Canadian oil transferred at PAL not subject to tariffs

: Freight
25/02/03

Shipments of Canadian crude that are transferred onto very large crude carriers (VLCCs) at the Pacific Area Lightering zone (PAL) en route to Asia-Pacific will not be subject to tariffs.

PAL lies in the US' exclusive economic zone (EEZ), which provides the US with sovereign rights over natural resources within the zone but permits all countries the right to freely navigate the surface waters, including crude tankers, according to the UN Convention on the Law of the Sea.

US president Donald Trump's 10pc tariffs on Canadian energy, set to begin on 4 February, could reroute crude exports out of Vancouver, British Columbia, the Aframax-restricted terminus of the expanded Trans Mountain pipeline system.

Since the first cargo from the Trans Mountain Expansion (TMX) pipeline project in May 2024, Canada has exported about 350,000 b/d from Vancouver through 31 January, according to Vortexa data. About 165,000 b/d went to the US west coast, and the other 185,000 b/d went to Asia-Pacific.

The tariffs could price Canadian crude out of the US west coast and push more barrels across the Pacific. Shippers have shown a preference for direct voyages from Vancouver to Asia, sending about 115,000 b/d directly on Aframaxes and 70,000 b/d via VLCCs at PAL, Vortexa data show.

By Tray Swanson

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