Reliance Industries, the Indian refining giant, has made its first purchase of Canadian crude oil from the new Trans Mountain pipeline. The company has bought 2 million barrels of Access Western Blend (AWB) crude from Shell for delivery in July, according to trade sources.
The Trans Mountain pipeline expansion project, owned by the Canadian government, is scheduled to start transporting oil in May. The pipeline will nearly triple the flow of crude from Alberta to Canada’s Pacific Coast, opening up access to Asian and U.S. West Coast markets.
Shell will perform ship-to-ship transfers to move the oil, which is a heavy and highly acidic diluted bitumen produced by Canadian Natural Resources and MEG Energy, onto a Very Large Crude Carrier for shipment to Reliance’s Sikka port in India, where the company operates the world’s largest refining complex.
The deal was reportedly done at a $6 per barrel discount to September ICE Brent on a delivered basis.
Reliance’s purchase marks the company’s first foray into buying Canadian crude, joining a growing group of Asian refiners that have been exploring ways to increase their imports from the country. Chinese firms, such as Sinochem, Unipec, and PetroChina, have already bought several cargoes of AWB and Cold Lake crude from the new pipeline for delivery to China in June.
The opening of the expanded Trans Mountain pipeline is expected to provide sellers of Canadian oil with better access to the growing Asian market, where refiners typically pay higher premiums compared to other regions.