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Venezuela MTBE export ban limits options for US producers: trade
HOUSTON
Petroleumworld.com, Aug 21 , 2008Venezuela's ban on MTBE exports will create a new set of market challenges for producers in the US Gulf Coast, who have been been unable to sell MTBE in the US since May 2006, when ethanol effectively replaced it in US-produced gasoline, traders said Wednesday.
"MTBE is going to get ugly," commented one trader. "Barrels will have to go to Europe." This will not be a welcome circumstance for US producers, it would appear, as for most of the year US MTBE prices have been well above those in Europe.
On Wednesday, the European MTBE Platts assessment was about $2.88/gal, well below the current USGC assessment of $3.00-$3.01/gal. Freight and attendant costs to export to Europe from Houston are in the neighborhood of 26 cents/gal.
If MTBE were to be exported today to Europe, the netback to the USGC would be about $2.62/gal. Domestic producers are looking frantically for other options, sources close to the companies have said recently.
The USGC has only two major MTBE producers, Huntsman and Lyondell, which together make about 1.5 million barrels/month.
MTBE EXPORT BAN ADDS TO DOMESTIC SUPPLIES Venezuelan President Hugo Chavez earlier this month issued a decree effectively stopping exports from the SuperOctanos 14,000 b/d MTBE plant, a joint venture between the Ecofuel, a division of Italy's Eni, and Pequiven, a state petrochemical firm.
Although Venezuela's state PDVSA is a net importer of MTBE, estimated at about 750,000 b/m, or 25,000 b/d, sourced from the US and other countries, SuperOctanos was a regular exporter from Venezuela, where subsidized gasoline prices average only 19 cents/gal.
Market sources said SuperOctanos was set to export MTBE when the presidential decree came down and as a result has about 350,000 barrels in storage.
Because of the barrels in storage and because PDVSA recently imported MTBE from the Persian Gulf and the USGC, the sense is the company will not need any MTBE for September and after that will at most take one import monthly.
According to the US Energy Information Administration, Venezuela imports about 500,000-750,000 b/m of MTBE from the US.
The other major buyer of US-produced MTBE is Mexico, which typically takes about 500,000-600,000 b/m.
The balance of the exports go to intermittent buyers including Chile, Costa Rica, the Netherlands Antilles and to Europe, with Europe now the most-likely default destination for US MTBE, market sources suggested.
Story by Robert Sharp from Platts
- robert_sharp@platts.com
Platts 20 08 08
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