In a major development, Chad’s heavy sweet Doba crude has attracted new buyers looking to produce 0.5pc sulphur marine fuels ahead of new regulations, reports the Argus Media.
The New Buyers
- Vitol, an old buyer: Traders said trading firm Vitol purchased three out of four 950,000 bl Doba cargoes for loading in August — the fourth went to Chinese state-owned refiner ChemChina. Vitol is not a regular buyer of Doba, and is likely to take the cargoes to its 82,000 b/d refinery in Fujairah, UAE, which has been able to produce fuel oil compliant with the International Maritime Organisation (IMO) sulphur cap since February.
- Saudi owned Motiva: Saudi state-owned Aramco’s US refining firm Motiva purchased Doba in May for the first time since at least January 2016. Ship tracking data show it loaded a partial cargo of the grade onto the Astra that transferred it to the Paramount Hamilton, which then discharged in Port Neches, Texas, near Motiva’s 603,000 b/d Port Arthur refinery.
- Maersk: Container shipping firm AP Moller-Maersk purchased Doba in late May, when it took a cargo on the Petalidi to Rotterdam. The firm is leasing a petrochemical industrial distillation (PID) unit from independent Dutch storage company Koole in Rotterdam. This unit can process crude to produce low sulphur marine fuels. Three cargoes of Doba crude and a single cargo of similar grade Sudanese Dar were delivered to Koole’s Rotterdam terminal in 2019, ship tracking firm Vortexa data showed.
Maersk last year partnered with tank storage operator Vopak to store its 0.5pc sulphur fuel at the port of Rotterdam. The new storage space will cater for about 20pc of the firm’s global bunker fuel requirements in 2020, when the International Maritime Organisation’s (IMO) 0.5pc global sulphur cap enters into force.
How will it help Doba?
If these firms continue regular purchases, they would join an already diverse stable of buyers. The most regular of these are Germany’s Uniper, India’s private-sector Reliance, and Chinese state-controlled buyers Unipec and ChemChina.
Why is it important for Doba?
Prices of Doba have fallen sharply in recent weeks because demand in Asia-Pacific, its predominant destination, retreated as refining margins fell. A Doba cargo now sells for 75¢/bl below North Sea Dated; as recently as late May it sold for $2/bl above the benchmark. This could be attracting a greater number of buyers.
Doba crude could also attract more demand from simple crude-processing units and bunkering terminals in 2020 because of its high yield of fuel oil.
Doba’s Hopes in Fujairah
Uniper has such a facility at Fujairah, which can produce up to 3mn t/yr of 0.5pc sulphur fuel oil. Uniper has bought at least four 130,000t cargoes of Doba for delivery there in the first half of this year; overall Doba deliveries to Fujairah have increased to at least 650,000t in the first half of 2019, from 130,000t during the same period in 2018.
Fujairah will be a supply hub for the 0.5pc sulphur marine fuels that ships will have to use as of next year if they do not have exhaust scrubbers fitted. Increased demand for IMO-compliant fuels is already supporting refining margins, and this in turn could support future purchases of heavy sweet crude grades such as Doba.
Low-sulphur fuel oil (LSFO) prices moved to a premium against Ice Brent crude in July for the first time in 16 years. Most recent price indications for IMO-compliant fuels suggest still-higher premiums. High-sulphur 3.5pc fuel oil — the primary marine fuel today — traditionally trades at a discount to crude.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Argus Media
