U.S. refiner group sues Trump EPA over high-ethanol gasoline

MOSCOW (MRC) -- The main U.S. refining industry association said it sued to block the Trump administration’s effort to expand sales of higher ethanol blends of gasoline, arguing the move exceeded the administration’s authority, said Reuters.

The legal challenge from the American Fuel and Petrochemical Manufacturers (AFPM) association escalated a battle between the oil and corn industries over the nation’s biofuel policy, which requires refiners to blend biofuels like corn-based ethanol into their gasoline, often at great expense.

President Donald Trump had directed the Environmental Protection Agency to lift a summertime ban on the sale of gasoline containing 15 percent ethanol, called E15, in an effort to help farmers suffering from the U.S. trade war with China. The EPA unveiled its rule doing so on May 31.

The summertime E15 ban had been implemented during the Obama administration to reduce smog emissions, but Trump’s EPA said E15’s impact on air quality was similar to that of E10, which could already be sold year-round.

The tension over the policy move reflects how Trump has struggled to please both Big Oil and Big Agriculture, two critical constituencies in the Republican president’s 2020 re-election bid.

AFPM asked the U.S. Court of Appeals for the District of Columbia to review the EPA’s rule, in papers filed on Monday, said Diana Cronan, a spokeswoman for the group.

AFPM has one month to provide the court with the outline of its case, she said.
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G20 to tackle ocean plastic waste as petrochemical producers expand

MOSCOW (MRC) -- Japan wants to make reducing the glut of plastic waste in the oceans a priority at the Group of 20 summit it is hosting this month as governments around the world crack down on such pollution, said Hydrocarbonprocessing.

Images of plastic debris-strewn beaches and dead animals with stomachs full of plastic have sparked outrage, with many countries, including more than two dozen in Africa, banning plastic bags outright.

The EU has voted to outlaw 10 single-use plastic items, including straws, forks and knives, by 2021. It has also set targets for all plastic packaging, the top source of plastic waste, to be recyclable by 2030.

Such moves are setting up a showdown with the oil industry, which is pouring billions into new facilities to produce more plastic and other petrochemical products, particularly in Asia.

Refiners such as India’s Reliance Industries and China’s Sinopec are seeking new revenue sources as electric cars become more popular and gasoline and diesel demand slows.

“If the world goes the direction of European targets, some markets can go from high growth to low growth or no growth. Profits could suffer,” said Jeff Brown, president of energy consultancy FGE in Singapore.

Tackling plastic pollution has been less of a priority in Asia, which is the world’s biggest producer of the material - and its waste.

Prime Minister Shinzo Abe of Japan, which is hosting the G20 summit, says he wants his country to lead the world in reducing marine plastic trash, including developing biodegradables and other innovations.

The June 28-29 meeting in Osaka, assembling 20 major economies, including China, Brazil, France and the United States, won’t yield an agreement on targets or concrete steps, two officials involved in preparations told Reuters, speaking anonymously because they were not authorised to speak to the media.

A more likely outcome is for G20 environment ministers, gathering this weekend in the mountain town of Karuizawa, to propose ways to enact a vaguely worded “action plan” on marine plastic waste introduced at the 2017 summit in Germany.
MRC

Petrobras revises timing of price adjustments for diesel and gasoline

MOSCOW (MRC) -- Brazilian state-run oil company Petroleo Brasileiro SA said that its management approved a revision in scheduling of price adjustments for diesel and gasoline in its refineries, reported Reuters.

In a securities filing, the company said price adjustments will be made according to market conditions locally and abroad, instead of being made at fixed intervals. The revision will grant Petrobras flexibility, improving its competitiveness and efficiency, the company added.

As MRC informed before, in October 2017, Petrobras’ minority stakes in Braskem and Deten Quimica was excluded from Petrobras’s divestment program, according to a government decree published in Brazil’s Official Gazette. The decree prevents Petrobras from immediately selling its minority stake in Braskem, which had been announced last year. A new decree will be required to release the stock sale.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
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Indonesia tests biodiesel in cars amid push for palm oil consumption

MOSCOW (MRC) -- Indonesia began testing biodiesel with a bio-content of 30% in cars, its energy ministry said, as the Southeast Asian nation pushes to boost local markets for its vast palm oil crop, said Hydrocarbonprocessing.

The world’s top palm oil exporter aims to make it mandatory for all biodiesel to have a 30% bio-content, known as B30, from next year, up from 20% now.

Industry experts have said that could push consumption of bio-content made from palm oil to as much as 9 million kilolitres (KL) per year, up from an estimated 6.2 KL in 2019.

The test will be conducted over the next four months with various passenger vehicles and trucks, Dadan Kusdiana, head of research and development at the Energy and Mineral Resources Ministry, told reporters.

The passenger vehicles will cover 50,000 km (31,000 miles) and trucks 40,000 km during the road test, Kusdiana said.

The ministry also plans to start testing trains, ships and heavy machinery in the mining sector using the fuel.

To offset slowing global demand for palm oil, Indonesia has been pushing to increase domestic consumption of the commodity, used in products ranging from fuels to soap. Nearly all the country’s biofuels are made from palm.

As MRC informed earlier, Total is set to start up a biodiesel refinery using palm oil whose planned launch last summer sparked opposition from farmers producing vegetable oil and from environmental activists.
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Compensation for tainted Russian oil to be decided company by company

MOSCOW (MRC) -- Compensation for the tainted Russian oil supplied to Europe earlier this year via the Druzhba pipeline and in cargoes will be decided company by company, Russia’s Deputy Energy Minister Pavel Sorokin told Reuters.

Russia halted some oil supplies in April after excessive levels of organic chloride were found in the million barrel-per-day Druzhba pipeline that crosses Belarus and serves customers as far west as Germany.

Russian oil pipeline monopoly Transneft put the volume of oil affected at 3 million tonnes, or nearly 22 million barrels.

France’s Total and Russia’s Lukoil have both said compensation per barrel of tainted oil should stand at around USD15.

Belarus has said the volume of contaminated crude could be as high as 5 million tonnes, equivalent to a month’s exports via Druzhba of about 1.2 million barrels a day and worth USD2.3 billion at current prices. However, not all that will be subject to compensation.

Asked about compensation, Sorokin, who is holding talks on the contamination on behalf of the Russian energy ministry, said: "Each (company) has its own situation. There are different schemes of work for oil supplied by the pipeline and in cargoes."

"This means different approaches and, as a result, completely different costs of eliminating the consequences." He said his team had suggested an algorithm for calculating costs.

The compensation will take into account the time needed to mix tainted oil with clean volumes to keep chloride levels within allowed limits, as well as the cost of storage, freight costs, and other expenses, Sorokin said.

He said no foreign buyers of Russian oil have yet calculated the exact amount of compensation they are seeking, though talks were expected to conclude in the near future.

"Russia is and Russia will be a reliable supplier," Sorokin said. "Compensation will be fair."

Officials have said Transneft is to pay compensation rather than the state.

They said while it will compensate oil producers for their losses from the tainted oil, oil firms should in turn talk to their customers about losses further down the supply chain.

Druzhba splits into the two routes in Belarus. Russia has managed to restore some supplies of clean oil to Poland via Druzhba’s northern leg and to Ukraine, the Czech Republic, Hungary and Slovakia in the south.

Russia has put some tainted oil into storage in Europe, including in Hungary, and has agreed to pump some volumes back from Belarus to mix them with clean crude at home. It can then be refined domestically and re-exported.

Sorokin said Russia will be pumping oil back from the Unecha-Polotsk line in two weeks and for now, the contaminated oil is being stored at the Naftan refinery in Belarus. In the south, all tainted oil has been put into storage, he said.

Some Russian ports which were not initially affected by the crisis have seen an increase in chloride levels as Russia has been diluting the tainted oil with clean volumes, he said, though they remained within permitted levels.

Sorokin said chloride levels at Russian ports would not be higher than at Ust-Luga, where the energy ministry said on Monday organic chloride levels in oil cargoes stood at 2.7 parts per million (ppm).

He said the level would remain in a range of 2.5-4 ppm, while for pipeline supplies to Europe, oil will have ‘minimal’ chloride content. "(European customers) will mix it (with clean oil) according to their own plans," he said.

Russia is still studying other options for cleaning the oil other than mixing it, Sorokin said. Tainted oil can affect refining equipment, but oil products are unaffected and there will be no impact on end-users such as motorists, he said.

Druzhba accounts for around a quarter of oil exports from Russia, the world’s second biggest oil exporter after Saudi Arabia.

As MRC wrote before, in early June 2019, the Czech oil refinery at Litvinov, owned by PKN Orlen unit Unipetrol, started receiving oil from state emergency reserves due to halt in Russian supplies via the Druzhba pipeline.

We also remind that the impact on European refinery throughput in the second quarter of 2019 from contaminated crude on the Druzhba pipeline is seen at roughly 250,000 barrels per day, under 2% of the continent’s product demand, as per the International Energy Agency.
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