PetroChina ships diesel to Americas in bigger cargoes

Chinese state-controlled oil firm PetroChina has started shipping products to Latin America on larger, 70,000-75,000t long-range (LR) vessels as it looks to expand its market share by cutting transport costs.

The LR vessel Fulham Road, carrying 60,000t (448,000 bl) of diesel from PetroChina's 200,000 b/d Liaoyang refinery, left Yingkou port in northeast Liaoning province on 28 May headed to Brazil. This is the first LR oil product cargo that PetroChina has shipped to the region.

The firm's international trading subsidiary PetroChina International previously chartered 35,000-40,000t medium-range vessels to export products to America. It has sold a total of 7.31mn bl of diesel to 12 regions in Latin America since 2015, including direct exports from China and cargoes it bought on overseas markets.

Shipping the cargoes on larger vessels will reduce transport costs while improving loading and operating efficiencies at berths, increasing PetroChina's competitiveness in the export market. The company started loading products from its Jinzhou and Jinxi refineries on LR vessels in March 2017, and exported about 850,000t of oil products from the two refineries on LR vessels last year. This cut transport costs by around 17mn yuan ($2.65mn or $3.12/t) compared with exports carried separately on smaller vessels.

The use of LR vessels supports the strategy by PetroChina's parent company state-owned CNPC to expand its marketing networks in Latin America.

PetroChina has been trying to find more markets for its product output amid its increasing refining capacity and an oversupplied domestic market. It has targeted Latin America, agreeing to take a 30pc stake in private-sector Brazilian oil product distributor TTWork in early March.

China exported 25.55mn t of oil products — diesel, gasoline and jet fuel — in January-May, up by 31.3pc from the same period last year. Exports last month were 6.13mn t, up by 52.2pc and 19.8pc from a year and month earlier respectively, preliminary customs data show.