Daily Energy Report

Saudi oil exports, renewable gasoline, coal use in China, EVs in Australia, flaws in some green technologies, Russian oil exports and the shadow fleet, and more

CHART OF THE DAY:

The Rise and Fall of Saudi Oil Exports to China and US

Commentary:

The dramatic changes observed in Saudi crude flows to the US market between the summer 2018 and early 2020 were accompanied by a jump in Saudi oil exports to China and which have remained strong since then, as shown in Figure (1) above.

During the first three months of this year, Saudi Arabia exported an average of 1.67 million barrels per day (mb/d) of oil (crude and condensates) to China compared to 1.61 mb/d during the same period last year, according to figures from data intelligence firm Kpler.

Saudi crude oil exports to the US market, meanwhile, plummeted to 137,000 b/d in March, based on Kpler’s data. Flows started dropping below 200,000 b/d in February. By contrast, Saudi crude exports to the US in March 2022 stood at around 335,000 b/d, and close to 405,000 b/d in February of that year, as shown in Figure (1). The last time exports were at a very low rate compared to historical data was in October and November 2020 when Saudi flows to the US fell to 100,000 b/d and 138,000 b/d respectively.  

EOA’s Main Takeaway:

The drop in Saudi crude exports to the US market last month could be partly attributed to the shutdown of the Motiva Enterprises’ DCU-2 coker (Delayed Coker Unit) at the Texas-based Motiva refinery, North America’s largest refinery with a crude refining capacity of 630,000 b/d. In January 2023, Aramco announced the 100% acquisition of Motiva Trading by the Aramco Trading Company (ATC), a move which the Saudi oil giant said would strengthen “Aramco Trading Company’s global operations and extensive portfolio, with incremental access to” the Motiva refinery. The move also made Aramco Training Americas the “sole supplier and ‘offtaker’ of Motiva Enterprises,” according to a press release.

As for Saudi exports to China, the marked increase in flows since the summer 2018 has been due to different reasons, including US sanctions on Iran’s oil industry—which allowed OPEC’s top producers Saudi Arabia and Iraq to snap up Iran’s share in the Chinese market— and Aramco’s desire to increase its presence in China, the world’s biggest crude oil importer. 

Saudi oil exports are projected to grow stronger in China’s market, despite the existing competition from discounted Russian oil barrels. Several developments support this forecast, including Aramco’s recent move to acquire a 10% interest in Shenzhen-listed Rongsheng Petrochemical Co. Ltd., a deal that the Saudi company said, “would significantly expand its downstream presence in China.” As part of this arrangement, Aramco will supply 480,000 b/d of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd (ZPC), under a long-term sales agreement, according to a press statement on March 27.

STORY OF THE DAY  

1-      REUTERS: Chevron, Exxon pursue cleaner gasoline as alternative to EVs

Summary:

Chevron and Exxon are road-testing renewable gasoline blends that they claim could reduce emissions from conventional cars to levels “competitive with EVs”, Reuters reported.

"We really believe there has to be alternatives for the light-duty vehicle," Reuters quoted Chevron President of Americas Products Andy Walz as saying at a recent event to road test the fuel. "Electrification is not the only answer," he added.

EOA’s Main Takeaway:

This is a creative idea.  Chevron’s fuel is 50% gasoline and 50% renewable fuel (biofuel).  This special mix reduces emissions in any car by about 40%.  The beauty of this technology is that it doesn’t require any modifications to the cars or infrastructure.   While the cost is expected to be higher than gasoline, a Chevron official told the EOA that it is cheaper than electric batteries if you count the infrastructure cost.  We will publish more details on this in the Weekly Newsletter. We encourage readers to subscribe here.