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UK Forties oil pipeline set to return to normal rates within days

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

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The UK's Forties oil pipeline is set to resume normal flows of around 450,000b/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 liftedand crude flows are expected to reach normal rates "around new year," Ineossaid in an update.

In previous guidance Monday, the company had estimated normal flows would beachieved "early in the new year."

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

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

Ineos also reiterated that the repair on the pipeline, which handles around45% 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 pipelineat reduced rates.

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

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

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

It could not be confirmed if output at Buzzard, the largest field in terms ofcurrent 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, beganproduction through the Forties Pipeline System in 2007.

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

Traders, however, said that force majeure for deliveries of crude fromoffshore platforms into the Forties pipeline, which accounts for about 40% ofthe UK's North Sea crude, were still currently in place. LOADING DEFERRALS

The shutdown of this key artery had resulted in several deferrals of crudecargoes.

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

As a result, Forties is currently scheduled to load 18 cargoes or 385,714 b/din February, down three from January's revised program, according to a copy ofthe loading program.

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

The first cargo scheduled in the revised December program is F1208 of ENIequity, scheduled for December 28-30, which is currently with Petroineosaccording to Platts tracking data and is likely to feed in to the Grangemouthrefinery.

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

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

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

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

Buying interest for the UK's Forties Blend also returned to the PlattsMarket on Close assessment process this week with good spot demand shown byLitasco, the Swiss trading arm of Russian major Lukoil.

The shutdown of the pipeline occurred less than six weeks after Ineoscompleted the purchase of the pipeline, together with the Kinneil gasseparation terminal, from BP for $250 million. -- Eklavya Gupte with Maude Desmarescaux, Edited by Jason Lindquist,