Adnoc may skip gasoil exports for Q1 2012
Dubai, November 30, 2011
State-owned Abu Dhabi National Oil Co (Adnoc) is likely to skip gasoil exports for the first quarter of next year as the company is still considering plans to offer a higher grade of gas oil, industry sources said on Wednesday.
Abu Dhabi, the main crude producer in Opec member the United Arab Emirates, plans to switch the country's diesel fuel supply to only ultra low-sulphur diesel by 2012, according to a strategic plan put in place for 2009 to 2013, in a bid to align itself with the global trend of shifting towards cleaner fuels.
Adnoc has communicated its intention to offer gasoil cargoes with a 10 ppm sulphur content to its export customers through term contracts.
However, traders and industry sources based in the Middle East and Singapore said the refiner appears to have delayed its term negotiations for next year due to uncertainty involving the specifications of the 10 ppm sulphur gasoil.
"Their expectation is that this region would slowly shift to 10 ppm as well," said a source with knowledge of the issue and how is based in Abu Dhabi.
"But currently no government would be taking 10 ppm for their domestic market so if they decide to produce 10 ppm that means they will have to find new markets for it."
Currently, Adnoc has term contracts to export about 600,000 tonnes of 5,000 ppm sulphur gasoil over January to December to unspecified buyers.
It also has a separate term to supply domestic refiners Emirates General Petroleum Corp (Emarat) and Emirates National Oil Company (ENOC) with the low sulphur gasoil, also known as 500 ppm.
"The most obvious question is if they shift to 10 ppm how can they continue to supply to Emarat and ENOC which buy 500 ppm. There must be a change to the law or regulations to do that," the source in Abu Dhabi added.
With limited outlets in the Middle East for the 10ppm sulphur gasoil grade, the refiner was trying to meet the specifications required by customers in new markets, especially in Europe, sources said.
Diesel exports to Europe have to meet very stringent criteria, one of which is the cold properties in the fuel used as heating oil in winter.
"They might continue to offer 500 ppm sulphur gasoil next year but looks like it's not certain yet," a trading source based in the Middle East.
Adnoc will have a partial shutdown at its Ruwais refinery for maintenance in the first quarter of next year, with the crude distillation unit out for about 30-35 days possibly from January.
This could be a factor delaying the term negotiations, a second trading source said.
Shutdown in January
Term negotiations for jet fuel contracts, however, are proceeding as normal, traders added.
Adnoc was heard to have lowered its offer for 2012 jet fuel term contracts to a premium of about $1.90 a barrel to benchmark Middle East quotes, from the initial $2.10 a barrel it was seeking, trading sources said.
Buyers, however, are standing firm at premiums of about $1.80 a barrel, which is closer to recent term negotiations settled by Kuwait Petroleum Corp and Bahrain Petroleum Corp, they added.
"That is a high number, I don't think they would attract much interest with that," said a middle distillates trader based in the Gulf. – Reuters
More Energy, Oil & Gas Stories
- S Korea to pay Iran $550m under nuke deal
- Qatar LPG exports will stay unchanged till 2018
- $14bn Bahrain energy sector focus for summit
- Iraq now world's fastest-growing oil exporter
- Old IT systems pose risk to oil firms
- Thomson Reuters adds commodity monitoring tool
- Oil below $90 to hit GCC economies
- GlassPoint appoints new Oman director
- Sheffield company opens Dubai hub
- Oman targets big rise in gas output
- Intertek buys UAE firm for $66m
- Qaiwan to tender Baizan refinery EPC contract
- Al Maha wins Oman Air fuel supply deal
- Iran to become top gas importer by 2025
- UAE hydrocarbon projects seen hitting $11bn
- Summit focus on occupational safety
- Aramco names new senior VP
- Siemens gets $253m Qatar power contract
- Taqa-led group's India deal worth $1.6bn
- Taqa-led group to buy India power plants
- Iraq oil exports hit record 2.8m bpd
- Korean refiners eye more Iraq crude
- Dana starts Egypt gas plant upgrade
- Opec oil production hits new high in Feb
- Taqa-led group to buy Indian hydropower plants
- Schneider gets energy management certification
- Morocco moves ahead with $1.7bn wind farms
- Iraq approves power plant investments
- 670,000 oil & gas wells ‘need to be drilled’
- Qatar bourse celebrates Mesaieed listing