|
|
|
|
Provided exclusively to CapitalLinkShipping.com by
|
|
Tanker - Market Commentary
Week Ending Friday May 21, 2010
|
Far Eastern Exports?
A surge in production coinciding with Organization of Petroleum Exporting Countries (OPEC) cuts allowed Russia to briefly assume the role of the world's largest crude oil exporter in 2009. Russia has maintained high levels of crude oil production this year, but it is the country's expanding export infrastructure that has been felt most directly within the tanker market. A new pipeline and recently-christened Kozmino Oil Terminal are the latest developments in the Eastern Siberia - Pacific Ocean (ESPO) project and they have already demonstrated potential to offset some long-haul ton-mile demand from the Arabian Gulf. As construction of the ESPO pipeline and use of its crude oil continues, they will mark an important development likely to influence tanker trade flows in the Pacific region and beyond.
The central component of the ESPO project is a pipeline linking oil fields in Russia's Far East with its Pacific coast in order to tap markets in the East. The first phase of the $26 billion project included construction of a 1,200 mile, 600 kb/d pipeline linking oil fields in Taishet to Skovorodino, of which 300 kb/d of crude oil cargoes are carried by rail to the Kozmino Terminal. Current plans call for the pipeline to be extended to almost 3,000 miles, replacing the rail component to reach the port at Kozmino directly, as shown in the map below. As part of this second phase of development, capacity of the pipeline is expected to be raised to more than 1.5 million barrels per day by 2014.
Off and Running…
The Kozmino Oil Port has a 21 meter depth and can accommodate tankers with deadweights between 80,000 and 150,000 dwt. The standard cargo size from Kozmino is about 100,000 mt and since the port's opening, cargoes have overwhelmingly been carried on Aframax tankers. The number of reported spot fixtures from the terminal has increased significantly since the first tanker was loaded from Kozmino late last year. There were 16 reported fixtures loading in Kozmino in April, reflecting a rapid increase in activity from the five spot fixtures reported from the port in February, as shown in the chart below.
More than half of reported spot fixtures from Kozmino have gone to South Korea, with Japan and the West Coast of the United States as the next most frequent destinations reported for these cargoes. Smaller percentages of ex-Kozmino fixtures have reportedly been exported to China, Thailand, Taiwan and elsewhere in region.
The regional distribution of cargoes coming from Kozmino thus far can be attributed partially to refiners just trying out a new blend of crude oil coming through the pipeline. The crude oil coming from the ESPO pipeline is a light and sweet blend that is well-suited for the region's refiners and their desire to produce high volumes of gasoline and other light refined products. Of a higher quality than existing Russian Urals blend, ESPO blend is sourced from fields in Eastern Siberia and priced according to benchmarks including Dubai and Brent crude oil.
By offering competition to Middle Eastern crude oils, the Kozmino terminal does threaten to reduce volumes of crude oil bound for Eastern markets on long-haul voyages, but its effect cannot be discerned by simply subtracting the pipeline's capacity from VLCC ton-mile demand. As use of the ESPO pipeline and its blend of crude oil continues, it is likely that their influence will be also be felt other, more unpredictable ways.
The ESPO pipeline and accompanying terminal are important developments for the Aframax market as they are poised to create a new area of demand for this trade segment. As that market develops, there are a number of ways in which ton-miles lost through reduced long-haul voyages between the Arabian Gulf and the East could reappear. Perhaps the cargoes out of Kozmino will service the requirements of crude oil traders working to capture opportunity in the market. Although the distance and transportation economics today suggest that these cargoes will feed nearby Asian refineries, ESPO cargoes have reportedly been delivered to refineries in Los Angeles and Hawaii already, and there is also a chance that some of the supplies presumed to be destined for China and other regional markets may end up on the West Coast of the United States or elsewhere farther afield.
The history of the oil markets has taught us that barrels can move beyond the closest destinations for a variety of reasons.
Poten Tanker Market Opinions are published by the Marine Projects & Consulting department at Poten & Partners. For feedback on this opinion or to receive this via email every week please send an email to tankerresearch@poten.com. For information on the services and research products offered by our Marine Projects & Consulting department or to contact our tanker brokers please visit our website at www.poten.com.
|
|
Blank Check Companies 
Eagle Bulk (EGLE)
Live Share Prices 
Blank Check Companies 
Todays Headlines 
Press Releases 
2010 Q2 Calendar 
