Shell Boosts 2010 Diesel Term Volumes By More Than 60% -Trader
March 30 2010 - 4:42AM
Dow Jones News
Royal Dutch Shell PLC (RDSB) plans to purchase more than 14.6
million barrels of ultra-low-sulfur diesel in 2010 from Japanese,
South Korean and Taiwanese refiners, up more than 60% from last
year's term volumes, according to a trader familiar with the
matter.
However, the company is taking a more bearish view of jet fuel,
signing a 2010 contract to buy just 2.1 million barrels from South
Korea's S-Oil Corp. (010950.SE), or more than 40% less than last
year, the trader said.
In Japan, Shell plans to purchase 12 cargoes with a combined 3.6
million barrels of ultra-low-sulfur diesel--also known as
10-parts-per-million-sulfur gasoil--from Nippon Oil Corp.
(5001.TO), and four cargoes of a combined 1.2 million barrels from
Idemitsu Kosan Co. (5019.TO) at premiums around 75 cents a barrel
to benchmark Singapore quotes.
Shell will also buy six cargoes with a combined 1.44 million
barrels of gasoil from Taiwan's Formosa Petrochemical Corp.
(6505.TW) at a premium around $1.60 a barrel.
Finally, the company has renewed an agreement to purchase 12
cargoes of a combined 8.4 million barrels of gasoil from South
Korea's GS Caltex Corp. at a premium of about $1.30 a barrel.
Shell's gasoil term volumes for 2010 are more than 60% higher
than in 2009, when it bought 7.2 million barrels of
ultra-low-sulfur diesel from GS Caltex and 1.8 million barrels from
S-Oil at premiums of $2.25-$2.60 a barrel, respectively.
Separately, South Korea's S-Oil Corp. (010950.SE) will resupply
Shell with three jet fuel cargoes of a combined 2.1 million barrels
at a discount of about 60 cents a barrel to quotes, the trader
said. The jet fuel term volumes are lower than in 2009, when S-Oil
supplied 3.6 million barrels to Shell at a discount of around 75
cents a barrel.
A spokeswoman for Shell said the company typically doesn't
comment on trading and operational matters.
Even when the East-to-West arbitrage economics are closed, Shell
is known to ship diesel and jet fuel from North Asia back to Europe
to supply its vastly integrated system, according to a survey of
shipping fixtures and traders.
"They can make a lot disappear," a Singapore-based trader said.
"Their economics are completely different."
Although the company doesn't win many regional spot market
tenders to buy or sell middle distillates, it has regular supply
outlets to countries such as the Philippines, Indonesia, Malaysia
and Australia, traders say. Shell has won several tenders this past
year to supply jet fuel to Philippines' Petron Corp. (PCOR.PH), and
it has a large contract to supply gasoil to Indonesia's AKR
Corporindo (AKRA.JK), traders say. Shell also has been known to
sell high-sulfur gasoil to Indonesia's state-owned oil company PT
Pertamina.
In addition, Shell may store some of its term barrels in
Singapore, where the company has access to about 300,000 cubic
meters--or about 1.8 million barrels--of middle distillates storage
at Tankstore Ltd.'s terminal in Pulau Busing, according to two
traders familiar with the matter.
-By Wayne Ma, Dow Jones Newswires; +65 6415 4065;
wayne.ma@dowjones.com