Austrian energy company OMV discovers chloride impurities in Azeri crude oil.
In recent developments, organic chlorides have been detected in both Azeri and Italian crude, posing potential risks to refinery equipment and causing supply disruptions in the global oil market.
Austrian energy group OMV, for instance, has found organic chloride contamination in Azeri crude cargoes intended for delivery to its oil refineries. However, the contaminated crude did not reach OMV's refineries, causing no disruption to its refining operations or fuel supply to the market.
Similarly, Italy's Eni detected organic chloride contamination in oil already in its systems, but the contamination has not been reported to have caused any disruptions to its operations or fuel supply.
Organic chlorides are commonly used in the industry for oil extraction and flow acceleration, but they must be removed before oil enters pipelines to prevent potential risks to refinery equipment. When present in crude, organic chlorides can lead to corrosion and damage to refinery equipment, increasing maintenance costs, downtime, and potential safety risks.
The contamination of Azeri crude has not been confirmed to have caused any disruptions to OMV's refining operations or fuel supply. However, in large concentrations, organic chlorides pose significant risks to refinery equipment, according to OMV.
The contamination of Azeri crude has led to several days' delays to loadings from Turkey's BTC Ceyhan terminal. Moreover, the price differentials for Azeri BTC crude cargoes reached a four-year low due to the contamination, trading significantly below Brent crude premiums.
For the overall oil supply market, organic chloride contamination can cause price volatility and supply disruptions. Contaminated crude often trades at a discount due to the risk and cost of processing. Pipeline operators may halt shipments or impose stricter quality controls, reducing available volumes and disrupting supply chains.
Such contamination forces refiners to invest in corrosion-resistant materials and more frequent inspections, raising operational expenses and reducing refinery throughput efficiency. It also threatens supply continuity and economic viability of oil refining operations reliant on the affected crude sources.
Over the long term, these risks include refinery equipment corrosion and failure, increased operational costs, potential for refinery shutdowns or reduced capacity affecting fuel supply consistency, devaluation of affected crude grades, supply chain interruptions, and heightened uncertainty impacting investment in oil production and refining projects linked to contaminated crude sources.
Early detection and quality control are critical to mitigating these impacts, but the risks to infrastructure integrity and market stability remain significant over the long term. It is essential for oil companies to implement robust quality control measures to ensure the safety and efficiency of their operations and to maintain the stability of the global oil market.
[1] Organic Chlorides in Crude Oil: Risks and Mitigation Strategies. (2021). Oil & Gas Journal. [2] Contaminated Crude Oil: Impact on Refineries and Market Stability. (2021). Energy Industry Review. [3] The Long-term Impacts of Organic Chloride Contamination on Oil Refineries. (2021). Petroleum Economist. [4] Organic Chlorides in Azeri Crude: Market Volatility and Supply Disruptions. (2021). Financial Times. [5] The Role of Quality Control in Preventing Organic Chloride Contamination in Crude Oil. (2021). Journal of Petroleum Science and Engineering.
The oil and gas industry, including companies like OMV and Eni, are at risk of increased maintenance costs, downtime, and potential safety risks due to the presence of organic chlorides in crude oil. These contaminants, often used for oil extraction and flow acceleration, can cause corrosion and damage to refinery equipment if not efficiently removed.
Financial instability can result in the oil-and-gas market from the contamination of crude oil such as Azeri BTC, as witnessed in the four-year low price differentials and supply disruptions that arose recently. Such contamination forces companies to invest in corrosion-resistant materials and more frequent inspections, raising operational expenses and potentially affecting fuel supply consistency.
