Rising Guyana-USG crude flows benefit Suezmaxes

Surging Guyanese crude exports to the US Gulf coast may benefit Suezmax crude tankers as a potential new export market develops for the South American country's booming production.

Citgo's 167,500 b/d Corpus Christi refinery in Texas has taken three 1mn bl cargoes of medium sweet Payara Gold in May, with a fourth Suezmax, the Nordic Hawk, transiting the Corpus Christi ship channel on 29 May, according to ship tracking data from Kpler. If the Nordic Hawk and the Aframax onto which it lightered discharge by the end of the month, the refinery's imports of Payara Gold would top 100,000 b/d in May, up from 60,000 b/d in April and 32,000 b/d in March, according to Kpler.

US Gulf coast refiners last year imported just two Suezmax-size cargoes of Guyanese crude, or about 5,500 b/d. The primary destinations for the country's roughly 370,000 b/d of oil exports last year, about 85pc of which were hauled on Suezmaxes, were Europe, which took about 60pc, and the US west coast, which took about 25pc via re-export on the Trans-Panama pipeline, according to Vortexa data.

A new market to the US Gulf coast would add to already-rising Suezmax demand in Guyana, where tonne-miles this year through 20 May increased by 45pc from the same period last year and by almost fivefold from the same period in 2022, Vortexa data show.

Charterers moving Guyanese crude often opt for the economies of scale offered by 1mn bl Suezmaxes compared with smaller 700,000 bl Aframaxes.

The start of production at the 220,000 b/d Prosperity floating production, storage, and offloading vessel (FPSO) in November 2023 helped boost Guyana's oil production to 625,000 b/d in April, according to government data. Output in April exceeded the country's rated capacity by 65,000 b/d following improvements at the older Liza 1 and Liza 2 projects in the deepwater Stabroek block.

Mexican substitute?

Increased US Gulf coast imports of Guyanese crude come as crude imports from Mexico fall, exerting downward pressure on rates for Aframaxes since March. US Gulf coast imports of Mexico's medium sour Isthmus have led the declines, falling to about 135,000 b/d from 1 March through 27 May compared with about 220,000 b/d over the preceding three-month period, according to Vortexa data.

"Given the expectation of depressed Mexican crude exports going forward, the push and pull for Guyanese barrels between the US and Europe is likely to be stronger than ever," Kpler analyst Matt Smith wrote in a research note.

By Tray Swanson