April 7, 2014 / 10:55 AM / 4 years ago

Asia-Pacific Crude-Libyan exports likely to weigh

SINGAPORE, April 7 (Reuters) - Differentials in the Asia-Pacific crude market could come under pressure from an expected increase in Libyan exports, traders said on Monday.

Libyan rebels agreed with the government on Sunday to gradually end their eight-month petroleum blockade, which would free four eastern oil ports to export.

The Zueitina and Hariga ports, which account for around 200,000 barrels per day (bpd) of export capacity, will open immediately, while the larger ports, Ras Lanuf and Es Sider with capacity of around 500,000 bpd, will be freed in two to four weeks after more talks, the government said.

Libyan crude exports could increase by around 200,000 bpd over the next few days and a further 550,000 bpd by early May, JBC Energy estimated.

Storage tanks are full at the ports, and loading the crude will be straightforward, but getting the tanks resupplied from oilfields will take time.

While most exports of Libyan sweet crude will be sold in the European market, some cargoes are likely to come to Asia, traders said. Both El Sharara crude and Mellitah condensate was shipped to Asian destinations last year.

The higher supply could also narrow Brent’s premium to Dubai crude, making it more lucrative to ship Atlantic-basin crudes to Asia.

Brent-Dubai Exchange of Futures for Swaps (EFS) DUB-EFS-1M, or Brent’s premium to Dubai swaps, widened 2 cents to $3.52 per barrel. Last week, the spread narrowed to $3.35, its lowest in nearly five months.

“Differentials (...) are not likely to be swayed until the barrels actually begin entering the market, which given Libya’s record, may be much later than announced,” analysts at JBC Energy said in a note.

Some of the 3.6 million barrels of Vietnamese Bach Ho crude sold in a tender for May-loading was still in the hands of trading firms, traders said.

Trading firms could be stuck with the uncommitted cargoes amid competition from the new Libyan supply, they said.

* TENDERS

Petral, the trading arm of Indonesia’s Pertamina, bought 600,000 barrels of Champion crude for delivery to its Cilacap refinery in June and another 900,000 barrels to its Balikpapan refinery in a tender. Petral also bought 950,000 barrels of Angolan Cabinda crude for June-arrival at Balikpapan.

The cargoes bring the company total crude imports in June to 5.9 million barrels and will likely conclude imports for the month, a trader said.

Last week, Petral bought 600,000 barrels of Azeri Light, and the company also holds a term contract for another three 950,000-barrel cargoes for the month.

Vietnam’s PV Oil offered term supply of Su Tu Den crude, often used for direct burning, for July-December delivery in a tender that closes April 11 with bids valid until April 25. The company offered a minimum of 200,000 barrels per month.

The January-to-June supply tender of Su Tu Den was likely to have been awarded at premium of $4 per barrel to Dated Brent or slightly lower, according Reuters data.

PV Oil last sold two cargoes of Su Tu Den for loading May 10-31 to Japanese buyers at $4-$4.50 per barrel above Dated Brent.

Traders were still waiting for Rosneft and ONGC to issue tenders for Sokol crude. A loading programme showed a total of seven cargoes would be loaded in June.

*REFINERY

Japanese oil refiner Showa Shell Sekiyu KK said on Monday that it plans to refine 465,000 barrels per day (bpd) (6.73 million kilolitres) of crude oil for domestic consumption in April-June, up 8 percent from a year earlier.

* MARKET NEWS

The United States on Friday dismissed suggestions that Iran was exporting much more oil than it is allowed to sell under a preliminary nuclear deal with world powers and predicted that aggregate Iranian oil sales would meet targets set for Tehran.

Kuwait has increased oil production capacity to 3.3 million bpd and is hoping to reach 3.5 million bpd in 2015, the head of its state oil company said.

BG Group has moved its headquarters for global oil and liquefied natural gas (LNG) trading to Singapore from the United Kingdom to be closer to customers in the fast growing Asian region, the company said.

For crude prices, oil product cracks and refining margins, please click on the RICs below.

Brent

Dubai

Brent/Dubai EFS DUB-EFS-1M

PRODUCT CRACKS

Fuel oil crack

Gasoil crack

Naphtha crack

Complex refining margins

Reporting by Jacob Gronholt-Pedersen and Florence Tan; editing by Jane Baird

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