US crude exports jump sixfold as Canadian refiners tap into shale boom

MOSCOW (MRC) -- Oil exports from the US in April rose to the highest level in 15 years as Canadian refineries replaced more expensive imports from Europe and West Africa with shale oil from North Dakota and Texas, said Hydrocarbonprocessing.

The US shipped 268,000 bpd in April, the Energy Information Administration reported Monday. That’s the most since April 1999, and a more than sixfold increase since April 2012. Federal law allows exports of unrefined crude to Canada and restricts them to most other destinations.

The increase in exports follows a boom in oil production driven by horizontal drilling and hydraulic fracturing, or fracking, in places like North Dakota and Texas. The surge in output has increased supplies in the US, driving down prices relative to the rest of the world.

"The boom in US production caused a price differential to grow between foreign crude and US crude," said Carl Larry, president of Oil Outlooks & Opinions in Houston. "The margins for US crude are just so good that there’s no reason a Canadian refinery wouldn’t want to use it if possible."

US crude output rose to 8.47 million bpdin the week of May 23, the highest level since 1986. Eagle Ford light crude in south Texas sells for USD9.71/bbl less than Brent, the benchmark for European and African oil, according to data compiled by Bloomberg. It costs USD2/bbl to ship crude from Texas to Canada, Marathon Petroleum said in a May presentation.

Exports to Canada from the US Gulf Coast averaged 134,000 bpd in the first quarter, according to the EIA. March US exports were 246,000 bpd.

Refineries on Canada’s East Coast are designed to process light, low-sulfur crude like the type produced by fracking in the US, said Hannah Breun, a Washington, DC-based analyst for the EIA. Plants on the US Gulf Coast are generally better suited to refine thick, high-sulfur crudes from Mexico, South American and Western Canada.

Corpus Christi, Texas, the closest port to the Eagle Ford field, shipped out 468,000 bpd in April, according to data from the city’s Port Authority. That’s up from 15,000 bbl two years earlier. About 80% of that oil stays in the Gulf Coast, with the rest going to Canada and the US East Coast, according to Brad Barron, CEO of NuStar Energy.

Refineries in Ontario, Quebec and Canada’s Atlantic Coast imported about 615,000 bpd in February, according to the country’s National Energy Board. Under current export rules, shipments to Canada from the US will rise to 400,000 bpd in 2015 and stay at that level through 2020, said Damien Courvalin, a New York-based analyst for Goldman Sachs.

Low natural gas prices provide an additional competitive advantage to US producers in many industries including chemicals, steel, copper, aluminum, cement, and other energy intensive materials. As MRC wrote earlier, major American chemical suppliers had already taken advantage of shale gas fracking. Thus, Dow Chemical, Formosa Plastics, and Chevron Phillips Chemical unveiled their expansion plans in North America last year on the favouralbe price of shale gas and its substantial deposits.
MRC

MOSCOW (MRC) -- Shell and BP, the UK’s two biggest oil companies, are expected to announce trade deals with China today, on the second day of Premier Li Keqiang’s visit to Britain, said Independent.

The deals will form part of what is expected to be an GBR18bn package being brokered between firms in the two nations by the Chinese and UK governments.

BP is set to announce one of its largest deals to date with China, to supply the nation with liquefied natural gas (LNG). The contract could be worth as much as GBR5bn.

Shell is thought to have agreed to partner with the state-owned China National Offshore Oil Corporation to provide LNG, as well as cooperate on other global projects.

The Chinese Premier will meet with the Prime Minister for bilateral talks today and hold a press conference later this afternoon, where the trade deals are expected to be announced.

Two Chinese firms, Nord Engine and China Minsheng Investment Corporation, China’s largest private sector investment group, will also both announce large deals today.

Nord will put GBR150m into small and medium sized companies in the UK and EU and CMI is set to open its European headquarters in London and invest around USD1.5bn (GBR900m) across a range of different sectors.

China is seeking to bolster its slowing economy, which has seen GDP fall to 7.4 per cent in the first quarter of this year, an 18 month low, while David Cameron is keen to demonstrate greater links with the nation to improve struggling UK exports. As well as trade deals, Cameron is also thought to want to discuss China’s human rights record.

The main worry for China's leaders is if the economic slowdown leads to high unemployment that could spark social unrest. So far government officials say employment is stable.

So for now economists do not see any major stimulus or policy shift and instead expect the government to tough out the slowdown as they pursue a longer-term vision of reforming the economy towards consumer-led, rather than export- and investment-led growth.
MRC

MOSCOW (MRC) -- New anti-dumping duties on homopolymer suspension grade PVC imports from Taiwan, Korea, China, the US, Indonesia, Thailand and Malaysia have officially taken effect starting June 13, reported Apic-online with reference to the Indian Ministry of Commerce and Industry's statement.

According to an official notice issued by the government, new anti-dumping charges levied will stay effective for a period of five years, from 2014 to 2018, unless otherwise stated by the government.

An Indian trade source said market participants were not affected by the sudden levy as it had only been a "matter of time" before the new duties were imposed, so the local market was noted to be prepared for it.

A Northeast Asia source said buying demand in India remained "good and firm" in the sentiment-driven market after official announcements Friday. The source said he had received increased interest from Indian buyers for PVC cargoes free of additional duties this week.

As MRC wrote before, India's government had decided earlier this year to extend the duration of anti-dumping investigations on PVC imports, according to a notification made from the Ministry of Commerce and Industry on January 24. This followed the expiration of duties as of January 23, 2014. Prior to the declaration there had been conflicting reports and confusion as to whether materials brought into the country would be subject to the additional fees. However, the declaration noted that duties would be in place until the end of the investigation, which was set for March 4, 2014. Previous anti-dumping duties were in force for six years.
MRC

MOSCOW (MRC) -- Russian oil giant Rosneft has set up a crisis centre and a special commission within its headquarters after a refinery suffered a fire on Sunday, reportedly resulting in six deaths, said Upstreamonline.

The state-controlled company said that, around 11:40pm local time on Sunday, a vapour line of the gas fractionation unit at the Achinsk refinery in Krasnoyarsk region depressurised, leading to a fire.

"A crisis center was formed. Within the central headquarters of the company a special commission was (also) formed. Vice-president Igor Pavlov is working on the site."

The Moscow-based giant did not provide any further details but indicated that an update on the situation was due on Monday afternoon.

Local media earlier reported that 12 people were affected by the fire, with six person killed.

As MRC wrote before, Igor Sechin, Rosneft's President and Chairman of the Management Board, and Leonid Mikhelson, Chairman of SIBUR Holding’s Board of Directors, have signed a set of documents for supplies of associated petroleum gas (APG) from Rosneft's fields to Nizhnevartovskiy, Belozerniy and Nyagangazpererabotka gas processing plants (GPPs), and a contract for sales of dry gas from Nizhnevartovskiy and Belozerniy GPPs to Rosneft.

Rosneft swiftly followed this up with confirmation that it has reached an agreement with AAR to take the other half of TNK-BP in an all-cash deal worth USD28 billion.
MRC

MOSCOW (MRC) -- Prices of Chinese polyethylene terephthalate (PET) for buyers in the CIS markets increased by USD25-50/tonne last week, following higher paraxylene (PX) prices and rising prices of the entire feedstock chain, including PTA and MEG, as well as good sales in export markets, according to ICIS-MRC Price report.

The trend has been changing and Asian PET prices have been growing since mid-May. Prices of Asian producers rose by an average of USD70-80/tonne over this period.

Russian buyers reported last week's higher purchase prices of Chinese grades. Import prices were heard at USD1,310-1,340/tonne CIF Vostochny, excluding VAT, in the east of the country. A converter said prices of the bottom range were already difficult to accept at the end of the week.

Ukrainian buyers announced prices of Chinese PET grades at USD1,350-1,370/tonne CIF Odessa, excluding VAT. At the same time, prices of Middle Eastern grades were heard at USD1,335-1,345/tonne CIF Odessa, excluding VAT. The price difference led to an increase in consumer demand for PET.

As reported earlier, Ukrainian buyers preferred South Asian and the Middle Eastern PET. Imports from India grew from January to April 2014 to 10,000 tonnes versus 5,700 tonnes from January to April 2013. Imports from Pakistan tripled and totalled 4,500 tonnes. At the same time, shipments of Lithuanian PET fell twofold to 5,400 tonnes. Imports of Chinese PET slumped by 36% to 28,700 tonnes.
MRC