Peru crude slate shifts to regional grades
Peruvian crude production in 2015 fell by 17pc year-on-year to 57,970 b/d, according to data from the US Energy Information Administration (EIA), as state-owned PetroPeru and key producer Pluspetrol trimmed operating costs.
The production drop led to a fall in crude exports, from 15,322 b/d in 2014 to 7,963 b/d in 2015, according to customs data. The remainder of domestic Peruvian crude supply was augmented with new imports to meet consumption levels.
Nigerian supply to Peru, which totaled 26,112 b/d in 2013, or about 25pc of all crude, fell off entirely in early 2015 to be replaced by more economic blends. Peru's total crude imports in 2015 meanwhile rose 5pc from the previous year to 87,936 b/d.
Crude from Ecuador continued its traditional role making up just under half of Peru's total imports — year-to-date import statistics show Ecuadorian imports are 46pc of the Peruvian market this year.
Imports from Colombia made up the lion's share of replacements for the Nigerian crude, increasing by nearly 300pc in 2015 to 12,041 b/d, up from 3,094 b/d in 2014. First quarter 2016 imports from Colombia increased 32.5pc to 13,524 b/d, up from 10,209 b/d in the same period of 2015.
Medium sour Vasconia was the primary Colombian grade shipped to Peru as the crude is compatible with domestic Peruvian refineries and competes directly with Ecuadorean Oriente crude. Both grades were purchased throughout 2015 and 2016 through public import tenders for delivery to Peru's Conchan, Talara and Bayovar terminals.
Peruvian state-owned PetroPeru imports crude oil primarily through tenders and will purchase varying levels of either grade depending on spot crude price and freight economics. In 2016, tender purchases reported to Argus contained no Vasconia crude, compared to nearly 72pc Vasconia in 2015.
Tender data indicates these purchases have dropped off, however, as US crude began to actively trade in global waterborne markets following the December 2015 lifting of the 40-year-old export ban on US crude. At least 950,000 bl of US domestic sweet (DSW) blend, which is diluted to match WTI specifications, sold into Peruvian tenders this year.
DSW has very similar specifications to the Nigerian Bonny Light that once took up a significant portion of Peru's import portfolio. DSW has averaged a discount between \\$1-\\$2/bl to Bonny Light over the last year and Peru's proximity to the US cuts freight costs substantially. If Peru's refiners wish to increase the percentage of light sweet crude in their slate, this new market provides a robust, economic supply.
Peruvian domestic production has continued to suffer in 2016. Repeated pipeline ruptures have shut in a significant portion of the country's domestic supply. The latest breach on 24 June was the third rupture along Peru's 1,100km main northern pipeline this year and the 15th since 2010. The line has been closed since February.
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