China cuts second batch of 2023 fuel export quotas

China has decreased its second batch of export quota volumes for refined oil products, consultancies and trader sources said on Thursday, focusing on local demand during the refinery overhaul season and boosting domestic sales amid poor export margins, said Hydrocarbonprocessing.

The export volumes, comprising 9 million tons of refined products and 3 million tons of marine fuel, were allotted primarily to state-owned refiners, according to two refining sources and consultancies Longzhong and JLC. China Petrochemical Corp (Sinopec), China National Petroleum Corp, China National Offshore Oil Company and Sinochem Group were the main recipients of these quotas, taking around 92% of the total allocation.

Reuters has asked the four companies for comment. In addition, private refiner Zhejiang Petrochemical Corp, a refinery subsidiary of state defense conglomerate Norinco and China National Aviation Fuel Company were assigned 1.01 million tons. China's Ministry of Commerce did not immediately respond to a faxed request for comment.

The quota was less than the first batch of 18.99 million tons in early January but double the allocation of 4.5 million tons issued around a year earlier, Reuters records show. The smaller export quota comes as refiners stockpile products amid strong demand expectations for gasoline and diesel in the peak summer season.

China's gasoline and diesel export volumes have fallen for three consecutive months as refiners kept more cargoes for the domestic market where they are earning better profit margins, despite overall slow domestic demand growth. While refiners have been unwilling to export because of the stronger local margins, the year-on-year increase in quotas mean that they can still choose to export should domestic demand turn weak at some point in time.

Longzhong estimated refiners could lose about 482 yuan (USD69.73) a ton on gasoline exports and 734 yuan a ton on diesel exports in the current market. "This year, quota holders have greater flexibility to prepare export plans and capture arbitrage opportunities," said Energy Aspects analyst Sun Jianan. The 3 million tons of low-sulfur fuel export quotas in this second batch was down from 8 million tons in the first batch for this year.

However a trader from a state-owned Chinese oil company said the previous batch of low-sulfur fuel quotas had yet to be used up as marine bunkering demand was weak in the first quarter.

We remind, Chinese customs authorities are stepping up inspection checks on cargoes of heavy crude oil after uncovering several Iranian shipments that were mislabeled as diluted bitumen in an effort to bypass import quotas.
The checks, begun a month ago, are delaying oil discharges into the eastern refining hub of Shandong province. They are also adding to uncertainty over the risk of disruption to shipments from Iran and Venezuela, while cutting into refining operations just as fuel demand recovers.

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MRC) -- Iraq has sent an official request to Turkey to restart oil export flows through a pipeline that runs from the semi-autonomous Kurdistan Region in northern Iraq to the Turkish port of Ceyhan, said Reuters.

A statement by Iraq's Kurdistan Regional Government (KRG) on Thursday confirmed news reported earlier by Reuters that Iraq requested Turkey restart flows that have been shut in for almost seven weeks. "Both the Kurdistan Region's Ministry of Natural Resources and Iraq's Ministry of Oil are reportedly waiting for Turkey's response before resuming oil exports," the KRG statement said.

Iraq's request to Turkish state energy company BOTAS came after traders buying crude from the Kurdistan region signed contracts with Iraq's state-owned crude marketer SOMO on Tuesday and Wednesday following weeks of discussions, according to four sources familiar with the matter. Iraq's oil ministry and Turkey's energy ministry did not immediately respond to requests for comment.

Turkey halted Iraq's 450,000 barrels per day (bpd) of northern exports through the Iraq-Turkey pipeline on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC). The ICC ordered Turkey to pay Baghdad damages of USD1.5 B for unauthorized exports by the KRG between 2014 and 2018.

Iraq put off asking Turkey to resume flows as it spent weeks resolving various issues with the Kurdistan Regional Government (KRG) surrounding a restart deal.

The KRG has agreed for SOMO to market its crude oil. Its export revenue will be deposited in an existing KRG bank account with Citi in the United Arab Emirates, according to three sources familiar with the matter. Baghdad will have auditing access, Reuters previously reported.

SOMO also had to iron out contracts with buyers of KRG crude. The newly signed contracts are for a period of up to three months but do not address the vast amount of debt that the KRG owes trading firms, one of the three sources said.

Producers in the region have called for the KRG to prioritize debt repayment, making transparency and regularity of payments conditions for new investments and maximum export flows once the pipeline reopens, a separate industry source said.

The timing of the pipeline restart, however, remains uncertain. Turkey is seeking negotiations relating to the damages it was ordered to pay in the arbitration case, and wants permanent resolution of open arbitration issues before resuming flows, sources previously told Reuters.

"There are a number of considerations and one of the important (ones) is presidential elections in Turkey on May 14 with a possible run off," Bijan Mossavar-Rahmani, executive chairman of Norwegian oil company DNO, told a call with analysts on Thursday on the matter of the restart.

We remind, Russia has started diesel exports to Chile, expanding its oil products supplies to Latin America after a European Union embargo forced traders to find new outlets. According to Refinitiv data, two cargoes loaded in April in Russia’s Baltic port of Primorsk with about 73,000 tons of diesel heading to Guayacan port in Chile.

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Japan's biggest oil refiner Eneos Holdings said on Thursday it planned to more than double net profit to ¥310 B in three years and expand aggressively in green energy and climate-friendlier fuels, said Reuters.

Companies in Japan, an energy-poor country importing nearly everything from oil to coal, are under pressure from the government and shareholders to be carbon-neutral by 2050.

Russia's invasion of Ukraine has also made the green transition a matter of national energy security. Eneos, which still relies mainly on its oil business, plans to spend ¥1 T over three years on its energy segment including renewable energy projects, the hydrogen supply chain and sustainable aviation fuel (SAF).

Its first SAF plant in Japan should be launched in 2026 and it is considering another SAF facility that could be operational by about 2030. Renewable energy, primarily solar and wind power, should reach 6 to 8 gigawatts (GW) by 2040 from less than 1 GW now, the company said.

Eneos, also a major miner, said it was preparing to list its metal unit JX Nippon Mining and Metals, although the plans had yet to be finalized. Through the listing, Eneos will be able to execute strategic investment which is necessary for transforming the business portfolio to realize the energy transition, President Takeshi Saito said.

"The spin-off will also help reduce volatility of Eneos' earnings," he said. JX will sell majority stake in the Caserones copper mine in Chile to Lundin Mining after suffering a series of ramp-up delays and cost overruns, resulting nearly ¥350 B of appraisal loss in total.

Eneos aims to boost net profit to ¥310 B in the fiscal year to March 2026 from ?180 B projected for the current 2023/24 year. Net profit fell 73% in 2022/23 fiscal year to ¥143.8 B, hurt by declines in its petrochemical business and as gains on inventories were reduced.

Eneos plans to invest ¥180 B over the three years in its oil and gas upstream segment, including for additional development of liquefied natural gas in Indonesia and Papua New Guinea, and in its carbon-capture and storage business.

We remind, Eneos Holdings Inc. has no plans to buy Russian crude until all problems related to the Ukraine crisis are over and will purchase alternative supplies from the Middle East.

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PureCycle Technologies announced that it has reached mechanical completion of its first polypropylene (PP) purification plant in Ironton, OH, US., said the company.

The facility, which is based on proprietary technology licensed from Procter & Gamble, is expected to produce 107 M lbs/y of Ultra-Pure Recycled (UPR) resin, once fully operational.

The plant will now begin operational pre-startup and safety review processes. Initial pellet production is planned to commence in 2Q 2023.

We remind, SK geo centric (SKGC), a South Korean-based global leader in polypropylene (PP) production, and PureCycle Technologies, Inc. signed a joint venture agreement to operate the first Polypropylene recycling plant in Asia. SKGC will make a joint investment with PureCycle to build a plastic recycling plant in Ulsan, South Korea with an annual capacity of up to 60,000 tons. The plant, which is currently expected to be completed by the second quarter of 2025, will turn contaminated plastic feedstock into ultra-pure recycled ("UPR") resin that can be infinitely reused and recycled.

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Chemours, a US-based company, has awarded KBR to enhance the technology and capacity of its Nafion-branded ion exchange materials platform, said the company.

The contract is part of Chemours' USD200 M investment initiative that seeks to expand the Nafion membranes and dispersions technology platforms, which supports the increasing hydrogen economy.

“We are excited to be a part of this important program, which furthers our partnership with Chemours, and to deliver solutions that will contribute to a cleaner, more sustainable world,” said Jay Ibrahim, president of KBR’s Sustainable Technology Solutions business. “This win highlights KBR’s extensive clean hydrogen and specialty chemical expertise and is indicative of KBR’s strategic commitment to support our customers through the energy transition.”

For decades KBR has been a leader in the hydrogen value chain, serving as both technology provider and advisor and as a provider of differentiated project delivery solutions.

Wt remind, Evonik, the market and innovation leader in polyurethane additives, has boosted its range of high-performance products for the spray polyurethane foam (SPF) industry with the release of DABCO PM 301, said the company. Used in combination with the latest Opteon™ 1100 and Opteon™ 1150 blowing agents from Chemours, a global chemistry company, DABCO® PM 301 improves thermal performance and increases efficiency in SPF systems.

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