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With most September cargoes from Angola already booked, prices
have now eased with sellers simply looking to clear, before the
market focuses on later loadings. Chinese independent refiners have
been active, having provided a significant demand, but with a clear
decline observed during the last week. The premium for Girassol to
dated Brent has now dropped below USD 3.00, while the Dalia premium
has already reached USD 2.50. Distillate refining margins remain
high across Europe and Asia, making Angolan crude popular once
again after a long break that lasted around three months, during
which Chinese demand was quite disappointing.
Meanwhile, Total together with partners decided to launch the
Zinia 2 deep offshore development 150 kilometers off the shores of
Angola. This project will have a production capacity of 40,000 b/d,
being the first of several possible developments on Block 17. This
could extend the profitability of the block, which has already
produced more than 2.6 billion barrels. Total controls 40% of the
block, together with Equinor (23.33%), Exxon Mobil (20%) and BP
(16.67%).
Focusing on the destination of Angolan exports, China has been
dominating with volumes accounting for more than 60% so far this
year. Flows to the Far Eastern country have been increasing by more
than 8% between January and July 2019, year-on-year. July exports
to China went up by 9.3%, even if total numbers went down, with
most independent refiners interested in Cabinda, Mondo and Saturno.
Mostarda, the most recently introduced grade by Angola, arrived for
the first time in China last month. However, it seems that overall
Angola has suffered huge losses in terms of market share in Chinese
imports, in favour of Middle Eastern suppliers, mainly Saudi
Arabia. As data by IHS Markit Commodities at Sea
shows below, Angolan barrels lifted for China have remained quite
flat since early 2019, in contrast to Saudi Arabian volumes that
have increased dramatically during the last couple of months. This
primarily refers to Angola not supplying a lot to new refining
projects recently launched in China, an area where Saudi Arabia has
been much more successful.
Posted 15 August 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
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