The new trading arm of state-run Saudi Aramco has finalised a January to June 2013 term contract to sell jet fuel with at least one buyer, traders said on Friday.

Saudi Aramco Products Trading Company has agreed to sell undisclosed volumes of the fuel at a premium of about $2.70 a barrel above Middle East quotes for the cargoes, to be loaded from Jubail, they added. That is nearly 30 per cent higher than its current term contracts.

Royal Dutch Shell is the likely buyer, the traders said, although this could not immediately be confirmed.

Aramco is still negotiating the sale of term cargoes to be loaded from the Red Sea port of Rabigh, and may finalise these by year-end, traders said.

The company was offering either 45,000-tonne or 65,000-tonne cargo lots for loading from Jubail and Rabigh, with a half-yearly term instead of its usual yearly term.

Traders were surprised at the premium finalised for Saudi's jet fuel term, which they said was too high at 15 to 20 percent more than those agreed by other Middle Eastern refiners.

"Wow, why would anyone pay so much to Aramco? Those levels are crazy," said a middle distillates trader based in Singapore.

Abu Dhabi National Oil Company (Adnoc) finalised its 2013 jet fuel term premium at $2.35 a barrel above Middle East quotes, while Kuwait Petroleum Corporation (KPC) and Bahrain Petroleum Company (Bapco) both settled theirs at $2.25 a barrel.

A second trader said premiums might be higher for Aramco's term as its Jubail port is able to receive larger vessels such as Suezmax tankers, which would allow traders to optimise their cargoes.

"Shell owns Jubail as well, so together with their equity barrels and Saudi term, they can move Suezmax out of Jubail," the trader added.

The 305,000 barrels-per-day Saudi Aramco Shell Refinery company (SASREF) refinery in Jubail is 50-50 owned by Saudi Aramco and Shell Saudi Arabia Refining.

Traders expect the Middle East market to be flooded with supply of oil products when the new Saudi Aramco Total Refinery and Petrochemicals Company (Satorp) starts production at its 400,000 bpd plant at Jubail next year.

But the refinery's gasoil yield will probably be more than jet fuel, meaning supply of jet fuel is unlikely to increase too much, which could also be supporting term levels, said a Gulf-based trader.

Term premiums for Aramco's cargoes to be loaded from Rabigh are typically negotiated higher than those from Jubail as freight charges are usually cheaper for cargoes to be sent from the Red Sea to Europe, rather than the Gulf.

For its 2012 term, Saudi Aramco settled term premiums for jet fuel loading from Jubail at $2.10 a barrel on a free-on-board (FOB) basis to Middle East quotes and for jet fuel loading from Rabigh at $2.80 a barrel.

Meanwhile, Aramco has finalised with at least 4 to 5 companies its gasoil term for next year, traders said. Sellers include Shell and Vitol, they added.

Aramco Trading, which started commercial operations in January this year, is based at Aramco's Dhahran headquarters.-Reuters