US Gulf Coast Crude Oil Import Shake-up: Analysis

By George Backwell
Wednesday, May 21, 2014
VLCC File photo

The increase in domestic crude oil production is widely reported to have flipped US import requirements on their heads. While this holds true for light/sweet crude oil producers, there appears to be even more dependence on heavier/sourer crude oil suppliers in spite of the shale oil boom, reports Poten & Partners in their recent 'Poten Tanker Opinion'.

With traditional light/sweet suppliers like West Africa and Europe out of the fray, it is easier to observe the net results of forces that dictate from where the US sources its imports. Investments and long‐ term relationships will support long‐haul trade to the US, benefitting VLCC ton‐mile demand. However, Canada’s position as a supplier to the US Gulf Coast presents looming competition to such seaborne imports.

A look at the pricing differentials between Arab Medium crude oil and other grades, identifies the relative price strength of Saudi‐sourced barrels to US and Asian end‐users.

While baseline supply commitments are generally stable and established through term sales contracts, price discounts can indicate where above‐the‐ baseline crude oil production may be marketed.

Since the end of 2011, Arab Medium price discounts have tended to favor the US market (when the differential is below $0). This was likely the result of two factors: required crude oil stocking in anticipation of Aramco’s joint‐venture Motiva refinery Q1 2012 expansion and the calibration of US domestic crude oil prices with the introduction of new and competitive grades.

Transportation inefficiencies and physical constraints had thus far restricted the flow of domestic crude oil to thirsty Gulf Coast refiners causing these grades to trade at a steep discount compared to seaborne alternatives.

Although there is, what appears to be, continued improvement in Canadian and US crude oil transportation efficiency (pipelines, waterborne trade, etc.) improving the flow of local crude oil to the US Gulf coast, until new projects come to fruition, demand for incremental Saudi barrels could increase.

The strengthening of ties between Caribbean producers, such as Venezuela and Colombia, and China has limited supplies of short‐haul heavy/sour crude oil in the US Gulf. As a result, Saudi Arabia has become a larger percentage of the overall picture. Saudi Arabian crude oil now accounts for approximately 25% of total imports, which marks a significant increase from the 9‐11% range that was experienced as recently as 2010.

Further supporting VLCC ton‐mile demand, it is likely that the Caribbean to Far East trade flow will only strengthen as Chinese credit offered in exchange for oil supplies has the makings of a long‐term symbiotic relationship for many producer nations. In fact, recent news cites that Chinese companies are expressing interest in becoming producers in Mexico, as the country works to opens its doors to foreign participants.

In the future, the US Gulf could require an arguably higher proportion of heavy crude to mix with domestically‐produced light inputs. Although Canada will undoubtedly play a larger role in the supply mix over time, dwindling Caribbean supplies of heavy/sour crude oil will likely strengthen the US’s reliance on Saudi Arabian crude oil. With the US Gulf Coast expected to become more dependent on Saudi Arabian crude oil, more westbound cargoes could be afoot.

Source: Poten & Partners

http://www.poten.com/
 

Maritime Reporter January 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Transas: The Bridge to Tomorrow

Transas was founded in 1990, by a group of former navigators and engineers, who at that time envisioned ways in which computers could revolutionize maritime safety, communications and security.

ZF Celebrating 100th Anniversary

2015 marks the 100th anniversary of the foundation of ZF Friedrichshafen AG   Zahnradfabrik GmbH was founded in 1915, and through a 100-year history has developed

Signal Ship Repair Achieves OSHA Milestone

Signal International announced that on December 31, 2014, the Signal Ship Repair Operations located in Mobile, Alabama achieved one full year and worked 387,926 manhours,

Tanker Trends

US House Passes Bill to Pressure Regulators on LNG Exports

The U.S. House of Representatives passed a bill on Wednesday to speed permits for exports of natural gas, a measure that even if passed by the Senate and signed into law by President Barack Obama,

DSME Building 5 Icebreaking LNGCs for Yamal

Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) is building five large Arctic Liquefied Natural Gas Carriers (LNGCs), for which it has LNG ordered

Bomb Threat Cut Lithuania LNG Terminal Output

Gas supply from Lithuania's liquefied natural gas (LNG) import terminal was interrupted on Wednesday due to a bomb threat that later turned out to be a hoax, the

Ports

Puget Sound Container Volumes Flat in 2014

Container volumes through Puget Sound’s largest container ports remained flat in 2014, according to numbers released jointly for the first time by the ports of Seattle and Tacoma.

New Berthing System for Mooring Cargo Ships

Eagle Rock Aggregates, U.S. subsidiary of Polaris Materials Corporation, has completed a new aggregate import facility at the Port of Long Beach that features a

Damen Delivers Workboat to Multraship

Towage and salvage operator Multraship has taken delivery of the first of two customized Damen Stan Launch 804s vessels for its line handling and boatmen service companies in Terneuzen,

Finance

Denmark's Budget Gap May Flirt with EU Limit if Oil Stays at $50

Denmark's government estimates its budget would lose 7.5 billion Danish crowns ($1.1 billion) if oil prices remained around $50 a barrel, according to a document

Sweden-Poland Maritime Link Improved

The EU's TEN-T Program will co-fund with over €2 million the development of the sea ports of Trelleborg (Sweden) and Świnoujście (Poland), to increase their competitiveness and sustainability,

West Coast Port Talks Clear Hurdle

Shipping companies and the union for 20,000 dockworkers at nearly 30 U.S. West Coast ports have cleared a major hurdle in their protracted labor talks, clinching

Logistics

Puget Sound Container Volumes Flat in 2014

Container volumes through Puget Sound’s largest container ports remained flat in 2014, according to numbers released jointly for the first time by the ports of Seattle and Tacoma.

AAL Launches New Operation in Japan

AAL has announced the launch of a new operation in Japan AAL said the move aims to provide services and on-ground operational support directly to customers in the country,

Port of Redwood City Sees Cargo Increase

The Port of Redwood City experienced a five percent increase in cargo movement across its docks for the first half of fiscal year 2014/2015 that ended December 31, 2015.

Consulting

AAL Launches New Operation in Japan

AAL has announced the launch of a new operation in Japan AAL said the move aims to provide services and on-ground operational support directly to customers in the country,

ClassNK Releases Improved "e-Application"

ClassNK announced the release of an improved "e-Application" system. This improvement was planned based on requests from the users. Therefore, firstly we would

Launch of Asian Marine Casualty Forum

The Crisis in Global Maritime Casualty Response – Now Is the Time To Act – An industry Forum Designed to Promote Change An industry forum aimed at producing

 
 
Maritime Contracts Maritime Security Maritime Standards Navigation Port Authority Salvage Ship Electronics Ship Repair Ship Simulators Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2239 sec (4 req/sec)