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Latest storage news


Terminal News
September 13, 2017
Duqm Authority inks deal for liquid bulk berth
The Special Economic Zone Authority in Duqm has signed an agreement with Boskalis Westminster for the construction of the liquid bulk berth project at Duqm Port.The OMR 199.1 million agreement stipulates that Boskalis will carry out detailed engineering designs, construction of marine infrastructure and dredging and reclamation works, while Worley Parsons Engineering will oversee the engineering and construction works of the project...

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The Special Economic Zone Authority in Duqm has signed an agreement with Boskalis Westminster for the construction of the liquid bulk berth project at Duqm Port.

The OMR 199.1 million agreement stipulates that Boskalis will carry out detailed engineering designs, construction of marine infrastructure and dredging and reclamation works, while Worley Parsons Engineering will oversee the engineering and construction works of the project.

Works will include the excavation of 26 million m3 of material for the deepening of the basin and track channel at the port, which leads to the liquid dock to reach 18 meters.

Additionally, a secondary wave breakwater will be developed, along with a 1 kilometre quay wall.

Once the berth is complete, oil tanks for bulk materials and warehouses will be built by Duqm Refinery on the reclaimed land, to export refined products from Duqm Refinery and petrochemical industries area.

The berth will be able to handle naphtha, jet fuel, diesel, high sulfur fuel oil, LPG, coke and sulfur.



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Terminal News
September 13, 2017
VTTI Energy Partners' unitholders have agreed plans to merge with VTTI.Once complete, VTTI will become an indirect, wholly owned subsidiary of VTTI. 98.75% of VTTI Energy Partners' common units and 100% of its subordinated units voted at the special meeting in favour of the adoption and approval of the merger agreement and the subsequent transactions...

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VTTI Energy Partners' unitholders have agreed plans to merge with VTTI.

Once complete, VTTI will become an indirect, wholly owned subsidiary of VTTI. 98.75% of VTTI Energy Partners' common units and 100% of its subordinated units voted at the special meeting in favour of the adoption and approval of the merger agreement and the subsequent transactions.

The merger is expected to close on September 15.



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Terminal News
September 13, 2017
Manga LNG terminal project progresses
Manga LNG Oy's LNG terminal project is progressing on schedule following a ceremony to lay the base stone.Construction of the facility, located in the port of Röyttäs, will continue through autumn, after earth moving works were completed during the summer ready for the foundation of the terminal...

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Manga LNG Oy's LNG terminal project is progressing on schedule following a ceremony to lay the base stone.

Construction of the facility, located in the port of Röyttäs, will continue through autumn, after earth moving works were completed during the summer ready for the foundation of the terminal.

It is hoped that the roof structure of the tank will be installed before the winter.

The €100 million terminal, which is due to be completed in early 2018, comprises reception, discharging and filling stations for LNG ships, a 50,000 m3 tank as well as a pipeline and a car terminal for LNG tankers.

The import terminal is a joint venture between Outopumpu Oyi, SSAB Oy, Skangas and EPV Energia Oy.



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Terminal News
September 12, 2017
Gibson to expand Hardisty Terminal storage capacity
Gibson Energy will build 1.1 million barrels of additional storage capacity at its Hardisty Terminal.The company says the two 300,000 barrel tanks and one 500,000 barrel tank are due to be placed into service in the third quarter of 2019. The two 300,000 barrel tanks are supported by a long-term, fixed fee contract with a senior, investment grade, oil sands customer...

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Gibson Energy will build 1.1 million barrels of additional storage capacity at its Hardisty Terminal.

The company says the two 300,000 barrel tanks and one 500,000 barrel tank are due to be placed into service in the third quarter of 2019. The two 300,000 barrel tanks are supported by a long-term, fixed fee contract with a senior, investment grade, oil sands customer.

This expansion will swell overall capacity at the terminal to 10 million barrels.

The 500,000 barrel tank will service operational needs, the company says, replacing the tank that was earmarked for that purpose in the last expansion phase, which ended up being contracted to a customer under a long-term contract.

Steve Spaulding, president and CEO of Gibson, says: 'Our Hardisty Terminal continues to demonstrate its commercial competitiveness and this contract affirms the on-going demand for our strategic storage infrastructure in support of incremental oil sands brownfield development.

'We will continue to focus on the build-out of the undeveloped acreage at both our Hardisty and Edmonton terminals, and the growth of the proportion of our cash flow stream attributable to the infrastructure segment, as our number one strategic priority.'



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Terminal News
September 11, 2017
Hurricane Harvey increased petroleum prices & disrupted supply chains
Hurricane Harvey significantly disrupted crude oil and petroleum product supply chains and increased petrol and petroleum product prices.Analysis by the Energy Information Administration (EIA) highlights that for the week ending September 1, 2017, gross inputs to refineries in the Gulf Coast fell by 3...

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Hurricane Harvey significantly disrupted crude oil and petroleum product supply chains and increased petrol and petroleum product prices.

Analysis by the Energy Information Administration (EIA) highlights that for the week ending September 1, 2017, gross inputs to refineries in the Gulf Coast fell by 3.2 million barrels per day from the previous week. This is the largest drop since Hurricanes Gustav and Ike in 2008.

Refinery utilisation fell to 63%.

Just over half of all US refinery capacity is located in the Gulf Coast, supply petroleum products to the Gulf Coast, East Coast and Midwest as well as to international markets.

Additionally, 49% of total US working crude oil storage capacity and more than 40% of working storage capacity for both motor petrol and diesel fuel were located in the Gulf Coast region, as of March 2017.

As a result of disrupted supplies, the East Coast drew down inventories of motor petrol. Almost all of this drawdown occurred in the Lower Atlantic region, which stretches from Virginia to Florida.

Disruptions caused by the hurricane also led to higher petrol prices. The US average regular retail petrol price increased 28 cents per gallon.



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Terminal News
September 8, 2017
TransCanada seeks application suspension for pipeline projects
TransCanada is seeking to suspended applications for its Energy East Pipeline and Eastern Mainline Project amid significant changes to the regulatory process.The company has filed a letter with the National Energy Board (NEB) seeking a 30-day suspension to allow it time to review changes announced by the NED regarding the list of issues and environmental assessment factors of the project...

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TransCanada is seeking to suspended applications for its Energy East Pipeline and Eastern Mainline Project amid significant changes to the regulatory process.

The company has filed a letter with the National Energy Board (NEB) seeking a 30-day suspension to allow it time to review changes announced by the NED regarding the list of issues and environmental assessment factors of the project. It says it needs to 'understand how these changes impact the projects' costs, schedules and viability'.

It says in a statement: 'Should TransCanada decide not to proceed with the projects after a thorough review of the impact of the NED's amendments, the carrying value of its investment in the projects as well as its ability to recover development costs incurred to date would be negatively impacted.'

Russ Girling, TransCanada's president and CEO, says: 'Apart from Energy East, we will continue to advance our $24 billion near-term capital program in addition to our longer-term opportunities.'



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Terminal News
September 7, 2017
Magellan to expand Texas pipeline & storage assets
Magellan Midstream Partners will expand its refined petroleum products pipeline in Texas to meet growing demand for product transportation.The company plans to spend $375 million on the project, which involves the construction of a 135-mile, 16-inch pipeline from its terminal in East Houston to Hearne, Texas...

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Magellan Midstream Partners will expand its refined petroleum products pipeline in Texas to meet growing demand for product transportation.

The company plans to spend $375 million on the project, which involves the construction of a 135-mile, 16-inch pipeline from its terminal in East Houston to Hearne, Texas.

It is due to be completed mid-2019.

Magellan will own the pipelines via an undivided joint interest agreement with Valero Energy. Magellan's ownership interest in this new pipe will provide the ability to deliver additional product north to Temple, Waco and Dallas as well as Magellan's Midcontinent markets.

The company also plans to reverse an existing pipeline which will connect to the new pipeline segment, providing an incremental 85,000 barrels per day of refined product from the Houston area.

Additionally, Magellan will make a number of enhancements to its existing pipeline and terminal infrastructure, including construction of one million barrels of refined products storage on a combined basis at its facilities in Dallas, East Houston and Hearne. It will also construct additional connections to third-party refineries, pipelines and terminals within the Houston Gulf Coast region, including its new Pasadena, Texas terminal.

Michael Mears, CEO, says: 'Demand for refined petroleum products remains strong along Magellan's extensive pipeline system. Magellan is pleased to meet the industry's need for pipeline capacity serving the Dallas market and other important demand centres along our refined products pipelines system with an attractive investment supported by long-term commitments from well-known, strong creditworthy customers.'



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Terminal News
September 7, 2017
Sri Lankan LNG storage terminal given green light
Petronet LNG will form a joint venture to construct an LNG terminal to support power plants and transport sectors in Sri Lanka.The company will form a joint venture with Japanese and Sri Lankan companies following discussions between Sri Lanka's minister of petroleum resources development and India's minister of petroleum and natural gas last year...

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Petronet LNG will form a joint venture to construct an LNG terminal to support power plants and transport sectors in Sri Lanka.

The company will form a joint venture with Japanese and Sri Lankan companies following discussions between Sri Lanka's minister of petroleum resources development and India's minister of petroleum and natural gas last year.

The JV will develop the terminal to provide regassified natural gas to power plants, domestic and transport services in Sri Lanka. The capacity of the terminal, near Colombo, will be decided on the gas demand in Sri Lanka and is expected to be developed in two years.

The facility will be situated close to where most of the power projects are located.

In a statement, Petronet says: 'The LNG terminal would improve economics of various power plants and also generate immense direct and indirect benefits for the vast majority of Sri Lankan people.

'LNG imports is a significant solution to fuel the growth of this nation. It is a giant step towards the energy security of Sri Lanka.'



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Terminal News
September 7, 2017
Fujairah: Oil product stocks up 2.5% week on week
Fujairah's commercial stocks of refined oil products rose 2.5% to 19.816 million barrels in the week to Monday (September 4), remaining below 20 million barrels for a second week since large-scale refinery shut-downs in Texas related to Hurricane Harvey sent shock waves through global markets for oil products...

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Fujairah's commercial stocks of refined oil products rose 2.5% to 19.816 million barrels in the week to Monday (September 4), remaining below 20 million barrels for a second week since large-scale refinery shut-downs in Texas related to Hurricane Harvey sent shock waves through global markets for oil products.

Total stocks at the UAE Arabian Sea port were buoyed by a 540,000 barrels build in combined stocks of light and middle distillates, data released Wednesday (September 6) by the Fujairah Energy Data Committee showed. Meanwhile, heavy distillate and residue stocks, which make up more than half of total Fujairah oil product stocks, dipped 53,000 barrels, with stocks remaining broadly flat for a second consecutive week.

Stocks of light distillates, predominantly petrol and naphtha, rose 5.3% to 5.68 million barrels from a 10-week low of 5.394 million barrels the previous week when they had fallen 1.393 million barrels, or 20.5% - the largest weekly drop in terms of volume and the second largest as a percentage, since S&P Global Platts started tracking Fujairah stock data in January. Trading sources last week cited naphtha volumes headed for Asia as petrochemicals feedstock as the main driver for the large draw in the week ended August 28, which nonetheless also followed hard on the heels of the emergency shutdown of about 25% of US Gulf Coast refining capacity due to heavy floods in Texas and Louisiana after Harvey made landfall.

HARVEY EFFECT RECEDES

This past week, while there was little apparent reason for Asian demand for naphtha to take a sudden downturn, the European petrol draw across the Atlantic to meet hurricane-related US shortfalls had started to ease. US Gulf Coast refineries and ports were in the process of returning to service while Colonial Pipeline, the largest US refined products pipeline and which had also been closed due to floods, resumed operations from Houston.

In the east of Suez market, planned refinery maintenance in Indonesia was further supporting Asian demand for light

distillates, while differentials between Mean of Platts Singapore (MOPS) and Free On Board (FOB) Fujairah petrol prices were little changed over the week. Fujairah stocks of middle distillates rose 8.1% to 3.402 million barrels,

despite supply disruption of gasoil cargoes from the US Gulf Coast to Northwest Europe and the Mediterranean due to

Harvey resulting in lower than average stock levels in the Amsterdam-Rotterdam-Antwerp region.

However, high freight rates to move cargoes to Europe from the Middle East were keeping a lid on trade flow between the two regions. At the same time, rising gasoil outflows from India, which have exacerbated the supply overhang in the Asian market amid the current low demand during the monsoon season, may have contributed to the build in Fujairah middle distillate stocks.

In Singapore, middle distillate stocks have also risen, reaching a three-month high of 13.768 million barrels last week.



FUJAIRAH BUNKERS DISCOUNTED VERSUS SINGAPORE

Fujairah's stocks of heavy distillates and residues totaled 10.734 million barrels on Monday, down 0.5% week on week.

Demand for bunker fuel in both Fujairah and Singapore has been healthy over the past week. Prices for Fujairah 380

CST delivered bunker fuel, however, slipped to a discount to Singapore last week. It traded at a discount of about

$4/mt, down from a $1.25/mt premium the previous week and from $2-$3/mt the week before that.

The first-month/second-month backwardated structure for Arab Gulf 180 CST high sulfur fuel oil swaps widened

further to an eight-week high of $1.50/mt from $1/mt in the previous week as increasing volumes were shipped to

Singapore from the Middle East.



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Terminal News
September 6, 2017
PetroChina forms JV to build storage tank
PetroChina Fuel Oil has formed a joint venture with Qingdao Port International to build a crude oil storage tank at the Dongjiakou port area. According to local reports, the joint venture project will be engaged in the storage and transmission of oil products, including crude oil, fuel oil, diluted asphalt and wax oil...

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PetroChina Fuel Oil has formed a joint venture with Qingdao Port International to build a crude oil storage tank at the Dongjiakou port area.

According to local reports, the joint venture project will be engaged in the storage and transmission of oil products, including crude oil, fuel oil, diluted asphalt and wax oil. The project will have an investment value of RMB300 m, of which Qingdao Port will take a 49% stake.

The port says in a statement: ‘Both parties will leverage on their respective advantages and further improve the oil storage and transportation facilities in Dongjiakou Port Area, so as to further enhance the core competitiveness of the Port of Qingdao in respect of transportation of oil products.’



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Terminal News
September 6, 2017
Oil & gas industry starts recovery from storm Harvey
Picture credit: NASA
Storage and pipeline operators, refineries and ports have resumed operations in the wake of storm Harvey.The storm, which at its peak, was a category 4 hurricane, resulted in the deaths of at least 60 people, and left thousands of people homeless.Several companies and organisations have pledged donations for the Harvey relief effort...

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Picture credit: NASA

Storage and pipeline operators, refineries and ports have resumed operations in the wake of storm Harvey.

The storm, which at its peak, was a category 4 hurricane, resulted in the deaths of at least 60 people, and left thousands of people homeless.

Several companies and organisations have pledged donations for the Harvey relief effort. Exxonmobil has pledged $9.5 million, Crestwood Equity Partners plans to donate $125,000, Dow Chemical Company has pledged $1 million and Anadarko has donated $1 million. Additionally, BP, Chevron, ConocoPhillips, NuStar and Phillips 66 have also pledged donations.

In addition to halting operations and impacting global energy markets, in the week after the storm hit, more than one million pounds of dangerous air pollutants were released from oil refineries and chemical plants along the Gulf Coast, according to the Centre for Biological Diversity.

On Tuesday, August 29, rising water levels within the Guadalupe river system washed out four storage tanks at one of ConocoPhillips' well sites in DeWitt County, Texas.

The tanks are used to temporarily store produced oil and produced water from the well. The tanks held approximately 385 barrels of oil and 76 barrels of produced water but the actual spill volume has not been determined. At the time, the well remained shut-in, so no oil and water were flowing to the tanks.

The company says that all applicable federal and state regulatory agencies were notified immediately.

In the early hours of August 31, Arkema was notified of two explosions and black smoke coming from its plant in Crosby, Texas. An evacuation zone of 1.5 miles from the plant had been previously established and has since been removed. It shut down operations on the Friday before the storm made landfall.

The company says: 'Our site followed its hurricane preparation plan in advance of the recent hurricane and we had redundant contingency plans in place. However, unprecedented flooding overwhelmed our primary power and two sources of emergency backup power. As a result, we lost critical refrigeration of the products on site. Some of our organic peroxides products burn if not stored at low temperatures.'

The site remains closed.

Operations resume

According to S&P Global Platts, on September 5, Colonial Pipeline, the largest US refined products pipeline, resumed petrol shipments on its Line 1 from Houston and Pasadena, Texas.

It resumed pumping of diesel and jet fuel shipments on its line two on September 4.

Enterprise Products Partners has restarted substantially all of its major assets impacted by the storm, including its ethane and LPG loading terminals on the Houston Ship Channel.

Plans to allow crude carriers into the Houston Ship Channel are likely to be delayed as a result of a sunken dry dock in the waterway.

The Port of Corpus Christi has been opened, but some restrictions remain in place as it continues to survey all channels and inlets in the harbour.

Magellan has restarted two long-haul Texas crude oil pipelines – Bridge Tex and Long Horn and it has also started up a 180,000 b/d refined products pipeline that starts at its East Houston terminal in Texas.



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Terminal News
September 6, 2017
Magellan Midstream Partners has announced plans to build a new Delaware Basin pipeline for crude oil and condensate.The 60 mile pipeline will run from Wink to Crane, Texas, which serves as an origin to its Longhorn pipeline. The new Wink pipeline will have an initial capacity of 250,000 barrels per day, with the ability to expand to more than 600,000 barrels per day if there is demand for it...

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Magellan Midstream Partners has announced plans to build a new Delaware Basin pipeline for crude oil and condensate.

The 60 mile pipeline will run from Wink to Crane, Texas, which serves as an origin to its Longhorn pipeline. The new Wink pipeline will have an initial capacity of 250,000 barrels per day, with the ability to expand to more than 600,000 barrels per day if there is demand for it.

The project also includes the construction of a new terminal at Wink, which will offer broad inbound and outbound pipeline access to parties that connect to the facility.

It is expected to cost $150 million and is due to be operational in mid-2019.

Michael Mears, CEO, says: 'Magellan is known in the industry for its independent service provider business model and is ideally situated to meet growing industry demand for a crude oil and condensate pipeline system with access to customers originating from the Delaware Basin.'

The new pipeline segment will offer direct service from the Delaware Basin to the Crane origin of Magellan's Longhorn pipeline, which provides crude oil and condensate transportation service to the Houston and Texas City refining complex and marine export facilities.

In addition, this pipeline segment will be able to provide service from the Delaware Basin to the new crude and condensate line to Corpus Christi, Texas, that has been proposed by Magellan as well as others in the industry.

The company is also assessing additional pipeline and terminal investments in West Texas to strengthen and enhance its overall crude oil service offerings.



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Terminal News
September 6, 2017
Puma reports increased EBITDA
Puma Energy has reported a 5% increase on its EBITDA in its second quarter financials.Gross profit grew by 7% to $416 million, up from its second quarter 2016 results, due to stable volumes and improved unit margins from downstream activities.EBITDA increase to $191 million compared to the same period last year...

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Puma Energy has reported a 5% increase on its EBITDA in its second quarter financials.

Gross profit grew by 7% to $416 million, up from its second quarter 2016 results, due to stable volumes and improved unit margins from downstream activities.

EBITDA increase to $191 million compared to the same period last year.

The company says that storage capacity remained stable, while it started operations at five additional airports, mainly in Africa and the Asia Pacific.

Denis Chazarain, CFO, says: 'The group delivered another solid quarter.

'Capex has decreased significantly across regions and business segments, as several major construction projects have been completed. Majority of the capex in the first half of 2017 relate to storage construction projects in Ghana and Angola, which are both due to be completed during the second half of 2017.

'Furthermore, we continued the construction of Rostov airport in Russia, and development of the retail network in Africa, the Americas and Asia Pacific.'



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Terminal News
September 4, 2017
Pavilion & Singapore LNG sign storage agreement
Singapore LNG Corporation and Pavilion Gas have signed an agreement for LNG storage and reload services at the SLNG Terminal on Jurong Island.As part of the agreement, Pavilion Gas has rights to access tank capacity on a segregated basis at the facility for LNG storage and reload services over the next 24 months...

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Singapore LNG Corporation and Pavilion Gas have signed an agreement for LNG storage and reload services at the SLNG Terminal on Jurong Island.

As part of the agreement, Pavilion Gas has rights to access tank capacity on a segregated basis at the facility for LNG storage and reload services over the next 24 months. This supports higher volume of LNG trading activities, small-scale LNG opportunities, LNG breakbulk and vessel cool-down services.

Seah Moon Ming, CEO of Pavilion Energy and Pavilion Gas, says: 'With increased spot trading volume, this will strengthen Singapore's position as an Asia LNG hub.

'We will work closely with SLNG to facilitate multi-user access of the SLNG terminal for LNG trading activities. Pavilion Gas is well-positioned to expand and grow its LNG trading presence regionally and globally.'

John Ng, CEO of SLNG, adds: 'With the enhanced capacity and capabilities at our terminal, such as the newly-installed LNG truck loading facility and upcoming additional tank capacity, SLNG will be better able to serve industry players who are keen on using Singapore as a platform to grow their LNG businesses.'



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Terminal News
September 4, 2017
Fujairah's commercial stocks of refined oil products fell 6.6% to 19.329 million barrels in the week to Monday, August 28. They sank below 20 million barrels for the first time in 11 weeks on a decline more than 20% in light distillate stocks, as large-scale refinery shut-downs in Texas sent shock waves through global markets for oil products, especially petrol...

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Fujairah's commercial stocks of refined oil products fell 6.6% to 19.329 million barrels in the week to Monday, August 28. They sank below 20 million barrels for the first time in 11 weeks on a decline more than 20% in light distillate stocks, as large-scale refinery shut-downs in Texas sent shock waves through global markets for oil products, especially petrol.

Total stocks at the UAE port fell despite a slight build in stocks of heavy distillate and residues, which constitute more than half the total volume of oil products stored there, data released Wednesday, August 30 by the Fujairah Energy Data Committee (FEDCom) showed.

Stocks of light distillates, predominantly petrol and naphtha, fell on the week by 1.393 million barrels, or 20.5%, to 5.394 million barrels. It was the largest weekly drop in terms of volume, and the second largest as a percentage, since S&P Global Platts started tracking Fujairah stock data in early January.

Trading sources cited naphtha volumes headed for Asia as the main driver for the draw. Naphtha demand in Asia is rising on higher petrochemical margins. The fourth quarter is typically the peak period for Asian naphtha demand, which should result in an increasing draw on Middle East supply to Asia.

HARVEY GOES GLOBAL

However, tighter global petrol supplies in the wake of Hurricane Harvey may also already be having an impact on light distillate stocks as far away as the Middle East, including at Fujairah, which during the past few years has become a major oil products storage hub for the region.

Hurricane Harvey, downgraded to a tropical storm since making landing near Corpus Christi, Texas, has lingered for days in the Houston region, bringing catastrophic floods and causing many refineries on the US Gulf Coast to shut, either as a direct result of flooding or due to safety concerns. US petrol and middle distillate supplies, and exports have consequently fallen sharply and it is still unclear when refinery operations will return to normal.

Currently, petrol is seeing some tightness globally across all major regions. Robust demand from India and the Middle East is continuing to pull petrol from Europe, the more so in the Middle East, where the region's biggest refinery, Abu Dhabi's 800,000 b/d Ruwais refinery, is undergoing major repairs, expected to last until 2019, after a January fire severely damaged a residual fluid catalytic cracking unit.

That has reduced the refinery's yields of light and middle distillates. Demand from Indonesia, the Philippines and Vietnam is drawing down gasoline stocks in Asia.

In this environment, the aftermath of Hurricane Harvey could mean European petrol drawn across the Atlantic to meet shortfalls in the US, reducing European volumes available for export to the Middle East. The result could be a further draw on gasoline stocks at Fujairah and elsewhere in the region, where petrol demand is due to start a seasonal increase as sweltering summer temperatures recede to levels more conducive to outdoor activity.

Bullish sentiment in the region's petrol market is already evident in the backwardation of first/second month time spreads for Arab Gulf petrol 95 swaps to $1.88/b, the highest so far this year.

SUPPLY DISRUPTIONS

Fujairah stocks of middle distillates also fell on the week ending August 28 by 39,000 barrels, or 1.2%, to an 11-week low of 3.148 million barrels. The hurricane-related supply disruptions to US distillate exports might mean more diesel, gasoil and jet fuel moving West of Suez.

The stream of distillate cargoes from the US Gulf Coast to the Mediterranean and Northwest Europe has all but halted in the past eight days as the storm forced the closure of US Gulf Coast terminals and ports, as well as refineries. In addition, European middle distillate stocks are low due to increased summer demand.

Fujairah's stock of heavy distillates and residues totalled 10.787 million barrels on August 28, edging up 76,000 barrels or 0.7% on the week. Demand for bunker fuel in both Fujairah and Singapore has been healthy over the past week. Fujairah 380 CST delivered bunker fuel continued to be priced at a premium of about $1/mt over Singapore, down from $2-$3/mt the previous week.

The first/second month time spread for Arab Gulf 180 CST high sulfur fuel oil swaps was pegged at a seven-week high backwardation of $1/mt, with a possible shortfall in US fuel oil exports due to the hurricane seen as a key supporting factor.

At the same time, fuel-oil demand in the Middle East has been more robust than usual this summer because Saudi Arabia has been substituting fuel oil for part of the crude it burns at its power stations in summer to support peak demand for electricity to run air-conditioning. The kingdom does not have enough gas to meet peak summer demand from its predominantly thermal power plants while also supplying increasing direct demand for gas from its industrial and petroleum sectors.

Nonetheless, with summer drawing to a close, reducing local fuel oil demand, the Middle East will be well positioned to export the product in the coming weeks and months. Moreover, S&P Global Platts has estimated that about 230,000 mt/month of petrol production capacity has been lost at Ruwais since January due to the fire, which means a substantially increased yield of fuel oil from the refinery if crude processing remains constant.



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