New Colombian Crude Whets Appetite of US Refiners
The United States has started to import small batches of Colombia's Puerto Bahia heavy crude, an unusual development that underscores at least a temporary shift in the type of heavy oil flowing into U.S. refineries.
Typically, U.S. refineries have received their heavy oil from Canada, Venezuela and Mexico. But shipments of those grades have been limited by Canada wildfires, and slipping output in Mexico and Venezuela.
The first shipment of the Colombian heavy crude arrived at Lake Charles, Louisiana in February co-loaded with Vasconia crude for refiner Phillips 66, followed by a 260,000-barrel cargo in March for the same customer, according to sources and data available from the U.S. Energy Information Administration.
A third vessel, the Genmar Compatriot, discharged in mid-May in New Orleans about 350,000 barrels of several Colombian grades, including Puerto Bahia crude, according to the sources and Thomson Reuters vessel tracking data.
The new grade, also known as PB 19, has an API gravity of 19.8 degrees and 1.6 percent of sulfur content. It is produced in small volumes by Royal Dutch Shell and shipped from Barranquilla port, according to sources.
Until now, Puerto Bahia crude had been mostly sent to terminals in the Caribbean, where Shell mixed it with imported naphtha to convert it to the popular Castilla heavy blend, according to traders close to these operations.
The latest import of the heavy crude comes as a raging wildfire in Alberta's vast oil sands region has taken out more than 1 million barrels per day of oil production, curtailing shipments of heavy Canadian oil to the U.S and making refiners more open to new foreign crudes needed to combine with domestic light sweet grades.
A spokesman for Shell declined to comment.
This year's change in flows also comes after Colombia reshuffled its crude exports in mid-2015 to focus on marketing its Vasconia blend, which could fetch better sale prices.
In consequence, exporting companies reduced offers of Castilla, especially Colombia's main private producer, Pacific Exploration and Production, which no longer launches regular offers for it on the open market, a company source confirmed.
The last Castilla crude cargo sold by Pacific on the open market was in December, while state-run Ecopetrol, the largest producer of this grade, has also replaced Castilla sales with lighter, more expensive Vasconia.
At the same time, recent rebel attacks on Colombia's 210,000 barrel per day Cano-Limon Convenas pipeline have disrupted supplies of Vasconia crude.
(Reporting by Liz Hampton and Marianna Parraga; Editing by Terry Wade and David Gregorio)
(Reporting by Liz Hampton and Marianna Parraga; Editing by Terry Wade and David Gregorio)
