The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.

Less Ads, More Data, More Tools Register for FREE
Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO
Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPOView Video
Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant
Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plantView Video

Latest Share Chat

RPT-Saudi switches crude grades, delays oil supplies to buyers in Asia

Mon, 23rd Sep 2019 00:54

* Replaces light crude with medium, heavy grades

* Pushes back crude and products shipments by 7-10 days

* Complex refineries in Asia able to adapt quickly

By Florence Tan, Jessica Jaganathan and Jane Chung

SINGAPORE, Sept 20 (Reuters) - State oil giant Saudi Aramcohas switched crude grades and pushed back crude and oil productsdeliveries to customers by days after the attacks on its supplyhub severely reduced its light oil production and led to outputcuts at its refineries.

Crude oil loading delays were widespread as most buyers havereceived Aramco's request to push back shipments in October by7-10 days, several sources with knowledge of the matter said,giving the producer more time to maintain exports by adjustingsupplies from inventories and its refineries.

At least three supertankers that loaded crude in SaudiArabia this week for China and India had their crude gradesswitched from light to heavy oil while more buyers in Asia havebeen asked to delay shipments and switch grades in September andOctober, according to sources with knowledge of the matter anddata from Refinitiv and Kpler.

Unipec, the trading arm of Asia's largest refiner Sinopec, will lift Arab Heavy crude instead of Arab Lightand Arab Extra Light onboard Very Large Crude Carriers (VLCCs)Caribbean Glory and Xin Lian Yang this month.

Sinopec declined to comment.

VLCC Kalamos will also load Arab Heavy instead of mostlyArab Extra Light for Indian Oil Corp.

IOC does not comment on commercial matters. The sourcesdeclined to be named as they were not authorised to speak tomedia.

Saudi Aramco is drawing down Arab Heavy crude from itsinventories to replace oil grades, said an oil analyst who alsodeclined to be named.

"Saudi always destocks oil in July and August. So thecurrent inventory level would be around 170 million to 175million barrels," the analyst said.

"This could last 25 days in theory. In practice, it may beeven less."

Two South Korean refiners have also agreed to switch outlight grades for Arab Medium and Arab Heavy cargoes loading thismonth and next, sources said.

Heavier Saudi crude grades yield more high-sulphur fuel oilthan the lighter ones, but Asian refineries are able to adaptquickly because most of the plants are equipped with secondaryunits that can process the residue into higher quality oilproducts, the sources said.

"There will be a little more burden on secondary units," onesource said, but "we just inform the refineries that grades willchange and they will manage somehow."

Bahrain's crude exports were also disrupted after aSaudi-Bahrain crude pipeline was shut. VLCC Tango which wasscheduled to load Banoco Arab Medium crude earlier this weekfrom Ras Tanura for Japan is still waiting, one of the sourcessaid.

"They informed us (of the delay) but every day it'srevised," he said.

"I'm afraid the situation is more serious than we assumedbut still information is limited."

Spot premiums for a wide range of crude and condensate fromthe Middle East and Russia jumped this week on Saudi supplydisruption.

The change in Saudi crude grades and loading delays areexpected to continue in October despite a Saudi pledge torestore lost production by the end of September.

In addition to crude, Saudi Aramco has also delayed thedelivery of spot diesel cargoes to a customer by 4-7 days,another source said.

Saudi Aramco has also bought two diesel cargoes which willbe sold to Europe and Africa as cargoes from Saudi refineries, aseparate source said.

(Reporting by Florence Tan, Jessica Jaganathan, Shu Zhang,Nidhi Verma, Koustav Samanta and Aizhu Chen in SINGAPORE, JaneChung in SEOUL; editing by David Evans)

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.