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Singapore: Saudi Aramco will cut gas oil (diesel) exports to 880,000 tonnes next year from 2.2 million tonnes in 2007, and will not renew any of its annual term deals, as domestic demand grows swiftly, industry sources said yesterday.
Saudi Arabia is expected to keep term jet fuel exports steady at one million tonnes. Saudi Aramco did not issue a tender to sell term middle distillates this year but short-listed players for price discussions for the upcoming weekend.
"Gas oil exports will be reduced because domestic demand is very strong," said one source involved in supply discussions, adding that all shipments will be sold on a spot basis. The grades will be a mix of 0.05 per cent and 0.5 per cent sulphur. Another source said: "Domestic diesel demand has already caught up with production."
Booming demand
Oil demand is booming in the kingdom, thanks to petrodollar-fuelled econ-omic growth and low domestic prices, forcing it at times to import extra supplies. The economy grew 4.3 per cent last year.
Aramco, which owns around 1.8 million barrels per day (bpd) of refining capacity in the country, imported 250,000 tonnes of diesel from August to October, as plant maintenance coincided with peak summer demand.
Exports also fell, as some Saudi cities have already moved on to cleaner diesel of 0.05 per cent sulphur from 0.2 per cent, which requires a greater level of secondary refining.
The supply cut followed on the 2007 term contract which saw diesel shipments being reduced to two million tonnes from four million tonnes in 2006.
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