First of Kuwait crude donation due in Japan

First of Kuwait crude donation due in Japan

First of 5 mln bbls donation due at Negishi plant; All donated oil to arrive by year-end

October 5, 2011 10:28 by Reuters

The first batch of 5 million barrels of crude oil donated by Kuwait to Japan after it was hit by the March 11 earthquake and tsunami will arrive at JX Holdings’ Negishi refinery near Tokyo next week, a trade ministry official said on Wednesday.

In April, Kuwait’s then oil minister Sheikh Ahmad al-Abdullah al-Sabah committed the free barrels, worth $388 million using the US crude price of $77.64 a barrel, to Japan on the orders of the emir.

Since the quake Japan’s demand for low-sulphur fuel oil has risen sharply to make up for less power supplied by nuclear plants following the radiation crisis in Fukushima.

Only 10 of Japan’s 54 reactors are still operation, with public worries about safety preventing those shut for routine maintenance from being restarted.

Traders see robust demand for gas oil, used in reconstruction.

Two crude tankers chartered by JX and carrying 1.5 million barrels of donated crude, in addition to barrels bought under a long-term contract, will first call at the firm’s Kiire oil reserve base in Kagoshima, southwest Japan, the official said.

Then a tanker carrying at least several hundred thousand barrels of the free crude will arrive at Negishi refinery around Oct. 11-12, the official said.

All the donated oil will arrive in Japan by the end of December, the official said, adding that it will be delivered to all four Japanese buyers of Kuwait crude under long-term contracts — JX, Showa Shell Sekiyu , Idemitsu Kosan and Cosmo Oil Co .

The refiners will send money to the value of the free oil to the Red Cross to be used for quake victims, the official said. (Reporting by Osamu Tsukimori; Editing by Chris Gallagher and Michael Watson)