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US refiners set to begin exports to West Africa

05.24.2012  |  HP News Services

The US industry will soon expand its exporting to include gasoline sales to West Africa, predicts Valero CEO Bill Klesse. "That's something we haven't seen before," he said.

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By BEN LEFEBVRE

HOUSTON -- US refiners will soon expand their growing fuel export business to include gasoline sales to West Africa, Valero Energy’s CEO Bill Klesse said Thursday.

US refiners have been able to process the discounted oil and natural gas available from the US energy boom into fuels priced below those made by foreign competitors.

The domestic energy boom has helped revive businesses in an industry that had been living on razor-thin margins for years.

Even as domestic fuel demand remains flat because of higher vehicle fuel efficiency and a lagging economy, demand has grown for US gasoline in Latin America and diesel in Europe.

The US will soon be able to export gasoline to West Africa, Klesse said.

"You will see gasoline move to West Africa from the Gulf Coast," Klesse told an audience at the UBS Global Oil and Gas Conference. "That's something we haven't seen before."

Valero, the largest independent refiner in the US, will increase its diesel production to about 40% of total fuel output to take advantage of foreign demand, Klesse said.

"We continue to see distillates exported into the marketplace, and the world is paying up," Klesse said.

US fuel net exports averaged 840,000 bpd for the first three weeks of May, according to the US Energy Information Administration.

That compares to net imports of 464,000 bpd during the same time last year.

Increasing US production of light, sweet crude oil in south Texas and North Dakota has pushed down raw material costs for refiners.

Domestic oil production will eliminate the need for imports of light, sweet crude into the US Gulf Coast by the beginning of 2014, Klesse said. That's a year earlier than most analysts have forecast.

"The oil is coming, and it's coming significantly," Klesse said.

US refiners are also benefiting from low prices of natural gas, which they use to make fuel blendstocks. Natural gas prices have sunk to a decade-low as the boom in production has created a massive supply surplus.

The low price in natural gas has helped the US refining industry defend itself even as mega-refineries topping 1 million bpd of production are built in Asia.

Although Reliance Industries in India and other mega-refineries have a huge advantage in production scale, they pay much higher prices for natural gas and oil than their US competitors, Klesse said.

"Everyone was concerned that Reliance was going to swamp us," Klesse said. "That hasn't happened. The competitive advantage of natural gas is absolutely huge."


Dow Jones Newswires



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anna davis
05.29.2012

I`m an African with advanced college degrees and a great work ethic. How can i be part of the exporting process? I can also be a consultant in any of your exporting stages. What do you say? By the way, I`ve lived and studied both in the US and Africa. Thanks for reading this. aa

OLASUNKANMI JIMOH
05.25.2012

This is a good development to drive down cost of fuels to west africa too.

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