A Liquimar Tankers Management suezmax is carrying the fist crude cargo from Equinor’s Johan Sverdrup field to China, underscoring rising long-haul shipping demand amid oversupply of oil in Europe.
Vessel-tracking data showed the 167,281-dwt Orpheas (built 2017) completed the loading from the Norwegian terminal of Mongstad on Saturday before leaving for Ningbo, China, with an estimated arrival date of 18 December.
The vessel was chartered by Unipec, the trading arm of Chinese state energy giant Sinopec that owns the cargo onboard, at a reported rate of $6.7m. An email seeking comment from Liquimar at the time of writing has yet to be responded.
The Johan Sverdrup is expected to ramp up its output to 440,000 barrels per day (bpd) by next summer, before a further hike to 660,000 bpd by the end of 2022 when the second phase of work is completed.
The main export terminal will be Mongstad, which can receive VLCCs, suezmaxes and aframaxes.
Kpler has predicted 10 to 11 liftings from the terminal through November.
“Given production capacity of the field, higher loadings volumes are likely into early-2020,” the cargo intelligence provider said.
Market players have anticipated much of the new output would be shipped to Asia, where refineries are diversifying their supply sources away from Opec producers.
With the supply cuts by Opec and its Russia-led allies still in place, the medium sour grade from Johan Sverdrup can serve as replacement barrels for Asian refineries, some said.
Asian refineries are generally configured to run on sour crude, while many European refineries can find it more profitable to process light crude from West Africa and the US.
Rising US-Europe trade
Moreover, Kpler data shows US crude exports to Europe have averaged 1.4m bpd in October, up 541,000 bpd from September, with high VLCC rates curbing US flows to Asia.
“The European market is also facing possible oil oversupply issues… Such large realised and expected European import levels [from the US] are likely to push Johan crude towards the East,” Kpler said.
The long-haul demand is expected to offer support to the VLCC and suezmax markets, where earnings have corrected from the multi-year highs seen earlier this month but remained at strong levels.
Based on Clarksons Platou Securities’ assessments, VLCC earnings were $80,400 per day, suezmaxes at $65,300 per day and aframaxes at $42,600 per day as of Monday morning.
“The correction continues in the tanker market with benchmark rates for VLCCs and aframaxes coming further down last week. Suezmaxes, in contrast, are holding up better,” Arctic Securities said.
