BP accuses Monroe Energy of wrongfully terminating contract

MOSCOW (MRC) -- BP Plc has accused Monroe Energy of wrongfully terminating a crude supply contract in 2016, costing the oil major at least USD59 MM in damages, according to a federal court filing, Reuters.

BP said in the filing that Monroe Energy, a subsidiary of Delta Air Lines Inc, terminated the contract after misinterpreting a provision regarding the blending of crude oils. BP declined to comment further on the case and Monroe could not be immediately reached. Monroe has yet to respond to the allegations in court.

The dispute with Monroe marks at least the second time in the past two years that BP has been accused by a refiner of supplying lesser-grade crudes. NARL Refining is embroiled in an arbitration dispute with BP that involves allegations that the oil major was providing crude oil at the company's Come-By-Chance refinery in Newfoundland, Canada, that helped BP's profits but hurt the refinery's equipment.

Monroe Energy inked a three-year contract with BP in August 2014 to supply the company's 185,000-bpd refinery outside Philadelphia with crude oil from the Eagle Ford or Bakken shale fields, according to the lawsuit filed on Thursday in US District Court in Southern New York.

Monroe agreed to pay USD8.35 above the US benchmark price for Eagle Ford and USD7.35 above the US benchmark for Bakken deliveries, according to the lawsuit. The supply contract was favorable for Monroe when US crude sold at a wide discount against the global benchmark during the early months of the deal, but the spread narrowed significantly in late 2015, making global crude more attractive to East Coast refiners.

Monroe notified BP last June that it was severing the contract, alleging the oil major was intentionally blending batches of Eagle Ford crude that did not meet the API gravity grade called for in the contract, according to the lawsuit.

BP said the agreement had no language that barred it from commingling grades of crude oil from the same fields, court papers showed. BP says it blended batches of Eagle Ford crude from different wells, calling it a routine industry practice.

BP also said Monroe used gravity figures measured at the docks in Texas, not at the point of delivery as required by contract, according to the lawsuit. Monroe never complained the delivered crude was not in compliance, BP said.

"Monroe's allegations were nothing more than an unfounded pretext to terminate the (contract)," BP said in the filing.
MRC

Turkmenbashi GPP sold 20,000 tonnes of PP at Commodity Exchange of Turkmenistan

MOSCOW (MRC) -- In the export trades of Turkmenistan's State Commodity and Raw Materials Exchange, 20,000 tonnes of polypropylene (PP) were sold, according to ICIS-MRC Price report.

On 14 April, Turkmenbashi Gas Processing Plant's 20,000 tonnes of PP were put up for auction in the export trades of the State Commodity and Raw Materials Exchange of Turkmenistan. The put up for action PP was aimed for shipment within 9 months at a starting price of USD960/tonne FCA/FOB port of Turkmenbashi.

Demand for PP in the stock exchange was quite strong in the first days of the trades, despite a rather long period of shipment. The bids for purchasing were received for 35,300 tonnes. But actual deals started to be registered only on 17 April, and 20,000 tonnes of PP were contracted in the trades at the starting price of USD960/tonne FCA/FOB port of Turkmenbashi.

As reported previously, one and a half months earlier, 10,000 tonnes of PP to be shipped within 7 months were sold in the Commodity and Raw Materials Exchange at USD956/tonne FCA/FOB port of Turkmenbashi.
MRC

Williams Partners agrees to sell its interests in the Geismar Olefins facility to NOVA Chemicals for USD2.1 Billion

MOSCOW (MRC) -- Williams Partners LP, Tulsa, has entered a deal to sell its indirect ownership interest in the recently rebuilt and expanded Geismar, La., olefins plant and complex to Nova Chemicals Corp., Calgary, (OGJ Online, Sept. 9, 2016), said the company on its site.

As part of the agreement, Nova Chemicals will pay Williams Partners USD2.1 billion in cash to purchase 100% interest in Williams Olefins LLC, which owns an 88.46% undivided stake in the Geismar olefins plant and associated complex, the companies said.

Alongside ownership interest in the 1.95 million-tonne/year Geismar ethylene plant, Nova Chemicals also will acquire 525 acres of undeveloped land next to the complex as well as Williams’ interest in the ethylene trading hub at Mont Belvieu, Tex., Nova Chemicals said.

The companies said they expect to finalize the transaction this summer, pending customary closing conditions and regulatory approvals. After closing the deal, Williams subsidiaries plan to enter long-term fee-for-service agreements with Nova Chemicals for supply and transportation of ethane feedstock from fractionation and storage sites in Mont Belvieu to the Geismar plant via Williams Partners’ 270-mile Bayou ethane pipeline.

Consistent with Williams’ strategy to allocate capital to its core, natural gas-focused business, sale of the Geismar olefins operations and proposed associated supply and transportation agreements also align with the company’s program of reducing its commodity margin exposure and securing a long-term, fee-based revenue stream for its US Gulf Coast transportation business, said Alan Armstrong, Williams Cos. Inc.’s president and chief executive officer.
Williams Partners plans to use the cash proceeds from the transaction to pay off its $850-million term loan and to fund a portion of the partnership’s capital and investment expenditures that form part of its extensive growth portfolio, the company said.

For Nova Chemicals, the proposed acquisition creates an opportunity to benefit from access to large US shale reserves while expanding its presence at the US Gulf Coast, a key component of the company’s long-term growth strategy, according to Todd Karran, Nova Chemicals’ president and chief executive officer.

In addition to buying Williams’ Geismar olefins business, Nova Chemicals is working on two additional projects to help meet growing consumer demand for polyethylene (PE), including its recently signed deal with Total SA and Borealis AG of Vienna to build a 1 million-tpy ethane steam cracker and 625,000-tpy PE production plant at Houston-based Total Petrochemicals & Refining USA Inc.’s manufacturing sites along the Texas Gulf Coast, as well as the proposed construction of a PE plant in Sarnia, Ont., based on its proprietary Advanced SCLAIRTECH technology.

As MRC informed earlier, NOVA Chemicals Corporation, a leading supplier of polyethylene in the Americas, has announced the start up of its new world-scale linear low density polyethylene (LLDPE) gas phase reactor at its Joffre, Alberta site.

Nova Chemical is one of the largest world's petrochemical companies, a manufacturer of polyethylene, styrene polymers, monomers, and many other related products.
MRC

PBF Logistics announces acquisition of Toledo terminal from Sunoco Logistics

MOSCOW (MRC) -- PBF Logistics LP announced that its wholly owned subsidiary has acquired the Toledo, Ohio, refined products terminal assets of Sunoco Logistics LP for USD10 MM, said Hydrocarbonprocessing.

The Toledo Terminal is directly connected to and currently supplied by PBF Energy Inc.'s Toledo refinery. "We are pleased with our acquisition of the Toledo Terminal which is PBFX's second third-party acquisition and third transaction completed this year,” said Tom Nimbley, PBF Logistics GP LLC Chief Executive Officer. The combined transactions represent a USD15 million increase to the Partnership's forecasted annualized EBITDA. We welcome the employees of the terminal to the PBFX family and look forward to maximizing the potential of our newest asset."

Located adjacent to PBF Energy's Toledo refinery, the Toledo Terminal is comprised of a 10-bay truck rack and over 110,000 bbl of chemicals, clean product and additive storage capacity.

As MRC informed earlier, Fluor was awarded a construction management contract by Sunoco Logistics for the Mariner East 2 project at its Marcus Hook Industrial Complex on the Delaware River in Pennsylvania.
MRC

China plans Shanghai crude oil futures launch in H2 2017

MOSCOW (MRC) -- China is looking at launching its crude oil futures in Shanghai in the second half of this year, two sources familiar with the matter said, breathing new life into a derivative that was considered shelved only months ago, said Reuters.

The contract is aimed at giving China, world's second-largest oil consumer after the United States, clout in pricing crude in Asia, and a share of the trillions of dollars in oil futures trade that flow through global benchmarks Brent and West Texas Intermediate.

Shanghai's International Energy Exchange (INE) last year was close to launching the futures contract, which was approved in 2014 after years of planning, but its plans were shelved after volatility in domestic stock and commodities markets spooked regulators.

The sources were unclear when the contract would actually start to trade. "In the second half of this year, maybe in September or October," one of the sources said, adding it could take place before the 19th National Congress of the Communist Party of China, where a change of guard under President Xi Jinping will take place.

The second source said the launch could happen earlier, possibly in July or August. It was not immediately clear what factors prompted the project's revival.

An INE spokeswoman did not give a definitive start date, saying, "We are actively preparing and are striving to launch the product as soon as possible."

Crude oil sold in Asia is mainly priced against the Dubai, Oman and dated Brent benchmarks assessed by S&P Global Platts or the Oman crude futures on Dubai Mercantile Exchange.
MRC