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Crude Buyers in Asia to Cut West African Imports

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August 23, 2012

Asian refiners will reduce imports of West African crude in September by 9.4 percent from August to near the lowest level this year, a survey of six traders and an analysis of loading plans obtained by Bloomberg News showed.

Refiners bought 51 cargoes totaling 1.6 million barrels a day from Angola, Nigeria, Republic of Congo, Equatorial Guinea, Democratic Republic of Congo, Cameroon, Chad and Gabon, the survey showed. This is less than the 59 shipments amounting to 1.76 million barrels a day planned for this month, and close to the year-low of 1.41 million barrels in July. Exports from Angola fell below one million for the first time in 2012.

Buyers in Asia can opt between Middle Eastern crudes or Atlantic Basin grades, and their choice normally depends on the value of the lighter, sweet blends from the North Sea and West Africa versus heavier, sour grades from Saudi Arabia and Iran. Lighter crude yields more lucrative products such as diesel and gasoline. Sweet grades contain less sulfur than sour. The value of the two is measured by the prices of benchmarks Dated Brent and Dubai crudes.

“Lower flows in September have firstly been due to a widening Brent-Dubai spread,” Ehsan Ul-Haq, a senior market analyst with KBC Energy Economics in Walton-on-Thames, England, said in an e-mailed response to questions yesterday.

The Brent-Dubai exchange for swaps averaged $3.45 a barrel in July, compared with $2.47 in June, according to data from PVM Oil Associates Ltd. The spread rose to $5.23 on Aug. 13, the highest since Nov. 8. Traders make less profit from shipping crudes from Europe or West Africa to Asia when the spread between the two contracts widens.

“Maintenance in the North Sea has led to European refiners buying additional barrels of West African crude to make up for lower North Sea output,” which reduced availability to Asian buyers, Ul-Haq said.

Chinese Imports

Refiners in China bought 31 cargoes, three less than August, the survey showed. China International United Petroleum & Chemical Corp., known as Unipec, cut its purchases by four lots to 21.

India will also reduce imports to 14 consignments in September, three less than this month, the survey showed.

Indian Oil Corp., the nation’s largest refiner, bought nine shipments, including four lots of Nigerian benchmark Qua Iboe blend, according to the survey. This compares with seven cargoes for August. Reliance Industries Ltd., which owns the world’s largest refining complex, will reduce its imports to two consignments from eight in August, the survey showed.

Taiwan’s state-owned CPC Corp. purchased four shipments of Angolan crude, one less than this month, the survey showed.

Nigeria will export 2.14 million barrels a day of crude next month, while Angola will ship 1.63 million barrels, Bloomberg calculations based on loading programs showed.

Qua Iboe was at $1.54 a barrel more than Dated Brent on Aug. 21, the highest since June 15, according to data compiled by Bloomberg. It was at a premium of $1.52 today.

The following tables show details of planned Asian imports. Most cargoes are for 950,000 to 1 million barrels. All the volumes are in barrels a day.

Countries   Number of Cargoes          Total Volume
            September  August        September    August
China       31         34            973,917     1,044,677
India       14         17            432,500       491,774
Taiwan       4          5            126,667       153,226
Indonesia    2          2             65,000        61,290
Japan        0          1                  0        12,903

Month            Cargoes   Total       Angola        Nigeria
September          51      1,598,083     988,583     287,500
August             59      1,763,871   1,306,613     154,032
July               48      1,409,516   1,017,419     212,097
June               57      1,801,000   1,020,667     513,333
May                59      1,810,613   1,147,581     370,774
April              60      1,878,167   1,214,167     424,000
March              61      1,837,258   1,081,452     401,613
February           66      2,151,034   1,357,586     496,552
January            61      1,826,935   1,056,613     461,290

December           47      1,433,387     993,710     279,032
November           49      1,554,500   1,028,500     285,000
October            49      1,507,742     962,581     308,065
September          42      1,344,333     930,167     287,500
August             50      1,536,613     931,774     387,097
– Sherry Su, Copyright 2012 Bloomberg
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