Saudi Arabia Raises 2012 Crude Sales to India: Persian Gulf Oil

Saudi Arabia will increase crude shipments to some Indian refiners next year as they add plants and seek alternative supplies after a payment dispute with Iran.

Iraq is looking to buy gasoline and diesel for delivery in the first half of 2012. Libya’s National Oil Co. said it will begin selling crude under new term contracts and is seeking 2.4 million metric tons of gasoline for next year.

The following is a weekly summary of Persian Gulf crude and product market news and forthcoming events:

Crude Oil

State-run Saudi Arabian Oil Co. may ship at least 65,000 barrels a day more crude to Mangalore Refinery & Petrochemicals Ltd. (MRPL), Bharat Petroleum Corp. and Hindustan Mittal Energy Ltd., according to four people with direct knowledge of the plans. The three now buy at least 90,000 barrels a day.

HPCL-Mittal, a joint venture between Hindustan Petroleum and billionaire Lakshmi Mittal that’s building a refinery at Bathinda in northern India, is seeking 40,000 barrels a day of Saudi crude next year, two of the people said. The company has requested a mix of Arab Heavy and Arab Medium grades and Saudi Aramco, as the Middle East supplier is known, is considering whether it can supply the grades, which are available in limited quantities, the people said.

Mangalore Refinery, a unit of Oil & Natural Gas Corp., India’s biggest explorer, agreed to buy as much as 20,000 barrels a day more Arab Super Light grade, raising contracted supply to more than 40,000 barrels in 2012.

Bharat Petroleum, India’s second-largest state refiner, will import about 3.75 million tons, or 75,000 barrels a day, of Saudi crude next year, from 3.5 million tons in 2011, two of the people said. Bharat Oman Refineries Ltd., a venture between BPCL and Oman Oil Co. that operates a plant in central India, will buy about 2 million tons a year of Arab Mix crude, which is made of 60 percent light oil and 40 percent heavy oil, they said.

India is boosting crude imports as the country builds refineries and petrochemical plants to meet domestic and international fuel demand. Refiners have had difficulty finding banks to transfer payments for oil purchases from Iran, which is constrained by international sanctions over its nuclear program.

Iran is not using its oil as a political weapon, though it could, if forced to, the country’s top energy official said. Disruption of supply from Iran would create “severe problems” for global crude markets, Oil Minister Rostam Qasemi said in an interview with Al Jazeera television.

The market “is not facing a shortage,” he said, adding that Iran would seek a “fair price” for crude when the Organization of Petroleum Exporting Countries meets next month.

Saudi Arabia’s Oil Minister Ali Al-Naimi said he is “very happy” with current crude prices.

Libya is preparing tenders for the sale of crude next year for the first time since the country’s transitional government took over from forces loyal to Muammar Qaddafi.

The government plans to begin selling about 400,000 barrels a day in January under long-term contracts before increasing to at least 700,000 barrels a day by the middle of 2012, Nuri Berruien, the chairman of National Oil Corp., said.

The country, which is already exporting oil under spot contracts, will also develop a new formula for setting the official selling prices of its crude and may change the number of grades it offers, National Oil officials said. It plans to meet potential buyers in Istanbul later this month to seek agreement on terms for long-term contracts for supplies from January through December 2012.

Qatar International Petroleum Marketing Co., known as Tasweeq, sold five cargoes of 600,000 barrels each of Al-Shaheen crude for January loading to Exxon Mobil Corp. and China International United Petroleum & Chemical Corp., or Unipec, at premiums of $3 to $3.20 a barrel over Dubai crude, said three traders who participate in the market.

In regional trading, Oman oil futures slipped 87 cents a barrel, or 1.7 percent in the week, to close at $109.42 a barrel on Nov. 18, according to data compiled by Bloomberg. Dubai crude gained $1.66 cents a barrel last week, to $108.67 a barrel.

Dubai crude swung to a premium to Brent last week, with the Middle East oil selling for $1.11 a barrel more than the European benchmark, compared with a discount of $3.83 a barrel seven days earlier.

Light Products

Iraq is seeking to buy 1.3 million tons of gasoline and almost 800,000 tons of diesel for supply in the first half of the year, three traders involved in the talks said. Bids are due tomorrow for supply of the fuel from January through June 2012.

Bahrain Petroleum Co. agreed to sell 1.1 million tons of naphtha for delivery next year at a premium of $16 to $16.50 a ton over benchmark prices, company officials said. The state-run refiner, known as Bapco, will sell the fuel for loading from January through December 2012. Bapco also sold 2 million tons of diesel for loading next year at a $3 premium.

Abu Dhabi National Oil Co. maintained its offer levels for a year’s supply of naphtha to Asia starting January, according to four people with knowledge of the talks. The state producer, which offered pentane-plus grade at a premium of $18.50 a metric ton to Middle East benchmark prices last week, indicated it will not lower its prices, the people said. Low-sulfur naphtha was offered at a premium of $17.50 a ton and splitter grade at $17.

The world’s largest natural-gas exporters, meeting at the Gas Exporting Countries Forum in the Qatari capital Doha, agreed that the price of the fuel used to generate electricity is too low. They disagreed on how the producers’ group could maximize its 12 members’ income.

Refineries

Yemen’s Aden Oil Refinery Co. halted its 150,000 barrel-a- day fuel-processing plant because of a lack of crude after an attack on a pipeline supplying it.

Iraq’s semi-autonomous Kurdistan region will raise crude refining volumes to 100,000 barrels a day next year from a current level of 60,000 barrels, said Ashti Hawrami, natural resources minister of the Kurdistan Regional Government.

To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net.

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