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ConocoPhillips puts Ekofisk crude in VLCC for storage.

Byline: LONDON:

ConocoPhillips will load a supertanker with 1.8 million barrels of Norwegian Ekofisk crude oil, combining three cargoes, probably for storage and sale later, ship brokers said.

The 300,000-dwt Malaysian Very Large Crude Carrier (VLCC) Bunga Kasturi Dua will arrive in Scapa Flow off Scotland's Orkney Islands and load two cargoes of Ekofisk in a ship-to-ship transfer from one of its own vessels and one cargo from an Italian Aframax, Orkney Harbour said on its website. Orkney Harbour said the VLCC, which brokers said was chartered to ConocoPhillips on a two-year time charter from last month, would complete loading and would then probably stay in Scapa Flow for longer-term storage. Brokers said its exact destination was unclear. This is the second major ship-to-ship transfer to be undertaken in Scapa Flow this year, the website said. Oil traders at ConocoPhillips were not immediately available to comment. At the end of January, the trading arm of Royal Dutch Shell sold three cargoes of North Sea Forties crude by transshipment, having stored the oil afloat for almost two months to take advantage of a deep discount for oil for immediate delivery versus future barrels. Traders said oil companies were still building up vast floating reserves of unsold crude oil on supertankers at sea because of this discount for prompt oil, known as a contango. The stockpile, mostly in the North Sea, US Gulf, in the Mediterranean and off the coast of West Africa, is now so large that it probably exceeds 80 million barrels -- about equivalent to a day's global oil consumption, brokers say. Despite the recent sale by Shell, the economics still make a compelling argument for buying oil now, putting it in a ship and selling it in a few months' time, traders say. Margins can be locked in at the time of purchase through a series of time spreads or contracts for differences as well as trades on London's ICE futures market.

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Publication:Oil & Gas News
Geographic Code:4EUUK
Date:Feb 18, 2009
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