Sinopec considering projects boosting US crude exports

Sinopec along with ArcLight and Freepoint Commodities are considering expanding Limetree Bay Terminal crude storage and restarting a shuttered refinery. LB Terminal photo.

Sinopec mulling stake in Permian to US Gulf Coast pipeline

China’s state-owned oil company, Sinopec, is considering investing in two projects in the United States which could boost oil exports and expand Caribbean storage facilities, according to Reuters.

Sinopec, along with US commodities trader Freepoint Commodities LLC and ArcLight Capital Partners LLC are looking at building a pipeline that would carry shale oil from the Permian Basin to the US Gulf Coast for export.

The project includes the construction of a terminal that can load 2 million barrels of crude onto a Very Large Crude Carrier (VLCC), said Reuters’ sources. The massive terminal would eliminate a number of logistics costs associated with US crude exports and would make prices more competitive for Asian buyers.

As well, the sources told Reuters that the three companies are considering expanding oil storage at Limetree Bay (LB) Terminals in St. Croix, US Virgin Islands and restarting a shut down refinery at the same site. ArcLight and Freepoint Commodities are joint venture owners of the facilities.

The LB Terminals website says plans are in the works to double oil storage capacity and restart the 650,000 barrels per day (b/d) refinery.

Sinopec has already signed a deal with LB Terminals to lease 75 per cent of existing crude storage to the company.

Sinopec, ArcLight and Freepoint declined comment on the story.

Reuters reports the investments could cut China’s trade deficit with the US, and allow Beijing to secure crude supplies.

“There is room for energy cooperation between China and the United States, but the projects will have to be commercially viable before the companies reach any agreement,” according to one of the Reuters’ sources.

Unipec, Sinopec’s trading arm will reportedly import about 42 million barrels of US crude in 2017, making it the largest buyer of US crude in Asia. In September, Unipec predicted the Americas will overtake Africa as the world’s second-largest crude supplier to Asia by 2025.

ArcLight and Freepoint will make up part of the business delegation visiting Beijing next week with President Trump.