U.N. shipping agency pushes ahead with tougher marine fuel rules

MOSCOW (MRC) -- The United Nations shipping agency pushed back this week on any phased entry for tougher marine fuel rules and further tightened regulations that will come into force in 2020, as per Reuters.

The International Maritime Organization will prohibit ships from using fuels with sulphur content above 0.5 percent from Jan. 1, 2020, compared with 3.5 percent today, unless they are equipped with so-called scrubbers to clean up sulphur emissions.

Ships found in breach of the new rules will face fines or the risk of impoundment by IMO member states. The shipping and oil-refining industries are scrambling to prepare for the shift and have made large investments to comply with the new standards since they were set in 2016.

Oil companies expect a jump in demand for cleaner distillates, mainly diesel, at the expense of fuel oil that would become largely redundant.

Last week, Washington said it backed a phase-in of the 2020 rules to protect consumers from any price spikes in heating and trucking fuels, although it did not seek a delay.

Some shipping associations together with the Bahamas, Liberia, Panama and the Marshall Islands had proposed an "experience-building phase", which gained support from Washington, leading to widespread market speculation in recent days about a possible review of the regulatory timeframe.

A discussion of their proposal in London this week at the IMO's Marine Environment Protection Committee, MEPC 73, failed to advance after the chair of the session said it was too vague. The paper's backers were told they could submit more concrete proposals at the next MEPC in May 2019 - especially focused on data collection and fuel oil quality.

That timeframe would, however, leave little time realistically before the regulations kick in for any potential review. The IMO has reiterated that there will be no delay in implementing the rules.

A U.S. Coast Guard official said on Thursday that Washington sought a "pragmatic" approach and would seek to develop proposals with like-minded countries for the May 2019 meeting. Some analysts including Rapidan Energy Group have suggested that major stakeholders including flag carriers were working to push back the global sulphur ban.

They also suggested that U.S. President Donald Trump's administration was likely to oppose the 2020 start date as it would cause a significant diesel, distillate and heating oil price spike in the winter of a U.S. presidential election year.
MRC

LNG tankers stranded off Singapore, Malaysia as demand outlook weakens

MOSCOW (MRC) - A fleet of half a dozen tankers carrying unsold liquefied natural gas (LNG) has been floating in Singapore and Malaysian waters for up to two weeks as winter demand in Asia looks weaker than initially expected, as per Hydrocarbonprocessing.

The ships together carry around a million cubic metres of LNG, worth more than USD200 million at current spot market prices. One of them, Adam LNG, is carrying 164,000 cubic metres of LNG that originated from the Arctic Yamal project in Russia, with Refinitiv Eikon ship tracking data showing the cargo to be open "for orders".

The LNG cargoes were purchased ahead of the northern hemisphere winter season, said several traders with knowledge of the matter, declining to be named as they were not allowed to speak publicly about commercial operations. "Everyone floated cargoes last month, with a steep contango over October to November, and they now can't find homes for these floating cargoes," an LNG broker said.

Contango means prices for future delivery are higher than those for immediate dispatch, making it attractive for traders to hold on to cargoes for later sale.

Many traders were also hoping for a repeat of last winter, when LNG <LNG-AS> spiked to 2014 highs of USD11.50 per million British thermal units (mmBtu) as the top three importers, Japan, China and South Korea, scrambled to meet demand amid China's gasification programme, unusually cold weather and widespread nuclear power outages.

"Some merchants were hoping for another price bull-run this year, and hoped importers would stock up more to prevent being caught short," said one trader in Singapore.

"That's not happened - at least yet - as weather outlooks suggest a relatively mild winter, and because a lot of nuclear reactors, especially in Japan, have returned to service," he said.

Japan is expected to experience warmer-than-average weather between November and January, the country's official forecaster said this week, implying low demand for heating.
MRC

S-Oil sees Q4 refining margins rise on seasonal demand, tight supply

MOSCOW (MRC) -- South Korea's S-Oil Corp said on Friday it expected fourth quarter refining margins to rise on higher seasonal demand and tight regional supply and with the start of its new refining and petrochemical plants supporting earnings, as per Hydrocarbonprocesing.

Singapore refining margins, the benchmark profits for Asian oil processors, rose to USD7.99 a barrel on Aug. 15, the highest since margins rebounded in July, supported by rising demand for gasoline and jet fuel. The profits from refining a barrel of benchmark Dubai crude into fuel currently stands at USd5.23 a barrel.

Asian gasoil margins hit their highest in more than three years on Wednesday, pushed higher by lower supplies in region and expectations for increased gasoil demand as consumers move to meet stricter marine fuel regulations.

"The seasonal demand growth and limited capacity expansions in Asia Pacific will further boost the refining margin," the refiner, whose top shareholder is Saudi Aramco, said in an earnings statement. The company said heating oil demand will increase refining margins as winter approaches.

S-Oil posted a 42.9 percent decline in operating profit to 316 billion won (USD277.67 million) for the July-September period, due to reduced inventory-related gains and despite improved refining margins. Operating profit was down from 553 billion won in the same period a year earlier.

The company also said its new residue fuel oil and olefin plants, known as the residue upgrading complex and olefin downstream complex (ODC), are expected to begin commercial operations in November.

The new units will churn out 405,000 tonnes per annum (TPA) of polypropylene, 300,000 TPA of propylene oxide, and 21,000 barrels per day of gasoline.

"Commercial operations of the RUC-ODC project are expected to contribute to Q4 earnings .... (their) stable operations are secured at maximum designed capacity," company treasurer Shin Kwan-bae said in a call with analysts.
MRC

Saudi hopes to attract USD427 billion in investments by 2030

MOSCOW (MRC) - Saudi Arabia expects to attract investments of more than 1.6 trillion riyals (USD427 billion) by 2030 in its push to boost industry, Energy Minister Khalid Al-Falih said on Thursday, according to state TV al-Ekhbariya, as per Reuters.

"The programme to develop national industries and logistics services (is) the largest and most important, and has a huge impact on the Saudi economy," Al-Falih said.

The minister estimated that the country's mineral wealth was worth more than 1.3 trillion riyals.

As MRC informed before, Saudi Aramco’s potential acquisition of a stake in petrochemicals maker SABIC would affect the timeframe of its own planned initial public offering, the firm’s chief executive, Amin Nasser, said in a TV interview in late July 2018.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
MRC

Finnish refiner Neste on crest of a wave with renewables

MOSCOW (MRC) -- Biofuel producer and oil refiner Neste is "on the crest of a wave", its CEO said after the company set a December deadline for an investment decision on a new Singapore plant and posted quarterly results that sent its shares up by 9 percent, as per Reuters.

The Finnish company, which produces diesel and other fuels from renewable materials at plants in Singapore and Rotterdam, reported bigger than expected third-quarter profit thanks to progress at its renewables operation. "Renewable products exceeded the previous year's performance as a result of a favourable market and successful margin optimisation," CEO Matti Lievonen said in a statement.

Third-quarter core operating profit rose to 395 million euros (USD449 million) from 350 million euros in the same period last year, surpassing the consensus forecast of 356 million euros in a Reuters poll of analysts. Neste said it was on track for a "very strong" full year, though maintenance shutdowns will squeeze profit in the remainder of the year.

"This is a very strong result, especially in renewables ... they clearly succeeded in sales, production and raw material purchases in that business," said OP Bank analyst Henri Parkkinen, who has a "reduce" rating on the stock.

Neste, which also has two conventional oil refineries in Finland, is looking for future growth in renewable jet fuels and said it would make a final decision in December over its plan to build a new biofuel plant in Singapore. "We will decide in December," Lievonen told Reuters "We have been working on the investment constantly and spent tens of millions preparing."

The company had previously said it would make a final investment decision by the end of 2018. "Based on what's happening in the renewables market, that investment has always looked justified," said OP Bank's Parkkinen.

Neste CEO Lievonen says the company's strategy has been further supported by the much-publicised recent report from the United Nations Intergovernmental Panel on Climate Change (IPCC).
MRC