Venezuela scrambling to load oil ahead of China tax

Spanish Market: Crude oil, Oil products
20/05/21

Venezuela's state-owned PdV is scrambling to load crude cargoes before China imposes a new import tax that has blindsided management in Caracas, Argus has learned.

Most of the Opec country's exports wind up in China's Shandong province, where independent refiners are girding for a new $30/bl tax on diluted bitumen, the product category under which Venezuela's 16°API Merey blend is imported after quietly transhipping through Malaysia and other intermediate destinations to mitigate the risk of US sanctions.

Top PdV officials were caught off guard by the new tax, which would effectively squeeze out heavy sour barrels from the strategic Shandong market. The sanctions sharply limit Venezuela's market alternatives. And if trading firms reclassify the Venezuelan supply as crude to avoid product taxes, imports would rapidly deplete refiners' crude import quotas.

A shrinking Chinese market also implies that Venezuela's oil-backed debt to Beijing would take much longer to pay off, accumulating more interest in the meantime.

The tax takes effect on 12 June, and PdV is hoping loadings before 11 June will be clear of the new levy. In the meantime, it is hoping Beijing will reconsider the measure.

Haste makes waste

PdV's efforts to rush out cargoes from its main Jose terminal are hamstrung by loading equipment breakdowns and oil quality issues such as high metals content and sediment.

In the first half of May, PdV loaded about 5.7mn bl or 380,000 b/d of its Merey blend crude bound for Asia, short of its plans.

Among the VLCCs that loaded in the period are Shandong-bound Ceres 1 on behalf of Montmagastre Ventures with the shipping agent identified as Desarrollo 1405, and the Joy and Princess Moore heading to Singapore on behalf of Yunshu Maritime, according to PdV terminal reports seen by Argus.

The company is working to repair loading arms, pumps and hoses but the equipment is mostly patched up because of a shortage of spare parts and skilled workers to conduct full-blown maintenance, company officials say.

A fresh backlog of tankers is starting to build at Jose, a recurring trend that reverberates upstream in the Orinoco heavy oil belt, the main source of Venezuelan production.

While the VLCC Comuna is currently loading, the Maya started loading Merey on 13 May but paused the next day because of quality issues. Zarby finally loaded after a bout of equipment problems at the terminal.

The tankers themselves are an opaque mix that tanker-tracking services list as out of range, decommissioned or unknown altogether. Transponders are routinely switched off to avoid detection.

The US imposed oil sanctions on Venezuela in early 2019 in a bid to dislodge President Nicolas Maduro. Mainstream shipowners and insurers steer clear of Venezuelan oil trade to avoid the risk of sanctions themselves.

Negotiating edge

The new Chinese tax is taking effect just as the Maduro government and the US-supported political opposition flirt with another round of negotiations. Narrower oil export options threaten to erode some of Maduro's advantage heading into talks.

Aside from the Asia-bound VLCCs, PdV has loaded several tankers at Jose this month for storage or cabotage to its eastern terminals, and for Cuba, which relies on Venezuelan crude and heavy products mainly for power generation.

Other crude grades on the export roster include Special Hamaca Blend, a synthetic grade from PdV's PetroPiar upgrader at Jose. The plant went off line earlier this week because of a gas flow line blast. Chevron has a 30pc stake in PetroPiar, but its activities are restricted by a sanctions waiver that the US is likely to renew in coming days.

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02/01/25

Viewpoint: USGC diesel exports may get European boost

Houston, 2 January (Argus) — US Gulf coast (USGC) diesel exports were on pace to rise in 2024, and growing demand from Europe could sustain the trend into 2025 as Brazil demand may falter. US Gulf coast diesel exports rose to an estimated 242mn bl, or 661,000 b/d in 2024, up by 9.5pc from 2023, according to oil analytics firm Vortexa. Figures are still subject to revisions as more information about cargoes and destinations in the final weeks of December become known. Exports strengthened in the second half of 2024 despite headwinds. From July through December, exports rose to 728,000 b/d, up from 593,000 b/d in the first half of the year. Europe was the top destination for US Gulf coast diesel exports in 2024, receiving 216,000 b/d, or 33pc, of the region's exports, up from 135,000 b/d, or 22pc, in 2023. South America was the second biggest destination for US Gulf coast diesel exports in 2024, even as the continent's share fell to 29pc from 35.5pc in 2023. Central America and Mexico received 24pc of US Gulf coast diesel exports in 2024. US Gulf coast diesel exports to Mexico dropped to 103,000 b/d during the second half of the year, down by 21pc from the first half of 2024, according to Vortexa. Mexico's energy policies aim to drive the country closer to energy independence, and Pemex's new 340,000 b/d Dos Bocas refinery is one tool to achieve that goal. The refinery was scheduled to fully be on line in 2024 but operated only intermittently during the year. It is expected to run more steadily in the first quarter 2025, according to market sources. This could further reduce shipments from the US Gulf coast to Mexico. But demand in other markets may mitigate this loss. While the total volume of diesel shipped to Mexico, Central and South America dropped by 12.2pc in 2024, diesel exports to the regions are expected to remain resilient in 2025, despite a traditional slowdown in the first two months of the year. Typically, US Gulf coast diesel exports in January and February slow as winter weather clips European demand while South American demand drops after the main summer planting season concludes and as summer holidays reduce the number of trucks on the road. Exports will likely pick up in March and continue to increase as the soybean harvest in Brazil, Argentina and Paraguay boosts demand. Warmer weather in Europe will also increase demand as driving increases while European refiners undergo maintenance turnarounds in March and April. EU diesel demand was strong in 2024 even as the energy transition advances renewable diesel and cleaner fuel sources. Among newly registered heavy trucks in the EU, 96.6pc run on diesel and 67pc of buses run on diesel, according to the European Automobile Manufacturers' Association. European lawmakers plan to phase out sales of new diesel trucks and cars by 2040 and 2035, respectively, delayed from a prior 2030 deadline. This will ensure demand remains stable, if not higher, for 2025. Russia's lower-priced diesel exports fulfilled Brazil's external needs for diesel in the first half of 2024. But in June, Russian refiners were unable to produce enough diesel to meet the country's demand, boosting US Gulf coast exports to Brazil to 43,000 b/d in the second half of the year, almost five times higher than the first half. Still, total US Gulf coast export volumes to Brazil for full-year 2024 were down by half when compared with 2023, as Russian exports to Brazil grew by 17pc to 150,000 b/d in 2024. Slowing growth in Brazil is also likely to curb diesel demand next year. Brazil's central bank forecasts economic growth to slow to 2pc in 2025 from 3.5pc in 2024 on expectations for higher borrowing costs, as the depreciation of the real currency accelerated at the end of the year. Even so, US Gulf coast exporters will be poised to fill whatever demand Brazil can offer next year. Going into the new year, US Gulf coast refiners seeking to export diesel will face challenges, but enough demand remains to keep volumes on track or even higher than 2024 levels. By Carrie Carter Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: North American BZ, SM output to dip in 2025

02/01/25

Viewpoint: North American BZ, SM output to dip in 2025

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Pakistan's NRL issues tender to sell January bitumen

02/01/25

Pakistan's NRL issues tender to sell January bitumen

Singapore, 2 January (Argus) — Pakistani refiner NRL is offering bulk and drummed bitumen cargoes totalling 8,000t for loading over January, in their latest export tender. The refiner is seeking fixed price bids on a fob Karachi basis for 2,000t of pen 80/100 drummed bitumen cargo and 6,000t of pen 60/70 bulk bitumen cargo. The drummed cargo tender is expected to be closed on 9 January and loaded within 30 days from the date of award, while the bulk cargo tender will close on 6 January, sources involved with the tender process said. The refiner had awarded its December-loading cargo to Switzerland-based trading firm Element Alpha, after withdrawing two previous tenders for loading over October and November. Pakistani cargoes are typically sought by international bitumen traders for delivery into South Africa. By Sathya Narayanan Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US crude output at record 13.46mn b/d in Oct: EIA

31/12/24

US crude output at record 13.46mn b/d in Oct: EIA

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Viewpoint: 2025 Hardisty heavy diffs may remain strong

31/12/24

Viewpoint: 2025 Hardisty heavy diffs may remain strong

Calgary, 31 December (Argus) — Heavy crude spot differentials in Alberta are expected to remain strong into next year, even with growing oil sands production and possible US import tariffs. After years of cost-overruns and construction delays, the 590,000 b/d Trans Mountain Expansion (TMX) commenced on 1 May, nearly tripling the capacity of crude able to reach Canada's Pacific coast and providing Alberta oil sands producers with increased access to buyers on the US west coast and Asia-Pacific. Extra egress capacity for Alberta crude westward has pulled previously apportioned volumes away from Enbridge's 3mn b/d Mainline system — Canada's main method of export to ship crude south to US refiners in the midcontinent and Gulf coast. In the fourth quarter, apportionment averaged just over 1pc for both light and heavy crude on the Mainline, significantly lower than the average apportionment of 21pc for lights and heavies in the fourth quarter last year. While president-elect Donald Trump's looming blanket tariff on all Canadian imports would re-direct more Albertan crude westward via TMX to Asia- Pacific buyers, many believe the tariff would be too harmful to US midcontinent refiners for Trump to actually carry out his threat. Prior to TMX's commencement, high apportionment combined with rising crude production heading into the winter months forced more crude onto railcars, which typically requires a $15/bl to $20/bl spread between Western Canadian Select (WCS) at Hardisty Alberta, and Houston, Texas, for uncommitted shippers to profit. With the redirection of apportioned volumes to buyers in the west, Canadian heavy spot differentials in Alberta have strengthened in a quarter when discounts have generally widened in recent years. Argus's WCS Hardisty assessment averaged a $12.08/bl discount to the CMA Nymex WTI during fourth quarter Canadian trade cycle dates, $11.52/bl stronger than the $23.61/bl discount averaged in the fourth quarter a year prior. Yet, crude output in Alberta's key oil sands is expected to rise heading into 2025, with production levels reaching record-high levels this year. Alberta crude output was 4.2mn b/d in October, according to the latest Alberta Energy Regulator (AER) data, up by 9.4pc year from a year earlier and the second highest monthly production on record. Alberta oil sands producers, meanwhile, have increased their crude production guidance for next year. Suncor expects to pump out 810,000-840,000 b/d across its upstream sector in 2025, up by 5pc from 2024. Cenovus expects to increase production next year by 4pc to between 805,000-845,000 b/d of oil equivalent (boe/d), and Imperial Oil plans to boost upstream production by 2pc to 433,000-456,000 boe/d. Egress capacity remains ample despite rising production heading into 2025. Total crude pipeline egress capacity out of Alberta is expected to be over 4.6mn b/d in 2025, with shippers still yet to utilize uncommitted space on the 890,000 b/d Trans Mountain pipeline. About 712,000 b/d or 80pc of the system is reserved for contracted shippers, with the remaining 20pc available for uncontracted shipments. With unconstrained egress capacity expected to persist, Suncor and Cenovus have both assumed WCS at Hardisty will average a strong $14/bl discount to WTI in 2025. In the near term, Trump's plans to impose a blanket 25pc tariff on all Canadian imports would threaten some US demand for Canadian crude. Yet, while some traders are pricing in the reality of US tariffs, most market participants are skeptical of whether Trump's tariff plans would extend to Canadian crude due to the co-dependency between Albertan producers and some US refiners. US midcontinent refiners, many of whom were financial backers of Trump's 2024 presidential campaign, are dependent on Canadian crude given a lack of access to alternative heavy sour crudes suited for their refineries. Canadian grades represent approximately 70pc of the US midcontinent refinery feedstock, with the remainder largely sourced in the US. US importers may take more crude from countries including Saudi Arabia, given the country has plenty of spare capacity to increase the production of heavy sour crude favored by US midcontinent refiners. However, replacing Canadian crude with waterborne supplies would result in a substantial increase in tanker demand. In August, only around 370,000 b/d of the 3.8mn b/d of Canadian crude imported by US refiners moved on tankers, Vortexa data show. Even if US refiners can replace Canadian and Mexican heavy crude, they are expected to face higher landed costs and, potentially, less reliable supplies. By Kyle Tsang Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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