SK Energy buys 1st US crude oil in move away from Middle East

MOSCOW (MRC) — South Korea's top refiner SK Energy is buying its first-ever continental US crude oil shipment as producer club OPEC's output cuts raise MidEast prices, giving other suppliers a chance to compete for the world's juiciest oil market—Asia, said Reuters.

One of Asia's biggest fuel importers, SK Energy said it will import 1 MMbbl of US WTI Midland crude in mid-October. The oil will be processed at its 840,000-bpd refinery in Ulsan, about 250 mi southeast of Seoul, showcased in a recent media tour.

The order is dwarfed by SK Energy's overall oil needs of 270 MMbbl/yr, mostly supplied from the Middle East. But it comes as big players in Asian oil imports snap up more US crude since the Organization of the Petroleum Exporting Countries (OPEC) pledge to rein in output through March 2018 to drain a supply glut and prop up prices.

"Light crude oil has become more economically viable than before and by importing light crude from Kazakhstan, US and Mexico, it helps us boost profits and diversify sources," said Kim Woo-kyung, spokeswoman at the conglomerate SK Innovation Co which owns SK Energy.

Kim said the refiner is also buying more from Mexico and Kazakhstan. "We have decided to import as well 1 MMbbl of Mexico's Isthmus crude," also to arrive at Ulsan in October, she said.

SK Energy received a total of 2 MMbbl of Kazakhstan CPC crude for arrival in late July and early August, Kim said.

Continental US oil exports to South Korea have become more frequent since the United States in 2015 relaxed crude export rules, and have been spurred since the OPEC curbs were announced: GS Caltex, South Korea's No.2 refiner, said last month it bought a total of 3 MMbbl of US crude for August–October delivery.
MRC

MOSCOW (MRC) — Sinopec Corp said its oil storage facilities and petrol stations have not been affected by the earthquake that struck a remote and mountainous part of the province of Sichuan in southwestern China on Tuesday night, said Reuters.

Similarly, PetroChina's refinery, gas fields and pipelines have not been affected by the Sichuan earthquake, a spokesman said on Wednesday.

The quake measured 6.5 in magnitude in a sparsely populated area 120 mi west-northwest of the city of Guangyuan at a depth of 6 mi.

As MRC informed before, Sinopec group, parent of Sinopec Corp, will invest USD29.05 billion to upgrade four refining bases between 2016 and 2020 to produce higher-quality fuels. Sinopec's upgrades come as China, the world's second-biggest oil consumer, is embracing more stringent fuel standards in its battle against pollution and suffering an overall glut in refining capacity. After the upgrades, the total refining capacity of the four refining sites will reach 130 MMtpy, or 2.6 MMbpd, while ethylene capacity will reach 9 MMtpy.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group's key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

MOSCOW (MRC) — ExxonMobil Corp is considering expanding light crude processing capacity at its Beaumont, Texas, refinery with the addition of a third crude distillation unit, a company spokeswoman said, said Reuters.

If approved, construction could begin on Unit C in 2019 and be completed in 2022, said Exxon spokeswoman Charlotte Huffaker. She declined to disclose the contemplated capacity or possible cost of the Unit C expansion.

"These investments reflect the increased availability of abundant, affordable supplies of US light crude," Huffaker said. The expansion would be part of the USD20-B "Growing the Gulf" project announced in March by Exxon Chairman and Chief Executive Darren Woods.

While Exxon has mentioned potential expansion of light oil refining capacity at the Beaumont plant as part of that project, this is the first time the company has talked about Unit C and given a timeline for possible construction.

Since at least 2014, Exxon has been considering the addition of a large distillation unit that would boost Beaumont's crude oil refining capacity from 362,300 bpd to between 700,000 bpd and 850,000 bpd, sources told Reuters in 2014 and 2015.

The contemplated crude capacity expansion was put on hold in early 2016 due to cuts in capital spending, sources said at the time.

On Thursday night, sources familiar with Exxon's plans said the company was now looking at adding a large crude distillation unit at the refinery. The two crude units currently at the Beaumont refinery are Units A and B.

The last major expansion of a US refinery was the 5-yr, USD10-B addition of a crude distillation unit and other units at Motiva Enterprises Port Arthur, Texas, refinery which more than doubled its size to 603,000 bpd. The expansion was completed in 2012.

The Motiva expansion was originally budgeted at USD5 B, but went through a year-long review in 2009.

Last year, Exxon added 20,000 bpd in light crude refining capacity to Unit A at the Beaumont refinery, Huffaker said.
MRC

MOSCOW (MRC) — OPEC expects greater adherence to its pact with non-OPEC producers to cut oil output after two days of meetings in Abu Dhabi aimed at boosting compliance with the accord, said Reuters.

The Organization of the Petroleum Exporting Countries, Russia and other producers are cutting output by about 1.8 MMbpd until March 2018 to get rid of a glut and support prices.

OPEC producers Iraq and the UAE have shown relatively low compliance with the deal based on figures from secondary sources OPEC uses to monitor its supply. Meanwhile, non-OPEC Kazakhstan and Malaysia have been boosting output in the last few months, according to the International Energy Agency.

In Abu Dhabi, a panel comprising Russia, Kuwait and Saudi Arabia, plus officials from OPEC's Vienna headquarters, met individually with officials from Iraq, the United Arab Emirates, Kazakhstan and Malaysia. "Discussions were conducted in a constructive atmosphere and proved fruitful," OPEC said in a statement.

"The conclusions reached with the countries at the meeting will help facilitate full conformity," it added, although it did not give details on how compliance would be increased. The meeting was a special session of the JTC, or Joint Technical Committee, which is monitoring adherence to the deal. A ministerial panel, known as the JMMC, met last month and instructed that the Abu Dhabi meeting be held.

"The UAE, Iraq, Kazakhstan, and Malaysia all expressed their full support for the existing monitoring mechanism and their willingness to fully cooperate with the JTC and JMMC in the months ahead in order to achieve the goal of reaching full conformity," OPEC said.

Another OPEC source said the officials discussed crude exports and some countries' disagreement with the level of their production as assessed by the secondary sources.

At a meeting held in Russia last month, the UAE and Iraq confirmed their commitment to the pact but offered no concrete plan on how to meet their production targets, sources said.

Iraq and the UAE say the assessment of their production by secondary sources—figures from government agencies, consultants and industry media that OPEC uses to monitor its output—before the pact took effect in January was too low.

They argue that as a result, the two countries have the unpalatable task of making an even bigger cut to comply fully.
MRC

MOSCOW (MRC) - Russia's largest oil producer Rosneft said it had made around USD6 billion in pre-payments to Venezuelan state oil company PDVSA and had no immediate plans to make any further advance payments soon, said Reuters.

OPEC member Venezuela is struggling to pay back creditors as its economy endures triple-digit inflation and chronic shortages of food and medicine.

Last Friday, Venezuela inaugurated a new legislative superbody that is expected to rewrite the constitution and give vast powers to President Nicolas Maduro's ruling Socialist Party, defying protests and worldwide condemnation that it undermines democratic freedoms.

Russia is a close political ally of Venezuela's leaders. Rosneft Chief Executive Igor Sechin said earlier this year his company, the world's top listed oil firm by output, would continue to work in Venezuela and would never leave the country.

As of Tuesday, Rosneft's pre-payments to PDVSA have totaled around USD6 billion, Rosneft said on a conference call with investors. This includes principal of USD5.7 billion and interest of USD245 million, it said.

"The repayment is proceeding according to schedule," the company said. "To date, a total of USD743 million on the principal has been repaid and another USD489 million in interest."

"We expect the final repayment to be made in oil and oil product deliveries, which are ongoing strictly according to a schedule which we cannot provide to you. We expect full repayment before the end of 2019. No new pre-payments are planned."

Rosneft also plans to close the deal to buy a stake in India's refiner Essar Oil in the coming days, Pavel Fyodorov, Rosneft first vice-president, told the same conference call on Tuesday.
MRC