Algeria Feeling the Brunt of US Shale

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Algeria delivers the majority of its crude and condensate to the European market. Deliveries to Northwest Europe, Algeria’s top customer, have been running at an average of 314,000 barrels per day through the first 10 months of 2019, some 15 percent higher than over the same period last year. Although France and the United Kingdom are the main recipients of Algerian barrels, the Netherlands has seen a large increase of Algerian light sweet barrels in the last couple of months.

The 15 percent rise seen in Algerian flows this year pales in comparison, however, to the doubling in arrivals of US crude to Northwest Europe over the same period. Total European imports of US crude also continue to charge higher. Deliveries last month reached a new record of 1.12 million bpd, compared to 630,000 bpd over the same period last year.

 

As Algeria faces increasing competition in Europe from US shale barrels, it is having to seek a new home elsewhere. In the Persian Gulf, and particularly the United Arab Emirates, we have been seeing an increase in Algerian deliveries since 2018. There has also been a rise in deliveries to South Asia, mostly to India in the form of Saharan Blend and Algerian Condensate.

Not surprisingly, Algerian flows to North America have also fallen in recent years. While they have dropped off to the US East Coast, they have completely dried up to Canada.

Deliveries of Algerian crude and condensate to Canada have been declining for a number of years, hitting rock bottom this year with only one shipment of Algerian Blend in April. The majority of Algerian barrels used to head to the Valero-operated Quebec City refinery prior to this year’s sharp decline. To rub salt in the wounds, Algeria has been pushed out of the market by US shale.

US oil flows to the Quebec refinery have been increasing since 2017. Deliveries over the first 10 months of the year have averaged 122,000 bpd, up by over a third compared to the year-ago pace.