Major Refineries Receiving Maintenance
Indian and Chinese companies have spent billions over the past decade becoming major players in the global refining industry, but now they will need to conduct some heavy maintenance during Q3 and Q4 should they wish to avoid any potential slowdown in production, according to the latest report from research and consulting firm GlobalData.
The new report highlights that Indian refineries are taking advantage of the lower-demand season by performing a large amount of scheduled maintenance work. Indian Oil Co. will perform a 45-day full plant turnaround in Q3 2013, at its 160,000 barrels of oil per day (mbd) refinery at Mathura, and a fluid catalytic cracker (FCC) turnaround at the same site for a further 15 days. In Q4 2013, Bharat Petroleum will perform maintenance on an atmospheric distillation unit and a 50.2 mbd diesel hydro-treating unit at its 191 mbd refinery in Kochi.
Some Chinese refineries will also undergo work this year. In Q4 2013, China National Offshore Oil Co. will shut an FCC in its Huizhou refinery for planned maintenance. In the same period, Fujian Refining and Petrochemicals is planning to conduct a 50-day full plant turnaround at its 280 mbd refinery in Fujian.
“Crude oil sellers and traders have their eyes on the Asia-Pacific region’s refineries,” says Jeffrey Kerr, GlobalData’s managing analyst for Downstream Oil and Gas. “Any potential slowdown in refined product demand in China or India would be likely to have a knock-on effect on the rest of the region and would affect throughputs. Some of these refiners could extend their planned maintenance periods if the economics dictated staying shutdown made more sense from a fiscal perspective.”
Brazil is another emerging country that will need to conduct maintenance at its refineries. Petrobras, Brazil’s state-owned oil company, managed to reduce gasoline imports to 81 mbd in Q2 2013, but this level will be difficult to maintain as the company will be carrying out scheduled work on two of its refineries during Q4 2013. This will make it difficult to maintain high levels of refinery output for the remainder of the year.
“It will be a couple of years before Brazil’s next two under construction refineries come onstream, meaning that Brazil will continue to be a net importer of refined products from the U.S. for some time to come,” says Kerr.
Although maintenance work is scheduled in all major regions of the world, global refineries have maintained high rates of operation throughout Q3 2013, as strong margins in those regions encourage companies to maximize the production of refined products.
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.