Page 10 - DMEA Week 12 2023

DMEA COMPANIES DMEA

KPC to cut back Asian crude

sales as Al-Zour ramps up

KUWAIT ASIAN refiners were recently informed by The project’s developer, state-owned Kuwait
Kuwait Petroleum Co. (KPC) that the supply of Integrated Petroleum Industries Co. (KIPIC),
Kuwait Export Blend crude could be reduced first began test runs at the giant greenfield facility
by April under terms stipulated in new annual in June 2022, marking the start of the commis-
contracts. sioning. This included the start-up of one of the
The request by Kuwait to Asian refiners to refinery’s three 205,000-bpd crude distillation
reduce oil imports comes as the country aims to units (CDUs), with the intention of commission-
begin full-scale production at its 615,000 barrels ing them fully later in same year. The second and
per day (bpd) Al Zour refinery later in the year. third CDUs were to be commissioned in Octo-
The supply cut may bolster prices as refin- ber and December; however delays pushed this
ers look for extra deliveries from Kuwait’s back until later in 2023 instead.
neighbours. Al-Zour will also be able to export between
Both India and Japan have already announced 85,000 bpd and 106,000 bpd of very low sulphur
that plans to reduce their annual purchases have fuel oil (VLSFO) once it reaches full capacity.
commenced, with the Indian Oil Corp. (IOC) This will meet 8% to 10% of monthly fuel oil
saying it would reduce its yearly oil purchases demand in Asia, which is short finished 0.5%
from Kuwait next month by 20% of 20,000 bpd. VLSFO products.
To make up for the reduction in oil from Refinitiv analyst Emril Jamil said last month:
Kuwait, the company raised its term crude vol- “We anticipate most of Kuwait’s VLSFO will flow
umes from Iraq’s state oil marketer SOMO by to Singapore as it is a key maritime hub for fuel
20,000 bpd. Meanwhile, Japanese sources were replenishments.” Asia is also short naphtha, with
widely quoted this week as saying that KPC had data from Vortexa and Kpler showing that KPC
contacted numerous refineries in the country to exported 150,000 tonnes of light and full-range
negotiate supply reductions, but no details were naphtha to countries such as South Korea and
disclosed. Japan between November and January from
Al-Zour is expected to cater to strong middle Al-Zour. Shipments to other destinations such as
distillate demand in Europe, which is increas- Taiwan, Singapore and Thailand have also been
ingly short of diesel following the recent Russian rising, and total exports could increase to 3.5mn
oil product import ban. tonnes per year (tpy) at full capacity.™

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