VGO trades higher on outage at Motiva’s Texas crude unit

13 June 2012 19:41  [Source: ICIS news]

HOUSTON (ICIS)--The premium traded for vacuum gas oil (VGO) increased following the shut down of a crude unit, expected to last two to five months, at the recently expanded Motiva Port Arthur refinery in Texas, traders said on Wednesday.

The increase also followed Shell’s large purchase of VGO. The company bought 1.0m bbl of VGO on Monday, according to a VGO broker on the Gulf coast.

Motiva is a 50-50 joint-venture between Shell and Saudi Aramco.

The crude distillation unit (CDU) went off line after a failed weekend start-up attempt on Saturday at the 600,000 bbl/day refinery, the largest in the US.

The Texas Commission on Environmental Quality filing said the unit had been stabilised, but it did not mention if production was impacted.

A refined products trader on the Gulf coast said the CDU’s outage took refinery capacity down by 50%.

Shell would not comment on the length of the unit’s outage or if other unit’s capacities had been reduced.

VGO premiums to West Texas Intermediate (WTI) crude gained $0.25-1.75/bbl. A broker said low-sulphur VGO traded at $28.00-28.50/bbl over WTI, increasing from premiums of $27.25-28.25/bbl. For high-sulphur VGO, premiums jumped to $26.50/bbl, up from 24.25-25.25/bbl traded on 8 June, the broker said.

The crude unit produces VGO, which feeds the fluid catalytic cracker (FCC) to yield the primary blendstock for gasoline, cat gas.

Accordingly, the crude unit’s outage would hinder gasoline production unless the refinery purchased spot VGO to continue operations at its FCC unit.

By: Sheena Martin
+1 713 525 2653

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