Home / Commodities / Freight News / Mexico sends rare cargoes of medium sour crude Isthmus to USGC

Mexico sends rare cargoes of medium sour crude Isthmus to USGC

Mexican state-owned oil producer Pemex exported three separate cargoes of the Mexican medium sour crude Isthmus to the US Gulf Coast between December and January.

Low operating rates at some of Pemex’s refineries are thought to have freed up barrels of Isthmus crude. At the same time, refineries on the USGC have been looking for alternatives to Venezuelan crudes following the imposition of sanctions last year.

Mexico resumed trading Isthmus in the Americas region about three years ago according to recently-released US Customs Bureau and Platts Analytics data.

Isthmus and Maya

Pemex’s petroleum refining systems in Mexico run a mix of Isthmus-Maya crudes to process oil products.

Isthmus is a medium sour grade with a 32-33 API gravity and 1.8% sulfur content with high gasoline, diesel, jet fuel and naphtha yields.

Production units with a larger intake of Isthmus crude have been Pemex’s 330,000 b/d Salina Cruz, 315,000 b/d Tula, 275,000 b/d Cadereyta and 245,000 b/d Salamanca.

Mexico refinery production

Low operating rates at those refineries, caused by declining crude production and poor maintenance works, are believed to be the reason for the availability of Isthmus in the export market.

Refining decline

On September 2019, the average total production capacity in use of Mexico’s refining system was 40%, the most recent Secretariat of Energy (Sener) data showed.

Additionally, since 2010, crude oil inputs to Mexico’s petroleum refining system have declined 50% to 600,000 b/d from 1.2 million b/d, according to a report published by the US Energy Information Administration in 2019.

The last time an Isthmus crude cargo was imported into the US was December 31, 2017, when 406,000 barrels were loaded out of the port of Dos Bocas, Tabasco, and delivered to Honolulu, Hawaii, the same data showed.

However, Pemex data shows April 2018 was the last date the company loaded 8,000 barrels of Isthmus exported to the Americas region, without disclosing the exact destination of the cargo.

US refiner Valero has been the buyer of the three Isthmus cargoes recently, imported and loaded out of the port of Pajaritos, Veracruz, located in the Gulf of Mexico.

Mexican crude oil exports to US

The vessel Uraga Princess delivered nearly 500,000 barrels of the Mexican grade to the port of Corpus Christi on January 16, with Valero as the receiver, according to US Customs data.

Also the tankers Ningbo Dawn and Leo Sun delivered 407,000 barrels and 495,400 barrels of Isthmus, respectively, at Port Arthur between December 11-23, the same data showed.

Medium-sour Isthmus has typically been used as diluent for heavy sour grades – Mexican Maya included – in USGC refineries with coking and sulfurization units.

The recent imports of Isthmus by Valero were believed to be used by the company to blend the crude with high sulfur fuel oil, according to market sources. Valero did not immediately respond to a request for comment.

Since the US Department of Treasury imposed sanctions on Venezuela’s state-owned oil producer PDVSA in January 28, Valero has been seeking replacements for Venezuelan crudes

Chevron, Valero and Citgo were the top three buyers of Venezuelan crudes in the US market.

In 2019, Pemex changed the formula used to calculate its exports crude prices. The new formula excluded the fuel oil component to avoid a major price impact of the International Maritime Organization sulfur-cap regulation, which went into effect on January 1.

As a result of that change, the differential of Isthmus deliveries to the USGC dropped nearly $8 year on year to minus $4.40 in January from plus $3.50 in the same month of 2019, according to Platts data.

The average outright price for Isthmus deliveries to the USGC was nearly $60.50/b in 2019, but so far in January, the average price has been $63/b, the same data showed.
Source: Platts

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping