Customers for N.L. oil About to grow
NEW YORK Newfoundland is finding new customers for its oil. For years large volumes of oil produced off the east coast were shipped to U.S. refiners.
But booming U.S. output has cut the demand from nearby refineries. Newfoundland’s oil exports to countries other than the U.S. are already up 59 per cent compared to all of last year, totalling almost 23 million barrels, according to data compiled by Bloomberg. The number of non-u.s. recipients has grown to 14 countries from just 6.
That means crude from Newfoundland is ending up in places like Croatia for the first time. With sanctions on Iran’s oil looming and ship fuel regulations set to make the province’s crude more attractive, the customer base is set to grow.
The declining price of U.S. benchmark crude relative to international prices — which Newfoundland uses — has spurred more East Coast refiners to look for shale, according to Gerry Goobie, general manager for marketing and transportation at Canada Hibernia Holding Corp., the government-owned company that has an 8.5 per cent interest in Newfoundland’s Hibernia field.
“Newfoundland crude sellers would need to find other buyers,” Goobie said. “That’s why it’s going further afield.”
As the province moves forward with plans to double production by 2030, Newfoundland oil has made its way as far north as Norway and as far east as China. Croatia is set to become the newest customer.
Theshipminervaclaraisenroute to Omisalj on Croatia’s southern coast after loading at Newfoundland’s Whiffen Head crude terminal on Aug. 18, according to ship tracking data compiled by Bloomberg. INA Industrija Nafte DD owns the Mediterranean nation’s only operating refinery in Rijeka near the port of Omisalj. It will be INA’S first purchase of Canadian crude, a source said.
A looming cap on sulphur emissions for ship fuels may also spur new customers.
“This is a market opportunity for heavy, sweet crude in Newfoundland,” said Allan Fogwill, chief executive officer of the Canadian Energy Research Institute.
U.S. sanctions on Iran and Venezuela’s chronic production issues could also mean more interest for Newfoundland’s oil despite the difference in qualities. Buyers looking to replace those sour crudes are likely to try the heavy to medium sweet Newfoundland oil given its proximity in quality, even though it won’t be an exact replacement. That might open up additional markets in Europe for Newfoundland. Bloomberg