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Chinese INE considers Singapore for marine fuel futures delivery

November 24/2020

MOSCOW (MRC) -- The Shanghai International Energy Exchange (INE) is considering using oil storage sites in Singapore owned by PetroChina Co as a delivery point for its low-sulphur fuel oil futures contract, reproted Reuters with reference to two sources with direct knowledge of the matter.

The INE's move would be the first time a Chinese futures contract would be deliverable outside of China and could boost liquidity for the contract, as well as help to influence pricing for shipping fuel.

Low-sulphur fuel oil (LSFO) is required as ship fuel to meet new maritime emissions regulations that went into effect this year. Singapore is the world's biggest ship-fueling port.

The INE posted a notice on its website seeking market feedback on allowing LSFO futures contract buyers to take deliveries outside China, but did not give a location or a start date for the change.

However, Singapore could be used as a delivery point for the LSFO contract before the end of the year, the two sources said.

"The new plan gives traders, especially those large bunker fuel players in Singapore, greater flexibility to take deliveries as they see more economic and convenient, versus say Zhoushan (in China)," said one of the sources.

PetroChina International, a unit of PetroChina, was Singapore's top marine fuel supplier in 2019. The company owns a 25% stake in Singapore's Universal Terminal oil storage site at Jurong Island in the island city-state's southwest.

An INE spokesman declined to comment on the matter. PetroChina and Singapore's Maritime Port Authority did not immediately respond to requests for comment.

The INE's yuan-denominated LSFO contract has traded 4.9 million lots through October since it started up in June, or about 320 million barrels, the exchange said.

The INE and China aim to grow the contract, for fuel oil with a sulphur content of 0.5%, into an Asian benchmark for the ship fuel. The current benchmarks are for cargoes sold in Singapore.

As MRC informed before, state-owned PetroChina plans to spend about Yuan 10 billion (USD1.49 billion) annually in the next five years for low carbon emission transitions as part of the company"s effort to meet Beijing"s call for carbon neutrality by 2060, according to the statment of Wei Fang, Assistant Secretary to the Board & Head of Investor Relations, during the company"s Q3 result briefing. PetroChina, China"s top integrated giant, had produced 4.43 million boe/d of oil and gas in January-September. Wei said the company targets to achieve near zero emission by 2050 and is currently drafting the new green and low carbon development plan in line with PetroChina"s 14th Five-Year Plan for 2021-25.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

PetroChina Company Limited, is a Chinese oil and gas company and is the listed arm of state-owned China National Petroleum Corporation, headquartered in Dongcheng District, Beijing. It is China"s biggest oil producer.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP random copolymer, propylene, HDPE, ethylene, petrochemistry, PetroChina, Rosneft, China, Russia, Singapore.
Category:General News
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