In a significant move, Reliance Industries has purchased 2 million barrels of Canadian crude oil from Shell, scheduled for delivery in July 2024. This transaction marks the first time the Indian refinery will receive oil from Canada’s newly expanded Trans Mountain pipeline. The crude will be transferred via a ship-to-ship (STS) operation and transported by sea to India.
This acquisition places Reliance among a growing number of Asian refineries that are turning to Canadian crude for their oil needs, facilitated by the new pipeline expected to start operations in May of this year.
The Trans Mountain pipeline, owned by the Canadian government, is set to nearly triple the flow of crude from Alberta to Canada’s Pacific coast, significantly enhancing access to Asian markets and the western coast of the United States.
According to sources cited by Reuters, Shell will manage the STS transfers to move approximately four shipments of 500,000 barrels each of Access Western Blend (AWB) to a very large crude carrier (VLCC). The oil will then be shipped to Sikka Port in India.
An insider revealed that the deal was finalized at a $6 per barrel discount compared to the ICE Brent benchmark for September delivery. AWB is a type of heavy, highly acidic diluted bitumen produced by Canadian Natural Resources and MEG Energy.
Canadian oil sellers are actively exploring ways to boost exports to Asia, where demand is increasing and refineries often pay higher premiums for crude.
Chinese companies, including Sinochem, Unipec (the trading arm of Asia’s largest refinery), Sinopec, and PetroChina, have also purchased several shipments of AWB and Cold Lake crude from the pipeline for delivery to China in June, trade sources reported.
