Sinopec to lift less Saudi crude in August

Sinopec to lift less Saudi crude in August

Sinopec's August cuts will be less than that of July; Tianjin to shut crude processing facility; Saudi to supply contracted volume despite higher OSP; Buyers of Iranian crude have choice to seek Saudi supplies

July 9, 2012 5:01 by Eva Fernandes

China’s top refiner, Sinopec Corp, will lift less crude from top exporter Saudi Arabia in August, an industry source said on Monday, as it extends cuts for a second straight month.

Typically, oil demand dips in the second quarter in a transition from heating usage to summer gasoline demand in the Northern Hemisphere and many Asian and European refiners carry out planned maintenance. Consumption revives from July as homes and offices burn more energy to run air conditioners.

The cut in imports from Saudi Arabia in August will be less than July, the industry source said, without giving details on the volumes. Imports will fall due to refinery maintenance, he said, declining to be identified because he was not authorised to talk to media.

Tianjin Petrochemical Corp, a unit of Sinopec, plans to shut its 300,000 barrels per day (bpd) crude processing facility and a 1 million tonne per year (tpy) ethylene complex from mid-August until the end of September.

Asia’s top refiner, which takes in 80 percent of China’s Saudi crude imports, is already cutting production in July for the second month as inventories bulged and margins fell due to slowing demand.

The other two Chinese Saudi crude buyers will lift full contract volumes for August, sources at the refineries told Reuters.

Saudi Arabia will supply full contracted volumes of crude to other Asian term buyers in August, despite an unexpected increase in the official selling price (OSP) this month.

Saudi Arabia has raised the August official selling price (OSP) for its light crude for Asia for July, state run oil firm Saudi Aramco said.

Sources told Reuters than Saudi suppliers will be meeting the term commitments for buyers in Japanand South Korea.

CHOICE FOR IRAN CRUDE BUYERS

Big buyers of Iranian crude may also ask for extra Saudi supplies if necessary, a source at a north Asian refinery said.

Most big importers of Iranian crude have cut back on their purchases because of tough western sanctions imposed due to concerns over the nation’s nuclear program.

Top buyer China is disputing freight costs for shipping crude, while Japan and South Korea have halted all Iranian imports this month. India also plans to reduce July loadings.

Saudi Arabia, the OPEC kingpin, has consistently supplied full contractual volumes to most Asian buyers since late 2009.

(Reporting by Osamu Tsukimori in TOKYO, Mee Young Cho in SEOUL and Judy hua in BEIJING Writing by Ramya Venugopal Editing by Manash Goswami and Ed Lane)