August 18, 2016 / 9:21 PM / in 2 years

Vitol says Exxon Mobil lacked 'transparency' during Torrance outage

HOUSTON (Reuters) - Swiss commodity trader Vitol SA [VITOLV.UL] criticized Exxon Mobil Corp this week for failing to be transparent about maintenance at its Los Angeles refinery following a February 2015 blast, which contributed to tighter gasoline supplies and higher prices.

Refinery units are heavily damaged after an explosion at the Exxon-Mobil refinery in Torrance, California, February 18, 2015. REUTERS/Bob Riha Jr.

Speaking before a committee of the California Energy Commission on Tuesday, Brad Lucas, a West Coast trader for Vitol, said that lack of information from Exxon made it difficult to time cargo deliveries into the West Coast market.

The explosion at Exxon Mobil’s 149,500 barrel-per-day Torrance refinery, which provides about 10 percent of California’s gasoline supply, knocked a gasoline-producing unit offline for more than a year.

The higher prices created an incentive for traders to import fuel into California, but only if they could gauge when prices might fall after a refinery restart.

Lucas said at the meeting that Exxon kept promising that the Torrance refinery would come back online “next month,” but that it never seemed to happen. “In my opinion, there was a lack of transparency with what was going on with Torrance,” he said. “Basically, the lack of transparency kept cargoes at bay.”

The meeting by the Commission’s Petroleum Market Advisory Committee was to discuss gasoline price volatility and policy alternatives to mitigate price spikes.

Exxon in an emailed statement on Thursday rejected Vitol’s claims, saying it operated responsibly and in strict compliance with all laws.

PBF Energy acquired the Torrance facility from Exxon on July 1.

Vitol’s comments came after California Attorney General Kamala Harris issued subpoenas to refiners in the state in May as part of a probe into whether they manipulated gasoline prices since 2014.

California’s gasoline prices are among the highest in the continental United States, in part due to special blending requirements mandated by the state, and because it imports much of the crude oil it refines.

In July 2015, refinery outages and tightened supplies pushed Los Angeles wholesale CARBOB gasoline prices to record levels of more than a $1.30 a gallon premium to the U.S. RBOB futures contract.

Kinder Morgan, which operates pipelines and terminals, also spoke at the hearing.

Editing by Terry Wade and Matthew Lewis

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