Trafigura, Vitol might step up trade in Russian oil

Global energy traders Trafigura and Vitol still help to export limited supplies of Russian refined products within the rules of international sanctions, but they are considering whether to resume more trade in Russia's oil, as per Reuters.

The two Swiss companies were among the largest lifters of Russian crude oil and refined products before the country's invasion of Ukraine last February. By last summer, both firms had already sharply reduced their presence in Russian oil and later sold their interests in Vostok, a major upstream development in Siberia.

"We lift limited refined products within sanctions... our position is under review," Trafigura CEO Jeremy Weir told the FT Global Commodities Summit in Lausanne, Switzerland. The United States has been openly keen to make sure Russian oil flows continued after the EU embargo took effect on Dec. 5 to prevent price spikes and has indicated that it views the trade under the G7 price cap mechanism as legal.

The current oil price dip following the collapse of three banks has combined with inflation risks to further lower new investment in oil output, with a tight market looming in the second half of the year as China rebounds from COVID-19 curbs. The U.S. Treasury recently held some talks with Trafigura to emphasize their stance, sources familiar with the matter said.

"Less than 100,000 barrels per day (bpd) of our traded volume now is Russian business. Will that move up with some slightly stronger guidance? Yes, maybe," Vitol CEO Russell Hardy told the summit.

Vitol traded 7.4 million bpd last year, down from the previous year owing to the company stepping away from more than 90% of the Russian oil business it previously did. Gunvor's co-head of trading Stephane Degenne was more circumspect.

We remind, Russia's piped supply of Urals crude to the European Union via the southern spur of the Druzhba pipeline is set to rise 6% on a daily basis in the first quarter from the three months before, data from industry sources and Reuters calculations showed. The EU pledged to stop buying Russian oil via maritime routes from Dec. 5. Supply via the Druzhba pipeline remains exempt from sanctions, though flows via its northern spur, which supplies Poland and Germany, dried up last month.

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The EQUATE Group, a global producer of petrochemicals and the world’s leading supplier of Ethylene Glycol, announced its full-year earnings for 2022, said the company.

The EQUATE Group reported total revenue of USD3,947 million in 2022, compared to USD4,159 million in 2021. The Group also reported a net income after tax of USD611 million and EBITDA of USD1,217 million, compared to USD1,109 million and USD1,735 million, respectively, for 2021.

In the face of changing market conditions, EQUATE remained resilient. Through cost positioning and feedstock, EQUATE was able to respond to demand trends and optimize margins, resulting in a low-cost operating model and strong cash conversion.

Commenting on the results, Naser Aldousari, President & CEO of EQUATE Group, said: “As economic conditions deteriorate across the world, we have put in place a comprehensive set of immediate and long-term measures to drive resilient performance. We keep our financial position strong by focusing on disciplined and balanced capital allocation. We will continue to manage our operations and adjust our business to the changing market in order to generate long-term value for our stakeholders, as we leverage our competitive advantages and operational agility."

EQUATE Group’s results reflect their focus on operational reliability, a low cost-to-serve model, and a proactive approach in navigating challenges and market dynamics to deliver a long-term sustainable strategy.

We remind, EQUATE has nominated its April 2023 MEG India Contract Price (ICP) at $515/tonne CFR India Main Ports. The April nomination was USD23/tonne lower than the March number.

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Technip Energies has been selected by Texas Green Fuels (TGF) to commence pre-FEED (Front-End Engineering and Design) for the TGF Galveston Bay clean fuels export project, said Hydrocarbonprocessing.

TGF's export complex will produce industrial-scale, cost-effective, and sustainable fuels such as clean ammonia, hydrogen, and methanol. With Texas' abundance of low-cost renewable energy, developed infrastructure, competitive skilled workforce, government incentives, and lower construction costs relative to other regions, TGF expects to become one of the world's lowest-cost producers of clean fuels.

Technip Energies, a world-leading engineering and technology player for the energy transition, will perform pre-FEED which will enable TGF to confirm the technical and economic feasibility of the project. The partnership between Technip Energies and TGF will leverage Technip Energies’ global expertise to extend through EPC (engineering, procurement, and construction) of the TGF complex.

Laure Mandrou, SVP Carbon-free solutions of Technip Energies, commented: “Technip Energies is committed to bringing Texas Green Fuels’ ambitious clean fuels export project to the execution phase as clean fuels made from renewable electricity is an important path to support the world’s energy transition."

TGF’s mission is to support global net zero objectives that mitigate the adverse impacts of climate change by developing projects that convert the world’s abundant, low-cost renewable electricity into clean fuels. These clean products are produced using renewable electricity for all electricity requirements. TGF's Founders and Co-CEOs, David Glessner and Langtry Meyer, are experienced in all facets of mega-energy infrastructure export project development.

David Glessner, co-CEO of Texas Green Fuels stated: "Texas Green Fuels will build upon the strong energy culture in Texas to seamlessly offer sustainable fuels such as clean ammonia, hydrogen, and methanol for both domestic and export markets." Langtry Meyer added that "we're committed to playing a leading role in this transformative shift" and that "the market for clean fuels will grow rapidly and evolve similarly to LNG."

The TGF export complex will not only bring economic benefits to the state of Texas but also help reduce carbon emissions for industries such as marine shipping, power generation, and fertilizer. Final investment decision is expected in 2025 with commercial operations commencing in 2028.

We remind, Technip Energies has been awarded a contract by CNOOC and Shell Petrochemicals Company Ltd. (CSPC) for the Huizhou Phase III project, a mega liquid ethylene cracker located in Huizhou, Guangdong Province, China. Technip Energies is providing the proprietary technology and process design for CSPC’s 1,600 KTA(1) ethylene plant. This liquid ethylene cracker pioneers the use of a low CO2 furnace design and electrification of major compressors. The plant is anticipated to have 20% lower CO2 emissions than a similar conventional facility and will be able to maximize benefit from the rapidly decarbonizing power grid for future CO2 emission reduction.

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Shell plc has published its latest scenarios: the Energy Security Scenarios. The two new scenarios explore how the world could evolve following Russia’s invasion of Ukraine, said the company.

Specifically, they look into the possible energy and climate outcomes that could result from a world that has security as its dominant concern. Shell Scenarios are not predictions or expectations of what will happen, or what will probably happen. They are not expressions of Shell’s strategy, and they are not Shell’s business plan; they are one of the many inputs used by Shell to stretch thinking whilst making decisions.

The first scenario, called Archipelagos, follows how today’s pressures could play out to the end of the century. National interest remains key and renewables are mainly seen as a way to improve energy security. By 2100, net-zero emissions is within sight, but the world has failed to meet the goal of the Paris Agreement. This scenario is “exploratory”: it seeks to plot a course from where the world stood in 2022.

The second scenario, called Sky 2050, shows just how fast the world must move to meet the goal of the Paris Agreement. Global climate security becomes the primary concern. Nations race to switch to cleaner energy and a competitive landscape emerges for technology, minerals and manufacturing capacity. Competition drives rapid change and the world reaches net-zero emissions in 2050. This scenario is “normative” and extremely challenging: it set goals of net-zero emissions by 2050 and warming restricted to below 1.5°C by 2100, and then worked back to the realities of 2022 to explore how these end points could be reached.

We remind, Shell plc has published its Energy Transition Progress Report 2022, which shows it has again met its climate targets as part of its energy transition strategy. The report will be put to shareholders for an advisory vote at Shell’s Annual General Meeting on May 23, 2023.

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In the oldest refining town in the American West, Phillips 66 is promising a greener future as it moves to halt crude-oil processing and build a massive renewable diesel plant, leading a global trend, said Reuters.

That plan, announced in 2020, was initially welcomed by residents weary from a history of pollution and toxic leaks. But some have grown skeptical as the project’s details cast doubt on the environmental benefits of revamping the 127-year-old complex on 1,100 acres in Rodeo, California.

The company’s initial claim that it would slash greenhouse gasses by half doesn’t match the project’s environmental impact report, published by county regulators, which shows a 1% reduction, according to a Reuters calculation of emissions data in the report. What’s more, refining of petroleum byproducts may continue as a side project.

And renewable-diesel production will require a surge in marine and train traffic, increasing emissions and spill risk. The conversion also requires boosting natural-gas usage to produce hydrogen required to make the biofuel. These dynamics and other variables raise questions about Phillips 66’s marketing of renewable diesel as a green fuel and make it impossible to tell whether and how much the refinery overhaul will reduce community pollution, three independent environmental experts told Reuters.

The project’s environmental impact will be a test case for similar facilities worldwide. Several dozen new U.S. renewable diesel plants are planned, according to energy consultancy Stratas Advisors. Most will be conversions of oil refineries. Production capacity could triple, to 6 billion gallons, by 2026, Stratas says. Europe and Asia are seeing similar trends.

The Rodeo conversion could be either “a model or a cautionary tale,” said Gwen Ottinger, an associate professor in the Center for Science, Technology and Society at Drexel University who has studied air-pollution monitoring in Rodeo.

Phillips 66 representatives say the project, dubbed Rodeo Renewed, will significantly cut certain regulated pollutants, and will lead to large cuts in greenhouse gasses when the biofuel is burned in vehicles. The refinery’s general manager, Jolie Rhinehart, said renewable diesel is the cleanest-burning option for use in transporting goods by truck.

“Heavy-haul trucking is a vital aspect to our way of life in this country and in this world,” she said. “And renewable diesel is the lowest-emission way to fuel that energy that we need to keep our trucks moving." Rhinehart added that emissions directly from the plant, affecting local residents, would be “significantly reduced” by the project.

Some Rodeo residents worry the overhaul could become another chapter in a long story of local pollution. Sitting across the bay from San Francisco’s glittering cityscape, Rodeo is a poster child for post-industrial problems. In addition to the Phillips 66 plant, the area has hosted a second oil refinery, a lead smelter, and a dynamite factory. Vacant storefronts and rusted-out cars blight the boulevard leading to a beach too toxic for swimming. The community, in unincorporated Contra Costa County, has much higher concentrations of illness, poverty and brownfield cleanup sites than most others in California.

We remind, Nexus Circular has signed a long-term commercial agreement with Chevron Phillips Chemical (CPChem) for the supply of a significant volume annually of circular liquid feedstocks from a new advanced recycling facility. This long-term contractual commitment further strengthens CPChem’s relationship with Nexus for advanced recycled plastic feedstocks to produce Marlex Anew Circular Polyethylene.


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