A cargo of North Sea Forties crude is on its way to Spain, at least the second vessel to make the voyage this month, as strengthening Russian prices encourage a wider range of buyers for the U.K. grade.
Repsol SA loaded a Forties cargo on the SC Sara on June 22, according to ship-tracking data compiled by Bloomberg. Another Forties consignment was loaded onto the vessel Torm Ingeborg yesterday at Hound Point, Scotland, according to ship-tracking data from ShipAIS. Both vessels are heading for Tarragona, where Repsol operates an 186,000 barrel-a-day refinery. Total SA booked a ship to collect a cargo at the Forties terminal and ship it to Poland, shipbroker data show.
A narrowing spread between prices for Forties and a Russian alternative crude, Urals, has made these arbitrage trades possible, said three people familiar with the matter who asked not to be identified because the information is confidential. Spain hasn’t imported crude from the U.K. since September 2011, according to state-run reserves agency Corp. de Reservas Estrategicas de Productos Petroliferos, or Cores. The data extend through April 2013.
Forties crude cargoes are finding homes in European destinations as changes to South Korea’s tax regime has curtailed the flow of North Sea crude to the Asian nation. South Korea and the European Union signed a free-trade agreement in July 2011, which exempted its refiners from a 3 percent tax on EU imports. The agreement triggered an arbitrage flow of North Sea crude to the Asian country, before slowing since March when the South Korean government closed a loophole that allowed its refiners to claim rebates on oil product exports derived from North Sea crude.
Poland is among other destinations where the North Sea grade, one of four that make up the Dated Brent benchmark, is being bought. The Russian grade, Urals, cost 17 cents a barrel more than Dated Brent in northwest Europe yesterday, up from a discount of $2.90 on March 1, data compiled by Bloomberg show. Forties was at a 5-cent premium to Dated Brent yesterday, versus a 12-cent premium on March 1.
Chartering & Shipping Services SA, a shipping unit of Total, booked the British Falcon for July 4 from the Forties loading terminal Hound Point for a voyage to Gdansk, according to reports from ship brokers, including JGO Shipbrokers AS. Brian O’Neill, a spokesman for Total in Aberdeen wasn’t available for comment yesterday, and officials at Total’s press office in Paris didn’t return an e-mail seeking comment.
The Urals price differential in northwest Europe earlier this week rose to its highest since August 2012, according to data compiled by Bloomberg News. This coincides with Urals crude exports from the Baltic port of Primorsk falling to 3.8 million metric tons in June, the lowest level in more than five years. Exports are set to remain little changed in July at 3.83 million tons, or 905,610 barrels a day, according to a preliminary loading program obtained by Bloomberg News.
Loading programs are monthly schedules of crude shipments compiled by field operators to allow buyers and sellers to plan their supply and trading activities.