New data reveals that Canada’s expanded Trans Mountain pipeline (TMX) is successfully achieving its goal of diversifying the country’s crude oil markets. According to Vortexa data provided by Bloomberg, Canadian oil producers have exported approximately 28 million more barrels of crude from the west coast since the pipeline expansion began in June, compared to the same period in 2023.
In contrast, shipments from the U.S. Gulf Coast have decreased by 1.68 million barrels over the same timeframe. This positive trend demonstrates that TMX is effectively reducing Canada’s dependency on U.S. pipelines and refiners, which previously led Canadian producers to accept lower prices and face greater exposure to oil price fluctuations.
The majority of the oil transported through TMX is directed to Asian markets, with nearly two-thirds going to China, India, South Korea, and Brunei. The remaining oil is sent to U.S. refiners. China has become TMX’s largest customer, importing 8.24 million more barrels of Canadian crude since June. This increase marks a total rise of 11.6 million barrels in shipments from Canada’s west coast and a decrease of 3.35 million barrels via the Gulf Coast. South Korea is the second-largest buyer, receiving 3.91 million additional barrels, while India has imported 1.53 million more barrels.
Chinese private refiner Rongsheng Petrochemical purchased two Canadian Access Western Blend (AWB) crude cargoes from ConocoPhillips and Vitol, in addition to two AWB cargoes obtained through a tender. AWB and Cold Lake crudes are heavy sour grades with 3.5-4% sulfur and API gravity of 21-22 degrees. South Korean refiner GS Caltex bought a 550,000-barrel Cold Lake crude cargo, sharing it with Japan’s ENEOS, which received 250,000 barrels. South Korea’s SK Energy acquired a similar-sized cargo from Unipec, and Brunei’s Hengyi Petrochemical also bought a 550,000-barrel shipment from PetroChina. These cargoes were sold at discounts of $5 to $6 per barrel compared to ICE Brent prices.
The expanded TMX pipeline will increase crude flow from Alberta to Canada’s Pacific coast to 890,000 barrels per day (bpd). This expansion offers Asian refiners a chance to diversify their oil imports and provides Canadian producers greater access to both U.S. West Coast and Asian markets. TMX crude exports are projected to reach 350,000-400,000 bpd, competing with heavy grades from Latin America and the Middle East. Muyu Xu, a senior crude oil analyst at Kpler, noted that Cold Lake crude is about $10 per barrel cheaper than Iraq’s Basra Heavy for deliveries to China.
“Canada’s TMX crude is appealing to Asian buyers looking for affordable heavy grades, especially since they lack access to U.S.-sanctioned Venezuelan crude,” Xu told Reuters. “It will take some time for refiners to fully evaluate and test TMX crude as the initial shipments have just arrived,” she added.
U.S. Gulf Coast Remains Significant
Despite the growth of TMX, the U.S. Gulf Coast is expected to continue playing a vital role. Vortexa analyst Rohit Rathod points out that the Gulf Coast’s ability to load very large crude carriers (VLCCs), which can transport up to 2 million barrels of oil, remains a major advantage. For example, Reliance Industries of India shipped 2 million barrels of Canadian crude via a VLCC in May from Vancouver to its refinery in Jamnagar. In contrast, smaller Aframaxes, which can carry up to 800,000 barrels, are restricted to loading about 550,000 barrels at Vancouver due to port draft limitations.
Canadian Government Moves Toward Privatization
In other developments, the Canadian government is planning to privatize TMX. Trans Mountain Corp., the owner of TMX, is preparing to sell bonds to refinance part of its debt ahead of a future sale of the pipeline operator. As of March 31, the company had a debt of C$25.3 billion ($18.4 billion), including C$19 billion in credit agreements with a syndicate of lenders.
The Canadian government initially acquired the original pipeline from Kinder Morgan Inc. in 2018 to ensure the expansion project proceeded. The federal government took over Trans Mountain, which became a Crown corporation, to secure a critical Canadian asset. However, the project faced significant cost overruns, with expenses reaching C$34 billion, more than six times the original estimate.