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Crude oil on its way from Africa to the United States, destined for an ill-fated refinery that plans to close its doors permanently in Pennsylvania, is being diverted to other places, according to Reuters sources.
The 335,000-barrel-per-day Philadelphia Energy Solutions (PES) refinery, which will close permanently on Monday, used 43.1 million barrels of African oil last year. Only the Phillips 66 refinery in New Jersey imported more oil from Africa.
The oil currently being diverted is a one-million-barrel shipment of Nigerian crude oil, which is now headed into storage in Canada, Reuters said, citing Kpler, which also shows a million barrels of crude idling in nearby waters.
But even more crude has been diverted away from the refinery and to new buyers, according to Refinitiv Eikon data, and at a “heavy” discount, Reuters added.
The United States purchased 4.1 million barrels of Nigerian crude oil in April, the last month for which the Energy Information Administration published data.
Pennsylvania decided not to pour money into saving the largest refinery on the Eastern seaboard after a couple of explosions in June took it offline. Pennsylvania’s decision to let the refinery wither on the vine was multifaceted, citing not just safety concerns but “competitive challenges against more modern refineries that would be extremely costly and difficult to overcome,” a spokesman for Pennsylvania’s governor said at the time.
The 1300-acre, 145-year-old refinery is a near dinosaur, went through bankruptcy proceedings in 2018, citing its financial failings due to the federal Renewable Fuels Standard Policy and a lack of access to cheap domestic crude oil, among other factors.
The closure of the Pennsylvania refinery will cut US refining capacity by 2% to 18.46 million bpd, according to Reuters calculations of government data.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.