Sri Lanka’s Ceylon Petroleum Corp (Ceypetco) has finalised a term contract for the purchase of nearly three million barrels of oil products for delivery over a six-month period from PetroChina, industry sources said yesterday.

PetroChina has sold spot barrels to Ceypetco in the past, but this is the first time China’s top oil and gas producer will supply term barrels to the Sri Lankan state-owned company, another sign that Chinese companies are aggressively exploring new markets for their excess diesel.

Unipec, the trading arm of China’s top refiner Sinopec Corp, recently took part in a spot tender to sell gasoline and gasoil to Ceypetco for the first time.

Chinese refiners have been seeking alternative markets to supply surplus diesel caused by a combination of weak domestic demand and additional refining capacity.

For its six-month term, Ceypetco bought 675,000 barrels of 0.25 percent sulphur gasoil at a premium of $1.98 a barrel above Singapore quotes and 475,000 barrels of jet fuel at a premium of $1.76 a barrel, one of the sources said.

It also purchased 1.56 million barrels of 90-octane gasoline at a premium of $1.98 a barrel and 125,000 barrels of 95-octane gasoline at a premium of $2.53 a barrel, the source added.

The delivery period is being maintained at December to May as requested in the tender, a Singapore-based trader said, though this could not immediately be confirmed.

The term tender was issued last year and had closed on November 1. The reason for the delay in awarding the tender is not clear.

Ceypetco has cancelled a spot tender to buy 310,000 barrels of gasoil and jet fuel for delivery on February 16 since its term contract has now been finalised, a source familiar with the matter said.

The company had been relying on the spot market to cover its requirements from October when its term agreement with PV Oil Singapore, an affiliate of Vietnam’s PetroVietnam Oil Corporation, ended.


 (REUTERS)