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Algeria - Products Exports.

West Europe is the largest market for Algerian oil products, absorbing more than 90% of total exports which now average about 330,000 b/d. Algerian gasoil, with very low sulphur content, is ideal for blending into diesel fuel in winter and is priced at a substantial premium over Russian gasoil. Due to its high viscosity, it is very much in demand in Italy, Holland and the US. The quality of Algeria straight run fuel oil, with 0.3% sulphur, is highly valued as a cracker feedstock and is virtually equal to vacuum gasoil, burned by Italian and US power utilities.

Exports of Algerian gasoil rose rapidly from mid-1996, when the Skikda refinery improved its gasoil from 0.07% sulphur grade to 0.05%, thus meeting new 0.05% sulphur gasoil/diesel regulation applied in the EU from Oct. 1, 1996. By late September 1996, Sonatrach had sold all the 0.05% sulphur gasoil it had allocated for export to European and Mediterranean markets until the end of that year. Russia, Algeria's main non-EU competitor, was supplying mostly heavier gasoils which was not suitable to the premium markets beyond Oct. 1, 1996.

Further work was undertaken at the Skikda refinery to raise its production of 0.05% sulphur gasoil in 1997. Algeria also gains from maintenance shutdowns among West European refiners. But the situation changed in 1998 as the winter was mild and the European market was awash with gasoil and diesel. Gasoil/diesel prices fell sharply through the year and Sonatrach could no longer impose a high premium for its product. In mid-1997, for example, Sonatrach raised the price differential of its 0.05% sulphur gasoil to $1.50/ ton and traders paid another $1.50/ton premium. Now, this gasoil is trading at a discount.

Sonatrach is the active spot seller of 0.05% sulphur gasoil/diesel on the Mediterranean market. It is competing with both traders and European refiners selling surpluses of the top grade fuel.

In late 1994 London-based SPC opened a trading unit in Singapore to handle the Asian market for LPG and other products. Sotal Energy Ltd., a JV owned 50% by Sonatrach and 50% by Total of France, markets Algerian LPG in Europe, North Africa and other areas.
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Publication:APS Review Oil Market Trends
Geographic Code:6ALGE
Date:Feb 15, 1999
Previous Article:Algeria - Part 3 - Exports Are Increasing, With Improved Logistics.
Next Article:Algeria - LPG Exports.

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