COLOMBIA: America’s No. 4 oil producer, is changing the slate of crudes it exports in a bid to offset the falling prices that are crimping the revenues of its top oil companies.
The country has started to deemphasize exports of several heavier crudes, mainly Castilla, and increase offerings of Vasconia, a medium blend that fetches about $3.50, or 8 percent, more per barrel.
But to lift output of Vasconia, Colombia must increase imports of products such as naphtha and natural gasoline, which are used as diluents to lighten the barrels for export.
State-run Ecopetrol has already started to make the shift and has pushed independent producers in Colombia, including Pacific Rubiales, to do the same, brokers and industry sources said.
Colombian officials plan to carry out the change without letting overall export volumes fall. The country sent more than 500,000 barrels a day to the United States in May, and shipments are up more than 45 percent this year.
Ecopetrol typically buys naphtha on the open market to make blends, while Toronto-listed Pacific Rubiales has increased purchases of natural gasoline through tenders.
“Ecopetrol has asked several operators to cut the variety of crudes being offered for exports,” said an executive from a company working in Colombia.
Both companies did not to reply to requests for comment.
Diluting heavy crudes to convert them into a medium blend like Vasconia with 24 API degrees of density and less than 1 percent sulfur makes economic sense if naphtha and natural gasoline are cheap enough, a trader said.
After penetrating Asia in recent years, Colombia is again targeting the United States as U.S. imports wane from traditional suppliers such as Mexico and Venezuela.
Colombian sales to the United States have been dominated by heavy sour Castilla – with 18-19 API density and up to 2 percent sulfur – going to refineries along the Gulf Coast, U.S. government data show.
Traders say it will be tough to completely replace Castilla, but Vasconia has started to make gains among oil companies in the United States, including ConocoPhillips, ExxonMobil , Tesoro Corp, Royal Dutch Shell and Lyondell Basell.
Colombian medium-grade crudes landing in the United States have risen to nearly 17 percent of all Colombian shipments so far this year, up from 13 percent last year.
“Several refining companies are testing different grades of Vasconia as they cannot easily find Castilla anymore,” a trader said.
