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Brazilian Crude Oil Exports remain strong so far in August, with
volumes only marginally down since last month. The country has been
loading more than 1.45 million b/d on tankers this month, heading
primarily for Asia, versus 1.49 million b/d shipped in July.
Cargoes heading for China dropped to 770 thousand b/d, down from
810 thousand b/d in May and June and the record high of 1.2 million
b/d shipped to China in April 2020. China has been facing severe
delays at several of its ports due to high congestion, affecting
discharging activity mainly of VLCCs near Ningbo, Qingdao,
Lianyungang and Dalian. As a result, Brazil started to ship more to
SE Asia, including its storage facilities, while there has been a
rather slow increase in shipments heading for India.
Brazil Crude Oil Shipments
Petrobras targets to offer more new deals to Asian refiners in
an effort to expand its market share in Asia. OPEC expects oil
production in South America to grow 2.3% to 6.19 million b/d by the
end of 2020. The popularity of Brazilian grades among Asian
refiners cannot be ignored by traditional exporters - members of
the cartel. Meanwhile, refiners in South America have been feeling
the pressure, with the impact of the Covid-19 pandemic turning
rather severe. Colombian oil refiners have suffered massive losses
and struggle mainly due to high operating expenses.
In contrast to Brazil, other exporters of South America have
been exporting a big portion of their output to USA and European
destinations. Venezuela's production and exports are still under
severe pressure, with the country understood to be now focusing on
swaps of their crude oil with imports of diesel.
Market Shares and Crude Oil Flows from South
America
Brazilian exports to Asia could be further supported once India
starts raising its crude oil flows from Brazil as the country has
been trying to diversify its import basket away from Middle Eastern
producers. The country expressed its interest for Brazilian grades
earlier this year, but the activity has been kept limited since the
outbreak of Covid-19.
Meanwhile, Total launches Phase 3 on the Giant Mero Field
Development (Libra Block), having taken the investment decision for
the field located deep offshore, 180 km off the coast of Rio de
Janeiro. Its liquid treatment capacity stands at 180,000 b/d and
could start up by 2024.
Users of IHS Markit Commodities at Sea can also track domestic
movements within Brazil, from offshore terminals back to the
country's exporting ports, with a lot of information provided on
grades, shippers and much more.
For more information on the product used in this outlook, visit
Commodities at Sea page.
Posted 24 August 2020 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade
