Viewpoint: Alaskan oil exports poised to fall in 2022

Alaskan North Slope (ANS) crude exports to Asia-Pacific could keep trending lower as the US west coastrecovers from Covid-19-induced demand drops and competing Opec+ output builds.

At least nine cargoes, or nearly 24,000 b/d of the domestic-medium sour ANS, were loaded for export to Japan, China, Singapore or South Korea in 2021, compared with 13 cargoes, or nearly 43,000 b/d, loaded for delivery to similar destinations in 2020, according to the latest data from the US Census Bureau and an analysis of vessel tracking data.

Competing Opec+ crude shipments to the US west coast rose to 423,000 b/d in the first nine months of this year, from 390,000 b/d over the same period last year, as US west coast refinery utilization rates rose to nearly 83pc from roughly 74pc over the same period, according to the latest data from the US Energy Information Administration (EIA).

US west coast receipts of Alaskan crude fell to 390,000 b/d from 400,000 b/d at the same time, taking roughly 90pc of available ANS supply in the same nine months, respectively.

ANS was estimated at an average premium to Arab light of $1.53/bl so far this year from a 50¢/bl discount last year, when Opec+ curtailed production. This could support increased shipments of Middle Eastern grades to California and Washington state refiners.

The Opec+ roadmap to restore the production that it removed from the market in 2020 entails monthly hikes of 400,000 b/d through April next year, followed by a rise of 432,000 b/d each month until all of the group's original 9.7mn b/d cut is unwound.

Asia-Pacific demand for ANS surged last year when the first wave of the pandemic pressured US west coast refinery runs and created a surplus of global crude supply that weighed on prices.

ANS averaged a roughly 65¢/bl premium to the international benchmark Ice Brent so far this year from a roughly $1.77/bl discount to the primary waterborne benchmark last year. Should these trends continue, that could further pressure the export arbitrage from Alaska.

China has taken roughly 80pc of all ANS crude loaded for export over the last two years, most recently a cargo delivered by the US flagged tanker Alaskan Spirit to Lanshan, China, in late August.

The Suezmax Vail Spirit is laden with the latest export of the grade since 12 December and is not yet signaling a destination, according to vessel tracking data,

ANS exports to China drew support from a "phase one trade deal", during former US president Donald Trump's administration, that required China to buy $69bn worth of US crude, LNG and other energy commodities in 2020-21. China has met less than 40pc of its purchase commitments for 2020 and between 42-56pc for 2021, according to calculations by Washington think tank Petersen Institute.

The phase one deal was so named because the Trump administration was expecting to negotiate a follow-up agreement — phase two — to increase purchases of US goods by China. The administration of President Joe Biden says it has no plans for such an agreement.

By Benjamin Peyton