Middle EastTankers

New Yanbu refinery will boost product tanker trade, shipbroker says

London: Both clean and dirty tankers are set to benefit from the boost in refined products exports from the new refinery at Yanbu, Saudi Arabia, and Abu Dhabi’s expanded Ruwais refinery, a report from Connecticut-based shipbroker Charles R Weber Co says.

“The [Yanbu] refinery forms one of two key regional refining capacity expansions that are expected to propel LR tanker demand and undermine European refining economics, still reeling from poor margins over much of the past three years,” George P Los, Charles R Weber Research’s senior market analyst, writes in the report, published today.

The Yanbu Aramco Sinopec Refining Co (Yasref) refinery began loading cargoes in December and has throughput capacity of 400,000 bpd. So far this month, one gasoline cargo and two diesel cargoes have been loaded at the facility.

Capacity at Abu Dhabi Refining Company’s Ruwais refinery has been expanded by a further 400,000 bpd. Once the refinery has ramped up production, “substantial” processing rates are expected during the second half of 2015, Los says.

“While greater forward CPP market absorption of LRs is likely to accompany stronger earnings during the second half 2015, an ongoing contraction of aframax and panamax fleets amid relatively stable demand will likely limit the extent thereof,” the analyst writes.

“As a result, static dirty fleets could support an extending of earnings around levels observed during recent quarters, while offering further upside to LR earning and eventually bringing both clean and dirty earnings more closely aligned.”

When the 400,000-bpd Jubail refinery in Saudi Arabia ramped up production to normal rates in July 2014, earnings for LR tankers averaged a year-on-year gain of around 108%, Los notes. In May 2014, before the commissioning, 42% of LR2 tankers were trading in CPP as opposed to DPP. This figure grew to 46% by December 2014.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.
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