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REFINERY MARGIN TRACKER: Mediterranean gains supported by gasoil, diesel exports

Increase font size  Decrease font size Date:2021-02-10   Views:48

  New York—Increased export gasoil and diesel demand coupled with relatively low refinery utilization rates supported stronger margins for refineries in the Mediterranean, an analysis from S&P Global Platts showed Feb. 8.



  While refining margins in most of the US and Asia fell week on week, due in part to higher crude prices, margins for Mediterranean refiners trended higher. Southern plants benefited from increased downtime at the larger, more sophisticated refineries in Northwest Europe, which increased their exports volumes of gasoil and diesel there.Mediterranean Urals cracking margins averaged $2.34/b for the week ended Feb. 5, up from $1.78/b the week earlier, while CPC Blend cracking margins averaged $4.20/b, up from $3.39/b, according to S&P Global Platts Analytics margin data.



  NWE margins also rose. Cracking margins averaged $2.10/b and $4.03/b, respectively, for Urals and CPC Blend for the week ended Feb. 5, compared with $1.34/b and $2.10/b the week earlier.



  Mediterranean margins were boosted by increased global export volumes of gasoil and diesel, which averaged 887,000 b/d for the week ended Feb. 5, up 281,000 b/d from the week earlier, according to Kpler commodity tracking data. This included 116,000 b/d sent to NWE, surpassing January's total average export volumes of 675,000 b/d.



  Conversely, gasoil and diesel exports out of NWE dropped to average 356,000 b/d for the week ended Feb. 5, lower than the 499,000 b/d the week earlier and below January's average of 501,000 b/d.



  High NWE refinery outagesMediterranean refiners benefited by record downtime for crude distillation units at NWE plants. According to Platts Analytics, regional NWE crude distillation outages reached an all-time high for the month in January at 1.84 million b/d, a result of maintenance, economic idling of crude distillation units and low refinery utilization to match supply with weak demand resulting from the pandemic.



  "The effect of renewed lockdowns continues to suppress product demand in several countries, as more measures are taken in order to prevent even more COVID-19 cases," Platts Analytics wrote in a research note.



  Platts Analytics expects crude distillation capacity offline at NWE refineries to ease slightly but remain relatively high into February, averaging 1.77 million b/d, as new strains of the coronavirus moving across northern Europe force more stringent measures to prevent the spread.



  Despite more refinery capacity online in February, Kpler expects NWE exports to fall, with NWE February gasoil and diesel exports to average 446,000 b/d. However, Mediterranean flows of gasoil and diesel into NWE are expected to rise in the near term, increasing 104,000 b/d in February, up from January's 32,000 b/d, as refinery utilization remains low.



  Platts Analytics expects NWE refinery capacity to start to return in May as turnarounds end and economic run cuts ease. The permanent closure of Gunvor's Antwerp, Belgium, plant and one crude unit at Petroineos Grangemouth plant will cut refinery capacity and support higher margins going forward.



  Increased Mediterranean-to-NWE flowsMediterranean refiners started the year at relatively high utilization rates in the 90% range. Platts Analytics estimates January crude distillation outages in the region were 990,000 b/d and will increase as turnaround season begins in the second quarter. Forecasts are for first-quarter outages to average 950,000 b/d.



  With the onset of planned maintenance beginning in the second quarter, capacity is expected to trend down to 82%. In addition to planned work, several regional refiners—including Saras Sarroch, Repsol Taragonia, and Raffineria di Milazzo—have been practicing "intermittent idling" to balance supply and demand, according to Platts Analytics.



  Falling refinery utilization and the return of NWE refinery capacity also seems to be putting a damper on flows of gasoil and diesel exports from the Mediterranean. Kpler data shows exports of 780,000 b/d for the week ended Feb. 12, about 100,000 b/d below the week earlier.



  However, even with the restart of some NWE refineries, Kpler sees Mediterranean exports of gasoil and diesel moving north increasing. Kpler estimates total Mediterranean exports of gasoil and diesel in February will average 897,000 b/d, up from January's 675,000 b/d, and will include 104,000 b/d and 32,000 b/d, respectively, going to NWE.


 
 
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