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Tropical Storm Cristobal closes ports in Mexico´s Bay of Campeche

Highlights

Ports closed in three costal states

No impact on essential infrastructure

Storm to head north into US Gulf of Mexico

Mexico City — Tropical Storm Cristobal forced ports to close in three states in Mexico's Bay of Campeche area June 3, although there has been no major impact on oil, gas or power generation infrastructure.

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Ports in the states of Veracruz, Tabasco and Campeche have been closed to all ships, said the head of Mexico's civil protection agency, David Leon, in a press conference.

Northern ports in the state of Veracruz remained open, including the ports of Veracruz and Tuxpan, according to a Mexico-based oil broker.

All relevant oil and gas infrastructure is working without disruption due to emergency protocols put in place by Pemex, the state oil company, said Leon. Power generation plants of state utility CFE in the area were also operating normally, he said.

The 220,000 b/d Minatitlan refinery, located in Veracruz, is operating normally, although still below capacity, a source at the plant said.

It was not clear what impact the storm has had on petroleum terminals in the area. Major Mexican oil facilities such as the Dos Bocas marine terminal will likely face loading delays. Other facilities in the storm's path include the Villahermosa terminal, Campeche terminal and Progreso terminal, and Pajaritos terminal.

The Pajaritos terminal and the Tuxpan terminal are the two main loading destinations for US refined products exports into Mexico, according to Kpler vessel tracking software.

However, exports to Mexico have slowed since March as the coronavirus has reduced fuels consumption in Mexico.

Kpler showed very few clean or dirty tankers in the area June 3.

Campeche is also one of the most active oil and gas exploration and production regions in the country.

Pemex was not immediately available for comment.

Cristobal, which was formed with the remnants from storm Amanda, showed maximum sustained winds of 60 mph June 3, according to the US National Hurricane Center, which issued a tropical storm warning for area ports.

The storm is currently on track to head north into the US Gulf of Mexico, home to roughly 1.9 million b/d of crude production, according to the US Energy Information Administration. The storm is expected to weaken before it makes landfall in Louisiana by late June 6.

OFFSHORE PRODUCERS PREPARE

Offshore oil and gas producers said they are monitoring the storm, and BP has already started to reduce output in preparation.

"With forecasts indicating that Cristobal will begin moving north across the Gulf of Mexico later this week, BP has begun removing offshore personnel and ramping down production at BP's operated facilities Thunder Horse, Atlantis and Na Kika," said BP spokesperson Jason Ryan. "Non-essential personnel are being evacuated from BP's operated Mad Dog platform but production remains unaffected at this time."

Other producers were beginning to reduce personnel as well.

"To ensure the safety of our people and protection of the environment, we are removing non-essential personnel from some of our central GOM facilities," Occidental Petroleum said in a prepared statement. "All of our facilities in the Gulf remain operational at this time."

Likewise, Royal Dutch Shell said it has activated its hurricane team and is closely monitoring the storm.

"We will be reducing personnel on board some assets as work activities and conditions allow," said Shell spokeswoman Cynthia Babski. "There are no planned impacts to production at this time."

Gas liquefaction terminals in Louisiana and Texas are also monitoring Cristobal to determine if they need to implement contingency plans.

At Cheniere Energy's Sabine Pass in Cameron Parish, Louisiana, the operator has emergency preparedness and response plans that it will activate if necessary, spokeswoman Jenna Palfrey said.

In Hackberry, Louisiana, south of Lake Charles, current operations of Trains 1 and 2 as well as commissioning activities underway for Train 3 have not been interrupted at Sempra Energy's Cameron LNG, spokeswoman Anya McInnis said. Maintenance on Train 3 unrelated to the storm continued.

Operators have already been pulling forward maintenance, shutting down units and working to control costs as they seek to manage lower production and trade flow due to the coronavirus pandemic.

Feedgas flows to US Gulf Coast LNG export terminals rose approximately 600 MMcf/d to 3.8 Bcf/d on June 3 versus the day before, but flows are still down substantially from a week earlier amid weak global demand.

With the volume of cargo cancellations reported for July approximately double the count for June, and questions about the extent of a possible recovery in August, the US market is expected to face pressure for the foreseeable future. Decisions on whether to sanction new projects are likely to see further delays.