Shell Bringing First U.S. Malaysian Condensate Import

A cargo of Malaysian Bintulu condensate bought by Royal Dutch Shell (RYDAF) is sailing to New Orleans, Louisiana, a trade source in Asia familiar with the matter said on Tuesday, in what appears to be the first U.S. import of that grade of offshore oil according to Thomson Reuters Trade Flows data.

The Polaris, a medium-range vessel, loaded 200,000 barrels of the condensate at Malaysia's Bintulu terminal in early February, before stopping at Singapore's Jurong Port to pick up another parcel, the source said.

It sailed west from Jurong in late February toward the United States, around Africa's Cape of Good Hope, Reuters' vessel tracking data show.

A Shell spokesperson said the company does not comment on the details of commercial matters.

U.S. oil imports from Malaysia are rare. Market sources were baffled when told about the shipment, and questioned whether it made economic sense for the relatively small vessel to make the more than month-long journey.

The Polaris is carrying roughly 300,000 barrels of product, half the size of a typical Aframax cargo, Reuters data show.

The cost of a trip from Singapore to the U.S. Gulf Coast fell to roughly 54 percent of the World Scale rate in the last week of February, from 119 percent of the flat rate in early January, potentially opening an arbitrage to the United States, according to Reuters data.

Shell, through its Motiva joint venture with Saudi Arabia, operates a petrochemical and refinery plant in Norco, Louisiana, roughly 25 miles outside of New Orleans. The petrochemical facility can run light hydrocarbons to produce ethylene, propylene and butadiene.

In March, Shell and Saudi Aramco announced plans to break up the joint venture, with Shell taking sole ownership of the Norco complex and nearby Convent refinery, which could allow the company to test new crudes for refining.

In January, the first U.S. import of Malaysian crude oil in a year arrived at Par Pacific Holdings Inc's Honolulu refinery in Hawaii. That import included 630,000 barrels of Kikeh crude and 100,000 barrels of Tembikai oil.

The latest data from the Energy Information Administration shows no U.S. imports of Malaysian crude from February 2010 to January 2015.

Bintulu condensate, which is produced by Malaysia's state oil company Petronas, has a gravity of about 64 API degrees. It is frequently blended with Bintulu light crude for exports.

Reporting by Liz Hampton and Marianna Parraga