KUWAIT - Kuwaiti Export Movements.

Of KPC's total crude oil exports of 960,000 b/d, over 60% move to Asia. Almost 22% are going to Europe and South Africa. The US market takes the rest. Term clients on both sides of Suez account for over 90% of total crude exports, with the rest moving to KPC's trans-national systems in Europe and east of Suez. Kuwait's export crude, a blend 31[degree sign] API with over 2.5% sulphur, is relatively rich in distillates. In addition, KPC's overseas trading unit buys about 150,000-200,000 b/d of non-Kuwaiti crudes and sells them to term clients, down from 450,000 b/d in mid-1995. These include crudes being processed by non-KPC refineries.

Shell, helping KPC's upstream unit KOC in offshore exploration under a service contract (see Gas Market Trends 21), lifts about 100,000 b/d of Kuwaiti crude. Exxon takes less and is helping KOC to develop a field of very light oil in western Kuwait. Chevron, helping KOC in Burgan and other fields, is among the lifters. Term clients include Texaco and other integrated companies and refiners. Most of the majors buy Kuwaiti crude mainly for their Asian markets. (Chevron and Texaco were merged recently).

The state's Indian Oil Corp. (IOC) is the biggest Asian client of KPC for both crude oil and products. It often lifts about 100,000 b/d of crude and a big volume of distillates. Japanese term clients include Cosmo Oil, Idemitsu and Japan Energy. Other Far Eastern clients include Taiwan's CPC and South Korean companies.

Pricing of crude oil from Kuwaiti terminals to the west no longer follows the system applied by Saudi Aramco (see Saudi formula pricing in Vol. 44, SP 77- 80), and KPC no longer has formula prices for European and US destinations. In February 1998 KPC broke the traditional pricing link to Saudi Aramco's Arabian Medium for sales to eastern buyers. It then set an east-bound formula directly based on the monthly average spot prices of Dubai and Oman crudes.

KPC pricing of oil products from Kuwait to both sides of Suez follows spot market quotations. Most term deliveries are priced at a premium over Platt's Middle East spot price assessments, plus a premium taking into account formulae applied by Saudi Aramco, Caltex in Bahrain and other Middle East export refiners. KPC is the biggest exporter of gasoil/diesel in the Gulf region, and these distillates have good quality (see DT 22). KPC imposes a high premium on their spot prices when demand is strong and offers competitive prices when demand is weak. The same applies to its jet kerosine and fuel oil sales. The company has term contracts for big volumes of naphtha, gasoil/diesel, jet fuel and kerosine, and HSFO. The rest of the Kuwaiti refineries' exports is sold on spot basis. The biggest buyer of Kuwaiti distillates on term basis and in spot tenders is IOC.

Products sold by KPC's trans-national system overseas are priced according to the retail price trends in each country. In almost all cases, prices are in local currencies. Sales from overseas units are mostly done by KPC retailers, such as the Q8 petrol stations (see DT 24).