Austria starts to eject Gazprom from gas storage facility

Austria is following through on a "use it or lose it" threat to eject Russia's Gazprom from its large Haidach gas storage facility for systematically failing to fill its portion of the capacity there, said Reuters.

The country’s industry regulator, E-control, started the process for assuming control over the underground Haidach site using a law which entered into force this month that allows Austria to seize critical storage spaces if operators fail to fill them to at least 10% of capacity.

“When clients don’t store, they need to pass it on to others,” Energy Minister Leonore Gewessler said on Wednesday. "This is now happening with Gazprom."

Wresting control over Haidach marks a turning point in Austria’s energy relationship with Moscow. The Alpine country continues to get about 80% of its gas from Russia, whose cuts in natural-gas supplies are testing the European Union’s unity in response to the war in Ukraine. Companies are bracing for potential retaliation for Austria’s actions.

As a next step, Austria needs to agree with Germany on how to fill the depot, which has a maximum capacity of 33 terrawatt hours. Haidach traditionally has served industrial users in Germany’s Bavaria, and is not connected to the Austrian gas grid.

The Austrian government has said it plans to build a pipeline connecting its own network with the gas facility. But that may take years, according to the national energy trader Gas Connect. Haidach was built by Gazprom and Wingas GmbH at a cost of 300 million euros (USD306 million).

It wasn’t immediately clear which part of the facility Austria was targeting with its steps. State-owned RAG Austria AG, which controls a third of the depot, has stored about 65% of its available capacity. Germany’s Federal Network Agency controls 55.55% of Haidach’s storage through Wingas and Securing Energy for Europe GmbH, or SEFE, which were seized from Gazprom earlier this year.

In a statement Wednesday, Gazprom said it only owns about 11% of the site after Germany took control of its German gas subsidiaries.

We remind, Gazprom has not booked additional gas transit capacity for exports to Europe via Velke Kapusany on the Slovakia-Ukraine border for June, auction results showed, although it already has some capacity booked under an existing deal. In total, 70.4 MMcm3 per day of capacity was on offer at the auction. Under its existing supply contract, Gazprom automatically has gas transit capacity booked, which means gas will continue to flow in June. However, the company can book additional capacity if it needs it, an industry source said.

PJSC Gazprom is a Russian energy company engaged in exploration, production, transportation, storage, processing and sale of gas, gas condensate and oil, as well as production and sale of heat and electricity. The largest company in Russia, the largest gas company in the world, owns the longest gas transmission system (over 160,000 km). It is the world leader in the industry.
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More than 5 MM barrels of oil that were part of a historic U.S. emergency reserves release to lower domestic fuel prices were exported to Europe and Asia last month, according to data and sources, even as U.S. gasoline and diesel prices hit record highs, said Hydrocarbonprocessing.

The export of crude and fuel is blunting the impact of the moves by U.S. President Joe Biden to lower record pump prices. Biden on Saturday renewed a call for gasoline suppliers to cut their prices, drawing criticism from Amazon founder Jeff Bezos.

About 1 MMbpd is being released from the Strategic Petroleum Reserve (SPR) through October. The flow is draining the SPR, which last month fell to the lowest since 1986. U.S. crude futures are above $100 per barrel and gasoline and diesel prices above USD5 a gallon in one-fifth of the nation. U.S. officials have said oil prices could be higher if the SPR had not been tapped. "The SPR remains a critical energy security tool to address global crude oil supply disruptions," a Department of Energy spokesperson said, adding that the emergency releases helped ensure stable supply of crude oil.

The fourth-largest U.S. oil refiner, Phillips 66, shipped about 470,000 barrels of sour crude from the Big Hill SPR storage site in Texas to Trieste, Italy, according to U.S. Customs data. Trieste is home to a pipeline that sends oil to refineries in central Europe. Atlantic Trading & Marketing (ATMI), an arm of French oil major TotalEnergies, exported 2 cargoes of 560,000 barrels each, the data showed.

Phillips 66 declined to comment on trading activity. ATMI did not respond to a request for comment. Cargoes of SPR crude were also headed to the Netherlands and to a Reliance refinery in India, an industry source said. A third cargo headed to China, another source said. At least one cargo of crude from the West Hackberry SPR site in Louisiana was set to be exported in July, a shipping source added.

"Crude and fuel prices would likely be higher if (the SPR releases) hadn't happened, but at the same time, it isn't really having the effect that was assumed," said Matt Smith, lead oil analyst at Kpler. The latest exports follow three vessels that carried SPR crude to Europe in April helping replace Russian crude supplies. U.S. crude inventories are the lowest since 2004 as refineries run near peak levels. Refineries in the U.S. Gulf coast were at 97.9% utilization, the most in three and a half years.

As per MRC, U.S. manufacturing activity slowed more than expected in June, with a measure of new orders contracting for the first time in two years, signs that the economy was cooling amid aggressive monetary policy tightening by the Federal Reserve.
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Samsung Engineering, one of the world’s leading engineering, procurement, construction and project management companies announced that it has signed an agreement with Aramco for the National EPC Champions initiative, said Hydrocarbonprocessing.

The official signing occurred on July 5, during the Saudi Aramco Namaat Industrial Investment Program event, held in the Al-Ghawar Hall at Aramco’s main office in Dhahran, Saudi Arabia. The formal agreement signing between Samsung Engineering, Al Rushaid Petroleum Investment Company (ARPIC), and Aramco took place earlier. Samsung Engineering's President and CEO Sungan Choi, Aramco’s Vice President of Project Management, Abdulkarim Ghamdi, and ARPIC’s CEO and Chairman, Rasheed Al Rushaid, attended the Namaat event following the signing of the agreement.

The National EPC Champions initiative is tailored for investments in the EPC sector to foster local industries through the Namaat program. The Namaat program aims to build national champions, create a robust industrial ecosystem and introduce unique job opportunities. Samsung Engineering, as an International EPC contractor, with ARPIC, as a local EPC contractor, will establish a joint venture with the objective of increasing Saudization levels, maximizing iktva targets, and deploying leading construction technologies.

ARPIC has several collaborations in the oil and gas industry, including joint ventures and affiliates in the areas of manufacturing, construction, and engineering. As a National EPC Champion, Samsung Engineering showcases its prominent presence in Saudi Arabia. Samsung Engineering has solidified its position in Saudi Arabia by carrying out over 30 projects over the past 20 years, including 16 projects with Aramco. Samsung Engineering plans to successfully carry out the National EPC Champions initiative projects, based on its experience in the Saudi Arabian market and network of suppliers and partners, and to further strengthen its position in the local market through digital technology and automation solutions.

Samsung Engineering is strengthening its competitiveness in business execution by optimizing the execution system according to the characteristics of each global region, while promoting shared growth for the client in the performing country. Samsung Engineering is building its own EPC execution systems by region through collaborations with local partners with technical skills and local production systems. In addition to Saudi Arabia, Samsung Engineering plans to expand its global operation strategy to other regions in the Middle East and Asia.

Sungan Choi, President and CEO of Samsung Engineering said, "It is always Samsung Engineering’s mission to put our commitments for long-term development in the Kingdom as a priority and through this National EPC Champions initiative, we are proud to say that we will continue to do so in upholding that mission. We are confident to provide the best digital technology and automation solution services to Aramco, while leveraging our comprehensive experience of working with ARPIC."

As per MRC, Saudi Aramco has notified at least five North Asian refiners, mostly Chinese, that it will be supplying less than contracted volumes of crude oil in July. The cuts to Chinese refiners come as more cheap Russian oil heads to the world's top oil importer, which has refused to condemn Russia's invasion of Ukraine. Chinese oil demand has also been depressed by COVID-19 restrictions in the past two months. In addition, demand for Saudi crude has been climbing in Europe where the European Union has moved to phase out Russian crude and European buyers are racing to find other suppliers.
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China's crude oil imports from Russia soared 55% from a year earlier to a record level in May, displacing Saudi Arabia as the top supplier, as refiners cashed in on discounted supplies amid sanctions on Moscow over its invasion of Ukraine, said Hydrocarbonprocessing.

Imports of Russian oil, including supplies pumped via the East Siberia Pacific Ocean pipeline and seaborne shipments from Russia's European and Far Eastern ports, totaled nearly 8.42 MMt, according to data from the Chinese General Administration of Customs. That's equivalent to roughly 1.98 MM barrels per day (bpd) and up a quarter from 1.59 MMbpd in April.

The data, which shows that Russia took back the top ranking of suppliers to the world's biggest crude oil importer after a gap of five months, indicates that Moscow is able to find buyers for its oil despite western sanctions, though it has had to slash prices. And while China's overall crude oil demand has been dampened by COVID-19 curbs and a slowing economy, leading importers, including refining giant Sinopec and trader Zhenhua Oil, have stepped up buying cheaper Russian oil on top of sanctioned supplies from Iran and Venezuela that allows them to scale back competing supplies from West Africa and Brazil.

Saudi Arabia trailed as the second-largest supplier, with May volumes up 9% on year at 7.82 MMt, or 1.84 MMbpd. This was down from April's 2.17 MMbpd. Customs data released on Monday also showed China imported 260,000 tons of Iranian crude oil last month, its third shipment of Iran oil since last December, confirming an earlier Reuters report.

Despite U.S. sanctions on Iran, China has kept taking Iranian oil, usually passed off as supplies from other countries. The import levels are roughly equivalent to 7% of China's total crude oil imports. China's overall crude oil imports rose nearly 12% in May from a low base a year earlier to 10.8 MMbpd, versus the 2021 average of 10.3 MMbpd. Customs reported zero imports from Venezuela. State oil firms have shunned purchases since late 2019 for fear of falling foul of secondary U.S. sanctions.

Imports from Malaysia, often used as a transfer point in the last two years for oil originating from Iran and Venezuela, amounted to 2.2 MMt, steady versus April but more than double the year-earlier level. Imports from Brazil fell 19% from a year earlier to 2.2 MMt, as supplies from the Latin American exporter faced cheaper competition from Iranian and Russian barrels. Separately, data also showed China's imports of Russian liquefied natural gas (LNG) amounted to nearly 400,000 tons last month, 56% more than May of 2021.

For the first five months, imports of Russian LNG - from mostly Sakhalin-2 project in the Far East and Yamal LNG in Russian Arctic - rose 22% on the year to 1.84 MMt, according to customs data.

We remind, analysts expected Manufacturing PMI to be flat from its ugly preliminary print of 52.4 and saw ISM Manufacturing dropping to 54.5 from 56.1 - both still comfortably in expansion (above 50) despite the collapse in US macro data relative to expectations. BUT... things improved intra-month for Manufacturing PMI - rising to 52.7 final from 52.4 preliminary - but still notably below April's 57.0 print. ISM Manufacturing was worse, falling to 53.0 from 56.1 (below the 54.5 expectations).
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TotalEnergies has agreed to transfer its remaining stake in Russia's Kharyaga oil field to the country's state producer Zarubezhneft, the French company told Reuters, in its first major divestment in Russia in the wake of Western sanctions, said Reuters.

"TotalEnergies has agreed to transfer to Zarubezhneft the remaining 20% interest that the company held in the Kharyaga oil field," a spokesperson for TotalEnergies told the news agency on Wednesday. "This transaction is subject to the approval of the Russian authorities," the spokesperson said, without elaborating on the terms of the stake transfer.

The Kharyaga oil project is operated under a product sharing agreement. As the part of the agreement, TotalEnergies received some 100,000 tons of oil for exports as every month. According to two sources in Russian oil trading, TotalEnergies did not act as the seller of that volume in June, but Zarubezhneft did instead.

TotalEnergies had been a part of the Kharyaga oil project for over 20 years along with Norway's Equinor, which quit earlier this year. TotalEnergies said in March that it would not renew its Russian gasoil and crude oil supply contracts for its German refinery, but would source gasoil from Saudi Arabia and crude via Poland instead.

The French oil major, which has faced criticism for stopping short of joining rivals Shell and BP in divesting oil and gas assets in Russia, still has minority stakes in a number of non-state-owned Russian companies: Novatek (19.4%), Yamal LNG (20%), Arctic LNG 2 (10%) and TerNefteGaz (49%). It has said it could exit Russia if it had to because of sanctions, which have already caused it to book a USD4.1 billion impairment.

As per MRC, TotalEnergies Marine Fuels and Mitsui O.S.K. Lines, Ltd. (MOL) have successfully completed the first biofuel bunker operation for a vehicle carrier in Singapore. The local operation was made possible with support from the Maritime and Port Authority of Singapore. The MOL-operated car and truck carrier, Heroic Ace, was refueled by TotalEnergies-supplied biofuel on 11th June 2022 via ship-to-ship transfer, while the carrier performed cargo operations simultaneously. The biofuel has been consumed during the carrier’s voyage to Jebel Ali, in the United Arab Emirates.
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