• 24 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 1 day Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 1 day Syrian Rebels Relinquish Control Of Major Gas Field
  • 1 day Schlumberger Warns Of Moderating Investment In North America
  • 1 day Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 1 day Energy Regulators Look To Guard Grid From Cyberattacks
  • 1 day Mexico Says OPEC Has Not Approached It For Deal Extension
  • 1 day New Video Game Targets Oil Infrastructure
  • 1 day Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO
Alt Text

Russia Goes All In On Arctic Oil Development

Fighting sanctions and low oil…

Alt Text

Saudi Arabia Looks To Shelve Aramco IPO

Saudi sources have confirmed that…

Alt Text

Has The Bear Market In Oil Finally Ended?

Recent data provides reasons to…

Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

U.S. Refiners Look Abroad As Domestic Competition Increases

LNG tanker

U.S. oil refiners are going global. That’s the message that has been coming from the industry over the past year when a lot of refining capacity abroad was shut down for various reasons, making way for imports from the U.S.

Bloomberg reports that in 2016, American companies exported 3 million barrels of refined petroleum products daily – a record high – and sector players seem determined to continue expanding their export capacity. Exxon, for example, recently announced a $20-billion investment program for the Gulf coast, to consist of refining and petrochemical production facilities and infrastructure. The output is planned to be exported.

Exxon is far from alone in this. According to Bloomberg, many are looking abroad for new markets to take advantage of the cheap supply of crude and gas domestically, which makes the product more competitive internationally.

For now, however, refiners seem to be focusing mainly on Mexico, where refining infrastructure is in dire need of repairs and upgrades, so the country last year relied on U.S. fuel imports for half of its consumption. However, this is a temporary market in all likelihood, as Mexico works to liberalize its energy sector and new players take over the refining capacity from former monopoly Pemex. What’s more, Bloomberg notes, Mexico’s fuel demand is not growing.

U.S. refiners are also exporting to Latin America and Africa, as well as to Asia, and have plans to start exporting to Europe. Asia is perhaps the most sought after regional market in the world as it contains all the major so-called emerging economies, which are the drivers of global fuel demand growth, led by India.

Europe is a riskier undertaking – American fuels and other oil products have to be really competitive to establish a solid presence there, where Russia, Nigeria, and Gulf producers have dominated the picture for decades. What’s more, imports of oil and products to Europe are falling – the green drive in the European Union is bearing fruit, and that fruit is not good for the energy industry.

So, Asia is the key market, along with Latin America and Africa. This sounds like a solid enough global market, and it’s not just about oil. The U.S. could become the world’s top supplier of liquefied natural gas over the next 20 years, according to Canada’s Enbridge and U.S. Tellurian Inc.

Currently, capacity totaling around 70 million tons annually is being built around the country, and low LNG prices are not deterring the companies behind these projects. LNG is largely considered the fuel of the future, or a bridge between fossil fuels and renewable energy, so its prospects are brighter than oil’s.

Reorienting themselves to exports is certainly a smart move on the part of U.S. energy companies with a view to the future, and it’s not just about taking advantage of suitable circumstances in various regional markets. It’s also about avoiding another slump like the one that started in 2014.

Shale boomers have been building production at a fast pace ever since OPEC announced its production cut deal that pushed prices up to the mid-$50-a-barrel range. Now this breakneck production boost is being viewed as the main headwind for prices. Again. Some believe another price crisis is looming unless the shale producers slow down. Indeed, even their very own Harold Hamm of Continental Resources warned against expanding production too fast.

So, exports are the natural choice: combining the advantages of cheap raw materials with growing demand. Competition will be tough because there are many vying for the same markets, but there seems to be no better alternative for the long term.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News