CALGARY – For the likely the first time, a major shipment of oil from Atlantic Canada is headed across the globe to markets in China.
Husky Energy Inc. spokesman Mel Duvall confirmed his company had sold a cargo of one million barrels of oil from its projects offshore Newfoundland and the shipment would depart for China later this month.
The destination is highly unusual for Atlantic Canadian crude oil, as domestic, U.S. and European markets are all closer to Canada’s East Coast than Asian markets.
Duvall would not confirm whether the shipment would make its way to China via the Panama Canal but that route is likely given that energy news wire Platts reported the shipment would be co-loaded with Venezuelan heavy oil en route to the Asian country.
Platts also described the journey between Atlantic Canada and China as a “first-of-its-kind voyage” and a “breakthrough” though Duvall could not confirm whether this shipment marked the first time oil from Husky’s offshore Newfoundland projects had moved all the way to China.
ARC Financial Corp. vice president, energy research Jackie Forrest said she was not aware of any previous shipments of oil from Atlantic Canada heading to China because of the high price of transportation.
“Typically, there isn’t enough of a difference between the prices here in North America and Asia to warrant the cost of transportation so you will see crudes go to closer markets like Europe and the United States,” Forrest said.
“To make this economic, you would have to see the price difference between those two markets be equal to, or slightly greater, than the cost of transportation,” she said.
The majority of Atlantic Canadian oil is processed domestically, according to the Canadian Association of Petroleum Producers’ most recent crude oil markets forecast. Export destinations for Atlantic production typically include the U.S., or European markets like the United Kingdom, Spain, the Netherlands and Italy.
Platts reported that the shipment was viable because supplies out of the Middle East had shrunk following OPEC member countries’ recent production cuts. OPEC announced in November that it would scale back its cumulative production following a two-year-long oil price collapse.
In Nov. 2013, Platt’s reported, Husky sold one million barrels from its White Rose offshore project to Indian Oil Corp. Husky announced in December that it could sanction an expansion of its White Rose project, 350 kilometres off Newfoundland’s coast, in 2017.