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 One week after U.S. authorities confirmed a ruling easing a 40-year
ban on shipping lightly processed oil abroad, Enterprise Product
Partners <EPD.N> has sold its first cargo to a Japanese trading
house and was seeking more buyers in Latin America, according to
trading sources.
Two Singapore-based sources said Japanese trading house Mitsui & Co
Ltd <8031.T> had bought a 400,000-barrel cargo of U.S. condensate
that is expected to be loaded and sent to Asia later this month or
in early August. The firm was marketing that cargo to refiners, they
said.
One trader at a major global oil company said Enterprise had offered
to sell it condensate for export and asked about making potential
sales to Latin America.
The preliminary marketing efforts are the strongest evidence yet
that U.S. oil companies are on the verge of unleashing light,
gaseous petroleum from the country's massive oil and gas fields to
markets overseas. By the end of the year, as much as 300,000 barrels
could be exported each day, according to an analysis done last week
by Citi in New York.
The deal follows news last week that two companies - Enterprise and
Pioneer Natural Resources <PXD.N> - have approval from the U.S.
Department of Commerce to export condensate that had been minimally
processed to reduce volatility.
The approvals represent a softening of a total ban on U.S. oil
exports that has been in place since the Arab oil embargo of the
1970s, and they open up the United States to global oil consumers
for the first time in a generation.
"A lot of traders are asking us about it and telling us they're
trying to get more cargoes from Enterprise especially this week and
next week," one of the traders said. "So far, I didn't hear any end
users in Asia bought."
U.S. condensate supply is estimated at about 1 million barrels per
day.
Enterprise and the U.S. unit of Mitsui were not immediately
available for comment.
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"I believe this is the first approved export of condensate outside
of Canada (since the export ban)" said Al Troner, a condensate
expert and president of Asia Pacific Energy Consulting. "It will
become fairly regular now."
Traders are rushing to ship condensate to Asia, the major condensate
import market where new processing units, known as splitters, are
expected to begin operating in the third quarter, sources said.
Condensate is a major feedstock for the petrochemical industry.
Importers like China, Japan and South Korea have splitting capacity
that can turn condensate into naphtha and other products. In Asia
Pacific, splitters can process up to 900,000 barrels per day of
condensate, according to a presentation by Facts Global Energy.
Other potential buyers lie on the doorstep of the United States in
Latin America, where it could be used as a substitute for naphtha as
a diluent for heavy crude oil.
(Additional reporting by Julia Payne in London, Meeyong Cho in
Seoul, Edward McAllister in New York and Marianna Parraga in
Houston; Writing by Jessica Resnick-Ault and Edward McAllister;
Editing by Marguerita Choy and Cynthia Osterman)
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