BP Amasses Diesel as France Bolsters Strategic Fuel Inventories

BP Plc (BP/), Europe’s second-biggest oil company, increased purchases of diesel for delivery into France more than 10-fold last month before the country raises the amount it requires companies to hold in emergency fuel reserves.

BP bought about 380,000 metric tons of diesel in March bound for the French ports of Lavera and Le Havre, according to data from Platts, the news and pricing unit of McGraw-Hill Cos. That’s up from about 30,000 tons in each of the previous two months, the data show.

France, which was among consumer nations that released strategic fuel stocks in 2011 in response to reduced supply from Libya (OPCRLIBY), increased the volume it requires oil companies to hold in storage from July. The International Energy Agency, which coordinated last year’s release, said on March 29 that it is ready to act again in the event of supply disruption.

“France is currently building its strategic stocks with the plan to increase them further in the second half of the year,” said Olivier Jakob, managing director of Petromatrix GmbH, a Zug, Switzerland-based researcher. Robert Wine, a London-based spokesman for BP, declined to comment on operations when contacted by phone yesterday.

Oil stockpiles held by member states of the Organization for Economic Cooperation and Development were below the five- year average for a seventh month in January, according to the IEA. “Inventories, notably crude in Europe and the Pacific, look very tight in absolute terms,” the agency said in its monthly report on March 14.

Emergency Stockpiles

France requires oil companies to hold the equivalent of 29.5 percent of 2011 consumption in storage from July 1, Jean- Marc Tenneson, executive officer of Comite Professionnel des Stocks Strategiques Petroliers, or CPSSP, said today by phone from Paris. That’s up by 1 percentage point from last year. The CPSSP is responsible for Sagess, which manages the country’s strategic oil reserves.

France issued a tender in February to buy 350,000 cubic meters of diesel, or 295,750 tons, for delivery to Lavera, according to Tenneson. “As of the beginning of April, no delivery has been made,” he said.

Crude oil dropped to a six-week low in New York last week amid speculation that the U.S. and European governments may agree to draw down emergency inventories. French Prime Minister Francois Fillon told France Inter Radio on March 29 the prospects of an accord were “good.”

“Any further release would slow down their restocking efforts,” Jakob said today by phone, referring to France.

Rising Prices

The volume of BP’s diesel shipments was calculated by Bloomberg based on transactions in a daily forum known as the Platts pricing window, which matches buyers and sellers. In addition to the shipments to France, the company bought about 140,000 tons bound for Italy and the U.K., the data show. This doesn’t show volumes of oil products delivered through private transactions.

Diesel for delivery into northwest Europe gained 2.5 percent to $1,045 a ton, a third monthly advance, data compiled by Bloomberg show. Prices for shipments into the Mediterranean rose 2 percent to $1,047 a ton last month.

The IEA coordinated the release of about 60 million barrels of crude and oil products over 30 days last year. France contributed 3.2 million barrels, of which about 2.4 million barrels was diesel. Those reserves had been refilled as of the end of December, Tenneson said, adding the decision to raise stockpile levels was taken in June last year. It has no link with the European Union decision to restrict crude imports from Iran, he said.

Crude traded at $105 a barrel today on the New York Mercantile Exchange, up about 5.9 percent this year. Futures closed at $102.78 on March 29, the lowest settlement since Feb. 16. Brent crude was at $125 a barrel on the ICE Futures Europe exchange in London, up 17 percent in 2012.

To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net

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

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