The European Parliament is urging the European Commission to look closely at banning ships from using heavy fuel oil on Arctic shipping routes.

A resolution adopted by the foreign affairs and environment committees on Tuesday called on the EU "to speak with one voice and push to keep the Arctic an area of cooperation."

Members of the European Parliament want the commission and member states "to work towards banning the use of heavy fuel oil in maritime transport, through the MARPOL convention," a statement from the European Parliament said.

"In case this does not prove feasible, the EU should take measures to prohibit the use and carriage of heavy fuel oil for vessels calling at EU ports."

As ice in the Arctic region is thawing earlier, Arctic shipping lanes have become attractive as a way to save money on transporting goods from Asia to Europe.

However, a significant drop in the price of bunker fuel in recent years has undermined the commercial case for Arctic transits. The use and carriage of heavy fuel oil is banned in the Antarctic.

http://www.platts.com/latest-news/shipping/london/meps-call-for-arctic-ban-on-ships-using-bunker-26653259

Asian spot prices for LNG delivery in March fell to parity with European gas benchmarks on Friday, while importers in India, Thailand and Mexico finalised purchases amid healthy supply.

Traders said Asian prices for March delivery fell 25 cents to about $7.50 per million British thermal units (mmBtu), matching the UK's National Balancing Point trading hub levels.

Qatar's liquefaction Train 7 - previously idled for maintenance - resumed production on Friday, raising the possibility of more frequent deliveries to Britain from the second-half of March and April, one trader said.

However, other sources told Reuters that Train 7 may be due to shut down again in March.

Meanwhile, Australia's AP LNG project is expected to idle half a train's output towards the end of February.

But output from the giant Gorgon project was steady, with plant operator Chevron readying to bring a third production line on-stream early in the second-quarter.

Despite colder-than-average forecasts for the next 45-days in South Korea's capital Seoul, which is also a major LNG importer, traders said a combination of pre-Christmas buying, stored reserves and returning nuclear reactors has kept Korea Gas Corp out of the spot market.

Traders said they had heard Gail India had bought supplies in the low $8 per mmBtu range, while Thailand's PTT bought a cargo in the high $7 per mmBtu level, possibly from Chevron.

In the Atlantic, Vitol bought a tender cargo from Angola for delivery to Europe, but looks to be in talks to swap it for a different destination, possibly Egypt, one trader said.

Mexico also purchased two cargoes for February delivery. Steady cargo demand was seen coming from Spain.

Around six shipments are due to arrive at the Fos terminal in southern France over the coming weeks, alleviating tight gas markets which followed an outage at an Algerian export facility.

http://www.reuters.com/article/global-lng-idUSL5N1FO5T3

Swiss-based commodities giant Glencore has extended a deal with Libya's state oil firm to be the sole marketer of one third of the country's current crude oil production, sources familiar with the matter said.

It was not clear for how long Glencore would continue to have exclusivity over the output and whether some parts of the deal would be renegotiated.

The deal extends Glencore's dominance over rivals such as Vitol and Trafigura in handling barrels from the North African country for a second year running.

A spokesman for Glencore declined to comment. Officials at Libya's state-owned National Oil Corp. (NOC) also declined to comment.

Libya has struggled for years to end a crippling blockade of its oil ports amid a civil war and Islamic State intrusions. Between security fears and erratic supply, refiners eventually stopped attempting to buy from the North African country.

With a dwindling revenue stream, NOC needed an intermediary that was comfortable managing the risks, able to market the oil globally and pay cash upfront for the cargoes.

Glencore snapped up the opportunity in September 2015 to resell the only relatively stable onshore output - from the Sarir and Mesla oilfields loaded at the country's easternmost Marsa el-Hariga port. Libya's small offshore production also continued.

Since 2015, the trader has been the only company able to buy Sarir and Mesla crude output directly from Libya's NOC and is expected to continue as NOC has largely finalised its 2017 allocations.

Libya's production has recovered to around 700,000 barrels per day (bpd) and NOC hopes output will rise to 1.2 million bpd by the end of the year.

"It is a big mosaic at the moment, but Glencore has kept a large chunk of the trade," one of the sources said.

Glencore's deal entitles it to around 230,000 bpd from the Sarir and Mesla oilfields, the sources added. It also regularly delivers crucial refined fuel as Libya's refining system operates well below capacity. Glencore trades about 4.4 million bpd of crude and refined products.

Vitol and Petraco have also been picking up cargoes but on a small scale, and producers with stakes in oilfields in the country such as Total, Repsol, OMV have returned to loading tankers, as have buyers such as Unipec, the trading arm of China's state-owned Sinopec.

http://www.reuters.com/article/us-glencore-libya-oil-idUSKBN15L0JM

The U.S. Border Customs and Border protection in mid-January issued a document in which it proposes to revise several rulings and amendments to the Jones Act, which prevents foreign-flagged ships from shipping merchandise within the U.S.

While the foreign-built and flagged ships have been prevented from transporting merchandise between the U.S. coastwise points, over the years some exceptions have been made for construction vessels working in the offshore oil and gas industry.

Until now, the foreign construction vessels were allowed to carry aboard pipeline repair material; anodes; pipeline connectors; wellhead equipment, valves, and valve guards; damaged pipeline; and platform repair material. This was not seen as a Jones Act violation because the goods have been seen as a necessary equipment.

However, if the proposal is materialized, foreign-flagged vessels would not be able to carry any of the “items” listed above, and would be violating law if they did.

While the U.S. vessel owners have welcomed the proposed changes, saying the move will secure work for the U.S. flagged ships and the U.S. workers, not everybody is happy.

Hasty proposal

Members of the International Marine Contractors Association (IMCA) with vessels active in US waters, together with their clients, have expressed “serious” concern over the “hasty” proposals by the Customs and Border Protection agency to revoke longstanding decisions made over the last 40 years concerning the Jones Act.

According to the IMCA, these proposals have been introduced with no prior consultation, in the final two days of the Obama Administration, allowing only 30 days for public comment.

The intention is to prevent non-Jones Act qualified vessels transporting merchandise between coastwise points. However, the effect may be to prevent all foreign flag construction vessels working in the United States. The proposals would also affect US flag vessels which are not coastwise qualified, the IMCA says.

“We understand the drive to protect US tonnage given the difficulties in the PSV (platform supply vessel) market today, but the deep-water construction market represents a very different sector with very different vessels and technologies,” says IMCA’s Chief Executive, Allen Leatt. “It is a truly international market, as no single domestic market can support the heavy investments of these assets. Consequently, there is a real risk to damaging the whole Gulf of Mexico market as the unintended consequences do not seem to have been thought through.

IMCA wants more time

Leatt said: “The Obama Administration attempted similar changes in 2009, but discontinued the effort in the face of serious and substantial concerns raised by a multitude of stakeholders. We are seeking an extension of time for public comment, so that a proper reflection and analysis of the impact can be assessed.

“Stability in the workings of the Jones Act has enabled many successful businesses to be established in the US Gulf States, both offshore and onshore, over the last 40 years, creating huge numbers of US jobs. Given the tough times our industry has endured in recent years, this additional risk to jobs is very concerning if oil companies are faced with a lack of capacity in the market and inevitably higher costs.

“The Trump Administration has called for a freeze pending a review of all regulatory initiatives; equally it is well known that President Trump is ambitious for the US to increase domestic production. These proposals seem to run contrary to both objectives.”

U.S. industry reps rejoice

The American Maritime Partnership (AMP) – which describes itself as the voice of the U.S. maritime industry – on Monday said the U.S. Customs & Border Protection (CBP) move would “restore American jobs by correcting previous letters of interpretations of the Jones Act.”

“The men and women of the American maritime industry commend the U.S. Customs and Border Protection’s efforts to rightfully restore over 3,200 American jobs to the American economy and close loopholes that gave preference to foreign workers and foreign shipbuilding,” said Tom Allegretti, Chairman of the American Maritime Partnership. “We applaud President Trump’s commitment to ‘buy American and hire American,’ and the correct and lawful interpretation of the Jones Act will ensure the preservation of American jobs and maintenance of the U.S. shipyard industrial base, both of which are critical to our economic security and national security.”

“AMP joins a growing list of government and industry leaders that understand the importance of restoring American jobs to the American economy and support the restoration of this lawful interpretation of the Jones Act, which governs the transportation of equipment and cargo between coastwise points,” the organization said.

The Offshore Marine Services Assiciation’s President Aaron Smith, also supports the CBP proposal.

He said: “The Offshore Marine Service Association (OMSA) applauds the Administration’s strong step to restore the congressional intent of the Jones Act. This Notice opens a domestic market to U.S. mariners on U.S.-built vessels, owned by U.S. companies. The offshore service industry is ready, willing, and capable of completing this work, having recently invested $2 billion in U.S. shipyards on vessels tailored to safely completing this work.”

http://www.offshoreenergytoday.com/imca-slams-hasty-jones-act-move/

The number of rigs exploring for oil and natural gas in the U.S. increased by 17 this week to 729.

A year ago, 571 rigs were active.

Houston oilfield services company Baker Hughes Inc. said Friday that 583 rigs sought oil and 145 explored for natural gas this week. One was listed as miscellaneous.

Oklahoma increased by six rigs, New Mexico and Texas were each up by four and Alaska, Arkansas, Colorado and Wyoming each increased by one.

Louisiana lost one rig.

California, Kansas, North Dakota, Ohio, Pennsylvania, Utah and West Virginia were all unchanged.

The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May at 404.

http://abcnews.go.com/Business/wireStory/us-rig-count-increases-17-week-729-oklahoma-45258229

U.S. LNG exports hit record high in January

Cheniere’s Sabine Pass liquefaction plant in Louisiana exported fifteen LNG cargoes in January, setting a new record for U.S. monthly exports, the Energy information Agency confirmed in its weekly natural gas report issued on Thursday.

The Sabine Pass facility, first of its kind to ship U.S. shale gas overseas, started exporting LNG in February last year and has since then exported more than 65 cargoes worldwide.

Previously, Sabine Pass monthly exports were the highest in December, with twelve cargoes leaving the facility. These cargoes went mostly to Asia, where cold winter temperatures increased residential heating demand and rising spot LNG prices led to larger price spreads between the Atlantic and Pacific basins.

According to the agency, natural gas pipeline deliveries to the Sabine Pass liquefaction terminal averaged 1.8 Bcf/d for the week ending February 1, unchanged from the previous week.

“Four vessels (combined LNG-carrying capacity of 14.1 Bcf) departed Sabine Pass last week,” EIA said in the report.

Henry Hub drops

Natural gas spot prices in the U.S. fell at most locations in the week ending February 1 with the Henry Hub price dropping 13¢ from last Wednesday.

The Henry Hub spot price decreased from $3.25/MMBtu last Wednesday to $3.12/MMBtu two days ago, EIA said in its report.

The agency noted that temperatures moderated throughout the report week almost everywhere except for in the Northeast. As a result, prices generally fell in the report week.

At the Chicago Citygate, prices decreased 14¢ to $3.08/MMBtu this Wednesday while prices at PG&E Citygate in Northern California fell 16¢, to $3.50/MMBtu.

http://www.lngworldnews.com/u-s-lng-exports-hit-record-high-in-january/

Donald Trump and global crude producers are set to take prices on a bumpy ride this year, according to the world’s biggest independent oil trader.

As investors are kept on tenterhooks over U.S. policies and whether OPEC and other nations will curb output as pledged, global benchmark Brent crude may vacillate between $52 and $62 a barrel, according to Kho Hui Meng, the head of the Asian arm of Vitol Group. The market’s structure could also shift in the third quarter, with near-term cargoes turning costlier than those for later delivery, flipping from the other way around.

“I think this market is going to be very volatile,” Kho, the president of Vitol Asia Pte., said in an interview in Singapore. “People are worrying about U.S. policy. With the new administration, a lot of things are being speculated. So we can’t predict the future, we just have to wait.”

The sentiment reflects the uncertainty gripping markets amid Trump’s ascent, with traders of everything from currencies to metals and stocks trying to decipher the effects of measures by the leader of the world’s biggest economy. The oil market has been ruffled by the prospect of more geopolitical tensions on his harder line on major producer Iran. He’s also mooted a border tax on imports, which Goldman Sachs Group Inc. says had a low chance of being introduced but could trigger an oil selloff if implemented.

Trading companies such as Vitol and rivals including Trafigura Group and Glencore Plc could reap rewards from volatility. Vitol’s $1.6 billion in earnings in 2015 were boosted as it profited from price swings in the energy market. It posted a 42 percent decline in first-half 2016 profit amid fewer opportunities to benefit from price changes.

The company, which is formally incorporated in Rotterdam but operates from locations including Geneva, London, Singapore and Houston, has experienced strong growth over the last 20 years on the back of expanding oil trade, large price swings and, more recently, investment in storage and refining. In 1995, Vitol earned just a little over $20 million.

Oil traders often look to take advantage of a market structure known as contango -- where future prices are higher than current levels, allowing investors to buy oil cheap, store it in tanks or ships and lock in a profit for a later sale. But with global producers cutting output, the market may be poised to go into backwardation, when prompt crude is costlier than later cargoes.

The structure is now “quite flat so people are still watching,” Vitol’s Kho said. “Once the backwardation comes in, which we’re not there yet, then people begin to look at the viability of the floating storages and ultimately they’ll come out.”

https://www.bloomberg.com/news/articles/2017-02-05/top-trader-vitol-sees-rocky-2017-for-oil-as-trump-ruffles-market

Israeli energy company Delek Group has launched a takeover offer for the oil company Ithaca Energy.

According to Canada-based Ithaca, the offer is for a cash consideration of C$1.95 per share – this equates to £1.20 per share based on the exchange rate on 3 February 2017.

Ithaca’s board  has unanimously recommended the offer and values the entire issued and to be issued share capital of the company at C$841 million (US$646 million).

The target company, with assets in the UK North Sea, said the offer offer provides shareholders with the opportunity to “crystallise” the value of their holdings in cash and represents a 12% premium to the TSX closing price of C$1.74 per share on 3 February 2017 and a 16% and 27% premium to the 30 day and 60 day volume weighted average prices respectively.

The offer implies a total enterprise value of approximately US$1.24 billion.

Brad Hurtubise, Ithaca’s Non-Executive Chairman, said: “We are very pleased to announce the offer, which provides an attractive opportunity for all shareholders to secure a premium cash value for their investment following a sustained period of share price growth and at a favorable point in the Company’s evolution.”

 “A Special Committee of independent Directors has fully assessed the offer, with input from the Company’s financial advisor and an independent valuator, and believes the Offer is fair and in the best interest of the Company and its shareholders and unanimously recommends that the shareholders tender their shares to the offer.”

Apart from announcing the takeover offer, Ithaca also provided an update on its Stella development in the UK North Sea. The company said that good progress has been made on completing the remedial work on the FPF-1 electrical junction boxes, with the start-up of production from the Stella field still anticipated “later this month.”

As for the takeover, this is the third major North Sea deal announced in the past month. Late in January BP said it would sell portions of its interests in the Magnus oil field and some associated pipeline infrastructure in the UK northern North Sea and in the Sullom Voe Terminal (SVT) on Shetland to EnQuest.

Last week, Shell agreed to sell “a package” of UK North Sea assets to Chrysaor for a fee of up to $3.8 billion, as part of its previously announced $30 billion divestment program.

http://www.offshoreenergytoday.com/israeli-firm-launches-takeover-offer-for-ithaca-energy/

Enterprise Products Partners LP's Seaway pipeline is expected to resume service on or before Tuesday following its closure due to a leak in Collin County, Texas, earlier this week, the company said on Thursday.

The company continued to make progress in repairing its 30-inch (76-cm) diameter pipeline, which was struck by a third-party contractor on Monday, according to a company statement.

The 400,000-barrel-per-day pipeline, which brings crude from Cushing, Oklahoma, down to the U.S. Gulf Coast, is a joint venture between Enterprise Products Partners LP, the operator, and Enbridge Inc.

http://www.reuters.com/article/usa-pipeline-enterprise-seaway-idUSFWN1FN10S

More than a half-million barrels of US Gulf Coast HSFO have traded in the Platts Market on Close assessment process through just two days due to a combination of export demand and hedging, sources said.

A total of 585,000 barrels traded in the first two days of February, or around 25% of the total volume in January that traded for USGC HSFO, S&P Global Platts data showed.

One USGC trader said the beginning of a month is a key time for people who want to manage hedging positions in the paper market. This can also result in higher volume moving in the physical market, the trader added.

The trader also said some companies who have ships loading for export in Early February may need to fill up on barrels, or want to make sure to bid in the MOC process to keep the arbitrage they made on paper work in the physical market.

Other USGC traders were less convinced on the amount of export demand currently available in the USGC. A second USGC trader said the arbitrage is closed by as much as 90 cents/b to Singapore, with a third trader saying current bids in the MOC process make it "impossible" to export any material to Asia at a profit.

"It really doesn't make sense to be buying at these levels," the trader said. The trader also said the USGC was flush with supply, and finding motivated sellers outside the MOC process has not been an issue.

USGC HSFO was assessed at $46.42/b, the first time the product had been assessed at a premium to the front-month swap since November 22.

Trafigura purchased 360,000 barrels through the first two trading days, accounting for around 60% of the total volume in February. It also matches the amount the trading house purchased for the entire month of February.

A fixture of 130,000 mt of dirty petroleum products chartered by Trafigura was heard fixed last week out of the USGC to the Far East for loading February 1-3.

Sources from Trafigura did not immediately respond to comments on the increased trading activity.

http://www.platts.com/latest-news/oil/houston/surge-in-usgc-hsfo-liquidity-linked-to-hedging-21780475

U.S. gasoline stocks are rising much faster than normal at the start of the year, threatening to leave refiners struggling to clear an overhang of motor fuel later in the year.

Gasoline stockpiles rose by almost 21 million barrels during the first 27 days of 2017, compared with an average increase of less than 12 million barrels at the same time of year during the previous decade.

Stocks have only risen this fast on one other occasion in the last 10 years, and that was in 2016, when refiners and blenders ended up with a large surplus which lingered through the summer

Stocks hit a seasonal record of 257 million barrels on Jan. 27, according to an analysis of data from the U.S. Energy Information Administration.

Stocks are now 4 million barrels higher than in 2016 and almost 26 million barrels higher than the 10-year seasonal average.

Stocks are rising faster than normal across the eastern United States but especially on the East Coast and in the Midwest.

East Coast stocks have risen by more than 8 million barrels since the start of the year, almost double the average increase of 4.7 million barrels .

Midwest stocks are also up by 8 million barrels, more than double the average increase of 3 million barrels at this time of year.

Gasoline stocks normally rise throughout January and sometimes into early February as refiners and blenders build reserves ahead of the refinery maintenance season.

But the stock build in 2016 was exceptionally large as healthy gasoline margins encouraged refiners to process an unusually large volume of crude through the winter months.

Something similar appears to be happening in 2017 with refineries processing much more crude than normal despite unusual stock levels.

Refinery throughput has been running around 200,000 to 400,000 barrels per day higher than in 2016 since the turn of the year.

Refining margins have generally been higher than during the winter of 2015/16 which has encouraged refineries to increase their processing ("Key commodity prices and differentials", Valero, Jan 2017).

Hedge funds have established the largest bullish position in gasoline futures and options since July 2014 in anticipation that prices will rise.

The forthcoming maintenance season should lower refinery throughput and start cutting reported stock levels in the next 1-2 weeks. If maintenance is longer and heavier than normal it could help eliminate excess inventories.

But the build up of stockpiles and concentration of hedge fund positions will eventually have to be unwound at some point and could temper any further rise in gasoline margins.

http://www.reuters.com/article/usa-gasoline-kemp-idUSL5N1FO3P4

U.S. energy regulators late on Thursday approved construction of Energy Transfer Partners LP's Rover natural gas pipeline from Pennsylvania to Ontario, according to a filing made available on Friday.

The 3.25 billion cubic feet per day project is one of several awaiting decisions from the U.S. Federal Energy Regulatory Commission (FERC) while the agency still has a quorum and can make such rulings.

ETP has said it expected to put the first phase of the $4.2 billion project on line during the second quarter of 2017 and the remainder in service during the fourth quarter.

FERC leadership changes last week prompted several energy firms to request the agency make decisions this week on proposed gas pipelines to avoid potential construction delays.

President Donald Trump appointed Cheryl LaFleur as acting chair, which prompted Norman Bay, the former chairman, to announce he would step down on Feb. 3, leaving the commission without the quorum needed to conduct major business.

Other companies hoping for decisions this week include units of Spectra Energy Corp on the Nexus pipeline, Williams Cos Inc on Atlantic Sunrise, TransCanada Corp on Leach and National Fuel Gas Co on Northern Access.

Analysts at U.S. financial services firm Cowen and Co said on Friday the approval of construction of Rover was a positive for summer gas differentials in the Appalachia region.

The premium of gas at the Henry Hub benchmark in Louisiana over the Dominion South hub in southwest Pennsylvania's Marcellus Shale narrowed to a near three-month low on Thursday and put it within a penny of its lowest in two years.

Cowen said Energy Transfer can start cutting trees, which must be completed by March 31, but cannot build facilities until FERC staff is satisfied on the Stoneman House issue. Stoneman was a historic house in Ohio that the company demolished.

Cowen said the approval will benefit several companies that plan to ship gas on Rover, including Antero Resources Corp, Eclipse Resources Corp, EQT Corp, Gulfport Energy Corp, Rice Energy Inc, Range Resources Corp and Southwestern Energy Co.

Analysts at U.S. financial services firm FBR & Co said "failure to issue the Rover permit could have delayed the project by a year due to seasonal construction constraints."

FBR said FERC may consider Spectra's Nexus and NFG's Northern Access projects before Bay departs. But FERC has not yet issued any notices on Nexus or Northern Access.

http://www.reuters.com/article/us-usa-energytransfer-rover-idUSKBN15I24Y

Shell Chemicals has been making progress on a petrochemicals complex designed to leverage affordable feedstocks from Northeast US shale-gas plays, the company said Thursday.

The company has been "ramping up construction" at the site in Potter Township, Pennsylvania, in the Pittsburgh area that will produce 1.6 million mt/year of polyethylene, Shell CEO Ben van Beurden said in a conference call to discuss fourth-quarter results.

"We are working our way through regulatory approval," he said. "A lot of site preparation is already done."

Shell has not set a startup date but has previously targeted early 2020s.

The site will host a seven-furnace ethane cracker which will feed into three polyethylene production lines -- gas-phased high density polyethylene, slurry HDPE, and linear low density polyethylene.

The location of the project is unique, as recent waves of US ethylene and polyethylene projects have almost exclusively targeted the US Gulf Coast.

The site will represent the largest ethylene and polyethylene capacities in the region, but Shell pointed to significant advantages in the location.

"It sits on top of the largest feedstock in the United States," van Beurden said.

Shell expects to feed the steam cracker with affordable ethane sourced from the Marcellus and Utica shale basins.

Additionally, more than 70% of North American polyethylene demand stands within a 700-mile radius of Pittsburgh, according to Shell.

"It's right in the middle of where the main polyethylene demand in North America is," van Beurden said.

Shell made final investment decision on the project in June. Shell exercised its option to purchase the site in November 2014. In August 2013, Shell said it had secured ethane supply commitments from Hilcorp Energy, Consol Energy, Seneca Resources and Noble Energy.

http://www.platts.com/latest-news/petrochemicals/houston/shell-ramping-up-construction-on-pennsylvania-21780472