Fujairah's commercial stocks of refined oil products rose 7.9% to 17.278 million barrels in the week to Monday, October 16, having sunk to a near nine-month low the previous week, as a number of petrol cargoes arrived at the port, according to data from the Fujairah Energy Data Committee (FEDCom).
The overall rise was largely due to an increase in light distillates, which rose by 25.6% week on week to 5.72 million barrels.
The petrol market is bullish East of Suez, while a closed arbitrage to the US is likely to make more European petrol available to the Middle East, according to Platts Analytics.
While light distillate stocks jumped, stocks of middle distillates fell back 2.5% to 2.884 million barrels, and staying below 3 million barrels for a fifth week in a row. This is after rising nearly 20% last week.
The latest drop comes as Europe continued to draw in gasoil volumes from India and the Middle East on an open arbitrage. The east-west gasoil exchange of futures for swaps fell to a two-week low of minus $27.34/mt on Wednesday, mainly on a renewed tightening in the European market.
Stocks of heavy distillates and residues in Fujairah edged up 2% to 8.674 million barrels, but this is still well below the average of 10.49 million barrels since the start of the year after large draws in recent weeks.
Bunker demand has been reported as healthy, and this is expected to be supported by a seasonal rise in global refining this quarter, prompting a rise in regional crude and product tanker traffic.
Enbridge Energy has had a Presidential permit issued for its Line 67 pipeline following a five-year review process.
The permit authorises the company to increase transport up to a full design capacity of 890,000 barrels per day of crude oil and other hydrocarbons across a three-mile segment at the US – Canada border near Neche, North Dakota though Enbridge's terminal in Wisconsin.
Line 67 currently operates under an existing Presidential permit that was issued by the State Department in 2009. The 2017 permit authorises Enbridge to fully utilise its capacity across the border.
Line 67 is a key component of Enbridge's mainline system, which US refineries rely on to supply crude oil.
The company says in a statement: 'The renewed focus of the State Department and this permit reaffirms Line 67 continues to serve the national interest by delivering secure and reliable supplies of crude oil to US refineries, including those in Minnesota and neighbouring states.'
ExxonMobil has bought a crude oil storage terminal in Wink, Texas from Genesis Energy.
The Delaware Basin terminal is strategically positioned to handle Permian Basin crude oil and condensate for transport to Gulf Coast refineries and marine export terminals. It is interconnected to the Plains Alpha Crude Connector pipeline system, and is permitted for 100,000 barrels per day of throughput with the ability to expand.
Gerald Frey, president of ExxonMobil Pipeline Company, says: 'The terminal provides crude producers with a full range of logistical options including truck, rail and inbound and outbound pipeline access, not only for ExxonMobil's production, but for all Permian Basin producers.
'It also provides shippers with efficient and cost-effective access to market destinations in the Gulf region.'
Once complete, this terminal will be ExxonMobil's first in the Permian Basin to be anchored by the company's newly acquired Delaware Basin acreage.
Odfjell Terminals is set to sell its 50% ownership in Oiltanking Odfjell Terminal Singapore to a fund managed by Macquarie Infrastructure and Real Assets for $300 million.
The transaction will result in a net gain for Odfjell of approximately $135 million. The closing of the transaction is expected during the fourth quarter of 2017.
Kristian Mørch, CEO of Odfjell and chairman of Odfjell Terminals, says: 'We are pleased to have concluded on the sale of our Singapore terminal at what we believe is a very attractive valuation and a testimony to the strength and quality of the investments made in Singapore since 2001.'
Frank Erkelens, CEO of Odfjell Terminals, adds: 'This divestment is in line with our strategy to focus on the terminal where we have managerial control of the assets and to further invest in growth opportunities in our core markets, such as Houston and Rotterdam.'
US crude oil production is expected to surpass the all-time high set in 1970 as the Permian region continues to increase output.
According to the EIA, crude production will average 9.4 million barrels per day (b/d) in the second half of 2017, 340,000 b/d more than in the first half of 2017. Production in 2018 is expected to average 9.9 million b/d, surpassing the previous high of 9.6 million b/d set in 1970.
The EIA's Short-term energy outlook (STEO) projects that most of the production growth in the second half of 2017 will be in the Permian region. It has become one of the more active drilling regions in the US. Production continues to increase, in part, as a result of WTI crude oil average monthly prices that have remained higher than $45 per barrels since the second half of 2016.
The STEO forecast is based on recent drilling and production trends and on anticipated future changes, driven largely by the WTI crude oil price.
Pin Oak Corpus Christi has completed the acquisition of Gravity Midstream Corpus Christi.
The owners of Pin Oak Terminals, Dauphine Midstream and Mercuria Energy Group provided equity financing for the transaction.
Dauphine and Mercuria also recently commissioned a new storage terminal – Pin Oak Terminals – in Louisiana, which has approximately four million barrels of contracted capacity.
Pin Oak Corpus Christi has 737,500 barrels of storage, pipeline connections into nearby refineries, a crude processing unit, a polymer modified asphalt plant, rail loading and unloading facilities, a truck rack and access to Aframax and barge docks.
There are also long-term contracts in place to significantly expand the terminal's operations.
Craig Peus, CEO of Gravity Midstream, says: 'The team at Corpus Christi is excited to be joining the Pin oak family and partnering with investors who are dedicated to taking the terminal to the next level by expanding the terminal's operations and building a strategic hub in Corpus Christi.'
Harris Ziskroit, chief investment officer at Dauphine, adds: 'The site is optimally located and has tremendous potential to become one of the only multi-modal terminal facilities in Corpus Christi, offering a wide array of service offerings to move, store and process petroleum products.'
A tender for the construction of part of a pipeline for the Jask Oil Terminal is due to be held shortly.
An Iranian news agency reports that the MD of the National Iranian Oil Company says that tender is for part of a pipeline to transfer crude oil to the facility located in the southern Hormozgan Province.
Ali Kardor was quoted as saying: 'A project to lay a section of the pipeline has already been tendered and the remaining part will be put out to tender in the next few days.'
The project comprises laying 1,000 kilometres of oil pipeline from Genaveh in Bushehr Province to the port of Jask to transform Jask into a major oil terminal, which is aimed at easing and speeding up Iran's oil loading and shipment operations.
The terminal is part of a wider development plan to build two refineries, a petrochemical complex and oil storage units.
Stolthaven Terminals continues to deliver steady financials as the company implements a plan to improve its sustained long-term performance.
Its third quarter operating profit was $16 million, essentially unchanged from $16.1 million in the second quarter. Its utilisation rates fell from 87.5% to 85.6%, reflecting additional new capacity and a decrease in total contracted volume.
The company says the negative impact of the decrease in leased capacity and volume was more than offset, mainly by higher excess throughput revenue, along with increased utility revenue in Houston.
In its third quarter financial report, the company says that while Hurricane Harvey caused no physical damage to its property, due to the closure of the Houston Ship Channel, operational shutdowns and port delays, the third and fourth quarter results have been, and will be impacted.
Niels G. Stolt-Nielsen, CEO of Stolt-Nielsen, says: 'Results at Stolthaven Terminals were once again largely in line with those of the previous quarter, as we continue to implement actions aimed at improving that division's sustained long-term performance.
'Hurricane Harvey caused no material physical damage to the company's assets in Houston. In fact, we have taken steps in recent years to improve the hurricane preparedness of our terminal facility and our tank container depot along the Houston Ship Channel – and those actions proved effective.
'That said, our tanker, terminal and tank container operations all experienced some losses and additional costs because of the storm, through the financial impact, which is not expected to be material, will mostly be felt in the fourth quarter.
Looking ahead, Stolt-Nielsen adds: 'On balance, our overall outlook remains unchanged. For Stolthaven Terminals, we continue to expect a modest but steady improvement in results, driven by actions to enhance operational performance across our network of terminals.'
Orpic Logistics Company (OLC) has commissioned and started operations at its oil storage facility in Al Jefnain, near Muscat.
The facility comprises a new oil product storage and distribution centre with a capacity of over 170,000 m3 as well as 16 loading racks. It was commissioned by the CLH subsidiary of OLC, which was jointly created by CLH and Orpic.
The new facility is equipped with the latest technology, which enables the loading process to be completely automated from the moment the road tankers enter the facility until the relevant documentation is printed.
Road tankers from the major oil operators in the country have successfully completed the first fuel loading operations.
The facility receives fuel from the Sohar refinery through a new pipeline, the first one of its type built in the country. This makes it possible to reduce fuel transport by road and to increase the safety and efficiency of fuel distribution in Oman.
It is expected that in the coming months, the new plant will also be connected via pipeline with the refinery in Mina Al Fahal and Muscat international airport.
Once fully operational, the new logistics system will supply more than 50% of the country's fuel. It will provide a higher supply capacity of aviation fuel, as well as greater efficiency and sustainability, thanks to the use of the pipeline.
José Luis López de Silanes, chairman of the CLH group, says: 'We are proud to launch the first start of such an important operation for the country, which will make it possible to transform its logistics system for oil products into a safer, more efficient and sustainable model.'
USD Partners has started operations at its crude oil terminal in Stroud, Oklahoma.
The planned work required to allow the terminal to handle heavier grades of crude oil was completed one time and under the initial planned budget.
The Stroud terminal provides a destination point for rail-to-pipeline shipments of heavy crude oil from USD's Hardisty terminal in Western Canada and provides connectivity to one of the largest crude oil storage hubs in North America – Cushing.
Approximately 50% of the Stroud terminal's current capacity is available and actively being marketed to meet the takeaway needs of current and future customers.
Alexandra Batycky, associate director of USD Group, says: 'Our ability to deliver on time and under budget is a testament to the dedication, collaboration, and execution by the various stakeholders involved including our customer, the railroads and USD.'
Colonial Terminal Logistics is offers marine export capabilities to Colonial Pipeline shippers through Enterprise Products Partners' Beaumont terminal.
This will allow Colonial Pipeline shippers to move product from 13 Gulf Coast refineries to the Beaumont Terminal for loading onto vessels for transportation to the Florida retail marker, as well as for export to foreign destinations.
Colonial can provide customers firm dock capacity rights and will also have access to as much as two million barrels of new storage at the Beaumont facility.
Colonial says its long term vision is to move products for marine export from multiple terminals in the greater Beaumont/Port Arthur/Orange area. Its marine logistics services, which are cost advantaged to refined product services offered on the Houston Ship Channel, include storage, blending and dock usage solutions.
Bill Ordemann, executive vice president, commercial, for Enterprise's general partner, says: 'We are pleased to execute this agreement with Colonial Terminal Logistics, which expands the effective reach and increases volume for our Beaumont refined products marine terminal and storage complex.
'Our Beaumont facility is part of one of the most extensive marine terminal networks along the Gulf Coast and is uniquely positioned to provide flow assurance and market choices for refined products.'
Targa Resources has entered into a joint venture with Blackstone Energy Partners in the Grand Prix Pipeline and has signed a letter of intent to own a stake in the Gulf Coast Express Pipeline.
The company has executed agreements to sell a 25% JV interest in the Grand Prix natural gas liquids pipeline to funds managed by Blackstone Energy Partners.
Once complete, the pipeline will be a new 300,000 barrel per day common carrier NGL pipeline from the Permian Basin to Mont Belvieu, Texas.
Targa and EagleClaw Midstream Ventures have also executed a long-term raw product purchase agreement for transportation and fractionation services for the pipeline.
It is expected that the Grand Prix pipeline is due to be operational in the second quarter of 2019.
Additionally, Targa also announced it has executed a letter of intent, along with Kinder Morgan Texas Pipeline regarding the Gulf Coast Express Pipeline project. The project will provide an outlet for increased natural gas production from the Permian Basin to growing markets along the Texas Gulf Coast.
The participation of the three parties involved with the project is subject to negotiation and executive of definitive agreements.
As part of the agreements, Targa would own a 25% equity interest in it and would commit significant volumes to the proposed project.
The expected in-service date of the pipeline continues to be scheduled for the second half of 2019.
Glencore plans to acquire shares in Chevron South Africa and Chevron Botswana to expand its oil business.
The company has entered an agreement with Off The Shelf Investments Fifty Six Proprietary (OTS) to acquire a 75% OTS has in Chevron SA and certain related interests and the entire issued share capital of Chevron Botswana.
The assets comprise the interests of the Chevron group in its manufacturing, retail and industrial supply business in South Africa and Botswana.
The assets include a refinery in Cape Town with a crude processing capacity of 100 kbd, a finished lubricants blend plant and base oil terminal in Durban, a network of coastal shipping, depots and pipelines with significant crude delivery and storage infrastructure at Saldanha Bay and Cape Town Harbour and the South African retail network.
Glencore says it believes the assets provide an attractive downstream opportunity for its oil business.
The transaction is expected to close in mid-2018.
Fujairah's commercial stocks of refined oil products fell to a new low of 16.014 million barrels in the week to Monday, October 9, down 3% due to continued draws on heavy distillates and residues, according to S&P Global Platts Analytics.
Stocks of heavy distillates and residues fell 8.4% week on week to 8.5 million barrels, the lowest level since February, and second lowest total since stock records started being published in January, data released Wednesday by the Fujairah Energy Data Committee (FEDCom) showed.
Heavy distillates and residues account for more than half the total oil products stored in Fujairah. These stocks have now fallen 27%, or 3.17 million barrels, over the past two weeks, with outflows of fuel oil cargoes within the Persian Gulf region, as well regular shipments to Pakistan. That has been in addition to strong demand from Singapore, which has pulled Middle Eastern barrels towards Asia.
Last week saw the spread between benchmark Singapore 380 CST and Arab Gulf 180 CST rose to the highest level since March.
Platts Analytics estimated fuel oil exports from Iran, the region's largest net exporter, at 1.5 million mt in September, with shipments expected to decline to around 1.1 million mt in October as the country's electricity demand rises.
In addition, Iran's domestic power sector has been using more fuel oil due to gas shortages related to ongoing maintenance at the South Pars fields. Light distillate stocks fell 4.3% to 4.554 million barrels, well below the 4.9 million barrel average since the beginning of the year. That was despite balanced fundamentals in the petrol market in Europe, Asia and the Middle East, after prices saw a post-Harvey correction.
At the same time, the east of Suez market had pockets of strong petrol demand, in particular from Iran, Pakistan, Sri Lanka, Vietnam and Indonesia. First-month/second-month Arab Gulf gasoline 95 swaps fell to a three-month low last week, but have since steadied to be at 65 cents/b Tuesday.
MIDDLE DISTILLATES STOCKS RISE
Middle distillate stocks stood out this week, rising 19.5% to 2.957 million barrels, but remained below the 3 million b/d for the fourth week in a row due to the open arbitrage which has drawn gasoil from the Middle East and India to Europe.
The east-west gasoil exchange of futures for swaps was at a near four-week high of minus $20.55/mt Tuesday. While that indicated that arbitrage economics were still workable, rising freight rates and higher US distillate production meant the economics were getting tighter. US Gulf Coast refineries have now largely recovered from recent disruptions, with latest weekly data showing total US distillate production at 4.93 million b/d - up 216,000 b/d year on year.
Contanda Terminals has acquired 339 acres of land within the Port of Houston to further develop its storage terminal capability.
The multi-year commercial agreement covers a piece of prime, deep-water access property located on the Houston Ship Channel.
This acquisition enables Contanda to continue to develop its key strategic business objective of doubling its terminal storage capability over the next five years, and to expand into the bulk petrochemical and hydrocarbon markets.
The company says it will further strengthen its presence along the US Gulf Coast where project investments have surged since 2014. It operates three other bulk terminals along the Gulf Coast.
G.R. (Jerry) Cardillo, president and CEO of Contanda, says: 'This agreement with the Port of Houston Authority solidifies our long-term commitment to grow with the Port of Houston and the Houston Ship Channel.
'With this project, Contanda has the opportunity to make significant strides in achieving our corporate goals while firmly establishing our position as a leading storage provider in the growing petrochemical and hydrocarbon markets. We firmly believe in the Port of Houston, its capabilities and the opportunities it presents to our customers and shareholders.'
Contanda's state-of-the-art automated terminal facility will be built in phases to provide customers access to onsite processing, multiple ship and barge docks, and convenient tank truck and railcar accessibility.
The facility is centrally located for numerous pipeline connections, providing support storage services for a variety of commodities including petrochemical, clean petroleum products, various blend stocks, ethanol, crude oil, and refinery intermediates and other bulk commodities.
In addition to its three Houston terminals, Contanda operates 13 other bulk terminals across the US.