* Ineos lifts all restrictions on oil, gas line flows
* Restarts operations at Kinneil gas facility

The UK’s Forties oil pipeline is set to resume normal flows of around 450,000
b/d next week after flow restrictions on the repaired line were lifted, Ineos,
operator of the key crude supply artery, said Thursday.

All restrictions on oil and gas flows feeding the pipeline have been lifted
and crude flows are expected to reach normal rates “around new year,” Ineos
said in an update.

In previous guidance Monday, the company had estimated normal flows would be
achieved “early in the new year.”

Ineos, which only recently acquired the pipeline system from BP, discovered a
hairline fracture in the line December 8, leading to a halt in crude flows
through the line from December 11 and shutting-in of all the fields feeding in
to the system.

The company also said that the Kinneil gas processing plant, which feeds in to
the pipeline, had partially restarted.

Ineos also reiterated that the repair on the pipeline, which handles around
45% of UK liquids output, was now mechanically complete.

Earlier in the week, it said that it had started pressure testing the line,
allowing a small number of customers to send oil and gas through the pipeline
at reduced rates.

More than 80 fields contribute to Forties Blend and production at some of
these fields is beginning to resume.

Shell said a gradual restart of production operations had begun on the
Shearwater and Nelson platforms in the central North Sea.

Production at the Forties field operated by Apache restarted last week, and at
the time the company said that it could take several days before production
returns to pre-shut-in levels.

It could not be confirmed if output at Buzzard, the largest field in terms of
current output, had fully resumed.

CNOOC’s Nexen, which operates the field, was unavailable for comment.

The Buzzard field, which makes up about 31% of the total crude stream, began
production through the Forties Pipeline System in 2007.

Forties Blend is a medium sour crude with a sulfur content and API gravity
that vary according to the percentage of Buzzard within the blend.

Traders, however, said that force majeure for deliveries of crude from
offshore platforms into the Forties pipeline, which accounts for about 40% of
the UK’s North Sea crude, were still currently in place.


The shutdown of this key artery had resulted in several deferrals of crude

The original January loading program was revised when 13 cargoes were deferred
into the month from December, while 12 cargoes were deferred from January into

As a result, Forties is currently scheduled to load 18 cargoes or 385,714 b/d
in February, down three from January’s revised program, according to a copy of
the loading program.

But trading sources noted that there were no further deferrals since early
last week.

The first cargo scheduled in the revised December program is F1208 of ENI
equity, scheduled for December 28-30, which is currently with Petroineos
according to Platts tracking data and is likely to feed in to the Grangemouth

The next scheduled cargo is F1209 of ConocoPhillips equity, scheduled to load
December 29-31.

Total loadings of Forties in December were initially scheduled to be 13.2
million barrels, or 425,806 b/d, with average daily loadings down 14,194
b/d from November.

Traders also said that the backwardated structure underlying the weekly Brent
Contracts for Difference had flattened sharply in the past few days on news
that flows from the pipeline had resumed.

The news had initially created a strongly backwardated market on the
Brent-related derivatives markets but there are some signs that demand
for this grade will pick up in the coming weeks.

Buying interest for the UK’s Forties Blend also returned to the Platts
Market on Close assessment process this week with good spot demand shown by
Litasco, the Swiss trading arm of Russian major Lukoil.

The shutdown of the pipeline occurred less than six weeks after Ineos
completed the purchase of the pipeline, together with the Kinneil gas
separation terminal, from BP for $250 million.

— Eklavya Gupte with Maude Desmarescaux, eklavya.gupte@spglobal.com
— Edited by Jason Lindquist, newsdesk@spglobal.com

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