ExxonMobil has bought Mars crude produced offshore Louisiana for August delivery, for the first time in several days after briefly halting purchases due to a quality issue with zinc contamination, Reuters reports, citing two sources.
Mars crude is produced offshore Louisiana and is a staple with Gulf Coast refineries, including Exxon’s refinery in Baton Rouge, Louisiana.
However, supply of the Mars crude grade to the Gulf Coast refining hub was reduced last week after Chevron said that the start-up of a new offshore well may have contributed to the change of the composition of the Mars crude grade and zinc contamination of the medium sour crude.
Exxon has said it wouldn’t buy Mars crude until the issue with the zinc contamination is resolved.
Last week, the U.S. Department of Energy authorized the exchange of up to 1 million barrels from the Strategic Petroleum Reserve (SPR) to ease the crude shortage at Exxon’s refinery in Baton Rouge.
DOE has authorized an exchange from the SPR with ExxonMobil Corporation “to address logistical challenges impacting crude oil deliveries to the company’s Baton Rouge refinery.”
U.S. Secretary of Energy Chris Wright authorized this action to help maintain a stable regional supply of transportation fuels across Louisiana and the broader Gulf Coast.
“The exchange agreement preserves the SPR’s operational flexibility and will not impact or delay the Department’s ongoing efforts to refill the reserve,” DOE said.
The exchange will support ExxonMobil’s restoration of refinery operations that were reduced due to an offshore supply disruption. ExxonMobil will return the borrowed crude along with additional barrels of crude oil for the SPR at no cost to the taxpayer.
Following the emergence of the quality issue with Mars, the grade traded this week at a discount of about $0.30 to the U.S. price at the hub at Cushing, Oklahoma, compared to a premium of $1 per barrel to Cushing crude at the end of June.
By Tsvetana Paraskova for Oilprice.com
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