Lukoil has begun ship-to-ship loadings of ULSD

Russian oil producer Lukoil has started ship-to-ship (STS) loadings of ultra-low-sulfur diesel (ULSD) off its western exclave of Kaliningrad, according to traders and Refinitiv data, said Hydrocarbonprocessing.

About 33,000 tons of ULSD loaded by Lukoil in mid-February on to the M.T. Kalne tanker in the Baltic port of Primorsk has been taken to the port of Kaliningrad and is now being transferred on to the vessel Sea Runner, according to traders and Refinitiv data.

Lukoil has previously conducted STS loadings of Urals oil near Kaliningrad. Russia also plans to start STS loadings of light oil products and liquid petroleum gas (LPG) near its Baltic port of Ust-Luga, according to Federal State Unitary Enterprise (FSEU) Rosmorport.

A full EU embargo on Russian oil products went into effect on Feb. 5 and traders have since rerouted diesel exports to Africa and Asia, as well as used STS transfers.

We remind, Lukoil completes reconstruction of several units at Volgograd refinery. A large-scale reconstruction has been completed at the Volgograd refinery. The project included modernization of the CDU-VDU-5 crude distillation unit with production capacity of 3.5 MMtpy and the solvent extraction unit with production capacity of 300, 000 tpy. Over 230 core equipment items were installed and technologically outdated units were decommissioned. The share of Russia-made equipment installed during the reconstruction exceeded 70%. The construction site spanned the area of 34 thousand square metres; investments into the project exceeded 12 B roubles.

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China's diesel exports rose for a second month in December, while gasoline exports climbed for a third month, as the country's COVID outbreak limited domestic fuel demand, and refiners utilized their expanded yearly export quotas, said Hydrocarbonprocessing.

China exported 2.79 MMt of diesel in December, representing a 32.8% increase on November's 2.10 MMt, data from the General Administration of Customs showed on Wednesday. That is the highest since March 2021. Total diesel exports for the year amounted to 10.92 MMt vs. 17.21 MMt for 2021.

Gasoline exports were 1.91 MMt in December, the highest since October 2020, and up from 1.49 MMt the month before. Total gasoline exports for 2022 stood at 12.56 MMt vs. 14.54 MMt in 2021. Refiners continue to offload inventory abroad to make full use of their yearly export quotas after a year in which COVID-19 restrictions have choked domestic fuel demand. Though domestic travel initially picked up after restrictions were abruptly eased at the end of November, the subsequent nationwide surge in COVID cases in December dampened domestic consumer and industrial fuel demand as people stayed home to avoid infection.

To stimulate the pandemic-battered economy, the government issued an additional 13.25 MMt of export quota for diesel, gasoline and jet fuel, taking the total 2022 quota to 37.25 MMt, even with 2021's quota.

The government recently announced its first refined product export quota for 2023 at around 19 million tonnes as it seeks to further help demand. However, road traffic volumes in some large cities are appearing to increase. Domestic consumption of refined products, such as petrol and kerosene, is expected to pick up through the Lunar New Year, which falls on Jan. 21, with millions of Chinese expected to travel for the week-long holiday.

China's liquefied natural gas (LNG) imports posted their first major annual decline since the country began importing it in 2006. Total LNG imports in 2022 amounted to 63.44 MMt, down 19.5% on 2021's figures. December imports came in at 6.6 MMt, up only marginally on November and down 13% on the year. The drop, predicted by industry analysts, comes after a year in which pandemic restrictions curtailed manufacturing demand for the fuel. Global LNG prices, though lower in recent months, were high through much of 2022 due to the war in Ukraine, leading to a further contraction in demand from Chinese industrial consumers.

We remind, Sinopec Corp announced that it has completed trial runs at a 1-MMtpy ethylene plant in the southern Chinese province of Hainan that will boost exports. The facility is part of a 28.6 B-yuan (USD4.15 B) complex built at the site and is the second major petrochemical plant starting this year after a similar-sized facility was announced last week by PetroChina in Guangdong province.

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Shell said it completed withdrawal from its interest in Salym Petroleum Development in Russia on 3 March, said the company.

Shell Salym Development BV - a subsidiary of Shell plc - completed the withdrawal from its 50% interest in the Salym project, which had been jointly developed with Gazprom Neft, a subsidiary of Gazprom. This follows the receipt of all necessary regulatory approvals.

Shell also intends to end its involvement in the Nord Stream 2 pipeline project. At the end of 2021, Shell had around USD3bn in non-current assets in Russian ventures.

Shell said it expects that the decision to start the process of exiting joint ventures with Gazprom and related entities will impact the book value of Shell’s Russia assets and lead to impairments.

We remind, Shell Chemical Appalachia LLC announced it has commenced operations of its Pennsylvania Chemical project, Shell Polymers Monaca (SPM). The Pennsylvania facility is the first major polyethylene manufacturing complex in the Northeastern United States and has a designed output of 1.6 MMt annually.

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Spanish oil and gas company Cepsa plans to nearly double its investments over the next three years to a total of 3.6 B euros (USD3.82 B), with more than half of that amount going to sustainable energy and mobility, said the company.

It also posted a full-year net profit at current cost of supplies (CCS) of 790 MM euros for 2022, up sharply from the 310 MM euros reported in 2021. The planned investment increase of 93% for 2023-25 is from the previous three years, Cepsa said.

Adjusted CCS earnings before interest, tax, depreciation and amortization (EBITDA), excluding one-offs, jumped 62% last year to 2.94 billion euros. Cepsa said the improved core earnings were driven by better market conditions, higher underlying commodity prices and increased refining margins.

In 2022, Cepsa paid a total of 6.65 billion euros in taxes, which it said was an all-time record. Over two-thirds were paid in Spain.

The company said it will pay about 325 million euros in Spain's temporary energy windfall tax based on 2022 revenues, though the charge was not reflected in last year's results. Chief Executive Maarten Wetselaar has vowed to challenge the tax in court.

We remind, Cepsa has signed a deal with the Dutch port of Rotterdam to ship green hydrogen from southern Spain to northern Europe. The hydrogen will be produced at Cepsa’s San Roque Energy Park near the Bay of Algeciras, and will be exported through hydrogen carriers such as ammonia or methanol to the Port of Rotterdam.

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Tunisia imported record volumes of Russian gasoil and diesel last month as an EU embargo forced Moscow to find new customers for its oil products, according to traders and tracking data, said Hydrocarbonprocesing.

Tunisia imported nearly 77,000 bpd of Russian gasoil and diesel in February, compared with 20,000 bpd in January and 25,000 bpd in December last year, data from analytics firm Kpler showed. Most of the February volumes were delivered by Russia's Lukoil and Dubai-based trader Coral Energy, the Kpler data showed. In January, Coral delivered all of Tunisia's Russian imports, the data showed.

Russia used to be the main diesel supplier for Europe, accounting for roughly 60% of the continent's needs. A full EU embargo on Russian oil products, which went into effect on Feb. 5, disrupted this trade massively, forcing Moscow to find new clients for its distillates and other oil products.

According to Refinitiv tracking data, Russian and Baltic diesel flows to Europe fell to a record low of 1.77 MMt in February. Almost half of these volumes were heading to Turkey while the rest are mostly bound to locations where ship-to-ship transfers take place.

Russia has also been diverting low-sulfur diesel volumes from its Baltic ports to Morocco, Algeria, Ghana, and Brazil.

At the same time, Europe countries have been replacing Russian diesel supplies with increased imports from India, Saudi Arabia, China, Kuwait, Malaysia, among other locations.

We remind, Russia's revenues from oil and gas exports dropped by nearly 40% in January as price caps and Western sanctions squeezed the proceeds from Moscow's most lucrative export. Russia's oil and gas export revenues were USD18.5 billion in January, 38% lower than the USD30 billion Moscow received in January 2022, a month before its invasion of Ukraine, according to IEA numbers shared with Reuters. IEA Executive Director Fatih Birol said Western measures targeting Russian energy exports had achieved their aims of stabilizing oil markets and reducing Moscow's revenues from oil and gas exports.

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