Lukoil Bids Urals Crude at 16-Month High; Buzzard Field Reduced

Gunvor Group failed to buy North Sea Forties at a four-month high while OAO Lukoil sought without success to buy Russian Urals crude in the Mediterranean at the highest differential to Dated Brent in 16 months.

Production at the Nexen Inc.-operated Buzzard field is said to be running at reduced rates of 150,000 to 170,000 barrels a day, according to two people with knowledge of the matter who asked not to be identified because the information is confidential.

Asian refiners will reduce imports of West African crude for loading in July to the lowest in one year because of weakening demand, cheaper alternatives and supply disruptions in some Nigerian grades.

North Sea

Gunvor failed to buy Forties for July 24 to July 28 at 30 cents a barrel more than Dated Brent, a Bloomberg survey of traders and brokers monitoring the Platts pricing window showed. This is the highest since Feb. 25, and compares with a bid at a premium of 10 cents on June 28.

Three bids were placed at the same premium of 15 cents without attracting any sellers. One was from Trafigura Beheer BV for July 24 to July 28, one from Phillips 66 (PSX) for July 19 to July 23, and the third from Total SA (FP) for July 16 to July 22.

Total was also unable to buy Ekofisk for July 17 to July 24 at 80 cents a barrel more than Dated Brent, 5 cents higher than June 28, while Morgan Stanley didn’t manage to sell the grade for July 19 to July 21 at a premium of $1.00, according to the survey.

BP Plc (BP/) failed to sell Brent for July 24 to July 26 at 35 cents a barrel more than Dated Brent, the survey showed.

Reported crude trading typically occurs during the Platts window, which ends at 4:30 p.m. London time. Forties loading in 10 to 25 days was 11 cents more than Dated Brent, compared with a premium of 5 cents on June 28, according to data compiled by Bloomberg.

Brent for August settlement traded at $103.07 a barrel on the ICE Futures Europe exchange at the close of the window, compared with $102.53 in the previous session. The September contract was at $102.56 at the same time today, a discount of 51 cents to August.

Production at the North Sea Buzzard field has been lower than normal since June 28, the people said. The reduction is due to valves being changed at some of the field’s wells, one of them said.

A Nexen official, Karen Fordyce in Aberdeen, Scotland, wasn’t immediately available for comment by phone and an e-mail today.

Forties lot F0704 was deferred by one day to load on July 5 to July 7 following reduced production at Buzzard, two people with knowledge of the matter said.

Platts set the August Oseberg crude differential at 50.56 cents a barrel, while Ekofisk crude will be 46.19 cents a barrel for the month, the oil pricing agency said in an e-mailed note today.

Mediterranean/Urals

Lukoil failed to buy 80,000 metric tons of Urals for July 13 to July 17 loading at 45 cents a barrel more than Dated Brent on a delivered basis to Augusta, Italy, the survey showed. That is the highest bid since Feb. 9, 2012.

Urals in the Mediterranean rose by 20 cents to a premium of 5 cents a barrel to Dated Brent, the most since May 22, data compiled by Bloomberg showed. In northwest Europe, the grade was unchanged at 25 cents a barrel more than Dated Brent, the highest since Aug. 16.

OAO Surgutneftegas sold via a tender one cargo of Urals for July 22 to July 23 loading from Primorsk, and another for July 20 to July 21 loading from Ust-Luga to Talmay Trading, according to two people with knowledge of matter who asked not to be identified because the information is confidential. Both cargoes will be resold to China International United Petroleum & Chemical Co., known as Unipec.

The Russian company sold a third cargo for July 24 to July 25 loading from Primorsk to Itochu Corp (8001), they said.

The three cargoes were sold at premiums of about 20 to 40 cents a barrel to Dated Brent, they said.

West Africa

Nigerian Benchmark Qua Iboe fell 1 cent to $2.17 a barrel more than Dated Brent, data compiled by Bloomberg showed.

Asia bought 1.53 million barrels a day of crude from Angola, Nigeria, Equatorial Guinea, Republic of Congo, Ghana, Gabon and Democratic Republic of Congo, the least since July 2012, according to a survey of six traders and an analysis of loading plans obtained by Bloomberg News. That compares with a revised 1.58 million barrels a day for June.

Gabon will export three cargoes of Rabi Blend and two shipments of Rabi Light for August, unchanged from July, according to a loading program obtained by Bloomberg News. All lots are of 650,000 barrels.

Nigeria will boost daily exports of 18 major crude grades for August by 5.1% from July to 1.94 million barrel, loading programs obtained by Bloomberg News showed. No Bonny Light crude will be exported in August.

Nigeria’s manager-level oil-worker union called a “three-day warning strike” to press for improved welfare and better severance allowances for members.

“All service companies to go on full-blown strike” starting July 4 and “a systematic stoppage of loading vessels for export at the oil terminals” will begin on July 5, Bayo Olowoshile, general secretary of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said today in an e-mailed statement. All onshore and offshore locations have been placed on red alert, he said.

Pengassan also want the government to expedite passage of a new petroleum industry law, check pipeline sabotage and intervene in a tax dispute between the maritime regulator and Nigeria LNG Ltd. In the past, Pengassan has often called off strikes before they were due to start after assurances from the government.

To contact the reporters on this story: Sherry Su in London at lsu23@bloomberg.net; Laura Hurst in London at lhurst3@bloomberg.net

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

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