Europe braces for heavy oil refinery outages amid tight supplies

A heavy oil refinery turnaround season in Europe this autumn, plus French strike action, is set to push diesel prices higher and tighten supplies ahead of a European Union ban on Russian refined products which is due to come into force early next year, said Reuters.

In October, around 1.5 MMbpd of crude refining capacity is expected to be offline in Europe for planned and unplanned maintenance, Energy Aspect estimated. This figure compares with 1.1 MMbpd of offline capacity in September, and is above the 2015-2019 average for this period. In November, offline capacity is expected to reach 600,000 bpd.

The busier maintenance schedule is likely to be related to the COVID-19 pandemic. "Given all the Covid-related restrictions, social distancing etc, it's likely that not a lot of extensive works were actually carried out but rather just essential maintenance," Energy Aspect's Livia Gallarati said. Maintenance outages next month include Eni's Sannazzaro refinery in Italy, Repsol's Tarragona refinery in Spain, and Galp Energia's Sines refinery, among others.

"The European diesel market is looking a bit softer than we had expected say this time last month," Gallarati said, adding that the consultancy has softened its European demand forecast as economic pressures mount. Europe has also been upping its diesel imports from other regions like the Middle East and Asia, with September arrivals hitting a three-year high of 1.6 million barrels per day, based on data from oil analytics firm Vortexa.

But while higher imports and a softening demand outlook are helping to ease the pressure on diesel markets, widespread refinery outages in France, partly due to strike action, could tighten supplies again. One European trader said that while the market has priced in, and to a large extent prepared for the planned outages, it is the unplanned outages that could cause problems for the oil products market.

"The issue is unexpected outages like the French strikes," he said. Walkouts over pay and unplanned maintenance have resulted the temporary shutdown of four out France's six oil refineries in the week to 28 September. This has taken offline 740,000 bpd, or over 60% of France's refining capacity.

Exxon Mobil, which operates two of the shut plants, told Reuters it had temporarily put limitations in place for customers, saying this was in accordance with the terms of its supply contracts. Benchmark European diesel profit margins hit a two-week high of about USD50 a barrel on Wednesday, based on Reuters assessments, driven by the French strikes.

Analysts expect the shutdowns to tighten refined product supply if they drag on. "The wave of strikes in France took the market by surprise and there is uncertainty about its duration," OilX analyst Neil Crosby said. "Overall, we remain constructive diesel cracks come Q12023 as the market will struggle to replace lost Russian supplies," Gallarti said, adding that Europe stands to lose 500,000-600,000 bpd of Russian diesel due to sanctions.

The European Union will stop buying all Russian crude oil delivered by sea from early December, and will ban all Russian refined products two months later, in protest over Moscow's invasion of Ukraine. "We struggle to see stocks building massively from where we are," Woodmac analyst Mark Williams said.

We remind, strike action has reduced output at Exxon Mobil’s 240,000 barrel per day (bpd) Port Jerome-Gravenchon oil refinery and Notre Dame de Gravenchon (NDG) petrochemical site in France. French unions CGT and Force Ouvriere called for a strike at the plants on the evening of Sept. 20. This followed wage negotiations with Exxon Mobil related to growing inflation in Europe.
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Elliott Group, a leader in the engineering and manufacturing of rotating equipment, announced the release of their new CO2 Phase Hybrid Compressor Pump Solution, said Hydrocarbonprocessing.

Elliott has combined their proven expertise and extensive experience in CO2 compression and pump technology to develop a solution that addresses the handling of high pressure CO2. This compressor/pump design is equipped to handle any project and/or equipment related to CO2 compression needs from atmospheric pressure to typical piping pressure of around 2200 PSI and higher for sequestration requirements.

While each package configuration may vary slightly based on the customer’s specific conditions or needs, a typical CO2Phase compressor package would include the compressor, pump, motor(s), gear, lube system, and buffer or seal system.

Configurations are available with a double ISO-cooled compressor with a pump and two motors. “Elliott's CO2Phase Hybrid Compressor Pump Solution is proven, ‘ready now’ technology that addresses the CO2 compression market. The technology allows for compression of CO2 from near atmospheric pressure to supercritical pressures followed by efficiently pumping the CO2 to the final required pressure. It is ideal for CO2 pipelines or CO2 sequestration,” said Todd Omatick, Elliott’s New Product Introduction Manager.

Using both compressor and pump technology, this highly efficient CO2 compression system can optimize equipment and minimize operating costs.

China may tweak a proposed sharp increase in refined fuel export quotas for this year by extending the plan into next year, as it weighs the benefits to the economy of higher exports against low domestic stocks and operational challenges. However, the four sources with direct knowledge of the matter - and three others - said the government was still reviewing the matter. The market has been widely expecting China to release a fifth batch of fuel export quota of up to 15 MMt for the rest of the year, which would be its largest so far in 2022 and lift China's sagging exports.
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The American Fuel & Petrochemical Manufacturers (AFPM) and American Petroleum Institute (API) released the following statement after a meeting that included Secretary of Energy Jennifer Granholm, senior White House officials and leaders of the top U.S. refining companies, said Hydrocrbonprocessing.

“U.S. refiners and administration officials met to discuss current market imbalances and our industry’s ongoing work to efficiently and affordably supply fuel to the U.S. market. As the administration refuses to rule out limitations on exports, we shared the significant unintended consequences that would come with such a policy, including potential cost increases, refinery closures, job losses and productivity declines.

“The administration continues to govern with contradictory energy policies and rhetoric. On the one hand committing to provide energy resources to our allies while at the same time threatening limitations on exports; talking about the need for permitting reform to accelerate critical energy infrastructure while actively cancelling pipelines; talking about the need for more supply while restricting access to additional federal oil and gas leasing; talking about reducing costs while increasing taxes on domestic producers during a time of historically high inflation.

“The focus of this administration should not be on trapping product in the United States or diverting fuel away from retail sales and into storage, but rather, on how to better produce and more affordably move U.S. product within the United States. The oil and natural gas industry stands ready to continue to meet U.S. consumers’ needs for affordable, reliable energy while supporting our allies around the world."

As per MRC, American Fuel & Petrochemical Manufacturers (AFPM) has announced the winners of the 2021 Annual Safety Awards, part of the refining and petrochemical industries’ ongoing mission to enhance and recognize outstanding workplace safety. The awards, considered the industries’ premier awards, are part of a comprehensive program developed by the AFPM Safety and Health Committee to promote safe operations in the refining and petrochemical industries. They also recognize facilities that have outstanding occupational and process safety performance.
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The Flemish government recently awarded TotalEnergies the contract to install 1,500 electric vehicle charging points in Antwerp, said the company.

In the heart of Europe and in Belgium's most populous city, the company is reinforcing its commitment to offering and developing sustainable mobility, with the aim of becoming Belgium's leading company in the public charging market by 2024.

On the recommendation of the Department of Mobility and Public Works of the Flemish Region, the Flemish government has tasked TotalEnergies with the installation and commercial operation of a charging service for electric vehicles in the West Flanders (Westhoek, Kortrijk and Bruges) and Flemish Brabant (Brussels Periphery, Leuven) regions. TotalEnergies will install up to 4,400 public charge points over the next two years.

The new 22 kVA charging stations will be operated under the TotalEnergies brand for a period of twelve years and will be supplied with 100 % renewable electricity generated by offshore wind power in the North Sea off the coast of Belgium.

“We are very pleased with the trust Flanders has granted us for the coming years and we will draw on our expertise to encourage and support the mobility of its citizens. This success reflects TotalEnergies’ ambition to further accelerate its transformation into a broad energy company. In Belgium, as in all markets where we are expanding into electric mobility, we are committed to providing a customer experience and electric charging services that meet their expectations.”

We remind, TotalEnergies said it would increase investments and ramp up production of liquefied natural gas (LNG) as it laid out its strategy for a possible future without Russia - while still stopping short of severing links. Unlike rivals such as BP and Shell, TotalEnergies has held on to several of its holdings in Russia, which include important LNG joint ventures.
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Neste, Idemitsu Kosan, CHIMEI and Mitsubishi Corporation have agreed to build a renewable plastics supply chain utilizing bio-based hydrocarbons (Neste RE) for the production of styrene monomer (i.e. bio-SM), and its mass balanced renewable plastics derivatives including acrylonitrile butadiene styrene (i.e. bio-ABS), said Hydrocarbonprocessing.

The bio-SM production in Japan and the renewable plastics production in Taiwan will mark the first of such production in each country, and they are planned to take place in the first half of 2023.

Neste, the world’s leading producer of renewable and circular feedstock for the polymers and chemicals industry uses, will provide Neste RE to Idemitsu Kosan, the biggest SM manufacturer in Japan. For this collaboration, Neste RE is produced from 100% bio-based raw materials such as waste and residues and its use can significantly reduce greenhouse gas (GHG) emissions compared with conventional fossil feedstock use.

Idemitsu Kosan will then produce bio-SM based on the mass balance method and supply it to CHIMEI, the biggest ABS manufacturer in the world for its renewable plastics production. Mitsubishi Corporation will be coordinating the collaboration between the value chain partners to develop the renewable products’ market.

Through developing an even stronger partnership and closer collaboration than conventionally seen in plastics value chains, the companies are introducing new renewable contents into the value chain to enable plastic production where fossil feedstock has been replaced with renewable feedstock. With this, the companies are contributing to the plastics industry GHG emission reduction targets and the transition towards a low-carbon emission society.

We remind, Neste Corporation and Marathon Petroleum Corporation (Marathon) announced an agreement to establish a 50/50 joint venture to produce renewable diesel following a conversion project of Marathon's refinery in Martinez, California. All required closing conditions have been met, including the receipt of the necessary permits and regulatory approvals, and Neste and Marathon have today closed the transaction for the establishment of the joint venture to be called Martinez Renewables.
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