Tankers: Argentina is becoming a crude oil export destination

Argentina is expected to contribute to more crude oil exports by sea as production increases but consumption does not. In its latest weekly report, shipbroker Gibson said that “the explosive growth in American crude production has repeatedly focused on prospects in the United States, Guyana, Brazil and Canada.” In the US, developments in the shale sector have been closely monitored, with regular data and the involvement of public companies enabled developments to be examined more closely. In Guyana, Brazil and Canada, longer-term E&P projects and the use of FPSOs or large pipeline developments allow for easier analysis of future production levels. However, because Argentina is far less internationally oriented and depends for much of its production growth on unconventional sources (e.g. shale), it has not attracted as much international attention. But that could change now.”

According to Gibson, “Drilling activity in Argentina’s key shale region, the Vaca Muerta in Patagonia, resumed in 2021 after a brief hiatus in 2020 and has seen a steady increase in exploration activity since then.” Therefore, domestic production this year is expected to reach 780,000 barrels per day, down from around 500,000 barrels per day before the pandemic. Further gains are expected, with 1 million barrels per day on the horizon by 2028. However, given the price sensitivity of shale production, overall production may depend on oil market dynamics over the next five years.”

“In terms of crude oil trading, Argentina rarely imports crude oil from the sea, meaning that expanding production here will have little impact. However, as capacity expands, it is likely that most of the extra casks will be exported. Currently, most of the country’s crude oil exports are handled by Panamax vessels from Puerto Rosales or by Suezmax vessels from Caletta Cordova. However, state oil company YPF is currently in the early stages of a $1.2 billion project to export up to 380,000 barrels per day to VLCCs and Suezmaxes from the Atlantic Seaboard.

The project is in its infancy and may be modified or delayed; Still, it’s definitely something to check out. An export route via Chile to the Pacific was recently opened. The 110 kbd Trans-Andean Pipeline, which ceased operations in the early 2000s, has recently been renovated and provides an export route for Argentine production to the Bio-Bio Refinery (ENAP) at San Vicente in Chile. The pipeline also opens up the possibility of exporting crude oil from San Vicente to Aframaxes and Suezmaxes; However, volumes are constrained by ENAP demand and could compete with imports via sea to San Vicente,” said Gibson.

The shipbroker concluded that “Ultimately, while Argentina is unlikely to become a leading crude oil exporter any time soon, production is growing while refining capacity and domestic demand are not growing, increasing the availability of crude oil for export.” If If YFP manages to successfully develop its new export project on the Atlantic Seaboard, VLCCs and Suezmaxes will find a new source of demand, otherwise much of the exports will be limited to an aging Panamax fleet.”

Related Articles

Back to top button