Tuesday 19 March 2024
 
»
 
»
Story

Reliance ... still to renew term contract with Aramco

Speculation over Saudi-India oil deal as talks drag on

SINGAPORE, April 16, 2015

Saudi Aramco and India's Reliance Industries have not yet concluded a term contract to import diesel and gasoline, three industry sources said, fanning market speculation that the long-standing annual deal may not be renewed.
 
A deal has normally been signed by the first quarter, but negotiations have gone on longer at a time when Saudi Arabia has become less reliant on imports following refinery expansions.
 
The term deal talks had stalled because the companies had not been able to agree a price yet, said the sources who were familiar with the negotiations.
 
"Even if the Saudis don't import from Reliance, Reliance will be able to sell in the domestic market due to firm summer demand and low underlying crude oil prices," said one source.
 
Reliance and Saudi Aramco could not immediately be reached for comment.
 
While Saudi Arabia is the world's top crude exporter, a lack of refineries to process crude into fuel products has meant the kingdom has traditionally relied on imports, largely from Asia.
 
But an industry source who supplies products to Saudi Arabia said a deal might not be reached since there was less logic this year on both sides and Reliance could use the barrels itself particularly given higher freight rates.
 
If no deal is reached, reduced demand from Saudi Arabia and continued exports from its new refineries would weigh on Asian diesel margins, which are down 26 per cent from the same period last year. 
 
The volumes in the term deal vary, but typically range around 1.5 million to 3.7 million barrels a month of diesel, according to a trader who supplies oil products to Saudi Arabia.
 
Saudi Arabia added 800,000 barrels per day (bpd) of new capacity in its refineries of Yanbu and Jubail over the last two years, and is planning another 400,000 bpd in Jazan, bringing its total capacity to over 3 mbpd.
 
The country last year became a net annual diesel exporter for the first time since 2007, according to data published by the Joint Organisations Data Initiative (JODI).
 
Saudi Arabia exported about 88.8 million barrels of diesel and imported 72.6 million barrels in 2014, the data showed. In 2013, diesel imports were 92.4 million barrels and exports 45.8 barrels.
 
The country's gasoline imports overtook diesel for the first time in at least three years last December, as its Yanbu refinery is configured to produce mainly diesel, traders said. -- Reuters
 
 



Tags: aramco | Reliance |

More Energy, Oil & Gas Stories

calendarCalendar of Events

Ads