MOSCOW (MRC) -- Royal Dutch Shell, the largest oil producer in the US Gulf of Mexico, cancelled some export cargoes due to damage to offshore facilities from Hurricane Ida, signaling energy losses would continue for weeks, reported Reuters.
About three-quarters of the Gulf's offshore oil production remains halted since late August following Ida, one of the most devastating hurricanes for oil companies since back-to-back storms in 2005. Shell and other oil firms warned they could not yet say when full output would resume.
Shell owns about 80% of the Mars offshore oilfield, and in total pumps about 332,000 barrels of oil per day (bpd) from its eight facilities in the region. Damage assessments at a transfer hub that moves oil and gas from three deepwater oilfields are underway, the company has said.
Shell's crews are working to assess how long production from the Mars corridor will be affected, spokesperson Curtis Smith said in a statement.
Shell declared force majeure on "numerous contracts that we anticipate will be impacted by the damage." Force majeure is a legal provision used when unforeseen events such as storms prevent companies from meeting contractual obligations.
At least two large cargoes of Mars crude sold by Shell to Chinese buyers were canceled, according to people familiar with the matter.
BP Plc, co-owner of the Mars oilfield and the second largest Gulf oil producer, said last week it was resuming operations at some of its own platforms. But it declined comment on the status of Gulf crude exports on Thursday.
Two people familiar with BP's operations said the company last week negotiated the cancellation of a Mars crude cargo to South Korea. A US Gulf Coast refiner separately bought a cargo of Russia's Urals medium crude in anticipation of a long suspension of Mars supplies to US coastal refineries, the people added.
Almost 1.4 million bpd of offshore oil production remains shut and 1 million bpd of refining capacity is also offline. Refineries could fully recover before Gulf output does. However, imported crude is plentiful, the sources said.
As MRC wrote previously, Shell found evidence of building damage at its 230,611-bpd Norco, Louisiana refinery. But sources familiar with plant operations did not know the extent of the damage or time needed to make the repairs. Shell is awaiting the restoration of external electrical power to the Norco refining and chemical plant complex.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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