Bapco wins gasoil term deals at $3 premium
Dubai, November 19, 2012
Bahrain Petroleum (Bapco) has clinched deals with several buyers for gasoil term contracts for the first quarter of 2013 at a high premium of $3 a barrel to Middle East quotes, industry sources said on Monday.
Traders said the state refiner's premium for next year was way above the market and has even prompted some potential buyers to drop out of the talks.
"It is a rocketing high price," said one Gulf-based middle distillates trader. "The number is crazy and I don't think the market is currently there."
Bapco has finalised the talks with Gunvor, Vitol, International Petroleum Group and Petronas, while the volumes contracted were not immediately available.
Its price compares with the $2.20 a barrel that Kuwait Petroleum Company's obtained in its own 2013 term deals for 500 ppm gasoil.
Traders said there were quite a few new players who clinched deals with Bapco and the rising demand from East Africa might have made them willing to pay the higher premium. Kenya, Tanzania and Mozambique are dependant on fuel imports for their needs due to lack of sufficient refining capacity.
"Middle East barrels work nicely for East Africa but the level of $3 a barrel, it still seems pretty high," said a Singapore-based trader.
National oil firms usually negotiate with buyers contract terms for the whole of the year, but Bapco only concluded deals for the first quarter, traders said.
"They will have an option to re-negotiate the prices for the next quarter, or the rest of the year if they wish to do so," said another middle distillates trader.
"Bapco's management has been pushing to achieve $4 a barrel as premium, but of course that was way above the market," the first trader said.
Demand for gasoil has been on the rise in the Middle East, where it is used for power generation. Consumption usually spikes higher during the June-September summer months when temperatures rise. - Reuters
More Energy, Oil & Gas Stories
- Iran to boost diesel exports to Iraq
- European oil price investigation widens
- Key Iraq energy conference in Abu Dhabi
- Gulf Petrochem receives Meed award
- Mideast facing ‘double dilemma’ over oil future
- Taqa ranked top UAE energy firm by Forbes
- Ipic head appointed GEM chairman
- Qatar Petroleum unit rebranded as Alwaseeta
- QPI plans to extend Centrica deal in N. America
- Masdar CEO urges diversified energy mix