Save for later Print Download Share LinkedIn Twitter Saudi Arabian crude oil flows to the US have been as regular as a Swiss clock in the first half of 2001, as the kingdom defends its position as the number one supplier to the world's biggest oil market, and fights off efforts by Canada, Venezuela, and Mexico to gain market share (see p5). Even though Saudi Arabia had to scale back production by an official 800,000 barrels per day after two Opec output cuts -- with a further 324,000 b/d due Sep. 1 -- its exports to the US averaged 1.69 million b/d in the first six months, up from 1.52 million b/d in all of 2000. US refiners with Saudi term contracts were reportedly cut 20% on their nominations in July and August but US import data indicate that most of them -- including big independent lifters Marathon Ashland and Valero -- received close to their full contract volumes in the first half. But the figures can mask changes: Valero, for example, is understood to have assumed some Saudi supplies through a refinery deal with El Paso, meaning its base volume could still have been cut. Venezuela and Mexico are increasingly locking in US sales, as agreements from the late 1990s -- linking long-term supply contracts to refinery upgrading or synthetic crude projects -- kick into action (PIW Jul.23,p5). These ventures have resulted in Saudi Arabia losing at least 100,000 b/d in contractual deliveries to the US since last year, with another 50,000 b/d expected to be dropped in the fourth quarter of this year. Saudi Aramco is said not to be too concerned by these developments. Conoco switched roughly 50,000 b/d from Saudi Arabia to Venezuela early this year, after completing a syncrude project in Venezuela. Last year, Saudi Arabian deliveries ceased to Amerada Hess' giant St. Croix refinery on the Virgin Islands, after Hess forged a partnership with state Petroleos de Venezuela. Marathon Ashland, which has a 220,000 b/d Saudi contract, is expected to scale back by 50,000 b/d later this year, switching to Venezuelan crude for its Garyville, Louisiana, refinery. To protect its dominant position, Aramco is looking to hike its equity share in Motiva to 50% from the current 30.6%, with its partner Royal Dutch/Shell taking the other half. Both are planning to buy out Texaco, which must sell US downstream assets to get regulatory approval for its merger with Chevron . Motiva has an official contract for 600,000 b/d of Saudi crude, with a floor of 450,000 b/d, but normally buys around 550,000 b/d. In the first half of 2001, Motiva bought 63,000 b/d of heavy and sour Venezuelan crude. Motiva, as a venture in which Aramco holds equity, is not subject to nomination cuts. Import data show that US refiners clearly favor Arab Medium and Light, which account for half and a quarter of local Saudi sales, respectively. Most of the imported crude ends up around the Gulf of Mexico, in Texas, Louisiana, and Mississippi. Motiva ships large volumes up the East Coast, to its 140,000 b/d refinery in Delaware, while Valero moves some of its crude to New Jersey. Motiva gobbles up 418,000 b/d of Arab Medium, or roughly 40% of the kingdom's production of that grade. Exxon Mobil prefers Arab Light, which accounts for 60% of its Saudi crude intake, and is topped up by 40% Medium. The US West Coast has been attracting increasing Saudi volumes, mostly shipped there by Chevron. Sales to that region almost doubled last year to 90,000 b/d, and rose to an average of 130,000 b/d in the first half of this year, peaking at 180,000 b/d in April (PIW May14,p1). Chevron, which, like other majors, has a big global term contract with Saudi Aramco, is virtually single-handedly responsible for supplying the West Coast with Arab Medium, Light, and Extra Light. In the first half of 2001, Chevron shipped a combined 116,000 b/d of Saudi crude, mainly to its Richmond and El Segundo refineries in California. Chevron's remaining Saudi intake of 138,000 b/d went to Mississippi, where it runs the Pascagoula refinery. BP has taken some trial cargoes to its Carson refinery in California, and made these shipments a regular feature. BP has taken a modest 18,000 b/d of Arab Medium to Long Beach since March. US Importers Of Saudi Crude Motiva 526 Chevron 254 Marathon 217 Valero 211 Exxon 170 BP 103 Tosco 50 Lion Oil 27 Phillips 21 El Paso 20 Murphy 14 Total 1,689 In 1,000 b/d, for 1H'01. Source: EIA.