SINGAPORE: Russia's Rosneft has awarded a tender to sell up to 720,000 tonnes of straight-run fuel oil (M100) to international oil major BP at a slightly higher premium to the previous bulk sale, industry sources said on Monday.
BP purchased the Russian residual fuel at a premium of about $87 a tonne to the Singapore 180-centistoke benchmark, about $2-$3 a tonne higher than the previous sell tender issued.
The supply from Rosneft is for the period May through October, traders said, with BP expected to take delivery of between 2 to 3 cargoes of around 30,000-40,000 tonnes monthly.
Traders anticipate that the oil will be shipped into China's 'teapot' refineries for processing.
"The oil is too expensive to be used for blending, my guess is BP is going to be looking to move this oil into the Chinese teapots," a Singapore-based trader said.
"They may have already secured an outlet, because if you look at the current refinery dynamics in China, it would appear that they are closer towards cutting runs, so demand generally for any kind of feedstock looks thin."
Chinese refiners are already looking to cut back their processing rates due to swelling inventories of refined fuels like diesel as the recovery in industrial activity in the world's second-largest economy remains tepid at best. (Reuters)
