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UAE’s ENOC reduces Asia fuel oil mkt presence-sources
ENOC gives up half of storage capacity from Sept. 1.
September 14, 2010 1:40 by Reuters
Emirates National Oil Co (ENOC) has reduced its presence in the Asia fuel oil market, cutting its marine fuel supply volumes in Singapore by about half, in the face of a difficult trading environment, industry sources said on Tuesday.
Its fuel oil trading manager has also resigned, while the state oil firm has shut its bunker operations in the United Arab Emirates port of Fujairah earlier, in a market that has seen most players struggling with poor trading margins.
“ENOC remains committed to its business and operations in Singapore across all portfolios. As part of its continuous and overall review of business activities, ENOC — like all organisations — balances product portfolios,” an ENOC spokesman said.
“The movement of individual staff also does not mean change in existing business activities. Singapore and the larger Asian market will continue to be focus areas for ENOC.”
Dubai-based ENOC, a majority stakeholder in Singapore’s Horizon Terminals, halved its storage capacity for fuel oil to about 60,000 cubic metres (cu m) at the start of the month. China’s Brightoil Petroleum took over the half that it gave up.
In July, the firm pulled out of the Fujairah marine fuels market, amid falling volumes in the UAE port and after losing an estimated $20 million.
When ENOC first entered the Asian fuel oil market in 2006, it had around 200,000 cu m of capacity, of which about 90,000 cu m were sub-leased two years later and was then returned to the storage owner earlier this year.
“To have only 60,000 cu m of tankage in Singapore is very small, and it’s quite clear they are scaling down their fuel oil operations. Most medium-sized players have at least 100,000-150,000 cu m of capacity,” a Singapore-based Western trader said.
“It’s been a bad year for most players, especially those with medium-sized storages, no system barrels for supply and no niche outlets for demand, like ENOC.”
Trading manager Patrick Pak resigned last month and was replaced internally by senior trader Gerard Sum in a team of two traders.
ENOC, which has system barrels for distillates, naphtha and gasoline, typically buys fuel oil cargoes from arbitrageurs and participate in export tenders for supply and sell into the Singapore marine fuels market, the world’s largest with an average 3.4-3.5 million tonnes a month.
It is still supplying marine fuels in the spot ex-wharf market, but at reduced volumes and had stopped doing term deals with barge operators, the sources said.
The company was not seen in the fuel oil swaps market for over a month, Reuters data show. But it remained a presence in the physical pricing window, last seen offering 20,000 tonnes of prompt 380-cst at a premium of $1.00 a tonne on Monday, well above the day’s value of minus $2.50.
(Editing by Ramthan Hussain)