China Thirsty for Canadian Crude

And Venezuelan heavy just keeps dwindling away...  

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After the purchase of Canada is complete, all development will proceed unimpeded.  Xiexie nimen!

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2 hours ago, Dan Warnick said:

After the purchase of Canada is complete, all development will proceed unimpeded.  Xiexie nimen!

Honest question: how much of Canada could China buy?

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3 minutes ago, mthebold said:

Honest question: how much of Canada could China buy?

IDK, but Canadian exports are hindered by its insufficient ability to get its oil to the coast for exports.

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7 minutes ago, mthebold said:

Honest question: how much of Canada could China buy?

The only thing of value, as far as I can see, are the pot companies, so about $150 billion ought to do it!  LOL!

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17 minutes ago, mthebold said:

Honest question: how much of Canada could China buy?

better question: How much of Canada is Canada willing to sell? Chinese soft power indicates that it's more about footprint than money

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5 minutes ago, TraderTate said:

better question: How much of Canada is Canada willing to sell? Chinese soft power indicates that it's more about footprint than money

Seriously though, how does China translate ownership of foreign assets into "soft power"?  I get the general concept, but I've never worked out the specifics. 

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Well, not sure it would work in Canada, but in Africa, for instance, they offer significantly better deals for mining/oil because they are buying influence. So the governments get much better deals from Chinese companies, putting a lot of pressure on Western companies to change the way they do business. 

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China already has a lot of natres investments in Canada and with the Canadian crude transport bottleneck,  China is able to buy assets at depressed values (as can anyone else buy the same assets)

China is building a 164,000bpsd refinery in Canada under a JV which is designated for export of products to China. China has plans and investments in Canadian LNG, and had plans under various stages to invest in US LNG as well til the tariff and trades issue came around.

It is also a good opportunity for US Bakken producers to jump on this bandwagon and use the new pipeline to be built to ship US Bakken crude to Canadian west coast, blended with Canadian bitumen and exported to China and other points in the FEA & PACRIM

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Bloomberg) -- U.S. President Donald Trump is redirecting global oil flows.

West African and Latin American producers are sending ever-growing volumes of crude to China. America’s exports to the Asian country have slumped in favor of its neighbors. There’s an urgent global need to find replacement barrels for Iran’s, whose exports might just collapse next month.

The thing that connects the shifting flows is Trump’s foreign policy. China’s slumping purchases of American crude -- and its extra buying from elsewhere -- have coincided with a trade war between the U.S. and the Asian country. Likewise, reimposed sanctions on Iran, which start Nov. 4, have increased the need for the type of heavy, sour crude that the Persian Gulf state sells.

“If you combine the impact of U.S. sanctions on Iran and the U.S. trade war with China, it is Trump’s foreign policy which is reshaping oil flows,” said Olivier Jakob, managing director of consultancy Petromatrix GmbH. “The U.S. is becoming a great energy power and they will use that, we are starting to see the implementation of that in different parts of the energy scene, part of that is being seen today in the oil flows.”

Oil markets are also grappling with record U.S. output, fueled by shale production, and America’s removal in late 2015 of longstanding crude-export limits. Those shipments -- just a few hundred thousand barrels a day a few years ago -- now consistently top an average of 2 million barrels a day each month. American crude increasingly flows to markets in Asia, Europe and Latin America, data from the U.S. Energy Information Administration show.

Shifting Flows

But there have been recent changes in precisely where those barrels are going. China, the world’s largest energy consumer, in August didn’t import any U.S. crude for the first time since September 2016, according to the most recent data from the U.S. Census Bureau. That compares with almost 12 million barrels in July, when China was the second-largest recipient.

Shipments to South Korea soared to a record 267,000 barrels a day in August -- a 313 percent year-on-year increase, according to Bloomberg calculations from Census data. Volumes to Japan and India rose by 198 percent and 165 percent, respectively. Exports to the U.K., Italy and the Netherlands have also surged this year.

“The pattern of trade does look as though it’s going to ebb away from a focus on China to other Asian countries, and Europe,” said Caroline Bain, chief commodities economist at Capital Economics.

China is also increasingly turning to other regions. Colombian exports to the Asian nation rose fivefold in September, while Brazilian shipments hit their highest level this year. Chinese refiners bought 1.71 million barrels of crude a day from West Africa for October loading, the most since at least August 2011.

Sanctions’ Effect

It’s not yet clear to what extent, if any, China will curb shipments of Iranian crude due to U.S. sanctions. However, buyers in India, Japan and South Korea are reducing purchases from the Persian Gulf state. Saudi Crown Prince Mohammed Bin Salman said that the kingdom and other OPEC producers are making up for lost supply from Iran.

The demand for replacement crudes is apparent. Exports from Oman last month rose to their highest levels this year on healthy demand from China, Bloomberg tanker-tracking showed. Kuwait is directing more flows to Asia, while its shipments to the U.S. by late September all but dried up -- the first time that’s happened since the Gulf War of 1990-91.

The curbs on Iran are having an effect on oil prices, with global benchmark Brent trading now trading near its highest level in four years. Oman was the talk of one of the oil market’s biggest gatherings last month, as its crude surged past $90 a barrel. Supertankers, which often benefit when trade flows are dislocated, are earning the most since early 2017.

Flows from Iran could drop by 2 million barrels a day, to below 1 million barrels day in November and possibly December, Energy Aspects Ltd. said in a report dated Oct. 1.

Whether it’s the need he’s created for replacement supplies from Iran, or other actions by the U.S, president, Trump’s policies are now having a direct impact on where oil is flowing, said Eugene Lindell, an analyst at JBC Energy GmbH in Vienna.

“What you can say beyond doubt is that it’s creating lots of exotic trade flows that hadn’t been in the market before,” he said. “It’s been a major influence that has forced a change in trade flows.”

With assistance from Sheela Tobben, Lucia Kassai, Debjit Chakraborty, Dhwani Pandya, Julian Lee, Sherry Su, Christopher Sell and Helen Robertson. To contact the reporters on this story: Alex Longley in London at alongley@bloomberg.net; Bill Lehane in London at blehane@bloomberg.net. To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Brian Wingfield.

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China has lots to learn about the oil business.  I wonder if they have considered what would happen if organizations like the Communist Insurgent Apparatus (I don't know their names anymore) decided to disrupt flows from one or more of their 3rd world suppliers?  Safe and reliable is sometimes advisable......

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On 10/11/2018 at 7:38 AM, TraderTate said:

better question: How much of Canada is Canada willing to sell? Chinese soft power indicates that it's more about footprint than money

All I know is they own all of Vancouver and are growing in number

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4 hours ago, scaulpott said:

All I know is they own all of Vancouver and are growing in number

You can probably toss in half of Toronto while you are at it!

The Chinese entrepreneurial crowd has been buying up Canadian real estate, both as a safety valve if they have to flee (to avoid being executed for tax evasion, as execution is quite common in China) and to preserve their capital.  There are lots and lots of condos in Toronto bought by foreigners, and just sitting there empty, thus causing housing displacement and price pressure for the locals.  In turn, some Provinces are levying a 15% extra tax on real estate transactions where the buyer is offshore.  Does not seem to have dampened things much.

The typical median house in Toronto is now over one million dollars;  in Vancouver, I understand the median price is now  over 1.6 million. I saw a real-estate ad for a house that had burned down, sitting on a small narrow lot,  with the rubble still on it, that sold for:  $670,000!  Now come on, people, that is ridiculous. Canada went into the project to expand the population, it roared from 25 million in 1980 I recall to about 37 million today.  But nowhere near enough housing was built, mostly due to land restrictions to protect farmland around the cities. So you have these huge price increases, and new housing being slowly built large distances away from the city core, condemning the buyers to long commutes.  Who wants to live like that? 

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On 10/11/2018 at 7:48 AM, Tom Kirkman said:

And Venezuelan heavy just keeps dwindling away...  

Definitely and with the recurrent halt of upgraders in the Orinoco Belt and the crushed refining capacity of Venezuela with the massive power outages affecting oil production everywhere, its natural China is looking elsewhere and Canada with all the uncertainty looming for USMCA (new NAFTA) and Trump craziness regarding Canada and also the uncertainties looming for Mexico's oil industry after Lopez Obrador the coming president said hell give priority to domestic consumption rather than exports of oil, then Canada looks as a good option for China and venezuela lagging far behind with all the mounting debts to Beijing and the political instability, Canada seems like Disneyworld for Beijing insatiable thirst for oil with Trudea's never ending liberal attitude and Canada's low levels of political risks compared to the U.S. and Venezuela and also Mexico in this sense. 

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2 hours ago, jose chalhoub said:

Definitely and with the recurrent halt of upgraders in the Orinoco Belt and the crushed refining capacity of Venezuela with the massive power outages affecting oil production everywhere, its natural China is looking elsewhere and Canada with all the uncertainty looming for USMCA (new NAFTA) and Trump craziness regarding Canada and also the uncertainties looming for Mexico's oil industry after Lopez Obrador the coming president said hell give priority to domestic consumption rather than exports of oil, then Canada looks as a good option for China and venezuela lagging far behind with all the mounting debts to Beijing and the political instability, Canada seems like Disneyworld for Beijing insatiable thirst for oil with Trudea's never ending liberal attitude and Canada's low levels of political risks compared to the U.S. and Venezuela and also Mexico in this sense. 

That's a heckuva lot of ideas to pack into one sentence.  Well said, and good observations.

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15 hours ago, Tom Kirkman said:

That's a heckuva lot of ideas to pack into one sentence.  Well said, and good observations.

LOL sorry about this... common mistake of mine trying to correct it... thanks 

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