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<Has to relative cheap if that many majors are buying ULSD! – CR Comment >
———–Formosa Petrochemical To Sell 10-Ppm-Sulfur Term Gasoil To Conoco, Shell, Vitol
-By Wayne Ma, Dow Jones Newswires; +86 10 8400 7714; wayne.ma@dowjones.com
BEIJING Dow Jones/ 20 Nov 2011- Taiwanese private refiner Formosa Petrochemical Corp. has signed long-term contracts to supply a combined 3.6 million barrels of 10-parts-per-million-sulfur gasoil to Royal Dutch Shell PLC, ConocoPhillips and Vitol Holding BV in 2012, four traders familiar with the matter said Tuesday.
Each customer will lift one cargo consisting of 300,000 barrels every quarter from Formosa’s 540,000-barrel-a-day refinery in Mailiao. The buyers are paying a premium of about $2.40 a barrel to benchmark Singapore quotes, the person said.
The term volume will comprise about half of Formosa’s 10-ppm-sulfur gasoil exports next year, the person added. The rest will likely be sold on a spot basis.Formosa, which skipped term sales last year due to a major fire that damaged its No. 2 residue desulfurization unit, has been offering an average of 600,000 barrels a month on a spot basis to Asian traders.
Formosa’s 10-ppm-sulfur gasoil, also known as ultra-low-sulfur diesel, is often purchased by major oil companies such as BP PLC (BP.LN) or Shell for the Australian market, where it is used to power vehicles.
Alternatively, major trading houses including Vitol sometimes ship Formosa’s gasoil to Europe to take advantage of arbitrage opportunities.
Formosa had term contracts in 2010 with Sempra Energy Trading, Shell, Total SA (TOT), China International United Petroleum & Chemical Corp., or Unipec, and Winson Oil Trading Pte. Ltd. to supply a combined 5.76 million barrels.
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