ADNOC finalizes July 2015 June 2016 diesel term contracts

(MENAFN- Arab News) SINGAPORE: State-owned Abu Dhabi National Oil Co. (ADNOC) has finalized July 2015 to June 2016 diesel term contracts with several buyers traders said on Friday a first sign of commitment for the fuel since its newly expanded refinery started production this year.
The United Arab Emirates company has finalized contracts for its diesel with 10 parts-per-million (ppm) sulfur at a premium of $2.35 a barrel over Middle East quotes traders said.
Overall volumes were not certain but buyers include Total and Swiss Singapore they said.
This is the first time ADNOC has contracted to sell the low-sulfur diesel cargoes on a term basis to buyers outside the United Arab Emirates probably signaling that production at the refinery is stabilizing traders said.
Earlier this year ADNOC started production from its crude and secondary units at the expanded Ruwais refinery where capacity has more than doubled to more than 800000 barrels per day.
In May the refinery had to run at a lower rate due to start-up problems with a gasoline-making secondary unit but the term contract for diesel may indicate the refinery has either resolved that problem or expects to do so soon traders said.
ADNOC officials could not be reached for comment.
Once fully commissioned the expanded refinery is expected to produce an additional 8 million tons a year of diesel and another 4 million tonnes a year of jet fuel on top of the 5 million tons of diesel and 6 million tons of jet fuel now.
Ruwais' expansion comes at a time when new refining capacity from the Middle East including two new refineries in Saudi Arabia is putting pressure on Asian diesel margins as Asian barrels to the west are displaced traders said.
ADNOC's diesel term cargoes will probably head to Europe as arbitrage economics are currently profitable at the term level finalized a Singapore-based trader said.
The buyers were probably lifting at least three long-range-sized vessels a month from ADNOC under the contract the trader added.
ADNOC has an existing term contract with local fuel retailers Emirates National Oil Co (ENOC) and Emirates General Petroleum Corp (Emarat) to supply unspecified volumes of 10 ppm sulfur diesel for 2015.
It first offered the 10 ppm sulfur diesel for export in the spot market in mid-2012 ahead of a UAE shift toward cleaner fuel last year.
Earlier this month it finalized its July 2015 to June 2016 jet fuel term export contracts after skipping them for July 2014 to June 2015 and provided buyers with the option of more volume once production from Ruwais stabilized.