Singapore’s second-largest utility PowerSeraya’s term fuel oil deal with Venezuela’s Petróleos de Venezuela (PDVSA) has expired, with its last shipment arriving earlier this month, traders said on Wednesday.
Its oil trading arm, PetroSeraya, was seen buying two 380-centistoke (cst) cargoes, totalling 80,000 tonnes, during the pricing period, the first time they had done so in over six months.
“They don’t usually come out into the pricing window and they bought two large 40,000-tonne parcels today, which is quite unusual,” a Singapore-based Asian trader said.
“Their term contract with Venezuela just ended so that could be a reason. Their last VLCC just arrived and the question would be whether the supplies can last until May.”
May Western arbitrage supplies are heavy, with 3.5-3.6 million tonnes booked so far, while price levels for ready-made 380-cst from Rotterdam were discussed at premium levels of US$3.00 ($3.72)-US$4.00 a tonne for May arrival.
The utility had been receiving an average of two Very Large Crude Carrier (VLCC) loads of Venezuelan-specification 380-cst every three months, or about 180,000 tonnes a month, since the deal came into effect about five years ago.
Its last shipment, on board the 270,000-tonne supertanker Elizabeth I A, arrived in Singapore on April 1.
On Wednesday, PetroSeraya bought two 40,000-tonne parcels, for May 12-16 lifting, from PetroChina at premiums of US$3.75 a tonne to Singapore spot quotes on free-on-board basis (FOB), up from US$3.10 value a day ago.
With the end of its term contract, PetroSeraya is expected to turn buyer, picking up cargo lots to meet its bunker supply commitments, mainly in Singapore, the world’s largest bunker port.
“It’s likely that they will source their supply from other players who are bringing in cargoes, rather than arbitrage their own Western cargoes eastwards,” another trader said.
“They could also buy spot cargoes from PDVSA now and then, when the price is right.”
PowerSeraya set up its trading arm in 2007 after it had agreed on a fuel oil supply deal with PDVSA, in place of a cancelled deal to supply it with the power-generation fuel, orimulsion, for 10 years.
Since then, PetroSeraya has traded in Singapore’s marine fuels market, selling ex-wharf bunkers.
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