Scotland's Finnart Pipeline Repairs Projected to Continue Through April
(Reuters) — Repair work on the Finnart pipeline that supplies Scotland's only refinery will take longer than expected to complete, five industry sources told Reuters, in the latest in a series of setbacks this year.
The works could continue into April, two of the sources said, without giving an explanation. Market participants were previously expecting a March completion date, with repairs estimated to take several weeks from early February.
Repairs began after a small oil leak was discovered on the pipeline in early January.
"Now that the pipeline repair solution has been identified, the focus is to ensure appropriate remediation of the site," the Scottish Environment Protection Agency said. They said they could not comment on the duration of the repairs.
"Our regulatory staff are in ongoing discussions with Petroineos and their contractors to ensure they are clear on our expectations and plans are appropriate."
Petroineos declined to comment on the situation.
As long as the repair works on the Finnart pipeline continue, the 150,000 barrel per day Grangemouth refinery is unable to access crude imported from international markets, although it too is undergoing maintenance, reducing its need for crude.
The Grangemouth refinery took its largest remaining crude distillation unit (CDU) offline on Feb. 16 and in early January a diesel-producing hydrocracker was offline, the British parliament was told in response to a parliamentary question.
Further details were not available.
The refinery has increased its diesel imports, taking around 30,000 bpd in January, according to data from Kpler.
The highest monthly total since data began in 2013, it coincided with an upsurge in diesel prices on international markets and strong refining margins that Grangemouth could not benefit from.
Refining margins for diesel barges averaged around $34.30 a barrel in January, their highest since September.
Grangemouth is a major supplier of road fuels to Scotland's most populous Central Belt region and provides jet fuel for Scottish airports.
Forties Fallout
The maintenance could impact the North Sea crude market, two of the sources said, which is of global significance because it sets the dated Brent price benchmark.
As well as receiving crude via Finnart, Grangemouth receives North Sea crude via the Forties Pipeline System.
Higher demand as a result of the Finnart pipeline outage helped to push Forties differentials to a three-month high.
But with most of its crude processing offline, the plant's appetite for Forties could drop, leaving more volumes on offer in the spot market, the sources said. None of the sources was willing to be named because they were not authorized to speak publicly.
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