US west coast top destination for TMX in July

The US west coast overtook Asia-Pacific as the leading destination for crude from the newly minted 590,000 b/d Trans Mountain Expansion (TMX) pipeline in July.

Refiners along the US west coast have more than doubled their TMX crude intake, importing almost 5mn bl in July compared to 2.1mn bl in June, according to data analytics firm Kpler. Asia-Pacific refiners imported 25,500 bl fewer than the US west coast in July, at 4.9mn bl after importing 5.25mn bl in June.

Asian refiners have imported about 13mn bl of TMX crude since the expanded pipeline started up in May, while US west coast buyers purchased around 8mn bl.

The decline in TMX crude heading to Asia is in part due to fewer ship-to-ship (STS) transfers occurring at the Pacific Area Lightering zone (PAL). STS operations at PAL fell by nine in July, compared to 12 in June. Demurrage fees are possibly deterring charterers from building very large crude carrier (VLCC) -sized cargoes of TMX crude to Asia-Pacific, according to market participants.

Waning Chinese demand is also opening up TMX crude to US west coast buyers. Weak Chinese domestic products demand and higher costs of crude have lowered Chinese crude runs since the first quarter, while imports have curtailed. June crude imports of 11.3mn b/d were flat from May and 210,000 b/d lower than in January-June 2023. The country also began drawing from crude stocks in July, lowering stocks by 3mn bl according to analytics firm Vortexa.

State-owned Sinochem also skipped September purchases of Access Western Blend (AWB) from TMX after shutting down its 100,000 b/d Zhenghe and 120,000 b/d Changyi refineries in June. The company previously bought a 550,000 bl cargo of AWB for June and August delivery.

US west coast refiners are opting for cheaper TMX crude over Latin American grades. Imports of rival Ecuadorian crude Napo have fallen by 37pc to 2.7mn bl since the TMX start-up in May, according to Kpler.

Availability of Napo diminished after Ecuador's 450,000 b/d OCP pipeline halted operations for 16 days as erosion along the bank of the Quijos River threatened to rupture the line. The pipeline closure dropped the country's crude production 23pc to 375,000 b/d as of 2 July, according to hydrocarbons regulatory agency Arch.

Petroecuador's production fell the most because of the stoppage, leading to a force majeure declaration on exports of Napo crude on 20 June.

By Rachel McGuire and Narciso Cano