US crude flows toward South African storage

US crude exporters are taking advantage of new storage capacity in South Africa in a low-demand environment caused by Covid-19 containment efforts.

At least five tankers carrying an estimated 3.74mn bl of light sweet crude departed the US Gulf coast in April for South Africa, where the majority of which is expected to offload in a new tank farm at Saldanha Bay, according to preliminary vesseltracking data compiled by Argus. Another 2.14mn bl of US crude was reported exported to South Africa in March by the US Census Bureau.

Only three other cargoes left the US for South Africa before March 2020, though they were likely condensate instead of crude. A 500,000 bl cargo was exported in July 2017, and two 320,000 bl cargoes loaded for the country in each August 2019 and October 2019, according to government data.

Oiltanking MOGS Saldanha's new crude storage terminal in Saldanha Bay, South Africa, was originally conceived to comprise 12 tanks with a combined capacity of 13.2mn bl, though it is unclear whether the firm will hold firm on that decision. At least four 1.1mn bl capacity tanks are already online, and five more are expected to be fully operational in the third quarter of 2020.

The new trend of US crude shipments to Saldanha Bay may be aided by a new storage capacity auction on behalf of Oiltanking MOGS developed by Matrix Global Holdings, which is known for hosting similar events in the US market for crude storage in Cushing, Oklahoma, and in the Louisiana Offshore Oil Port's (LOOP's) sour crude caverns.

Matrix announced its new auction location this month, but was not immediately available to provide further details on the Saldanha Bay auctions.

Oiltanking MOGS' terminal is also connected to Saldanha Bay's existing crude jetty via the state-owned Strategic Fuel Fund (SFF)'s pipeline, which connects to another 45mn bl storage facility.

Additionally, the South African government is planning to buy at least 5mn bl of crude during the current low-price environment to help fill its strategic reserves. It will import these cargoes at Saldanha Bay.

By Amanda Hilow