Houston — (Update adds background, comments and details throughout)
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Switzerland-based trading company Vitol is scheduled to load during the first week of 2016 a US crude oil cargo from Enterprise Products Partners' Houston terminal, an Enterprise spokesman said Wednesday.
The 600,000-barrel cargo of domestic light crude oil is scheduled to load from the Enterprise Hydrocarbon Terminal, Enterprise said.
Enterprise made the announcement on its website Wednesday morning, saying it had "agreed to provide pipeline and marine terminal services to load its first export of crude oil produced in the US under the law enacted earlier this month."
The crude is South Texas Sweet with a 46-48 API gravity, according to a source with another trading company who was bidding for the same cargo.
Enterprise spokesman Rick Rainey confirmed the origin of the crude and the buyer.
"The cargo for which we are providing pipeline and loading services belongs to Vitol, which will decide on the delivery destination. The grade of crude oil is light sweet from the Eagle Ford," Rainey said.
Vitol, along with other trading companies, has exported US condensate from Enterprise terminals in the past. Excluding Canada, which takes the lion's share of US condensate and crude exports, the countries that have taken US condensate are Brazil, China, France, Germany, India, Italy, the Netherlands, Singapore, South Korea, Spain and Switzerland.
As for the destination of the cargo, sources said it was too early to tell. The current Brent-WTI spread is not conducive to crude movement from the Americas to Europe, unless the crude is heavily discounted.
"They're marketing all locations," one US crude cargo trader said.
Trading sources said Eagle Ford crude had been trading at about $3-$5/b under the NYMEX light crude contract, which could make economic sense if that is where the deal was done.
"It could be a backstop for their refinery with opportunistic marketing in Northwest Europe refineries," the source at the trading company which also bid for the cargo said.
Vitol has exported US processed condensate into Cressier, Switzerland, in the past where the oil trading shop has a refinery. Koch Industries has taken similar cargoes to the Netherlands, where the company has a splitter facility with cut points and trays adjusted to run ultra light crude.
Other possible destinations for the Vitol cargo include Latin America, where Mexico has long been seeking to import light crudes from the US. Venezuela and Colombia are also in the mix as both countries have been importing light crudes from West Africa.
Enterprise has been the exporter of record for the first half dozen cargoes of US processed condensate leaving US ports, but the company has not been the processor of condensate and has been responsible solely for aggregation, transport and storage of processed condensate at loading port.
BHP Billiton, after publicly announcing it would "self-certify" its processed cargoes, said it will market a large proportion of its output -- about 44,000 b/d -- independently and without Enterprise's aid in aggregation. Pioneer had explored similar avenues in marketing independent of Enterprise, while Peaker Energy, the first company granted BIS permission, had alwaysmarketed on its own.
US LOGISTICS STILL LIMITED
Crude export logistics are still limited due to operational constraints. Most draft restrictions in US Gulf Coast terminals are about 40-45 feet deep, allowing for medium range vessels capable of loading a maximum of about 500,000 barrels.
A cargo the size of the Vitol cargo would require a big Aframax, which would have a draft of about 45 feet fully laden. The maximum draft for the Houston Ship Channel is 40 feet, Phil Prapopulos, a ship broker with Tankship International said.
"So, that cargo would have to go on two Panamaxes or two MR tankers," he said.
That option would require lightering a ship offshore Galveston, Texas, which is a could prove costly. This operation is typically done as a three-day contract and currently costs $26,250/d for a three-day minimum and demurrage cost is $25,500/d, according to a separate ship broker.
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