New agreements are set to see Venezuela ship more oil and gas to Japan, a move which will boost cargoes.
New agreements are set to see Venezuela ship more oil and gas to Japan, a move which will boost cargoes at a time when tanker owners are counting on increased long-haul transportation to tighten up the tonnage list.
Japan and Venezuela agreed on Monday on broad cooperation to develop oil and gas projects in the Latin American nation, deepening bilateral relations to help diversify sources of energy for the resource-poor Asian country.
According to Venezuelan Energy Minister and PDVSA head Rafael Ramirez, state-affiliate Japan Oil, Gas and Metals National Corp (JOGMEC), Inpex Corp and Mitsubishi Corp will pursue a joint feasibility study with Venezuela on the Orinoco oil belt in the next two years.
The oil belt potentially has reserves of up to six billion barrels and the ability to produce about 200,000 barrels per day, Ramirez was quoted saying.
Production capacity on that level would require at least one suezmax fixture every week from Venezuela to Japan.
The accords ?are for the most part politically motivated?.
?It does not make commercial sense for Japanese refiners to buy oil from the furthest available source,? said one broker.
Tanker owners meanwhile, should be happy with these new arrangements, according to brokers, as they will help mitigate the effect of dipping global oil consumption.
Gibson has pointed out that global oil demand is not the only variable in the equation determining demand for tanker transportation.
According to the London-based brokers, ?changes in trade patterns can lead to major shifts in oil tanker movements and significantly influence the overall tanker demand.
?Incremental longer-haul crude movements reduce tanker availability and to a certain extent counter-balance the effect of the weakening oil demand," it said.
Increased shipments of oil from Venezuela to Japan is a perfect example of 'incremental longer-haul crude movements'.
Meanwhile, Chavez's publicly known intention to diversify his country's oil export markets away from the US would create a need for longer-haul tanker fixtures to satisfy US oil import requirements.
According to Gibson, ?the overall decline in short-haul US imports means that more oil is sourced from further afield.?
Gibson added that ?observed shifts in US crude trade in 2008 are expected to solidify in to the long-term trends and additional tonne miles will provide support to the tanker market going forward.?
Chavez's preference to sell Venezuelan crude to China instead of the US has the twin effect of forcing US players to buy more crude from further away sources and Chinese refiners to fix longer haul shipments, a Singapore-based broker told.
?And both scenarios will help mop up excess tonnage in the markets,? he added.