Curacao refinery at minimum as it continues partner hunt

MOSCOW (MRC) -- Curacao’s Isla refinery was still operating at a minimum level as it waited for the resolution of a legal dispute between Venezuela’s state-run PDVSA and ConocoPhillips to restore crude supplies to the plant, reported Reuters with reference to three sources close to the matter.

Isla, owned by the island’s government and operated by PDVSA, was also still searching for a new partner to participate in the 335,000-barrel-per-day facility, the sources said. One option being considered would be recruiting a company to supply crude and market its fuel output, one of the sources said.

PDVSA and Conoco this week reached a payment agreement over a USD2 billion arbitration award related to the 2007 nationalization of the U.S. oil firm’s projects in Venezuela. The pact is ultimately expected to restore PDVSA’s oil shipments to Isla and other facilities in the Caribbean.

As part of that deal, Conoco said it would suspend legal actions that largely sidelined PDVSA’s Caribbean operations. Separately, the Venezuelan firm this month settled unpaid bills with NuStar Energy, enabling it to resume use of a storage terminal in St. Eustatius.

It was unclear if Conoco has received the first payment from Venezuela and lifted the legal measures. PDVSA has failed to fulfill previous agreements with creditors. In the meantime, oil operations in Curacao remained almost completely frozen, including the refinery and the neighboring Bullenbay terminal, the sources added.

"The refinery is only in re-circulation to avoid a total paralysis," one of the sources said.

Isla suffered a power blackout in late July that along with a lack of crude supplies left operations in standby mode. Workers have been performing maintenance to several plants, including the fluid catalytic cracker and the alkylation unit, which is expected to take about two months to be completed.

Refinery spokesman Earl Balborda said on Wednesday workers have been unclogging the lines. He declined to comment on the PDVSA-Conoco agreement.

Conoco declined to comment. PDVSA did not respond to a request for comment.

PDVSA has not shipped Venezuelan crude to the island since late May, when Conoco began seizing Caribbean assets to satisfy the arbitration award, according to the sources and Thomson Reuters vessel tracking data.

Curacao’s fuel distributor, Curoil, recently has been seeking imports of crude or fuel from the US Gulf Coast to supply the refinery and gasoline stations in the island, two of the sources said.

Isla management and Curacao’s government last month said 15 firms were short-listed in a competitive process to temporarily replace PDVSA as the facility’s operator. The parties also were searching for a long-term operator for the refinery after PDVSA’s lease expires in late 2019.

The hunt for a temporary operator or oil supplier continued as the government and the refinery have been waiting for the Conoco-PDVSA settlement to progress in coming months, the sources said.

"We are still looking to find a suitable entity, to bring crude and have it refined, and arrange the marketing," one of the people said.

Tanker activity around Curacao’s Willemstad and Bullenbay ports has decreased in recent months, with only a few vessels going in and out the refinery and the terminal.

"It is too early to say how the Conoco-PDVSA deal will work. PDVSA might pay the first installment and get delayed in further payments, as it has happened before," another of the sources said.

As MRC informed before, Curacao’s Isla refinery is considering offers from 15 companies interested in temporarily operating the 335,000-barrel-per-day facility to replace the current operator, Venezuela’s ailing PDVSA state oil company, the refinery and the Curacao government said in a joint statement in late July 2018.
MRC

MOSCOW (MRC) -- China’s state energy group China National Petroleum Corp (CNPC) has completed an upgrade at Kazakhstan’s Shymkent refinery, in which it has a stake, allowing the plant to produce higher quality fuels, as per Hydrocarbonprocessing with reference to the company's statement.

CNPC started test runs early in August on a 2 million tonne-per-year catalytic cracking unit at the Shymkent plant, one of three refineries operating in the Central Asian nation.

The upgrade, which includes an isomerisation unit that started in June last year, raises the plant’s fuel quality to Euro IV and V from the previous Euro II.

Shymkent, in southern Kazakhstan, is half owned by Kazakh state oil and gas company KazMunaiGas and half by PetroKazakhstan, a joint venture of KazMunaiGas and CNPC.

We remind that, as MRC informed previously, in early August 2018, Honeywell announced that Jizzakh Petroleum JV LLC would use Honeywell UOP technologies to build a new refinery capable of processing 5 million tons per year of crude oil to produce clean-burning gasoline, diesel and jet fuel. The refinery is being built in the Jizzakh region of Eastern Uzbekistan.
MRC

MOSCOW (MRC) -- There was a shortage of some low density polyethylene (LDPE) grades in the Russian market in August, which led to a price rise. The shortage of LDPE will remain in September, according to ICIS-MRC Price report.

There was a major surplus of LDPE, which put pressure on prices, in the Russian market in the first half of the year. The market situation changed in July due to scheduled shutdowns for maintenance at three plants simultaneously, from surplus, the market became deficient in some segments. LDPE prices began to go up in July on the back of tight supply, the upward price trend continued in August.

In early July, Gazprom neftekhim Salavat and Angarsk Polymers Plant, whose capacities are 45,000 and 80,000 tonnes per year, respectively, shut down their LDPE production capacities for scheduled turnarounds. Tomskneftekhim took off-stream its production for maintenance in the middle of the month, the plant's capacity reaches 240,000 tonnes per year. Kazanorgsintez reduced its LDPE capacity utilisation because of a shortage of ethylene.

At the same time, the simultaneous outages at three plants affected only the balance of the cheap LDPE segment (108 grade). By early August, the bulk of supply of 108 grade polyethylene (PE) in the market was from Ufaorgsintez, and prices started on average from Rb86,000/tonne FCA Ufa, including VAT.

In mid-August, Angarsk Polymers Plant's LDPE offer prices appeared in the market; on average, prices started from Rb82,000/tonne FCA, including VAT. But because of technical issues, the resumption of PE production in Angarsk after maintenance had begun only by the beginning of the current week. And many sellers said they had already sold out all their August quotas.

Ufaorgsintez will shut its production capacities for a one-month turnaround in early September. Kazanorgsintez will also still have restrictions on LDPE production, and the Kazan producer will take off-stream some of its production capacities for a 24-day maintenance on 26 September.

Thus, supply of 108 grade LDPE will remain tight in the Russian market in September, which may put pressure on prices.
MRC

MOSCOW (MRC) -- A fire which broke out at a Shell-owned chemical plant on the same site as Essar Oil UK’s Stanlow refinery in northwestern England has been extinguished, reported Reuters.

Essar said that operations at its refinery were unaffected by the fire, the cause of which is currently unclear.

The Shell Higher Olefins Plant (SHOP) is separated from the refinery by a road and rail tracks. Essar operates the chemical plant as well as the refinery.

"Earlier this afternoon, a fire occurred at the SHOP chemical plant," an Essar spokesman said. The fire was extinguished later on Wednesday, he added.

"Operations and production of fuels and other products from Stanlow Refinery have not been affected. All supplies to customers are normal," the spokesman said, adding all staff were safe and accounted for.

At Stanlow, Shell uses ethylene to manufacture polymer, lubricant and detergent intermediates, plasticisers and detergent alcohols, according to its website. Shell was not immediately available for comment.

Earlier on Wednesday, fire engines from five different locations were sent to the 200,000 barrel per day oil refinery.

"There was a report of a large plume of black smoke. We have several pumps at the scene," a spokeswoman for the Cheshire fire service said. In a statement, the service said engines from five locations were on the scene.

Essar Oil UK, owned by the Indian billionaire Ruia brothers’ Essar Group, bought the refinery near Ellesmere Port from Shell in 2011. Around 900 people work at the refinery, according to its website.

"The site produces a range of oil products including about one sixth of Britain’s transport fuels annually - about 4.4 billion litres of diesel, 3 billion litres of petrol and 2 billion litres of jet fuel," Essar Oil UK’s website said.

We remind that, as MRC wrote earlier, in January 2018, Royal Dutch Shell plc (Shell) announced a final investment decision on the redevelopment of the Penguins oil and gas field in the UK North Sea. The decision authorizes the construction of a floating production, storage and offloading (FPSO) vessel, the first new manned installation for Shell in the northern North Sea in almost 30 years. The redevelopment is an attractive opportunity with a competitive go-forward break-even price below USD40 per barrel. The FPSO is expected to have a peak production (100%) of circa 45,000 boe/d.

Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. Shell companies have operations in more than 70 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects.
MRC

MOSCOW (MRC) -- Venezuela’s state-run PDVSA reported no damage to its refineries or oil operations at the country’s main producing region, the Orinoco Belt, from a 7.3-magnitude quake that shook the nation’s northeastern coast, two sources from the state-run firm told Reuters.

PDVSA’s facilities at its Eastern division were working normally as well, the sources added.

As MRC reported earlier, in the first week of August 2018, the Venezuelan-run 335,000-barrel-per-day (bpd) Isla refinery in Curacao was down after an operational problem triggered a blackout.

We also remind that Curacao’s Isla refinery is considering offers from 15 companies interested in temporarily operating the 335,000-barrel-per-day facility to replace the current operator, Venezuela’s ailing PDVSA state oil company, the refinery and the Curacao government said in a joint statement in late July 2018.
MRC