TMX to shake up USWC, Pacific Aframax market

  • Spanish Market: Crude oil, Freight
  • 02/04/24

The looming start-up of the Trans Mountain Expansion (TMX) to Canada's Pacific coast is poised to reshuffle crude tanker flows in the region.

The expanded pipeline and marine terminal project, which will nearly triple the crude takeaway capacity from Alberta to Vancouver to 890,000 b/d, made a call for a combined 4.2mn bl of crude from shippers starting in April as it prepares to fill the new pipeline. Already, two cargoes have been heard sold to Asia-Pacific buyers in what has historically been a US west coast-dominated market.

Commercial operations on the pipeline are expected to begin in May.

With new access to Asia-Pacific markets, where oil demand is growing, Canadian crude will compete primarily with oil from Russia and the Middle East, but on the US west coast, where demand is stagnant at 1.4mn b/d, TMX crude will need to replace other supplies, shipbroker Poten said.

It will be difficult to dislodge medium sour Alaskan North Slope (ANS) crude, which makes up about a third of supplies on the US west coast, Poten said. Many US west coast refiners have been configured to run ANS for decades, and a well-integrated fleet of US flag tankers hauls ANS from Alaska to California and Washington, as required by the Jones Act.

Market participants expect Canadian heavy sours to compete most directly with similar grades from Ecuador, which supplied about 125,000 b/d of crude to California in 2023, according to data from Kpler. But Canadian crude holds a key advantage over Ecuadorian crude: Ecuadorian law requires that its exports be carried by Flopec, a state-owned shipping company, or companies under agreement with Flopec, which limits shipping competition and creates inflated freight rates.

Exceptions include cargoes when Flopec does not have tonnage in position or cargoes requiring ship sizes such as Suezmaxes, which Flopec does not operate.

The halt of crude production at Ecuador's Ishpingo, Tambococha and Tiputini (ITT) fields by 1 September also could reduce the country's output by 48,000 b/d in 2024, according to Petroecuador. To offset the loss of production, the company plans to drill 156 wells — up by 56pc compared with the 100 wells drilled in 2023 — in several blocks.

Asia-Pacific demand for Canadian crude

Meanwhile, Chinese refiners have already purchased two Aframax-size cargoes of TMX crude for June delivery. Asia-Pacific demand for Canadian crude is expected to increase, though how much demand materializes depends on the pricing of export supplies, the availability of suitable tonnage and the competitive response from other producers, Poten said.

In the first quarter of 2024, Vancouver-China Aframax rates ranged from $4.25mn to $5.5mn lumpsum, or $7.78/bl to $10.07/bl for Cold Lake crude, according to Argus data. But shipowners likely would reposition their tonnage to or near Vancouver from other regions if rates remain at those levels, a shipowner said.

An increase in vessel availability would create downward pressure on rates, but some shipowners already involved in the US west coast market might charge a premium to leave the region for Asia-Pacific, market participants said.

In anticipation of volatile freight rates, at least eight Aframaxes will be used on time-charters for two TMX shippers with the intention to use them in Vancouver, market participants said.


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22/05/24

US WTI crude flows to India climb in April

US WTI crude flows to India climb in April

Singapore, 22 May (Argus) — Improved arbitrage economics and firmer demand for petrochemical feedstocks helped boost exports of naphtha-rich US WTI crude to India in April to its highest level in nearly a year, according to vessel tracking data. Around 208,000 b/d of light sweet WTI departed the US Gulf Coast for India in April, preliminary data from global trade analytics platform Kpler and Vortexa show. The shipments are to discharge at various Indian ports mostly in June, although the vessels' final destinations are still subject to change. The April volumes were higher compared with India-bound exports in March at an average of about 159,000 b/d and the highest monthly shipments of WTI from the US to India since May 2023, according to Kpler and Vortexa. Indian refiners had stepped up their purchases of WTI in recent months as prices for the grade on a delivered basis were deemed competitive compared with comparable alternatives such as Abu Dhabi light sour Murban crude, sources close to international trading firms and Indian refiners told Argus. Weak European demand as a result of refinery turnarounds had weighed on April-loading WTI prices, prompting other Asian refiners like China's state-controlled Sinopec to also buy June-delivery cargoes. The increase in WTI flows to India follow Indian refiners shunning light sweet ESPO Blend and Sokol crude from far east Russia earlier this year because of tightening US sanctions, prompting refiners to consider other alternative grades of similar quality. While Indian refiners have resumed purchases of ESPO Blend and Sokol crude loading in May and June following weaker demand from the grade's usual buyers in China, WTI exports to India remain steady. State-controlled Bharat Petroleum (BPCL) has signed a deal with BP to buy 1mn bl/month of WTI for four months starting in June, while preliminary data from Kpler and Vortexa show that more than 210,000 b/d of WTI has already departed for India in the first half of this month. Petrochemical push WTI is appealing for Indian refiners as the grade has a higher yield of naphtha, a key petrochemical feedstock, than other options such as Murban and west African crude, with Indian refiners looking to increase their petrochemical output. Naphtha comprises roughly 35pc of WTI's product yield, while Murban has a higher yield of gasoil and jet-kerosine than WTI. Despite Murban prices also coming under pressure as a result of Abu Dhabi's state-owned Adnoc diverting more of its heavier Upper Zakum crude to the domestic Ruwais refinery and freeing up more Murban for exports , Indian refiners prefer to import WTI for its high naphtha yields, market participants said. Firmer domestic demand has cut India's naphtha exports, with Indian refiners keeping larger volumes for use as a petrochemical feedstock. India's naphtha exports in 2023 were around 126,000 b/d (5.15mn t), down by about 17pc from average exports of 151,000 b/d in 2022, according to oil ministry data. Indian state-controlled refiners have instead focused on expanding their refining capacity , with a view to increase their diversification into petrochemicals to meet export demand. Most state-controlled refiners plan new petrochemical capacity.BPCL's expansion of its 156,000 b/d Bina refinery to 220,000 b/d will feature a new chemicals complex and produce more petrochemical products like ethylene and propylene. Hindustan Petroleum is aiming to commission an integrated petrochemical complex at its new 180,000 b/d Barmer refinery in 2025. By Sathya Narayanan and Roshni Devi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Asia demand lifts US VLCC rates to 4-month high


21/05/24
21/05/24

Asia demand lifts US VLCC rates to 4-month high

Houston, 21 May (Argus) — Rates for 2mn bl very large crude carriers (VLCCs) on the US Gulf coast reached four-month highs on 17 May amid elevated Asia-Pacific demand for US crude, especially in China. The rate to ship 270,000t of crude from the US Gulf coast to China, including $250,000 Corpus Christi, Texas, load-port fees, climbed by 11.6pc from 7-17 May to $10.1mn lumpsum, or $4.85/bl for WTI, the highest level since 12 January, according to Argus data. A surge of demand in the first half of May reduced tonnage in the Atlantic basin as Chinese refiners eye the end of a heavy refinery maintenance season . Over that span, the time-charter equivalent (TCE) rate, which reflects daily earnings for shipowners, for a scrubber-fitted VLCC hauling crude from Corpus Christi to Ningbo, China, increased by about $9,150/d to $50,613/d, according to Argus data. Similarly, the US Gulf coast-Rotterdam VLCC rate on 17 May matched its highest level since 11 January, reaching $4.95mn lumpsum, or $2.38/bl for WTI, including load-port fees, after Asia-Pacific demand limited the amount of VLCCs available for shipments to Europe. The rally comes amid rising onshore inventories of crude in China. Stocks increased to 924mn bl in the week ended 19 May, the most in nearly five months, according to data from analytics firm Vortexa. "An expected increase in refinery utilization during the third quarter justifies inventory building during (the second quarter), while the current import trend and ongoing refinery maintenance may imply less sharp inventory builds during May-June compared to last year," shipbroker BRS said. Last year, Chinese inventories of crude shot up to 1.02bn bl at the end of July from about 925mn bl at the end of April, Vortexa data show. A slower pace of inventory builds may create a less volatile environment for VLCCs compared to last year, BRS said. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia pauses pro-upstream offshore oil, gas reforms


21/05/24
21/05/24

Australia pauses pro-upstream offshore oil, gas reforms

Perth, 21 May (Argus) — Australia's federal resources minister Madeleine King acknowledges the political situation in the nation's upper house of parliament the Senate prevents any deal to clarify consultation requirements for the nation's offshore oil, gas, carbon capture and storage (CCS) and renewables sectors. The Senate last week passed the Labor party-led federal government's legislation on changes to deductions permitted under the Petroleum Resources Rent Tax (PRRT) and a new fuel efficiency standard for light commercial and passenger vehicles . But the deal struck with the Greens party and two independent senators meant the government withdrew amendments designed to specify which stakeholders must be consulted under law before receiving environmental permits. King blamed the Greens for her government removing the amendments from the agenda. "My disappointment is not for the industry but the community that will remain subject to inadequate and inappropriate consultation requirements for longer," King said on 21 May at the Australian Energy Producers conference in Perth. "The Greens political party and the crossbench independents and others promoted widespread misinformation in relation to the proposal that would ensure the community had the benefit of clarity and certainty in consultation." Environmental lawyers delayed field drilling and pipeline laying for Australian independent Santos' $4.6bn Barossa backfill project from late 2022 until early 2024, citing insufficient consultation with traditional owner groups, in a case ultimately dismissed by the Federal Court of Australia. Changes to offshore laws were promised by the federal government in January with concerns legal tactics could lead to further lawsuits aimed at driving up costs for LNG backfill, offshore wind power projects or CCS. Climate campaigners saw the changes as a vehicle for easing scrutiny on developers and its politicians promised to oppose any changes. But having dealt with the Greens instead of the Liberal-National coalition on legislation for fuel efficiency and the PRRT because of the latter's demands that the approvals process for oil and gas be expedited, Labor is less likely to now receive support for changes to consultation ahead of next year's federal election. The future gas strategy released by the federal government this month said new supplies are urgently needed, as gas-fired power generation will likely replace firming capacity provided by retiring coal-fired power plants. The report also found multiple reasons for Australia's low gas exploration investment, including difficulties with the approvals processes, legal challenges and market interventions that may lead international companies to focus on lower cost and lower risk fields in other jurisdictions. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US Coast Guard to assess port infrastructure risks


20/05/24
20/05/24

US Coast Guard to assess port infrastructure risks

Houston, 20 May (Argus) — Federal officials will conduct a study of US port infrastructure safety nearly two months after a massive containership brought down the Francis Scott Key Bridge at the Port of Baltimore. The US Coast Guard (USGC), along with the Ports and Waterways Safety Board of Inquiry, will study 10 US ports to evaluate the risks of increased traffic and large commercial vessels on infrastructure like bridges, railways, pipelines, cargo terminals and power plants. A report on risk mitigation strategies and practices will be issued by the board and finalized by 31 May 2025. The study could help avoid accidents like the one in Baltimore that killed six and curtailed traffic in and out of the harbor since 26 March , effecting markets for metals, biofuels, coal, organic agriculture, petcoke and other products. The containership that struck the bridge was removed from the accident site on Monday, allowing commercial vessel traffic to resume . The port is expected to fully reopen by the end of May. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Containership moved from Baltimore bridge site: Update


20/05/24
20/05/24

Containership moved from Baltimore bridge site: Update

Includes information on resumption of all vessel traffic. New York, 20 May (Argus) — Deep-draft commercial vessels can resume movement in and out of the Port of Baltimore following today's removal of the containership that collided with the Francis Scott Key Bridge in March, according to officials. The 116,851dwt Dali had been pinned under the wreckage of the bridge since 26 March, when it lost power and hit the span, sending it into the water. Earlier this month the sections of bridge still on the ship were removed and on Monday the ship was refloated and relocated. With the Dali relocated all movements by deep-draft vessels that would normally travel to and from the port could resume, according to the federal Unified Command overseeing the response. Remnants of the bridge still need to be removed from the seabed before the commercial channel is restored to its full width. The bridge collapse blocked traffic in and out of the Port of Baltimore, which is a major coal export and automobile import terminal. Several small, shallower channels had been open to allow some vessel traffic, but not the largest ships that normally make call in Baltimore. The US Army Corps of Engineers is seeking to have the main channel, with a depth of 15.24m (50 feet), fully reopened by the end of May. By Gabriel Squitieri Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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