Asia to Boost West African Crude Imports on Cheaper Brent, China Demand

Asian refineries will boost their imports of West African crude oil for loading in February to the highest in at least seven months amid cheaper Atlantic Basin grades and rising demand in China.

Shipments totaling 62.4 million barrels, or 2.15 million barrels a day, will be exported from Angola, Nigeria, the Republic of Congo, the Democratic Republic of Congo, Equatorial Guinea and Gabon, according to a survey of six traders and an analysis of loading programs obtained by Bloomberg News. That’s 18 percent more than the revised 1.83 million barrels a day scheduled for this month.

Refiners in Asia can buy Middle Eastern crude or West African grades and their choice normally depends on the value of the lighter, low-sulfur, or sweet, blends from Angola and Nigeria versus heavier, high-sulfur, or sour, grades from Saudi Arabia and Iran. Lighter crude yields more lucrative products such as diesel and gasoline.

The spread between European and Middle East grades has been narrowing over the past month after the U.S. and European Union imposed tougher sanctions on Iran. The moves came at a time when supply of sweet crude increased in the Atlantic Basin with the resumption of Libyan exports.

“With the return of Libya crude and the closure of refineries in the U.S. and Europe, the Atlantic Basin has to push some barrels out and that is seen through the weaker Brent- Dubai spread,” Olivier Jakob, managing director of the research group Petromatrix GmbH in the Zug., Switzerland said on Jan. 20 in an e-mail.

Brent-Dubai Spread

Libya will be pumping 1.2 million barrels a day more of oil than a year ago by the middle of the year and refinery halts will remove 1.8 million barrels of crude processing capacity in Europe and the U.S., according to Petromatrix.

The Brent-Dubai exchange for swaps, which measures the European benchmark against the Persian Gulf grade, reached a 14- month low of $2.32 a barrel on Jan. 16, according to data from PVM Oil Associates. It was at $2.62 today. Traders make more profit from shipping West African crude to Asia when the spread between the two contracts shrinks.

Chinese refiners will import 37 cargoes, the most in at least seven months, compared with 30 for January, the survey showed. China International United Petroleum & Chemical Corp., known as Unipec, bought 28 lots, eight more than this month.

China’s imports of crude may accelerate to a record this year as the world’s second-biggest oil user bolsters emergency stockpiles and expands refining capacity even as the pace of economic growth slows.

The nation may buy 9 percent more crude from overseas in 2012, according to the median estimate of seven traders and analysts in a Bloomberg News poll on Jan. 5. China’s refining capacity may expand by 600,000 barrels a day this year, the survey showed.

Indian Purchases

Indian companies bought 19 shipments for February loading, unchanged from this month, according to the survey.

Indian Oil Corp., the nation’s largest refiner, maintained its purchases at 12 cargoes for February, including eight shipments of Nigerian crude, the survey showed.

Asia’s imports for January were revised up by six cargoes to 61, after JX Nippon Oil & Energy Corp., Japan’s largest refiner, bought two shipments of Gabon’s Rabi Light, while three consignments of Rabi Blend and one Equatorial Guinea’s Aseng will also be shipped to Asia this month, the survey showed.

Nigeria benchmark Qua Iboe (AFCSQUA1) was at a premium of $2.51 a barrel to North Sea Dated Brent today, compared with an average of $2.27 in December, according to data compiled by Bloomberg.

Nigeria, Africa’s largest oil producer, plans to export 2.14 million barrels a day of crude next month while Angola will ship 1.82 million barrels, Bloomberg calculations based on loading programs showed.

The following tables show details of planned Asian imports. Most cargoes are for 950,000 to 1 million barrels.

---------------------------------------------------------------
Countries   Number of Cargoes   Total Volume (B/D)
            Feb.      Jan.      Feb.        Jan.
China       37        30        1,223,448   919,355
India       19        19          618,966   574,194
Taiwan       5         5          163,793   155,968
Indonesia    2         1           67,241    32,258
Japan        0         2                0    41,935
Others*      3         4           77,586   103,226
---------------------------------------------------------------

Month            Cargoes         Volume (B/D)
February 2012      66            2,151,034
January 2012       61            1,826,935
December 2011      47            1,433,387
November 2011      49            1,554,500
October 2011       49            1,507,742
September 2011     42            1,344,333
August 2011        50            1,536,613
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Note:
*Final destinations are not available.

To contact the reporter on this story: Sherry Su in London at lsu23@bloomberg.net

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

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