Switzerland has released emergency stocks of oil products due to the unplanned shutdown of its only operating refinery, Cressier, and low Rhine water levels, Lucio Gastaldi from the Federal Office for National Economic Supply said Tuesday. Gastaldi said the country would release 50,000 cu m of diesel and 40,000 cu m of gasoline -- about 2.5% to 4.5% of the country's total stocks for the two refined products.
"Three things happened at the same time," said Gastaldi. "The Cressier shutdown, low water levels on the Rhine and railways being at full capacity." This is the first time Switzerland has used its emergency stocks since November 2010, when a strike at French refineries curbed the amount of oil products shipped by pipeline to the country.
The 68,000 b/d Cressier refinery shut down last Wednesday due to a leak in the heat exchangers, said operator Varo Energy. Cressier is the last operating refinery in Switzerland after Tamoil's Collombey plant closed at the end of February due to poor margins. Gastaldi said the stock release is only temporary and could last for around 10 days, time for the refinery to return to production.
In addition, water levels on the Rhine have been low since July due to hot and dry weather in Germany and Switzerland, hampering the flow of barges carrying oil products and limiting the amount of resupply. Water levels at Kaub in western Germany -- which serves as a useful proxy for overall Rhine navigability -- were measured at 77 cm at 13:00 local time (1200 GMT) Tuesday, down 5 cm from 24 hours earlier and around 64% below the level at the same time last year. The lowest ever recorded level at the town was 35 cm back in September 2003, according to German federal waterways data.
"Strategic stock reserves are there for exactly situations like this and it's going to rain sometime so the stocks can be replaced. It's not like there isn't oil in storage in Amsterdam-Rotterdam-Antwerp [trading hub]," said one trader. "I'm not hearing of any rain...Kaub levels are due to reach mid-60 [cm] levels by the end of the week," said a second trader.
Oil product markets including diesel and gasoline are well supplied at the moment, but low water levels on the Rhine and the Danube have created oil supply issues for Germany, Switzerland and parts of Eastern Europe. Oil tanks in ARA are mostly, partly as a result of the situation on the Rhine.