Suncor leverages the Trans Mountain expansion to negotiate directly with customers, enhancing market reach and efficiency
Suncor Energy Inc. is poised to leverage its trading platform to negotiate directly with new customers through the newly operational Trans Mountain pipeline expansion, as highlighted in a report by The Financial Post.
This strategic move aims to eliminate intermediaries, giving the Alberta-based company a “unique” edge in accessing additional regions.
Dave Oldreive, Suncor’s executive vice-president of downstream, emphasized the company's distinctive approach, stating, “What might make us a bit unique is we are not reliant on third-party trading shops.”
He noted that this direct transaction model enables Suncor to fully capture the transaction value. Additionally, the company has leased vessels in the Pacific Ocean, which Oldreive believes will provide a cost advantage in shipping.
The Trans Mountain pipeline expansion, a 1,150-kilometre project that twins a line first constructed in 1953, now connects Alberta with British Columbia. It is expected to deliver about 890,000 barrels of oil per day.
The expansion is anticipated to bridge the price gap between Canada’s heavy crude, which trades at a discount compared to lighter US crude, by reducing transportation costs and opening new markets.
Oldreive also revealed Suncor’s intentions to reach markets in California and Asia and noted ongoing efforts by their trading offices to strengthen relationships in these regions for better negotiation leverage.
He highlighted the company's success in capturing unique quality differentials, including shipping diesel to Scandinavia and trading with Latin America.
Meanwhile, other industry players, including Cenovus Energy Inc., Canadian Natural Resources Ltd., and Meg Energy Corp., have expressed optimism about the pipeline improving market conditions for Canadian oil producers, with expectations of better pricing sustainability.
In financial terms, Suncor reported net earnings of $1.6bn in the first quarter, with a record high in oilsands production and refining throughput. However, its earnings per share were down from the previous year.
The company recently held its annual general meeting, where shareholders decisively rejected two resolutions concerning its climate commitments and reporting.
The first resolution, which challenged Suncor's net-zero by 2050 pledge, was overwhelmingly defeated, with 98.92 percent voting against it. The second resolution, which called for more detailed reporting on the company’s climate transition efforts, was also rejected by 88.45 percent of the vote.
