World Energy Market
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Canada's Trans Mountain pipe expansion to disrupt oil flow to US, boost prices
Canada's Trans Mountain oil pipeline expansion (TMX), which will nearly triple the flow of crude from Alberta to Canada's Pacific Coast beginning early next year, will shake up North America's supply by diverting barrels now mainly delivered to refiners and exporters in the U.S. Midwest and Gulf Coast.
Its startup could add as much as $2 per barrel to prices paid by U.S. Midwest oil refineries that sit along Canada's existing main oil-export route. Plants that benefited from discounted oil include those operated by BP (BP.L), Citgo Petroleum, Exxon Mobil (XOM.N) and Koch Industries' Flint Hills Resources, analysts said.
"They will be competing for barrels that no longer transit through their region," said a Calgary-based oil trader. "The market will have to reshuffle."
The long-delayed and controversial Canadian government-owned C$30.9 billion ($22.81 billion) TMX project is set to begin shipping crude early next year, although it could face up to nine months delay due to a last-minute proposed route change.
Once it starts operating, Canada will be able to ship an extra 590,000 barrels per day (bpd) to Pacific ports for delivery to U.S. West Coast and Asia refiners, where demand for heavy sour crude is expected to climb in the longer-term.
FEWER BLOWOUTS
Canada has supplied the Midwest with all of its crude imports since 2019, according to a Reuters analysis of Energy Information Administration data. That has left Canadian oil producers vulnerable to deep price discounts or "blowouts" whenever pipelines become congested or rupture.Pipeline operator Enbridge (ENB.TO), which ships the bulk of Canada's 3.8 million bpd of crude exports to the U.S., expects to see flows on its Mainline system drop by up to 300,000 bpd once TMX opens.
Last December, a spill on TC Energy's (TRP.TO) 622,000 bpd Keystone pipeline drove the Canadian heavy crude discount to U.S. oil to more than $33 a barrel, more than double its typical discount.
Having more Canadian export pipeline capacity means crude bottlenecks building up in the Alberta storage hub Hardisty should happen less often, reducing volatility and keeping prices steadier.
"For a decade the U.S. Midwest could count on that kind of blowout every year or two," said Rory Johnston, founder of the Commodity Context newsletter. "That's less likely now."
The start-up of TMX could add a "buck or two" to the cost of a barrel for Midwest refiners, he estimates.
GULF COAST RE-EXPORTS SHUT OUT
TMX also will make Canadian crude "re-exports" from the Gulf Coast less viable, squashing a trend that has gained in momentum in recent years, and increasing shipments of Canadian oil to China, said Matt Smith, lead oil analyst for the Americas at Kpler.So far this year, over 200,000 bpd of Canadian crude has been re-exported from the U.S. Gulf Coast, up from about 73,000 bpd in 2019, Kpler data showed. China is currently the leading destination for these Canadian re-exports, taking in 194,000 bpd in August.
Heavy Canadian crude will still make it to the U.S. Gulf to be used by refiners there, Smith added, and the region could also see an uptick in Latin American crude being displaced from the U.S. West Coast by TMX barrels.
($1 = 1.3549 Canadian dollars)
Canada's Trans Mountain pipe expansion to disrupt oil flow to US, boost prices
Canada's Trans Mountain oil pipeline expansion (TMX), which will nearly triple the flow of crude from Alberta to Canada's Pacific Coast beginning early next year, will shake up North America's supply by diverting barrels now mainly delivered to refiners and exporters in the U.S. Midwest and Gulf...
Canada's Trans Mountain pipe expansion to disrupt oil flow to US, boost prices
Canada's Trans Mountain pipe expansion to disrupt oil flow to US, boost prices
Canada's Trans Mountain oil pipeline expansion (TMX), which will nearly triple the flow of crude from Alberta to Canada's Pacific Coast beginning early next year, will shake up North America's supply by diverting barrels now mainly delivered to refiners and exporters in the U.S. Midwest and Gulf...www.reuters.com
What do you think about the subject?
@Nilgiri
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Not very much, because it was Biden administation that did a big "nope" on keystone pipeline extension (after Trudeau worked so hard to go over Canadian protest/activist groups that were raising issues against it - LOL!).
So Biden administration (and whichever sizeable deepstate groups behind it) has only itself to blame
Russian Ural crude oil is now sold for $85. The oil embargo of the G7 countries seems to be nothing more than a piece of paper.
Russia Plans Near Zero Diesel Exports Next Month After Ban
- Only shipments that are exempt from sanctions are planned
- Moscow banned exports to reign in domestic fuel prices
Russia plans to reduce diesel exports from its key western ports to almost nothing next month after the government banned overseas sales to tame surging prices at home.
The loss of Russian supply threatens to further strengthen a global diesel market that’s rarely been tighter, further jeopardizing supplies of a fuel that’s used by industry and in cars.
Russia, among the world’s top exporters, is currently planning to ship only diesel that it exempted from a ban imposed last month, according to industry data seen by Bloomberg. Even then, total shipments will be drastically reduced compared with September.
There has been skepticism among traders about how aggressively Russia would be able to enforce the diesel ban it announced on Sept. 21, with some saying a full stop would quickly fill the nation’s storage tanks, and therefore have to be reversed. A full halt through October, if it happened, would upend that idea.
Europe’s diesel prices soared. Futures jumped as high as $1012.75 a metric ton, a gain of $17 compared with where they closed on Thursday. Russia is the world’s top exporter of diesel type fuels. Its premium to crude oil also ballooned.
Loadings from Russian ports on the Black and Baltic Sea are planned at almost 223,000 thousand tons in October. However, that includes 210,000 tons from Belarus to be loaded in Primorsk, and 12,800 tons to be loaded in Novorossiysk for customers in the Eurasian Economic Union. Those flows are exempt from the ban, which was designed to lower domestic fuel prices.
Prices for the fuel have been surged around the world this year, in part because of curtailments of supplies of diesel-rich crudes from Russia itself. Curbs in output were in a response to western sanctions following the war in Ukraine. Moscow then followed up with export cuts.
Minor Deliveries
A government decree allowed minor diesel deliveries to trade-alliance partners from some former Soviet republics, humanitarian aid and transit, as well as consignments that already have loading papers and are accepted by oil-pipeline operator Transneft PJSC and Russian Railways JSC.On Monday, the government also excluded bunker fuel, gasoils and some middle distillates from the ban.
The October plan seen by Bloomberg only shows shipments of diesel delivered to ports by pipeline. Smaller volumes may also be sent by rail. Pipeline operator Transneft, which compiles the loading schedules, declined to comment.
Russia’s surging car-fuel prices have become one of the biggest contributors to inflation, a potential political headache as the Kremlin prepares for the presidential election in March. Earlier this week, President Vladimir Putin urged his government and Russian oil producers to jointly resolve fuel-supply and oil-tax issues — less than a week after the cabinet unexpectedly imposed the ban on gasoline and diesel exports.
No end date for the ban has set yet. While the measure has already cooled prices on Russia’s main commodities exchange, pump prices continue to rise.
The government is ready to take “strict regulatory measures”, if the situation doesn’t change, Deputy Prime Minister Alexander Novak said late Thursday, following his meeting with officials and oil executives.
Such measures could be comparable to those in force on the fertilizer market, according to Novak. Back in December 2021, in a move to curb rising food prices, Russia introduced fertilizer export quotas and has been extending them ever since.
Novak also instructed Russian customs and tax services to control exports of car fuels, and volumes stored in the port facilities will be redirected to domestic supplies.
Russia’s energy minister warned the export ban wouldn’t be lifted anytime soon.
EU Must Choose Between Cheaper Power or Protecting Wind Industry
Europe will have to decide whether it wants to reduce electricity prices or protect its wind-turbine manufacturers from low-cost Chinese competitors, said the boss of TotalEnergies SE.
Chinese companies such as Goldwind Science and Technology Co. Ltd. can offer turbines about 35% cheaper than their European competitors, said TotalEnergies Chief Executive Officer Patrick Pouyanne. Such savings could benefit an industry that’s struggling with cost inflation, but potentially undermine the region’s own renewables manufacturing industry.
“There’s a choice to make collectively, to know if we give the priority to electricity prices, or if we give the priority to jobs in Europe,” Pouyanne said at the annual conference of SER, France’s renewable energy lobby group, in Paris on Tuesday.
TotalEnergies took a stake in a Chinese offshore wind project to study the supply chain, Pouyanne said, and learned that turbine-maker Mingyang “has costs that beat all the competition.”
If Europe chooses not to shield its wind industry from competition, Chinese companies could come to dominate the sector just as they have in the manufacture of solar panels, Pouyanne said.
The European Union earlier this month launched an anti-subsidy probe into Chinese electric vehicles, which it said was needed to protect jobs and supply chains at home amid claims China is unfairly flooding the market with cheap vehicles. The bloc is also planning to unveil measures to help its ailing wind sector next month, after supply-chain bottlenecks and higher financing costs have put a brake on projects.
While the US establishment is preparing for new sanctions on Iran's oil industry, the Biden administration is resisting.
