URALS QUALITY WILL DOWN
PLATTS - The quality of Russia's key Urals crude exports towards Europe will continue to fall next year as more of the country's low-sulfur oil flows are diverted eastward to China, Russian national oil pipeline operator Transneft warned Monday.
Predicting a 2% rise in crude exports by Russian companies next year, Transneft said the sulfur content in its westbound export flows will reach "a critical level" this year, as the company has no further technological tools to improve the quality of crude flows headed west towards mostly European customers.
"Due to a [planned] rise in low-sulfur crude supplies to China, there will be no more low-sulfur volumes available for improving crude quality via other directions," Transneft's vice-president Sergei Andronov said Monday.
The increase in sulfur levels in Urals as Russia exports more premium crude through outlets in the far east of the country has long been predicted, and may support prices for rival crude grades such as neighboring Kazakhstan's high-value CPC crude.
The latter is exported through the Russian port of Novorossiisk via the CPC pipeline, which, unusually, is not owned by Transneft, but by an international consortium.
The rise of alternative crudes around the eastern Mediterranean, including CPC, Azeri and Kurdish crudes, has already depressed demand for Urals in recent years, pushing it to further flung destinations.
At the request of the energy ministry, Transneft maintains the quality of crude delivered to domestic refineries stable, at around 1.63% sulfur since 2014, Andronov said.
Increasing sulfur content poses a high risk to domestic refining because Russian refineries are only equipped to process crude with less than 1.8% sulfur.
As a result, the sulfur content in export flows rose to 1.61% from 1.51% over the same period, he said.
As a solution to the problem, Transneft has offered to direct high-sulfur crude into a separate export flow to Ust-Luga, but the energy ministry is reluctant to approve this plan. Sulfur content in ESPO blend remains at around 0.5%.
Eastward, crude exports via the Skovorodino-Mohe pipeline offshoot from the ESPO pipeline network to China are set to grow to 28.5 million mt in 2018, up from over 16 million mt this year, as Russia and China have mainly completed the expansion of the route, first vice-president of Transneft, Maxim Grishanin, said speaking during the same event.
In 2019, crude deliveries via Skovorodino-Mohe are to reach designed 30 million mt/year, he said.
Russia's top producer Rosneft exclusively supplies crude via the route to CNPC, under two intergovernmental agreements, with the deliveries launching in 2010.
The East Siberia-Pacific Ocean (ESPO) pipeline ships crude to Skovorodino and further on to the Kozmino port on the Pacific coast, from which mainly spot cargoes are exported.
Transneft plans to complete the expansion of the entire ESPO network in 2020, bringing Kozmino's capacity to 50 million mt/year, up from around 35 million mt/year currently, in 2019.
Transneft also expects to complete the expansion of the pipeline offshoot from ESPO to Rosneft's Komsomolsk -on-Amur refinery to 8 million mt/year from 6 million mt/year currently in the second quarter of 2018, Grishanin said.
Looking ahead, Transneft said it expects crude exports by Russian companies to grow by around 1.8% year on year in 2018 to 242.4 million mt, or around 4.87 million b/d, according to preliminary shipping requests by domestic oil producers.
Andronov said Transneft expects deliveries in the western directions to reduce as around 10-12 million mt of crude will be redirected towards eastern markets in 2018.
"We think that westbound exports most likely reduce at the Primorsk and Ust-Luga ports [on the Baltic Sea], as crude supplies via the Druzhba pipeline are carried out mainly via long-term contracts," he said, speaking at a company event.
|May, 23, 10:50:00|
|May, 23, 10:45:00|
|May, 23, 10:40:00|
|May, 23, 10:35:00|
|May, 23, 10:30:00|
|May, 23, 10:25:00|
WNN - "We met today to confirm the continuing commitment of the European Commission and the Atomic Energy Organisation of Iran towards the implementation of the Joint Comprehensive Plan of Action, and in particular its Annex III which addresses civil nuclear cooperation," Cañete and Ali Akhbar Salehi, president of the AEOI, said in a joint statement on 19 May. "We believe that the continuing implementation of the JCPOA, which was unanimously endorsed by UN Security Council Resolution 2231, is crucial for the development and progress of the region as well as the global peace and security."
BLOOMBERG - Natural gas will probably emerge as the main fossil fuel “winner” as it balances renewables in power generation and is used as a substitute for oil in petrochemicals. Long-term gas demand is set to increase by 15 percent, or by 750 billion cubic meters, compared to business as usual,
WNN - The United States, Canada, and Japan are launching the Nuclear Innovation: Clean Energy (NICE) Future Initiative. This global effort will make sure nuclear has a seat at the table during discussions about innovation and advanced clean energy systems of the future.
AOG - The agreement between ADNOC and ISPRL, which was initiated in January 2017 during a visit to India by a high-ranking UAE delegation, led by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, covers the storage of 5.86 million barrels of ADNOC crude oil in underground facilities, at the Karnataka facility. The first shipment, of approximately two million barrels of crude oil, will be followed by further shipments after India’s annual monsoon season.