Bapco seals key jet fuel and gasoil contracts.
Term premiums were set lower as buyers expected reduced import demand from Saudi Arabia and more supply from the Middle East next year due to new refining capacity and expansion of existing plants, the sources said.
Bapco's negotiation, one of the first to be finalised for next year, is expected to set the tone for term negotiations by other refiners in the Middle East.
Bapco set the gasoil term prices for 2014 at a premium of $2.50 a barrel above Middle East quotes and the jet fuel term prices at a premium of $2.15 a barrel, sources involved in the discussions said.
This is higher than the term prices for 2013, which were set at $2.25 a barrel for jet fuel. For gasoil, Bapco had set the 2013 term premium at $3 a barrel for the first quarter of the year and $2.60 a barrel for the rest of the year.
"Generally, the (price) levels still seem a bit high for next year, given that we are expecting more capacity in the Middle East," a Gulf-based
Companies involved in the gasoil term negotiations included Vitol, Independent Petroleum Group, Gulf Energy, Gulf Petrochem, Glencore, Augusta Energy, Addax, Galana Petroleum, Emirates National Oil Company, Swiss Singapore, Phillips 66, Itochu and Mitsui, traders said.
Among the buyers, Glencore and Mitsui are likely to be entering contracts with Bapco for the first time, traders said, though this could not immediately be confirmed. These firms are probably trying to expand their trading business in the Middle East and expand their sales in Africa, where they are taking advantage of growth opportunities, industry sources said.
For jet fuel, those involved in talks included Royal Dutch Shell, BP, BB Energy, Vitol, IPG, Total, Glencore, Augusta Energy, Swiss Singapore, Galana, Addax and ENOC, traders said.
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|Publication:||Gulf Daily News (Manama, Bahrain)|
|Date:||Nov 14, 2013|
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