Canadian Crude Exports From US Gulf Coast Largely Unaffected By TMX Startup

Canadian crude exported from the U.S. Gulf Coast in June clocked in at 1500,000 barrels per day, only slightly lower than average despite the commissioning of the expanded 590,000 b/d Trans Mountain pipeline (TMX) in May. 

 TMX has the potential to cut shipments from the U.S. Gulf Coast to India, China, and South Korea if more oil from Canada's West Coast heads to Asia. TMX could also displace shipments of some Latin American grades to Asian countries.

Vortexa analyst Rohit Rathod has told Reuters that the Gulf Coast’s biggest attraction remains the ease of loading very large crude carriers (VLCCs), which can carry up to 2 million barrels of oil, a feature that has helped maintain high levels of Canadian exports from the U.S. Gulf Coast. For instance, India’s Reliance Industries shipped 2 million barrels of Canadian crude via a VLCC in May from Vancouver to its refinery in Jamnagar. In comparison, smaller Aframaxes that typically carry up to 800,000 barrels are limited to loading only about 550,000 barrels at Vancouver due to port draft restrictions.

TMX crude exports are expected to clock in at ~350,000-400,000 bpd, and will compete with heavy grades from Latin America and the Middle East.  Muyu Xu, a senior crude oil analyst at analytics firm Kpler, has reported that Cold Lake crude is trading AT ~$10 per barrel cheaper than Iraq's Basra Heavy for deliveries to China.

"Canada's TMX crude attracts interest from Asian buyers who are keen to secure cheap supplies of heavy grades but do not have access to U.S.-sanctioned Venezuelan crude," XU told Reuters. "It will still take some time for refiners to experiment with and test TMX crude as the first few cargoes have just arrived," she added.

China, Japan, and South Korea are in line to receive the first cargoes of oil imports from TMX in September, becoming the first Asian countries to benefit from the expanded pipeline since it became operational in May. 

By Alex Kimani for Oilprice.com

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