Oil Majors Book Supertankers to Ship North Sea Crude To Asia

LONDON (Dow Jones)–Total SA (FP.FR) has booked a supertanker to ship North Sea Forties crude oil–the main component of global benchmark Brent–to Asia from Europe, in a second such move by an oil major this month, a shipbroker and crude traders said Thursday.

The Eliza Very Large Crude Carrier will load 2 million barrels of Forties crude around Dec. 24, with South Korea the likely destination, according to European traders and a shipbroker.

Total wasn’t immediately available to comment.

BP PLC (BP.LN) earlier chartered the Alexander the Great supertanker to ship 2 million barrels of Forties crude to South Korea in December.

A Korean refiner told Dow Jones Newswires Wednesday the arbitrage window for January loading of Forties crude appears to have opened up because Middle East producers increased their crude-oil official prices to record highs.

Asian refiners are looking for replacement grades, with Forties, Russian Urals and West African crudes as potential alternatives, traders have said.

Also, South Korea has a free-trade agreement with the European Union from July.

Forties differentials spiked two weeks ago, to a premium of 80 cents to physical Brent benchmark, with BP the key buyer. Traders attributed the rise in prices to the company buying Forties ahead of its 2 million-barrel shipment to Asia.

But differentials weakened significantly in December amid lackluster demand from European refiners due to low margins, or profits they make from processing crude into oil products, combined with a typical tailing off in activity at the end of the year.

In Wednesday’s price-setting window, Vitol sold two December cargoes to Shell at premiums of 20 and 25 cents to dated Brent.

Earlier this week, differentials were negative, even despite tighter market conditions, as more than 30% of the Forties barrels originally scheduled to load in December may leave the region, according to traders.

Apart from the two VLCCs heading to Asia, Statoil was heard to have booked a vessel to ship 1 million barrels of Forties loading Dec. 21 to Canada, although the move couldn’t be immediately confirmed.

-By Konstantin Rozhnov, Dow Jones Newswires