China November crude oil imports hit 10-mos high on stock build, new plants

China's crude oil imports in November rose 12% from a year earlier to their highest in 10 mos, data showed on Wednesday, as companies replenished stocks with cheaper oil and as new plants started up, said Hydrocarbonprocessing.

The world's largest crude importer brought in 46.74 MM metric t of crude oil last month, equivalent to 11.37 MMbpd, according to data from the General Administration of Customs. That was up from 10.16 MMbpd in October and 10.17 MMbpd in November 2021.

Chinese state refiners stepped up purchases of U.S. crude oil, taking advantage of arbitrage opportunities, while maintaining high imports of Russian oil ahead of the December 5 European embargo and imposition of an oil price cap.

Independent traders last month also moved a record amount of deeply discounted Iranian crude passed off as oil sourced from Malaysia, Oman or elsewhere, according to tanker tracker Vortexa Analytics. The higher imports resulted in a crude oil stock build of 41 MMbbl over the month, Vortexa estimated.

Also contributing to the rebound was the startup in late October of a 200,000-bpd crude oil unit at PetroChina's newly built refinery in Guangdong, while private refiner Shenghong Petrochemical said in mid-November that it shipped out its first batch of refined products.

Imports for the first 11 mos of the year totaled 460.26 MM metric t, or about 10.06 MMbpd, down 1.4% from the corresponding period last year. Wednesday's data also showed fuel exports reached 6.144 MM metric t, the highest since June 2021 and up from 4.456 MM metric t in October, reflecting Beijing's additional release of quotas.

Year-to-date exports, at 46 MM metric t, remained 19% below year-ago levels due to a broad curb on fuel exports earlier in the year.

Natural gas imports last month via pipelines and as liquefied natural gas (LNG) reached a 10-mos high of 10.32 MM metric t, as northern China entered its second month of winter heating.

Year-to-date imports were 9.7% below a year ago at 99 MM metric t, with annual imports of LNG set for their first major decline since 2006 as demand was crimped by surging global prices and a stagnant economy hobbled by strict COVID-related restrictions.

We remind, Invista (Wichita, Kan.) announced that INVISTA Nylon Chemicals (China) Co. held the inauguration ceremony for its new adiponitrile (ADN) plant at the Shanghai Chemical Industry Park (SCIP). Being a critical part of INVISTA’s integrated nylon 6,6 value chain, the plant, which is a more than 7 billion RMB (over 1 billion USD) investment, has a capacity of 400,000-ton/year and is the largest capital project in in the company’s history. The plant will further boost local production capability for nylon 6,6 and help accelerate the high-quality upgrades of the Chinese chemical industry.
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European motorists could find Russian diesel in their tanks even after bans take effect because regulators lack tools to trace the origin of fuel when it has passed through other countries, said Hydrocarbonprocessing.

The European Union banned Russian crude imports from Dec. 5 and will ban Russian oil products from Feb. 5, as it attempts to deprive Russia of oil revenues. Britain ended oil and oil product imports from Dec. 5. The challenges in tracking crude once it is refined and diesel once it is blended mean some Russian diesel is likely to be delivered to and re-exported from countries such as India and Turkey, market sources said.

Europe is struggling to replace up to 600,000 bpd of Russian supply, according to Eugene Lindell, refining and products market analyst at consultancy FGE. However, the reputational risk associated with buying Russian fuel, coupled with insurance difficulties, means only limited Russian volumes are likely to find their way into Europe, transported by small players.

How will diesel customs and exchanges police imports? Dutch customs, which oversee the major Amsterdam-Rotterdam-Antwerp trade and storage hub, UK enforcement authorities, and the Intercontinental Exchange will check official certificates of origin for import ships.

In case of doubt, UK and Dutch customs can request additional documents to help determine origin, such as contractual agreements, invoices, or bills of lading.

We remind, LUKOIL Neftochim Burgas , Bulgaria's only oil refinery, may have to shut down if the government does not follow through on plans to allow the Russian-owned business to continue exporting. The European Union has agreed to a ban on Russian crude oil imports as part of its sanctions against Russia for its invasion of Ukraine in February. The ban takes effect next month, but Bulgaria has been given an exemption and is allowed to import Russian crude until the end of 2024.

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Hungary's fuel supply situation is "critical" as demand has soared and panic buying has led to shortages, oil and gas group MOL said on Tuesday, adding the only solution was to create the conditions for increased imports, said Hydrocarbonprocessing.

Foreign players have cut fuel shipments to Hungary since the government capped the price of petrol and diesel at 480 forints (USD1.22) per liter a year ago. "MOL remains committed to maintaining security of supply from our own products, however securing full market supply cannot be ensured without the ramp-up of product imports in the current environment," the company said in a statement.

MOL's Managing Director Gyorgy Bacsa later added in an emailed statement that MOL was trying to import more products from its refinery in Slovakia but "has reached the limits of its logistical capacities." The company said it faced some shortfall of fuel stocks across almost its entire network of filling stations over the weekend as many people started panic buying and stockpiling.

The fuel price cap currently applies to drivers of privately owned vehicles, farm vehicles and taxis and is set to expire at the end of December. The government has said it will decide whether to extend the measure based on information from MOL on whether the company is able to ensure supply. The government did not reply to questions on Monday and Tuesday.

MOL also said it had started ramping up crude oil processing at its Danube refinery and expected to reach full capacity utilization in a couple of weeks. Due to maintenance work, the refinery has been operating at 50%–55% capacity, affecting all of MOL's products.

We remind, MOL announced that, through a subsidiary, it signed a long-term charter contract for three newbuilding liquefied natural gas (LNG) carriers with QatarEnergy. The vessels will be built at Hudong-Zhonghua Shipbuilding (Group) Co., Ltd. in China, and are scheduled for delivery in 2027. MOL signed a long-term charter contract with QatarEnergy in April 2022 for four newbuilding LNG carriers, and the relationship between QatarEnergy and MOL will be further expanded by three LNG carriers through the latest contract.
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Abu Dhabi National Oil Company (ADNOC) is accelerating operationalization of its board mandated low carbon growth strategy, by establishing a new Low Carbon Solutions and International Growth vertical that will focus on renewable energy, clean hydrogen and carbon capture and storage, as well as international expansion in gas, LNG and chemicals, said Hydrocarbonprocessing.

Musabbeh Al Kaabi has been appointed Executive Director of the new vertical. The creation of the Low Carbon Solutions & International Growth vertical builds on the company’s successful track record in responsibly and sustainably supplying energy to the world. It will play an important role in advancing the company’s ongoing transformation, which has included a steadfast focus on the decarbonization of its operations, energy efficiency and operational excellence, reductions in methane emissions, advancing CCUS to cut CO2 emissions, and the use of renewable and other zero-carbon energy sources.

Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Managing Director and Group CEO, said: “The Low Carbon Solutions & International Growth vertical will accelerate delivery of our decarbonization roadmap and advance our Net Zero by 2050 ambition. As the UAE prepares to host COP28 next year, we will continue to focus on practical and positive solutions that drive progress for the climate and the economy.

“With the direction and support of our nation’s wise leadership and the ADNOC Board, ADNOC is embarking on a new and exciting period of accelerated growth, with a determined focus on sustainability that will help future-proof our business for decades to come. To lead and drive the delivery of our new mandate, I am pleased to announce the appointment of Musabbeh Al Kaabi to the role of Executive Director, Low Carbon Solutions & International Growth, with effect from 16 January 2023.”

Since its inception ADNOC has been focused on sustainability, including eliminating routine flaring of natural gas across its operations. Its investments in the early 1980s to gather and process flared gas have been instrumental in mitigating the negative environmental impacts associated with flaring. The company recently set a new upstream methane intensity target of 0.15% by 2025, which is the lowest in the Middle East, and plans to continue to reduce methane emissions through the use of flare gas recovery systems and regular leak detection and repair programs.

We remind, Abu Dhabi National Oil Company (ADNOC) and Malaysia's Petroliam Nasional Berhad (Petronas) on Monday signed a deal awarding the first concession in the Middle East for unconventional oil resources. The six-year agreement is the first investment by a Malaysian company in an Abu Dhabi concession, United Arab Emirates state news agency WAM said.
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TotalEnergies and Air France-KLM have today signed a Memorandum of Understanding (MoU) for the delivery of more than 1 MMcm3/800,000 tons of SAF by TotalEnergies to Air France-KLM Group airlines over the 10-year period from 2023, said Hydrocarbonprocessing.

This sustainable aviation fuel will be produced by TotalEnergies at its biorefineries. It will be made available to Air France-KLM Group’s airlines, mainly for flights departing from France (in accordance with French legislation) and the Netherlands.

The sustainable aviation fuels produced by TotalEnergies reduce CO2 emissions by at least 80% on average over the entire lifecycle, compared with their fossil equivalent.

Air France-KLM has implemented a strict sourcing policy and is committed to purchasing only SAFs that do not compete with human food or animal feed, that are RSB* or ISCC** certified for sustainability, and that are not derived from palm oil.

With the signing of this MoU, Air France-KLM and TotalEnergies confirm their collaboration and their goal of furthering the development of a more responsible aviation sector. A long-standing partnership in support of aviation sector decarbonization.

Air France-KLM Group and TotalEnergies have been collaborating on the use of sustainable aviation fuel for nearly 10 years. Their partnership began with “Lab Line for the Future” in 2014, a two-year experiment during which 78 flights between Paris-Orly and Toulouse and between Paris-Orly and Nice were powered by 10% SAF supplied by TotalEnergies.

In January 2020, Air France and TotalEnergies participated, alongside Safran and Suez, in the Call for Expression of Interest launched by the French government aimed at developing sustainable aviation fuel production in France.

We remind, Technip Energies has been awarded a contract for work on the conversion of TotalEnergies’ Grandpuits refinery southeast of Paris into a zero-crude platform oriented towards sustainable aviation fuel (SAF). The converted plant will have a capacity to produce 210,000 tonnes/year of SAF from sustainable feedstock such as used cooking oil and animal fat.
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