India defers plan to fill parts of strategic petroleum reserve

India has deferred a $601.78 MM plan to fill parts of its strategic petroleum reserve, keeping in mind emerging trends in oil markets, the finance ministry said on Saturday, said Hydrocarbonprocessing.

In the federal budget for 2023-24, the government had outlined a plan to purchase crude oil worth 50 billion rupees for caverns in the southern cities of Mangalore and Visakhapatnam.

India, the world's third-biggest oil importer and consumer, imports over 80% of its oil needs and has built strategic storage at three locations in southern India to store over 5 million tons of oil to protect against supply disruptions.

We remind, Chevron Lummus Global LLC announced the award of a new licensing contract by Hindustan Petroleum Corporation Limited for the development of a grassroots integrated hydrocracker and catalytic dewaxing unit and a full catalyst reload of their existing lube oil upgrading program at the Mumbai Refinery in India.

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Russian energy company Novatek is likely to resume large-scale operations at its Ust-Luga processing complex and Baltic Sea terminal within weeks, following a suspected drone attack seen disrupting naphtha flows to Asia, said Hydrocarbonprocessing.

The tightening of supply from Russia, following fears of disruption in European naphtha exports to Asia from Yemeni Houthis' attacks on ships in the Red Sea, are driving up naphtha prices and refining margins in Asia.

The profit margin for making naphtha in Asia jumped by about $6 to $91.70 per metric ton over Brent crude on Monday after four straight sessions of losses.

Novatek said on Sunday it had been forced to suspend some operations at the huge Baltic Sea fuel export terminal and "technological process" at the complex due to a fire, started by what Ukrainian media said was a drone attack.

Kommersant newspaper also said on Monday, citing local authorities, that two storage tanks and a pumping stations were damaged due to the incident.

"We believe the plant is likely to return to significant capacity within weeks or, at worst, months," analysts at Moscow-based BCS brokerage said in a note. Novatek declined to comment.

Kremlin spokesman Dmitry Peskov said on Monday that Russia's military and other government agencies were taking the necessary measures, including when it comes to air defenses, after the suspected Ukrainian drone attack on the terminal.

The complex gets gas condensate, a type of light oil, for processing some 7 million metric tons per year from Novaket's Purovsky plant in Western Siberia for further production of oil products, such as naphtha, jet fuel and gasoil.

Analysts also said that Novatek will now be forced to export more gas condensate instead of high-marginal fuel via other terminals. Sinara Investbank said a quarter of Novatek's revenues could be affected due to the incident.

Novatek also exports gas condensate from the Arctic port of Sabetta. The exports grew by around 20% last year to 960,000 tons from 800,000 tons in 2022.

We remind, a fire tore through Ryazan oil refinery, Russia's third-largest, on Friday, the Komsomolskaya Pravda newspaper said, quoting emergency services. The fire at the oil refinery, controlled by Rosneft , has been put out and there were no injuries, RIA news agency reported. Separately, oil tanks at a storage facility in the town of Klintsy in Russia's Bryansk region caught fire after Russian forces brought down an incoming Ukrainian drone.

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Two oil tankers that had diverted away from the Red Sea have turned back and passed through the Bab al-Mandab Strait, ship-tracking data shows, though tensions in the region continued to disrupt global shipping and trade, said Hydrocarbonprocessing.

The vessels' return, as tracked by LSEG and Kpler, comes nearly a week after the United States and Britain launched strikes against Houthi positions in Yemen in retaliation for the militant group's protracted attacks on commercial shipping since November.

Until the strikes and despite the Houthi attacks, the majority of vessels continued to traverse the Red Sea, but more ships are diverting course because of escalating tensions.

It was not clear what prompted the two tankers' return, but some industry analysts said vessels willing to continue using the Red Sea route might be able to profit from trepidation in other corners of the freight market.

"It could be the case that some tanker owners are willing to go through the Red Sea if the freight (cost) is right," said Alberto Ayuso Martin, head of research at Spain-based Medco Shipbrokers.

Overall traffic of oil-laden tankers through Bab al-Mandab was 58% lower than the 2023 average over Jan. 13-17, said Mary Melton of analytics firm Vortexa, extending a 38% fall prior to the strikes between Jan. 6 and Jan. 10.

Tankers transporting "clean" fuels such as diesel and jet fuel have been more severely affected than those carrying residual fuels, known as "dirty" because of their higher toxicity, and crude oil, Vortexa's Melton said.

We remind, the two Aframax tankers that passed through Bab al-Mandab on Jan. 17 after previously turning away from the Red Sea are the Indonesia-flagged Gamsunoro and the Marshall Islands-flagged Free Spirit. Both tankers are carrying heavy fuels and last called at Fujairah - one of the biggest fuel oil hubs in the world - in the United Arab Emirates (UAE), the data shows.

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A fire tore through Ryazan oil refinery, Russia's third-largest, on Friday, the Komsomolskaya Pravda newspaper said, quoting emergency services, said Hydrocarbonprocessing.

The fire at the oil refinery, controlled by Rosneft , has been put out and there were no injuries, RIA news agency reported.

Separately, oil tanks at a storage facility in the town of Klintsy in Russia's Bryansk region caught fire after Russian forces brought down an incoming Ukrainian drone.

We remind, Control of Dow Europe Holding's Russian subsidiary Finndisp LLC has been acquired by Sergei Bendenko and Tula Region company JSC Plastic, which now own respectively 51% and 49% of polymer dispersions producer, data from the Unified State Register of Legal Entities showed. President Vladimir Putin signed an order in December allowing Dow Europe to sell 100% of Finndisp, which is based in Ramenskoye, Moscow Region. Bendenko has also been appointed CEO of Finndisp LLC, as well as Finndisp Uzlovaya LLC, a company established last October 25 that produces polymer-based paints and varnishes.

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Saudi Basic Industries Corp will go ahead with building a petrochemical complex in southeastern China's Fujian province, the company said in an exchange filing on Sunday, shoring up Saudi ties with China, the world's top oil importer, said Hydrocarbonprocessing.

The project, expected to cost around $6.4 B, will be developed in a joint venture with state-owned Fujian Fuhua Gulei Petrochemical. First proposed in 2018, the joint venture marks the latest in a series of tie-ups between Saudi firms and Chinese refiners.

The complex is expected to be able to produce 1.8 million metric tons of ethylene per year and is designed to expand SABIC's manufacturing presence in Asia and diversify its feedstock supply chain, SABIC said. Construction is expected to begin in the first quarter of 2024, with completion expected in the first quarter of 2027.

The announcement follows a number of similar investments by the kingdom's oil giant Saudi Aramco in China's downstream sector. Early in January, Chinese privately-controlled refiner Rongsheng Petrochemical and Aramco announced they were in talks to take a 50% stake in each other's refineries in China and Saudi Arabia.

Aramco previously announced it had agreed to acquire a 10% stake in Rongsheng, an investment attached to a 20-year crude oil supply deal with Rongsheng-controlled Zhejiang Petrochemical Corp. The deal closed in July at a valuation of $3.4 billion.

In September last year, Aramco announced plans to become a strategic investor in another private Chinese refiner Jiangsu Shenghong Petrochemical, which operates a 320,000 bpd refinery and petrochemical complex in the eastern province of Jiangsu.

Aramco is also in talks to acquire a 10% stake in Shandong Yulong Petrochemical Co, which is building a refinery complex that can process 400,000 barrels of crude a day in eastern China's Shandong province.

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