Saudi Arabia says to meet oil commitment to Asian refiners

Saudi Aramco has informed at least six refiners in Asia that it will supply full allocated volumes of crude oil in October, although at least one has been told of a grade switch partially. One other refiner has been told of delays to cargoes though volumes and grade will remain the same in October. Saudi Arabia has said it would be able to meet oil customers’ demand from its ample storage. But this is the first indication that its supply to top consumers in Asia - who consume more than 70 per cent of total Saudi crude exports - will largely remain stable.

Three state-owned refineries in India - Indian Oil Corp, Bharat Petroleum Corp Ltd and Mangalore Refinery and Petrochemicals Ltd will receive full allocated volumes of crude oil from Saudi in October, three industry sources said. But Aramco has informed India’s top refiner, IOC, that it would give some volumes of Arab heavy instead of Arab mix oil, said one of the sources, who declined to be identified as he is not authorised to speak to media. This indicates that the Kingdom is offering heavy crude instead of light crude as Arab Mix is a combination of Arab light and heavy.

No immediate comment was available from IOC. BPCL’S head of refineries, R. Ramachandran, said that his company would get full volumes from Aramco for September and October without any change in the crude grade. Two refiners, in China and Taiwan, also said Saudi Aramco had told them that there was no change to the loading schedule in September and October. “Saudi has confirmed (to us) that our refinery will fully get its requested loading in September and October. We have not been asked to switch or delay,” one of the sources said.

Saudi Aramco informed PetroChina yesterday that some of its loadings of light crude oil for October will be delayed by up to about 10 days, though it will still supply the same grades and volumes of light crude oil requested for October nominations, a senior Chinese state oil source with knowledge of the matter said. State-owned Bangladesh Petroleum Corp (BPC) will receive the full volume allocated for October, a senior BPC official said. “Yesterday, we had a discussion about the next shipment and they assured us that there will be no delay,” the official said.

Some 100,000 tonnes of Arab Light crude oil is scheduled to be loaded on Sept. 28. BPC imports 700,000 tonnes of Arab Light from Saudi Aramco annually for its sole refinery. In the Asia market, refineries in Japan, South Korea, India and Thailand are main buyers of Saudi’s Arab Light and Arab Extra Light, according to one of the sources. In South Korea, there has been no indication of disruptions to term supply, a Seoul-based source said. Officials from Japan’s JXTG Holdings, Idemitsu Kosan Co Ltd and Cosmo Energy Holdings Co Ltd said they were collecting information but declined to comment further on Saudi Arabian oil or alternative supplies.

While refineries are able to source for alternative crude grades from the United States, West Africa and Southeast Asia should there by a disruption to supply, spot premiums for light crude are expected to rise, two trade sources said. “Heavier condensate, the middle distillate-rich grades such as deodorised field condensate (DFC), can also be used as alternative for light crude if light crude gets very expensive,” a trade source said.

India looking to raise imports from Russia

India is looking at raising oil imports from Russia, its oil minister said yesterday. Dharmendra Pradhan said he had met the chief executive of oil producer Rosneft and that four Indian companies planned to increase their investment in Russian oilfields. “Today I met excellency Igor Sechin, CEO of Rosneft. We elaborately discussed the possibility of oil imports,” Pradhan told reporters. Rosneft, the world’s largest listed oil producer by output, confirmed that a possible increase of oil supplies to Indian refineries had been discussed.

Rosneft and the government also discussed the development of Nayara Energy, a company in which Rosneft holds a majority stake. The consortium is reviewing an option of a two-fold increase in refining throughput at the Vadinar Refinery, Rosneft said. In the first stage, the consortium has committed to invest $850 million towards the building of a petrochemical unit within two years.

“The consortium is also planning to expand Nayara Energy’s retail presence, which is currently the fastest growing pan-India fuel retail network with over 5,300 retail outlets,” Rosneft said in a statement. It also said joint projects - specifically Sakhalin-1 (oil and gas project), Taas-Yuryakh and Vankor (oilfields in Russia) - were being reviewed, but did not elaborate.