The medium sweet Liza Crude being produced offshore Guyana was fixed for China delivery this month during which more rare grades were expected to arrive, with Chinese independent refiners now open to buying anything economically competitive, S&P Global Platts said in a recent report.
“Grades like the Guyana offshore crude, Liza, North Sea’s Chestnut and Balder crude, and even Siberian Light crude, which usually does not leave the Mediterranean region, were fixed to be delivered into China in July,” Platts had said.
As a result of the crude oil demand devastation brough on by the coronavirus, China had emerged to be the only respite for crude sellers seeking to offload their cargoes.
Chinese refineries were ramping up run rates as travel restrictions eased and lockdowns lifted within the country, allowing manufacturing and production to gradually resume since late March.
Chinese refineries, both state-owned and independent, have been ‘spoiled for choice’ with the abundance of crude grades, such as the Liza Crude, seeking homes globally, market sources had told Platts.
China’s independent refinery Luqing Petrochemical had imported 1 million barrels of Liza crude from Guyana for July delivery at a discount of about $7.50/b to ICE Brent futures, on a DES basis, the first cargo of the Latin American crude to enter the China market, sources told Platts in April.
Luqing had also booked other crude grades from the North Sea, including Balder and Chestnut, at discounts of around $7.30-$7.50/b to ICE Brent Futures for June or July delivery.
Independent refiners also took at least two cargoes of US sour crude grade Mars at a discount of $8-$9/b to ICE Brent for July delivery into China, refining sources said.
Platts said availability of cheap barrels could ease China’s appetite for its favorite grades, including Russia’s ESPO crude and Brazil’s Lula crude.
The Liza Crude is categorized as medium sweet with a sulfur level of 0.51% and API gravity of 32.10 degrees.
Guyana began producing oil at the ExxonMobil-operated Stabroek Block in December 2019. Oil production in the South American country is expected to hit the 1 million barrels per day mark towards the end of the decade.