Tankers: European oil trade routes are being redesigned

The tanker market is in ever-changing waters as existing conditions are reshaping crude oil trade routes. North Sea oil production could come back into play, while exports from the Urals are expected to move east. In his latest weekly report, the Gibson Shipbroker said that “the combination of high oil prices and the need to find alternatives to Russian crude has led politicians and industry to renew interest in North Sea oil. North. Previously, many had written off the future of the North Sea as a major producing region given declining UK output due to rising costs, decarbonisation pressure and low oil prices during the pandemic. However, recent events may have thrown the basin a potential lifeline. If the North Sea can take advantage of higher oil prices and political support, it can develop and evolve into a more prominent position in lower-carbon oil production as Europe reconciles its future need for oil with secure energy supplies. long-term”.

Source: Gibson Shipbrokers

“The IEA estimates that combined UK and Norwegian production was 2.93 mbd in 2021, down from 3.09 mbd in 2020, with current first quarter production estimated at 2.97 mbd, suggesting a slight recovery in volumes, mainly due to Norway, while the UK has been consistently around 900 kbd since 2021. In terms of tanker accessories in the region, Gibson data shows that the number of Aframaxes being are fixing X-UKC for crude oil has risen since the beginning of the year from 38 in January to 56 and 51 in February and March respectively, suggesting an increase in short-haul demand. This is supported by reports of producers with their own refining systems choosing to keep barrels locally for their own use rather than trading them on a longer term basis,” the shipping agent said.

According to Gibson, “in the short term, keeping the barrels within Europe may have little impact on the high prices of refined products such as gasoline and diesel, since this would require an increase in regional refining production despite the loss of capacity after Covid-19. pandemic. However, any additional raw material would certainly be welcome. In terms of trade flows, the issue of the Russian Urals is important. It seems that there will be a reduction in imports from the Urals to Europe, either through official or self-sanctioned energy sanctions. Thus, even if the majority of Ural exports out of Russia shift from west to east, the loss of about 1.2 mbd entering Europe from the Baltic could be mostly offset by grades from the North Sea left locally for European refiners, in addition to volumes received from other sources such as West Africa, the Middle East and the United States.”

“However, it remains to be seen to what extent political aspirations for the region translate into strategic investments and increased production. It may take at least 5-10 years to fully develop new fields in the North Sea, by which time the oil market will likely have moved on and such investments will compete with alternative projects, including renewables as the energy transition in Europe further advances throughout its policy. schedule,” Gibson said.

“Another problem is the declining state of UK North Sea production compared to Norway’s expansion plan, which is transforming the country into a leader in low-carbon oil production through fields. such as Johan Sverdrup and Johan Castberg, in which the fields are connected to cheaper and renewable coasts. electricity networks has been essential for optimizing costs and reducing carbon emissions related to production. In terms of the future of UK courses, West of Shetland is the most promising, although the area is challenging in terms of its conditions. Shell announced that it may reconsider its decision to pull out of the Cambo field development, given the altered business environment. Environmentalists and the IEA stress that further development of new oil projects is not compatible with limiting global warming to 1.5°C. Therefore, decisions will have to be made at the political level about what is the priority in terms of energy security and climate policy”, concluded the maritime corridor.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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