Reuters reported that Abu Dhabi National Oil Company will hold term talks next month for naphtha lifting in January to December 2010 at a time sentiment has weakened versus early September as tight supplies have eased.
Traders are expecting the state owned refiner to get high single digit premiums at the very most for the 12 month supplies, against the USD 10.50 per tonne to USD 12.50 per tonne premium to its own price formula, on a free on board basis, that it fetched in the last round for July 2009 to June 2010 cargoes.
A Northeast Asian trader said that “I seriously doubt they can roll over premiums they had fetched in the last round, as fundamentals have changed.”
He said that ADNOC is expected to have additional supplies once its new condensate splitter and gas field come online from 2010 adding to the new supplies coming out of Qatar next month.
A Southeast Asian trader said that “ADNOC has big export volumes for light naphtha 2010 due to new gas production. They will have to be reasonable if they want to sell more term volumes. If not, they will end up selling spot naphtha, something which they do not like doing. ADNOC which had in the past negotiated with customers including Taiwan CPC, Japanese Marubeni and India’s Haldia Petrochemicals, by faxes and phone calls will be holding face to face talks for the first time in the week of October 19th 2009 at its new Singapore office established around September 2008.
ADNOC after Saudi Arabia and Kuwait has annual term contracts spanning from January to December, April to March and July to June. Its January to December 2010 discussion will come after Kuwait’s term talks for supplies lifting during December 2009 to November 2010 which is expected to be held around October 12th 2009.
The Asian market was grappling with tight spot supplies last month after Europe choked off exports due to refinery run cuts and to meet demand for petrochemical and gasoline production. But high Indian exports in September at around 850,000 tonnes versus 760,000 tonnes in August, continuous spot exports from Kuwait and unusual spot exports for October lifting from China’s WEPEC and Saudi Aramco helped filled the dent.
ADNOC which has assigned an official in Singapore earlier this year to deal in naphtha is expected to have an additional 1.3 million tonnes per year of naphtha from a new condensate splitter in Ruwais. Its gas field production on the other hand is expected to bring online an additional 1.7 million tonnes of naphtha a year.
A second Northeast Asian trader said that “The new condensate splitter was originally meant to start up in 2008 but it was delayed again and again. It should start either by year end, or early 2010.’
(Sourced from Reuters)
