Western Hemisphere heavy crudes have been a staple supply source for the past few decades, but the picture is rapidly shifting. The collapse of Venezuelan output and terminal decline of Mexico’s aging Maya heavy crude flows have removed around 450,000 barrels per day of exports over the past three years, and declines are accelerating. At the same time, infrastructure constraints are handicapping Canada’s ability to raise its exports. Although looming changes in bunker fuel sulfur standards will remove some market demand for heavy crude, complex refineries able to profitably run heavy, sour grades will be on the hunt for replacement supplies - and Colombia may have the answer. The region’s large concentration of sophisticated refineries with ample coking capacity - led by the US Gulf Coast - will keep Western Hemisphere demand for heavy crudes robust even after the International Maritime Organization’s reduced sulfur requirements for bunker fuels take effect in 2020 (PIW Jul.23’18). Brazil’s rapidly growing presalt output will see volumes of heavy, sweet crude from the Campos Basin increasingly hit the market in the coming years. But since coking is best placed to upgrade the value of sour crudes than sweet ones, be they heavy or light, the economic attractiveness of Campos crude for these plants is relatively limited. Colombia’s Llanos Orientales heavy oil production, on the other hand, also checks the “sour” box.
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