An oil tanker has started loading a cargo of condensate, or ultra-light oil, the first such export from the United States since the easing of a 40-year-old ban on U.S. crude exports, two sources familiar with the matter said on Wednesday.
Westport Petroleum Inc, the Franklin, Tennessee-based shipping arm of Japanese trader Mitsui & Co, chartered the BW Zambesi, an LR1 tanker, also known as a Panamax class vessel, in mid-July for the voyage. The tanker, owned by BW Group, docked at the Galveston terminal in Texas on Tuesday, AIS data on Reuters showed.
In a July 22 statement, BW stated it was ultimately uniquely positioned because when the opportunity for the first cargo of condensate became available, it could provide both clean and dirty LR1 product tankers on demand due to deft handling of contracts and deployment of a sizeable fleet. Christopher Gomez, Senior Commercial Manager (Americas), said: “It has been many months of hard work for the BW Houston office leading up to this milestone. We are very proud to have secured the charter, and thank our customers for their trust in BW’s quality fleet of vessels, and their support for us.”
It will load just over 400,000 barrels of condensate and is expected to arrive in Asia in early September, one source said. South Korean refiner GS Caltex has bought the cargo from Mitsui. The Crude Oil Export Ban under the Energy Policy and Conservation Act 1975 was a specific response by the US Congress after the 1973 Arab Oil Embargo to conserve US natural resources and increase energy efficiency. The Act also set up the first Corporate Average Fuel Economy (CAFE) standards for auto makers as well as provisioning for the US Strategic Petroleum Reserve stockpiling of crude to dampen and prevent supply disruptions.
It is important to note the ban has not been lifted, but rather – forty years later – US regulators have developed their interpretation of what is considered ‘crude’ under the Act. By lightly processing under specific processes, condensate is no longer considered crude oil and therefore not impacted by the ban. Condensate is a less dense, volatile mix of oil and light ends that exist in gas form within the oil reservoir but condense into a liquid at a lower surface pressure and temperature.