NuStar Energy L.P. (NS)

[Enterprising Investor]

A look at Italian refineries that could receive crude oil from the Eagle Ford (1/07/16)

By Sergio Chapa

It's the first crude oil export shipment since federal officials lifted a ban enacted during the 1970s Arab oil embargo.

Federal officials lifted the crude oil export ban on Dec. 18 but in a lightning fast turn around, ConocoPhillips (NYSE: COP) teamed up with San Antonio's NuStar Energy LP (NYSE: NS) to get the Theo T out of the Port of Corpus Christi on New Year's Eve.

Switzerland-based trading company Vitol is bought the oil from ConocoPhillips but is remaining tight-lipped about its ultimate destination.

Marine traffic records show that the Theo T is expected to arrive in Italy on Jan. 20 but its exact destination has not been listed.

A San Antonio Business Journal review of Italy's oil industry infrastructure reveals that the shipment destination makes sense but there are a number of scenarios that can play out.

Italy imports almost all of its crude oil but the Mediterranean nation is a major center of refining activity in Europe. With a total of 17 refineries that can process more than 2 million barrels per day, Italy is the second largest refiner in Europe falling just behind Germany.

Out of Italy's 17 oil refineries, 11 of them are located along the coast and have terminals that are capable of receiving tankers like the Theo T. But out of those coastal refineries, not all of them process the type of light sweet crude from the Eagle Ford.

A review of the refineries reveals that one owned by Italian company Saras SPA on the Island of Sardinia is a good candidate to receive the shipment. The refinery routinely accepts a variety of crude oil types and turns them into useful products for a large number of third-party customers. According to the company's website, almost half of the oil refined at their facility in Sardinia is already classified as light sweet crude.

But a totally different scenario could play out.

If the Theo T delivers the historic shipment to the ports of Savona, Genoa or Trieste, then the crude oil can be sent via pipelines to refineries in the interior of Italy or others in Switzerland, Germany, Austria and the Czech Republic.

Starting in the town of Trieste along the Adriatic Sea, the Trans-Alpine Pipeline, or TAL, can deliver crude oil to refineries in Germany, Austria and the Czech Republic.

The Central European Line, or CEL, receives shipments of crude oil in Genoa and moves it inland to refineries in northern Italy and western Switzerland.

An underground pipeline in the coastal town of Savona delivers crude oil to refineries in northern Italy.

The San Antonio Business Journal will continue to monitor the progress of the Theo T to find out the ultimate destination of historic shipment of crude oil from the Eagle Ford.

Sergio Chapa covers the energy industry for the newspaper.

http://www.bizjournals.com/sanantonio/blog/eagle-ford-shale-insight/2016/01/a-look-at-italian-refineries-that-could-receive.html