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China's independent refiners import Canadian Cold Lake blend to replace Venezuelan Merey

Hellenic Shipping News 2018-08-09 00:00:00

China’s independent refineries will receive their first batch of Canadian Cold Lake crude blend in August as feedstock to produce asphalt, replacing the falling Merey crude shipments from Venezuela.

The first cargo is 130,000 mt for Hongrun Petrochemical, carried by the Mashall Island-flagged Aristoklis. This vessel will call at Qingdao port in Shandong around August 14, a port source said.

Aristoklis departed from Vancouver on July 28, S&P Global Platts trade tracker cFlow showed. The vessel was chartered by Canada’s Suncor Energy, according to Platts shipping fixtures.

The Supplier of the cargo was not immediately known. The main participants in the Cold Lake oil sands deposit are Imperial Oil Resources, Cenovus Energy, Canadian Natural Resources Limited and Shell Energy, market sources said.

Chambroad Petrochemical has also bought a cargo of Cold lake, according to a company source.

Meanwhile, state-owned trading house Chinaoil has one cargo of Cold Lake crude arriving in August to offer to the independent refineries, a company source said.

“We still have around 80,000-100,000 mt of Cold Lake to offer,” the source said without disclosing further details.

Chinaoil, the trading arm of PetroChina, imports Merey crude under the oil-to-loan deal between China and Venezuela and now has been sourcing other crudes to replace falling supplies from the producer.

“Cold Lake can be used as a substitute for Merey crude for asphalt production,” a source with Dongming Petrochemical said.

But refiners need to blend the grade with other crudes, while Merey crude could be used directly to produce asphalt, he added.

Cold Lake Blend has an API of around 21 degrees and sulfur content of around 3.75%, while Merey crude’s API is 16 with 2.46% sulfur content.

Due to limited availability, independent refineries imported only 6.92 million mt of Venezuelan crudes over January-July, down 12.3% from a year earlier.

In July, Venezuela’s state-owned PDVSA was committed to exporting 1.2 million b/d of Merey crude and 500,000 b/d of DCO. But the company was only able to meet 44.1% of that commitment, delivering 593,000 b/d of Merey crude and 149,000 b/d of DCO, according to a monthly PDVSA crude plan seen by Platts.

In addition to Cold Lake, Kuwaiti Export Crude is also imported as a substitute for Merey.

Dongming Petrochemical will receive around 260,000 mt of Kuwait Export Crude in late August, the first purchase of the grade by the refinery.

Kuwait Export Crude has a gravity of 31 API, with a sulfur content of 2.5%.
Source: Platts