Abu Dhabi National Oil Company is likely to skip gasoil exports for the Q1 of next year as the company is still considering plans to offer a higher grade of gas oil.
Industry sources said that Abu Dhabi, the main crude producer in OPEC member the United Arab Emirates plans to switch the country's diesel fuel supply to only ultra low sulphur diesel by 2012 according to a strategic plan put in place for 2009 to 2013, in a bid to align itself with the global trend of shifting towards cleaner fuels.
Adnoc has communicated its intention to offer gasoil cargoes with 10 ppm sulphur content to its export customers through term contracts. However, traders and industry sources based in the Middle East and Singapore said that the refiner appears to have delayed its term negotiations for next year due to uncertainty involving the specifications of the 10 ppm sulphur gasoil.
A source with knowledge of the issue and how is based in Abu Dhabi said that their expectation is that this region would slowly shift to 10 ppm as well. But currently no government would be taking 10 ppm for their domestic market so if they decide to produce 10 ppm that means they will have to find new markets for it.
Currently, Adnoc has term contracts to export about 600,000 tonnes of 5,000 ppm sulphur gasoil over January to December to unspecified buyers. It also has a separate term to supply domestic refiners Emirates General Petroleum Corporation and Emirates National Oil Company with the low sulphur gasoil also known as 500 ppm.
The source in Abu Dhabi said that the most obvious question is if they shift to 10 ppm how can they continue to supply to Emarat and ENOC which buy 500 ppm. There must be a change to the law or regulations to do that.
With limited outlets in the Middle East for the 10ppm sulphur gasoil grade the refiner was trying to meet the specifications required by customers in new markets especially in Europe. Diesel exports to Europe have to meet very stringent criteria, one of which is the cold properties in the fuel used as heating oil in winter.
A trading source based in the Middle East said that they might continue to offer 500 ppm sulphur gasoil next year but looks like it's not certain yet. Adnoc will have a partial shutdown at its Ruwais refinery for maintenance in the Q1 of next year with the crude distillation unit out for about 30 to 35 days possibly from January. This could be a factor delaying the term negotiations.
(Sourced from Reuters)
