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One of Rigzone’s regular market watchers takes a look at the Kirkuk – Ceyhan pipeline shutdown, US crude exports, global refinery demand and more. Read on for more details.
Rig zone: What were some market expectations that actually played out over the past week and which expectations didn’t?
Hillary Stevenson, Senior Director of Energy Market Intelligence at IIR Energy: According to the EIA, US crude exports reached a record average of 3.6 million barrels per day in 2022, up 640,000 bpd from 2021. Crude export flows have been on the rise since lift the export ban in 2015. This is not surprising given that increased U.S. crude production combined with sufficient pipeline and dock capacity, particularly in Corpus Christi, where most exports originate . As expected, US SPR releases and higher demand for US barrels amid Russian sanctions lifted the average number of exports in 2022 above the previous record high of 2020. According to the EIA, exports may hit another record high in 2023 with flows averaging four million bpd so far this year.
Rig zone: What were some market surprises?
stevenson: Nothing like a pipeline shutdown to refocus the market on fundamentals. Crude flows on the 450,000 bpd Kirkuk – Ceyhan pipeline from the Kirkuk oil fields in Iraq to a port in Ceyhan, Turkey were shut down following a court ruling. Production may be affected if service is not returned soon, as reservoir capacity is limited. The pipeline was recently offline from February 5-7, 2023, due to the earthquake and for safety reasons, according to the IIR.
Rig zone: What news/trends will you be waiting for next week?
stevenson: It will be waiting for global demand from refineries to increase rapidly in the near term with the commercial start-up of projects on a global scale and unplanned outage resolutions. Dangote Industries Limited is finalizing tests at its 650,000 bpd Lekki refinery in Nigeria with expectations to start the unit commercially in early April. The refinery has been under construction since 2018 and will consume crude from West Africa, reducing the amount available for export. Kuwait Integrated Petroleum Industries Company (KIPIC) recently began commercial production of its second 205,000 bpd crude train at its 615,000 bpd Mina Al Zour refinery in Kuwait. The third and final crude train of 205,000 bpd is expected online later this year. Regarding unplanned outages, Cenovus is conducting initial restart activities at its 160,000 bpd Toledo, Ohio and 49,000 bpd Superior, Wisconsin refineries. In Denver, Suncor is preparing to restart its 98,000 bpd Commerce City refinery. All three refineries closed due to fire: Toledo in 2022, Superior in 2018 and Commerce City in 2022, according to IIR Energy. Increased global refinery demand will support higher crude prices and help ease distillate tightness.
To contact the author, please send an email andreas.exarcheas@rigzone.com
Photo credit – iStock.com/moxumbic
