Tuesday, January 19, 2010

China eyes Caribbean fuel oil market now, crude later

Haiti, the more I read, the more heartbroken I am for the people. This is totally geo-political, and there is nothing humanitarian about the US move into Haiti.

BEIJING, China (Reuters) -- PetroChina's move to take a big position in Caribbean oil storage should give the state oil company immediate muscle in the region's residual fuel trade and open up longer-term options for crude trading.

PetroChina's assumption this week of Saudi Aramco's lease on 5 million barrels of oil storage capacity at the strategically located Statia terminal in the Caribbean signaled its intent to build a global oil trading network.

The NuStar Energy LP Statia terminal on the Dutch Caribbean island of St Eustatius can handle the largest oil tankers. It is just a few days sail from major US refining and transport hubs on the Gulf Coast.

The Caribbean is growing more important as an oil trading center with the emergence of a possible new sour crude benchmark in the Argus Sour Crude Index. Still, sources say PetroChina's initial focus probably is on shorter-term marketing goals that will make it a major player in the Caribbean "bunker", or ship fuel, market.

"It will mostly be used for fuel oil or bunkers but may also be used for crude in the future," said a PetroChina trading official.

*Fuel oil is China's most widely imported oil product. It is burned in power plants, ships and processed by China's small privately owned "teapot" refineries.

Venezuela has emerged as China's biggest supplier of fuel oil as President Hugo Chavez looks to shift the country's oil marketing efforts away from the United States, even though the Caribbean nation lacks access to Pacific ports.

But the fuel oil market in Asia is becoming more competitive as demand growth eases and traders fight for market share. Analysts say economies of scale are needed to weather the downturn, driving the expansion of regional players into other markets such as the Middle East and India.

"It's in the center covering both North and South America. If you look at the bunker market alone, it's huge," said another Beijing-based PetroChina executive.

Underscoring PetroChina's eagerness to expand its reach in the Caribbean residual fuel market, the company is reportedly in talks with US refiner Valero to acquire its shuttered refinery on the island of Aruba.

The Aruba refinery mainly produces fuel oil and unfinished feedstocks, making it potentially an excellent source of fuel oil blendstocks for the Statia terminal.

But regardless of PetroChina's short-term plans for the Statia terminal, some oil traders and analysts believe it is only a matter of time until the state-backed company begins to use it as part of a crude oil trading network.

PetroChina began building a presence in the giant US physical crude markets several years ago. But with little of its own production in the region it may be some time until the PetroChina plays a bigger role in regional crude markets.

"Without equity crude it would not make business sense to use the terminal as a crude oil staging point ... the margins would be minimal," said Sarah Emerson, director of Energy Security Analysis Inc in Boston.

However, PetroChina is among the companies interested in Venezuela's Orinoco heavy oil belt, which could give it significant crude oil production in the Caribbean basin toward the end of the decade.

The widening of the Panama Canal later this decade will also alter the dynamics of the Caribbean market, making it more responsive to market forces in the Pacific.

The $5.25 billion expansion of the Panama Canal will allow the waterway to handle Suezmax ships, which can carry up to 1 million barrels of crude, when completed in 2014. It is expected to open up new trade flows for crude oil shipments from West Africa and bolster the role of Caribbean storage in the portfolio of global oil traders.

"With the canal expansion you'll have options to deliver to a lot of places. It opens up arbitrage to the (US) West Coast in a meaningful way and is going to turn the region into a key storage point for both oceans," said a US Gulf Coast crude oil trader. 

This expansion of the Panama Canal, an oil chokepoint, and the proximity of Haiti and specifically the Windward Passage to that chokepoint, as the shortest  trade route all mentioned here, are clear indicators of why the US is militarizing Haiti. There is no humanitarianism in this move, none what so ever!


  1. You know Pen, I think this might be the article I was thinking of, just got China mixed up with Russia... possible!

    (As said I am kind of ADD these days...am I getting old??? NOOOOOO!!)

  2. Oh wait - NO I am not ADD or insane (well...err)

    Russia to drill for oil off Cuba coast

    Thank goodness... for a minute I was a little concerned...


  3. I was listening to Rivero talk about Russia and Cuba on his show, but hadn't gone to the site to check it out, but this seems to be something else entirely.

    The Carribean, due to the expansion of the Panama canal is set to become a major oil hub, once again.

    And Haiti is right there, all the better to control China with, my pretties!

    I will read that one now, goodness, what a tangles web this all is,
    except it all boils down to control!

  4. I think this is the reason that a lot of people accept regarding Haiti- they go along with it because Haiti must be repressed to keep fuel prices low. Haiti stays out of the press because of this - a self control mechanism for the press to stay quiet about Haiti.

    But really this isn't the reason. Haiti has always resisted imperialism, Haitians even helped America fight off the imperialists. Haiti could become a center of resistance and freedom from Globalization if allowed to be free.

    Also Haitians are black. The Globalists seem to find an easier time getting whites to kill non whites than to kill whites. Many whites believe that blacks are genetically inferiour even today. Its a convenient place to start depopulation operations.

    Haiti gives our RCMP and many other police forces a place to train and prepare for oppression when it becomes their job to oppress us.

    The imperialists own Dominican Republic and don't need Haiti to trade oil.

  5. "The imperialists own Dominican Republic and don't need Haiti to trade oil"

    They don't need Haiti specifically the need to control the waterway.
    The windward passage is at it narrowest between guantanomo cuba and Haiti's north east.

    The water way is the most direct path for suez canal shipping.

    That is what they need to control Haiti for, to control the waterway.
    Check out the map in yesterdays posting, it makes that quite clear.

    Eventually they will extend across Cuba.

  6. Hi Penny. Sorry for the delay getting back to you after linking this post over at twelfth Bough. You are 100 % on the money with prepositioning on naval forces at the 2 maritime transit choke points.

    While I was reading this post I wondered what the global dispersion of oil refineries was. A very interesting fact came out. 10 of the top 40 global oil refineries are in the Asian area. They process 5.8 millions barrels worth per day out of a global total of 18.5 million barrels per day.

    The US has 12 refineries with a capacity of 4.8 million barrels per day. South America and the Caribbean have 3 refineries with 1.8 million bpd. Source;

    Is the US going to attempt with China what they did with Imperial Japan? Any naval action in this area will certainly distract the herd from the TSA issue as well as blocking maritime traffic. Oil tankers traffic will also be certainly curtailed.

    The aircraft carrier George Washington is en route to the Korean area and is due to take part in ‘War games’ on Sunday. The term ‘sacrificial goat’ comes to mind. Any disruption would be blamed on another ‘rogue’ regime. The economic disruption would be their blame also.

    Wall Street and the Pentagram certainly have the chutzpah to blackmail China and offer them a deal they can’t refuse - work out something on the debt and we won’t turn off the oil spigot. The chess pieces have been on the move for months – are we seeing the start of an end-game?

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