Indian Oil Corp studies renewed Venezuelan crude purchases

MOSCOW (MRC) -- Indian Oil Corp is considering buying Venezuelan crude for the first time in at least 6 yr, in a move that could help the crisis-struck South American nation settle unpaid bills with another state-owned Indian energy firm, reported Reuters.

The OPEC-member's economy has collapsed since crude prices plummeted in 2014, forcing it to delay payments for oil services and fuel supplies. Venezuela depends on oil for more than 90% of its export revenues.

Venezuela's national oil company PDVSA has missed debt payments to ONGC Videsh, the foreign investment arm of Indian explorer Oil and Natural Gas Corp, for 6 mos and wants to settle USD449 MM dues using existing and new Indian clients.

In a letter reviewed by Reuters, Venezuelan Oil Minister Eulogio del Pino wrote to the chairman of Indian Oil Corp, Sanjiv Singh, last week "to evaluate the possibility of a new Venezuelan crude oil supply and refining agreement" with IOC.

IOC chairman Sanjiv Singh confirmed he had received a letter from Venezuela seeking to sell crude.

"All routes are open for us. We need to look at pricing and quality before taking any decision," Singh told Reuters on Wednesday.

PDVSA did not respond to a request for a comment.

The letter said Venezuela has a supply agreement for more than 360,000 bpd with Indian companies.

It is not clear, however, whether Venezuela could supply more oil to overseas customers. To meet its highly subsidized domestic needs, PDVSA is said to have been siphoning off crude from cash-paying joint ventures with foreign firms.

Venezuela's crude production in October fell below 2 MMbpd, its lowest in almost three decades, according to figures provided to OPEC.

Currently, only private refiners Reliance Industries and Essar Oil currently buy Venezuelan oil.

IOC, which is India's biggest fuel refiner, has not processed Venezuelan oil for years as its crude is heavy and has a high sulfur content. However, IOC's ability to process such cheaper grades has improved after an upgrade of its 300,000-bpd east-coast Paradip refinery last year.

PDVSA and its Indian partners together produce around 40,000 bpd from joint ventures in Venezuela's Orinoco belt.

As MRC wrote before, Indian Oil Corporation's Rs 34,555-crore 15 million tonnes per annum Paradip Refinery was commissioned in phases from March 2015 onwards. Indian Oil Corporation was conducting feasibility studies to set up a petrochemical complex at Paradip in Odisha for Rs 20,000 crore. The petrochemical complex will be built in the vicinity of the company’s to-be-commissioned 15-mln tpa greenfield refinery at Paradip. The petrochemical complex will be in addition to the already announced Rs 3,150-crore polypropylene project at the same location, the foundation stone for which was laid by MOS for petroleum and natural gas.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.

Neste forms partnerships with four distributors to provide renewable diesel to California

MOSCOW (MRC) -- Neste has announced exclusive partnerships with four fuel distributors in California: IPC (USA), Inc.; Ramos Oil Company, Van De Pol Petroleum; and Western States Oil. Public and private fleets will now have access to a consistent and high-quality supply of Neste MY Renewable Diesel through these partners, said Hydrocarbonprocessing.

California's fuel regulations are among the strictest in the US and Neste MY Renewable Diesel is a sustainable drop-in fuel that meets those requirements. It is a low-carbon fuel produced from 100% renewable raw materials. Neste MY Renewable Diesel cuts greenhouse gas emissions by up to 80% and significantly reduces tailpipe emissions.

The four distributor territories are:

IPC USA, Southern California
Ramos Oil Company, Northeast California
Van De Pol Petroleum, Central Valley California
Western States Oil Co., North Coast California

Russian minister says OPEC oil deal hurting domestic economy

MOSCOW (MRC) — Russia's economic growth in October was negatively affected by a global deal between members of OPEC and Russia to curb crude oil production, Russia's economy minister said on Thursday, said Hydrocarbonprocessing.

Maxim Oreshkin's comments are the first by a senior Russian official giving a negative assessment of the deal, in which Russia joined OPEC and others in cutting output from January by about 1.8 MMbpd to end a supply glut.

The minister was speaking a week before Russia and the Organization of the Petroleum Exporting Countries meet in Vienna to discussing an extension of the pact to curb output, possibly to the end of 2018. It is now due to expire on March 31.

Under the deal, Russia agreed to cut output by 300,000 bpd from its level in October 2016. "Because of the OPEC deal we have a negative direct impact from oil production, as well as indirect effects related to low investment activity due to production limits," Oreshkin said.

Russia's oil-dependent economy grew 1.8% year-on-year in the 3Q 2017, slowing from 2.5% in the 2Q 2017, the best annual rate since 3Q 2012, data showed this month. Oreshkin and other officials have said the economy was on track to grow by more than 2% after 2 yr of recession. But data on retail sales and other areas have raised questions about the durability of the recovery.

Oreshkin told reporters that annual inflation in Russia had slowed to 2.4%–2.5%, adding that the ministry retained its full-year inflation forecast of up to 2.8%. Russian Energy Minister Alexander Novak said on Monday Russia would determine its position on a extending the oil pact later in November. OPEC meets in Vienna on Nov. 30.

Top crude exporter Saudi Arabia has been lobbying oil ministers to agree to a 9-mon extension at next week's meeting, people familiar with the matter told Reuters.

Brent crude futures have climbed above USD60/bbl for the first time since mid-2015 thanks to the oil pact, helping Russia's economy which depends heavily on oil and gas revenues.

But, if oil stays in the USD60–USD65 range or higher, Russia would be unlikely to support a deal extension for fear the spike would be followed by a damaging fall, said Chris Weafer, a senior partner at Moscow-based Macro-Advisory strategy firm.

"Moscow has had to deal with the economic and social consequences of two recent oil price collapses, in 2008-09 and from 2014," he said in a note this week. "The damage from a third collapse would likely greatly outweigh the financial gains to be made from higher oil in the meantime," he wrote.

China independent refiners group applied for 2018 fuel export quotas

MOSCOW (MRC) — A newly formed group of China's independent oil refiners filed an application with the country's Ministry of Commerce on Wednesday for fuel export quotas next year, a source with one of the group's member companies said on Thursday, as per Hydrocarbonprocessing.

The government has excluded independent plants this year from exporting refined fuel, having granted quotas only to state refiners. In September, a group of six independent oil refiners set up the USD5 B joint venture, named the Shandong Refining & Chemical Group, to compete with the state-owned oil companies and privately owned chemical companies.

Many of China's independent refiners count on the country's state-owned refiners as their main customers for their refined products because they have limited infrastructure such as storage tanks or a retailing network to sell directly to consumers.

Jiao Chong, the managing director of Qingyuan Group, a founding member of the Shandong Refining Group, said the government shall consider rewarding plants with fuel quotas that have moved quickly to upgrade their fuel quality to meet more stringent emissions standards and established credit in the crude oil market.

"Allowing these plants to export fuel will open a new channel for independents' fine quality products and help boost margins," said Jiao by cellphone from Shandong. He said he was not aware of the actual application and was not able to give a size of the quotas the group has applied for.

Qingyuan is based in the city of Zibo in the eastern province of Shandong where a majority of China's independent refiners, sometimes called teapots, are located.

Shell Canada, Syncrude cut synthetic crude volumes

MOSCOW (MRC) -- Shell Canada, a unit of Royal Dutch Shell, has warned customers synthetic crude volumes from its 255,000-bpd Scotford, Alberta, upgrader may be reduced in November and potentially December, reported Hydrocarbonprocessing with reference to traders.

A Shell spokeswoman declined to comment.

In a separate incident, the Syncrude oil sands project in northern Alberta has also told customers it will cut synthetic crude volumes by around 5% in November, two trading sources said.

Syncrude has capacity to produce nearly 350,000 bpd.

A Syncrude spokesman did not immediately respond to a request for comment.

As MRC wrote previously, in November 2017, Royal Dutch Shell Plc canceled a plan to permanently close the gasoline-producing unit at its 227,586 bpd Convent, Louisiana, oil refinery.

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.