natural disasters, countries are looking to secure their energy supply. LNG terminals provide a secure, reliable, and cost-effective way to transport natural gas from one place to another. This has led to an increased demand for LNG terminals, as countries seek to ensure their energy supply is not disrupted by external factors.

The emergence of new technologies is another key driver of the LNG terminal market. Technologies such as floating storage and regasification units (FSRUs) have allowed for the construction of smaller and more efficient LNG terminals. FSRUs allow for the offloading of LNG from a ship directly into storage tanks, which can then be used to supply gas to the local market. This has made LNG terminals more cost-effective and easier to construct, leading to an increase in demand.

Finally, the increasing demand for natural gas in emerging markets is another key driver of the LNG terminal market. As countries in the Middle East, Africa, and Asia continue to industrialize, their demand for natural gas is increasing. This has led to an increased demand for LNG terminals, as these countries look to secure their energy supply.

In conclusion, the global LNG terminal market is driven by a number of factors, including an increasing demand for natural gas, a growing need for energy security, and the emergence of new technologies. These factors have led to an increased demand for LNG terminals, as countries look to secure their energy supply and meet their growing demand for natural gas.

The LNG terminal market has been facing several key restraints and challenges in recent years. The most prominent of these include the high capital cost of setting up an LNG terminal, the need for increased safety and security measures, and the difficulty of finding suitable locations to build the terminal.

The high capital cost of setting up an LNG terminal is a major challenge. The cost to build a single LNG terminal can range from $500 million to $2 billion, depending on the size and complexity of the terminal. This is a significant amount of money for any company or government to invest, and it often takes several years for the terminal to begin generating revenue. Additionally, the cost of operation and maintenance of the terminal can be high and require significant investment over time.

The need for increased safety and security measures is another key challenge. LNG terminals are large-scale industrial facilities that handle and store highly explosive materials. As such, they require extensive safety and security measures to ensure the safety of workers, the environment, and the public. These measures can include physical barriers, monitoring systems, and security personnel. However, these measures can be difficult to implement and can add to the cost of establishing and operating an LNG terminal.

Finally, finding suitable locations to build the terminal is another challenge. LNG terminals are large facilities that require access to deep, sheltered waters for berthing and storage of LNG vessels. Additionally, the terminal must be close to existing infrastructure such as gas pipelines, power lines, and roads. Finding a suitable location can be difficult and often requires extensive research and negotiations with local governments and communities.

Overall, the LNG terminal market is facing several key restraints and challenges. These include the high capital cost of setting up an LNG terminal, the need for increased safety and security measures, and the difficulty of finding suitable locations to build the terminal. However, with the increasing demand for LNG and the development of new technologies, these challenges can be overcome and the LNG terminal market can continue to grow in the future.

By- Tank Terminals, Linkewire / 02.01.2024 

StocExpo’s Conference to Cover: Regulation Changes, Safety Best Practices and Digitalisation

Deep dive into regulation changes, safety best practices and digitalisation at this year’s StocExpo. Curated by the team at Tank Storage Magazine, the two conference tracks at StocExpo on 12 & 13 March will cover the hottest topics in tank storage, energy security and terminal safety.

Want to stay up to date with the regulations that impact you? In the FETSA Tank Storage Conference at StocExpo, Martin Reuvers, Senior engineer at Vopak, will give an update on revisions to PGS 12. Along with industry partners, Vopak has successfully developed a new Dutch standard for safe large scale ammonia storage. Reuvers will present the challenges posed by upscaling ammonia storage as an energy carrier, covering topics including tank design and inspection.

And in the Terminal Operations & Safety Conference taking place on the show floor, Kena Jolley, technical manager at EEMUA will be updating attendees on EEMUA 244. This regulation addresses the management of rectangular metallic tanks, through their complete life cycle, including specification, inspection, and maintenance. It provides practical, pragmatic guidance for owners and operators of such tanks which will help reduce the risk of failure in service and enable the extension of service life where appropriate.

When it comes to the energy transition, StocExpo is your opportunity to engage with industry leaders, expand your network and gain a comprehensive understanding of the evolving landcape of the tank storage sector.

Mathias Potvin, Terminal Manager at LBC Terminals Rotterdam, Barend Van Schalkwyk at OCI HyFuel, Tamme Mekkes, Business Development Director at Koole Terminals and Jammes Elgen, Head of Port Energy Solutions at Hamburg Port Authority are just some of the speakers covering this topic at the event. They will explore how terminals can reach net zero, what the ‘terminal of the future’ looks like and providing an outlook on what the energy transition looks like from a global perspective.

Euro Tank Terminal in Rotterdam is undergoing improvements in its energy use and emissions, which will enable the terminal to reach net zero by 2042.

The day before StocExpo, on 11 March, ETT will be hosting an exclusive terminal tour of the facility.

‘ETT is a versatile and diverse terminal, however with a compact footprint that is efficiently managed and operated,’ says Hellenthal on what to expect on the tour.

Want to hear how how market leaders have tackled the digital transformation? Over the course of the event, representatives from Evos, Argent Energy and Fujairah Oil Terminal will cover how IoT can be used to improve efficiencies and share their own digital journeys.

When it comes to safety, are you striving for an impressive lost-time incident free operation record? The easiest way to achieve this is to learn from others.

Lai Siang Yeong, Senior Manager Assets & Operations at Advario Asia Pacific will be helping you achieve safety excellence at the terminal. Advario uses HSSE leading and lagging indicators to improve safety at the terminal. He will also be sharing his experiences in creating a reporting, informed and learning culture.

Other noteworthy experts including Gavin Salmon, HSEQ at Oikos, Pol Hoorelbeke, VP Major Risks decision at Total Energies, Gestur Guðjónsson, Environmental and safety manager at Olíudreifing (Iceland) and David Tassadogh at GRESB will tackle topics including learnings from a refinery fire, the value of ESG reporting at the terminal and the risks natural hazards pose to the storage sector.

By Tank Storage / Molly Cooper 01.31.2024

Shell Invests to Repurpose German Energy and Chemicals Park Rheinland

Shell Deutschland GmbH has taken a final investment decision (FID) to convert the hydrocracker of the Wesseling site at the Energy and Chemicals Park Rheinland into a production unit for Group III base oils, used in making high-quality lubricants such as engine and transmission oils. Crude oil processing will end at the Wesseling site by 2025 but will continue at the Godorf site.

Huibert Vigeveno, Shell’s Downstream and Renewables Director, said: “The repurposing of this European refinery is a significant step towards serving our growing lubricant customer base with premium base oils. This investment is part of Shell’s drive to create more value with less emissions.”

The high degree of electrification of the base oil plant, as well as the ceasing of crude oil processing into fuels at the Wesseling site, is expected to reduce Shell’s scope 1 and 2 carbon emissions (those which come directly from our operations and those from the energy we buy to run our operations) by around 620,000 tonnes a year. Shell’s target is to become a net-zero emissions energy business by 2050.

The new base oil plant is expected to start operations in the second half of this decade. It will have a production capacity of around 300,000 tonnes a year, equivalent to about 9% of current EU demand and 40% of Germany’s demand for base oils.

By Shell / Hamburg , 01.29.2024

Rotterdam and Shannon Foynes Ports Plan Green Hydrogen Supply Chain to Continent

Ireland’s largest bulk port Shannon Foynes and the Port of Rotterdam have signed an agreement on developing a supply-chain corridor for exporting green hydrogen and renewable fuels into Europe generated from the west of Ireland’s offshore wind power.

Green hydrogen produces energy through electrolysis of water while eliminating emissions by using renewable energy.

The agreement will focus on market and trade development for what are expected to be large volumes of green hydrogen and its derivatives produced at a planned international green energy hub on the Shannon Estuary. Irish offshore wind has potential to generate 80 gigawatts of green electricity; over 10 times Ireland’s current national requirement.

The memorandum of understanding signed by the ports identifies significant volumes of green hydrogen, commencing with proof-of-concept volumes by 2030.

Europe’s green hydrogen strategy for 2030 is to import 10 million tonnes of renewable hydrogen by 2030 for use in heavy industry and transport sectors that are traditionally reliant on coal, natural gas and oil. Rotterdam intends to facilitate volumes of 40 million tonnes from across the world by 2050; a significant proportion of which can come from the Atlantic resource. Backed by the Dutch government, it is already investing heavily in hydrogen infrastructure including investing more than €4 billion in electrolysers though a hydrogen market is in its infancy.

The agreement will explore further opportunities with interested and suitable commercial parties. It also provides for engaging relevant public stakeholders to support the initiative on potential supply of green hydrogen and its derivatives, such as ammonia, and methanol, as well as sharing best practice information on desalination; high-voltage electricity, industrial clustering around hydrogen and “green ship bunkering processes”.

The two ports may also work on market development and jointly finding customers from Ireland. These would include the maritime fuels sector, sustainable aviation fuels, green fertiliser and facilities with direct green hydrogen fuel requirements such as the steel industry.

René van der Plas, international director at the Port of Rotterdam, said it was already Europe’s leading energy hub “and recognises the significance and opportunity for all European citizens and industries arising from the green transition … hydrogen is one of our priorities and we are working hard towards establishing infrastructure, facilities and partnerships that will help deliver on this.

“This agreement with Shannon Foynes port is one such partnership and can support our efforts to set up supply chain corridors for the import of green hydrogen into northwest Europe from countries elsewhere with high potential for green and low carbon hydrogen production,” he added.

Shannon Foynes Port Company chief executive Patrick Keating said: “With the largest wind resource in Europe off our west coast we have the opportunity to become Europe’s leading renewable energy generation hub. That will deliver transformational change for Ireland in terms of energy independence and an unprecedented economic gain in the process.”

Ireland could become a very significant contributor to REPowerEU, Europe’s plan to end reliance on fossil fuels, he added.

“We can produce an infinite supply of renewable energy here, and there are already a number of routes to market emerging for that energy. This agreement with the Port of Rotterdam is a key step towards enabling that. The Port of Rotterdam already works on introducing the fuels and feedstocks of the future with major oil and gas companies and its broader port community of over 3,000 commercial companies.”

With a port area over 40km and a throughput 467 million tonnes of freight a year, Rotterdam is Europe’s largest port.

Shannon Foynes Port Company, Ireland’s deepest sheltered commercial harbour and largest bulk port company, has statutory jurisdiction over all marine activities on a 500km2 area on the Shannon Estuary, which with depths of up to 32m and a handling capacity for large vessels up to 200,000 deadweight tonnes is among the deepest ports in Europe.

Meanwhile ESB Networks has lodged a planning application for its first major hydrogen project in Cork which it believes will play a “critical role” in Ireland achieving net-zero in the coming years. Papers were lodged with Cork County Council earlier this month for the development at the existing ESB generating station at Aghada in Cork Harbour. While this is only a “small-scale generation project”, it said it would be the first step in its wider plans to create a “hydrogen lighthouse around Ireland”.

By The Irish Times / Kevin O’Sullivan -January 29, 2024

Vopak’s Decade-Long Experience in Ammonia Handling

Vopak, a leading global tank storage provider, boasts over 20 years of expertise in handling ammonia. With six strategically located facilities worldwide, Vopak ensures the safe storage of ammonia and is well-equipped to support future industry advancements.

In Singapore, Vopak’s decade-long experience in ammonia handling sets them apart. Their dedicated team is proficient in managing both imports and transportation via pipelines and trucks. Given Singapore’s commitment to achieving net-zero emissions, Vopak stands ready to contribute towards the nation’s energy transition.

If you’re interested in exploring how Vopak can assist in accelerating the energy transition, we encourage you to reach out to them. Their knowledgeable team can provide valuable insights and solutions tailored to your specific needs. Take the first step towards a sustainable future by engaging Vopak today.

By Storage Terminals Magazine, 01.29.2024

ARA oil product stocks rise further (Week 4 – 2024)

Independently-held oil product stocks at the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose significantly, in the week to 22 February, according to consultancy Insights Global, as overall demand in the region remains muted.

Naphtha stocks rose on the week, after an increase the previous week. Increased blending interest for gasoline supported stock draws. But petrochemical demand was seen to be waning in the week compared with earlier in the month, which is likely to have increased storage at the hub.

Market participants have continued to indicate increased blending demand for gasoline in anticipation of higher exports to the US in the coming months, but gasoline stocks at the ARA hub declined in the week. There was some increase in export volumes out of the region. Volumes leaving for west Africa up from the previous week, indicating an increase. Departures to the US were also up on the week, according to Kpler data.

Gasoil stocks fell, pressured by longer delivery periods from the east as well as lower demand from Germany. Independently-held jet fuel stocks rose in the week, with cargoes coming into the ARA from the UAE as well as India.

By Atishya Nayak

Refiners Pledge to Invest $4.5 Bil. into Eco-Friendly Fuels

The country’s major refiners have pledged to invest a combined 6 trillion won ($4.5 billion) until 2030 in developing eco-friendly fuels to counter the environmental regulations that are increasing worldwide and improve a new growth engine for local oil companies and consumers, according to the Ministry of Trade, Industry and Energy, Wednesday.

With the pledge, the companies and the ministry have agreed to bolster the country’s refinery industry and stabilize the local consumer market amid rising uncertainties and geopolitical risks to the global energy market.

SK Energy CEO and President Oh Jong-hoon, S-Oil President of Corporate Strategy and Services Ryu Yul, HD Hyundai Oilbank CEO Chu Young-min and GS Caltex Executive Vice President Kim Jung-su on the same day met Second Vice Minister of Trade, Industry and Energy Choi Nam-ho in Seoul. The meeting was arranged by the ministry to discuss with the country’s big-four refiners how to improve national competitiveness in the global oil market.

The vice minister and the private firm leaders agreed to secure a stable supply of petroleum and maintain the price within a consistent range. Choi referred to petroleum as an “essential consumer product that takes up a significant portion of the public economy,” and said that its price must be stabilized to prevent public concerns.

Choi said that stabilizing the price requires the companies’ commitment to further investment and a spirit of mutual growth.

“A recent revision to the country’s Petroleum and Alternative Fuel Business Act has ushered in a legal, fundamental ground to further spread the use of eco-friendly fuels,” Choi said in the meeting. “And we want you companies to respond to the legal change by making bolder investments.”

Choi said the ministry is open to sharing problems the companies might experience during any part of the process, from importing petroleum to exporting their products.

“We expect the companies to pioneer new markets and come up with new products to keep their export momentum going,” Choi said.

The company representatives said their businesses need government support for their imminent grievances like securing fuel, tax exemption incentives, technological advancement and regulatory sandbox.

European Oil Product Imports Fall 20% in Jan on Red Sea Turmoil

01.19.2024 By Tank Terminals – NEWS

January 19, 2024 [Hellenic Shipping News]- Growing pressure on shipowners to avoid the Red Sea took a toll on European refined product imports in the first half of January, S&P Global Commodities at Sea data showed, as rising freight rates and tanker diversions curtailed supplie

While a pivot to US imports has helped Europe compensate for a lull in East of Suez inflows, upcoming refinery maintenance leaves exposed a market already low on inventories, analysts said.

Tanker flows initially appeared resilient to a rising security threat in the Suez, however, a growing number of oil companies, including BP, Shell and Reliance, have reduced shipments through the region.

Europe imported an average of 2.3 million b/d oil products from outside the region over Jan. 1-17, down from 2.9 million b/d in December, according to CAS.

Arrivals from Saudi Arabia, India and Kuwait have already tumbled respectively by 15%, 31% and 43% over Jan. 1-17 from December levels.

For Europe, falling import volumes put diesel supplies most at risk. The continent sources about one-third of its diesel supply from the Middle East, and with Insights Global data showing stock levels 257,000 below the five-year average Jan.11, upside risk is significant.

Higher imports from the US have provided some buffer. To date 237,000 b/d of diesel/gasoil supply has arrived in Europe from the US in January, down from 246,000 b/d in December but up significantly from an average of 155,000 b/d in 2023, CAS data showed.

With a further 416,000 b/d US diesel/gasoil supply loaded in January for export to Europe, a more than six-year high, continued flows are expected to provide a lifeline to the continent in the weeks to come.

East of Suez exports curtailed

In contrast, early January loadings indicate that arrivals could be set to drop further from East of Suez.

India is yet to load any refined product for export to Europe in January, interrupting the normal flow of diesel/gasoil on which Europe has become increasingly reliant since avoiding Russian supply.

Loadings from India have instead been diverted to the Persian Gulf and other destinations in Asia, with suppliers such as Reliance, which shipped all its gasoil to Europe in 2023, appearing to shirk soaring freight costs.

According to CAS data, India’s about 24% of gasoil exports were directed to the Persian Gulf in the first half of January, up from 19% in December.

Saudi Arabian loadings for Europe have also fallen to an average of 147,000 b/d over Jan. 1-17, from 293,000 b/d in December, while dispatched Kuwaiti volumes to the region dropped to 28,000 b/d, from 147,000 b/d, suggesting that European premiums may come under pressure to draw higher volumes.

US maintenance season looms

With Europe increasingly looking to US supply, scheduled maintenance programs could deal a blow to stock levels.

According to a recent S&P Global Commodity Insights refining report, first-quarter refinery utilization was expected to drop in the US as planned works begin, with PBF expected to conduct works on its hydrocracker in the Midwest as part of 45-day maintenance.

Maintenance was already underway at the Torrance, California plant and both Motiva and Valero’s Port Arthur refineries, indicating that a spike in flows to Europe could be short lived.

“Now that planned maintenance and outages due to the cold over there are starting to kick in, it’s looking like it’s [going to be] a tighter balance,” said a European distillates analyst.

He said that European refiners may have limited room to defer their own spring maintenance programs, having already pushed back some works in Autumn.

Demand weakness

Weak European demand has mitigated price shocks across product segments so far. Yet with inventories low, upside risk remains significant.

As the tanker segment has become embroiled by Red Sea disruption, bullish price movements have gathered speed. Month 1 ICE LS Gasoil futures rose 1.89% on the day at 1630 GMT Jan. 16, close to the 2% increase seen during the month through Jan. 15 as the market previously shrugged off signs of escalating tensions.

Market watchers continue to bet against a strong demand revival. S&P Global analysts recently downgraded first-half 2024 oil product demand forecasts by 90,000 b/d, citing diesel weakness, with a macroeconomic downturn expected to add pressure.

Platts, part of S&P Global, assessed ULSD CIF NWE cargoes at $812.25/mt on Jan. 16, up 1.72% on the day and 3.9% on the week

01.19.2024 By Tank Terminals – NEWS

January 19, 2024 [Hellenic Shipping News]- Growing pressure on shipowners to avoid the Red Sea took a toll on European refined product imports in the first half of January, S&P Global Commodities at Sea data showed, as rising freight rates and tanker diversions curtailed supplie

While a pivot to US imports has helped Europe compensate for a lull in East of Suez inflows, upcoming refinery maintenance leaves exposed a market already low on inventories, analysts said.

Tanker flows initially appeared resilient to a rising security threat in the Suez, however, a growing number of oil companies, including BP, Shell and Reliance, have reduced shipments through the region.

Europe imported an average of 2.3 million b/d oil products from outside the region over Jan. 1-17, down from 2.9 million b/d in December, according to CAS.

Arrivals from Saudi Arabia, India and Kuwait have already tumbled respectively by 15%, 31% and 43% over Jan. 1-17 from December levels.

For Europe, falling import volumes put diesel supplies most at risk. The continent sources about one-third of its diesel supply from the Middle East, and with Insights Global data showing stock levels 257,000 below the five-year average Jan.11, upside risk is significant.

Higher imports from the US have provided some buffer. To date 237,000 b/d of diesel/gasoil supply has arrived in Europe from the US in January, down from 246,000 b/d in December but up significantly from an average of 155,000 b/d in 2023, CAS data showed.

With a further 416,000 b/d US diesel/gasoil supply loaded in January for export to Europe, a more than six-year high, continued flows are expected to provide a lifeline to the continent in the weeks to come.

East of Suez exports curtailed

In contrast, early January loadings indicate that arrivals could be set to drop further from East of Suez.

India is yet to load any refined product for export to Europe in January, interrupting the normal flow of diesel/gasoil on which Europe has become increasingly reliant since avoiding Russian supply.

Loadings from India have instead been diverted to the Persian Gulf and other destinations in Asia, with suppliers such as Reliance, which shipped all its gasoil to Europe in 2023, appearing to shirk soaring freight costs.

According to CAS data, India’s about 24% of gasoil exports were directed to the Persian Gulf in the first half of January, up from 19% in December.

Saudi Arabian loadings for Europe have also fallen to an average of 147,000 b/d over Jan. 1-17, from 293,000 b/d in December, while dispatched Kuwaiti volumes to the region dropped to 28,000 b/d, from 147,000 b/d, suggesting that European premiums may come under pressure to draw higher volumes.

US maintenance season looms

With Europe increasingly looking to US supply, scheduled maintenance programs could deal a blow to stock levels.

According to a recent S&P Global Commodity Insights refining report, first-quarter refinery utilization was expected to drop in the US as planned works begin, with PBF expected to conduct works on its hydrocracker in the Midwest as part of 45-day maintenance.

Maintenance was already underway at the Torrance, California plant and both Motiva and Valero’s Port Arthur refineries, indicating that a spike in flows to Europe could be short lived.

“Now that planned maintenance and outages due to the cold over there are starting to kick in, it’s looking like it’s [going to be] a tighter balance,” said a European distillates analyst.

He said that European refiners may have limited room to defer their own spring maintenance programs, having already pushed back some works in Autumn.

Demand weakness

Weak European demand has mitigated price shocks across product segments so far. Yet with inventories low, upside risk remains significant.

As the tanker segment has become embroiled by Red Sea disruption, bullish price movements have gathered speed. Month 1 ICE LS Gasoil futures rose 1.89% on the day at 1630 GMT Jan. 16, close to the 2% increase seen during the month through Jan. 15 as the market previously shrugged off signs of escalating tensions.

Market watchers continue to bet against a strong demand revival. S&P Global analysts recently downgraded first-half 2024 oil product demand forecasts by 90,000 b/d, citing diesel weakness, with a macroeconomic downturn expected to add pressure.

Platts, part of S&P Global, assessed ULSD CIF NWE cargoes at $812.25/mt on Jan. 16, up 1.72% on the day and 3.9% on the week

German gas storage association says no risk of shortages this winter

The prospect of gas shortages this winter was “no longer expected” if no additional risks emerge, German gas storage industry association INES said 

Gas storage facilities in Germany began the year with an above average filling level of 91%, according to data corroborated by Gas Infrastructure Europe. As of Jan. 14, German stores were close to 84% full, according to GIE.

INES, representing over 90% of German gas storage capacity, warned that if extremely cold temperatures persisted, gas storage facilities in Germany “could be emptied extensively and the levels could fall to a low of 14% by mid-March.”

“As long as no additional risks arise, there is no longer any fear of a gas shortage for the remainder of the winter, even in extreme cold,” INES Managing Director Sebastian Heinermann said. “The gas storage facilities can be completely filled again before the next winter of 2024/2025.”

Heinermann noted high winter loads occurring in 2023, causing a “significant need for flexibility,” adding that such flexibility in Germany’s gas system had been provided by gas storage facilities, which made a significant contribution to optimizing the import system.

This translated to an average annual import level of some 2.7 TWh/d, and a corresponding production level of 0.01 TWh/d, with INES noting its peak load, which occurred Jan. 24, 2023, spiking to 5.7 TWh/day.

For 2023, INES said that German gas imports fell by about 468 TWh (44 Bcm), or 32% compared with 2022. This was largely due to the “complete cessation” of Russian pipeline gas from Aug. 31, 2022, it said.

German imports of gas totaled 974 TWh in 2023, with some 70 TWh imported via LNG terminals, INES said.

The country’s domestic gas production was recorded at 40 TWh in 2023, a decline of some 6% compared with 2022, the data showed.

Germany’s energy regulator, the Bundesnetzagentur, set a mandated level for its cumulative storage at 40% full by Feb. 1, 2024, with INES stating the target “can be met at all assumed temperature levels.”

Average temperatures in Germany were recorded as low as minus 8 C in parts of the country Jan. 16, according to German Meteorological Service Deutscher Wetterdienst.

Europewide storage facilities were just over 79% full as of the Jan. 14 gas day, with German gas storage sites recorded at 83.68% full over the same period, according to data from GIE.

Gas prices in Europe have largely reflected high gas storages, in addition to robust gas flows from the Norwegian Continental Shelf.

Platts, part of S&P Global Commodity Insights, assessed the Dutch TTF month-ahead price at a five-month low of Eur29.96/MWh

16 Jan 2024