Page 8 - AsianOil Week 36

AsianOil SOUTHEAST ASIA AsianOil

Vietnam’s fuel importers struggle

to shift diesel stockpiles

PERFORMANCE VIETNAMESE fuel importers’ reported efforts The source said that this, coupled with the
to shift large volumes of diesel by offering sales fact that the 130,000 barrel per day (bpd) Dung
commissions to retailers have apparently failed Quat refinery had “suspended its production for
to do the job. maintenance”, had allowed the Nghi Son facility
Importers had resorted to offering incentives to maintain operations at normal levels despite its
to retailers last week owing to a build-up in stock- fuel inventories also running higher than normal.
piles as a result of the coronavirus (COVID-19) The pandemic has depressed fuel demand
pandemic, Reuters quoted two unnamed indus- across the entire Asia-Pacific region, squeezing
try sources as saying on September 8. gross refining margins (GRMs) in the process.
Importers offered a commission of Profit margins for the benchmark gasoil
VND2,500 ($0.11) per litre on sales of diesel last grade in Singapore have shrunk 35% over the
week, one source said. The newswire said Viet- past month alone, according to Refinitiv Eikon
nam’s municipal diesel pump price averaged data cited by Reuters. This puts the cracks about
VND12,000 ($0.52) per litre. 75% below historical averages.
“Diesel demand is almost dead because it has Demand is so weak that while some refiners have
been strongly disrupted in industrial factories moved to replace state-owned Abu Dhabi National
where activity has been killed by COVID-19,” Oil Co.’s (ADNOC) cancelled cargoes for October,
said another. “So, importers are offering [a] sales others have opted either only to replace some or none
commission bonus to retailers to digest the huge at all, Argus reported on September 9.
inventory, but they still failed to sell.” Dubai crude remains in contango, with front-
Both sources said that reduced travel by car month November deliveries being offered at
had also hurt sales. A source at Nghi Son refin- a discount of $0.67 per barrel on September 8,
ery, meanwhile, told Reuters that importers had compared with a $0.35 discount being offered
opted to scale back their purchases in response on third-month January deliveries on Septem-
to reduced demand. ber 1.™

EAST ASIA

Qatargas wins Sinopec LNG supply contract

PROJECTS & CHINA’S state-run Sinopec has reportedly
COMPANIES awarded a long-term liquefied natural gas (LNG)
supply contract to Qatargas for 1mn tonnes per
year (tpy) of the super-chilled fuel.
The contract is indexed at an attractive dis-
count to Brent crude on a delivered ex-ship
basis, Reuters reported on September 4 citing rise by 100bn cubic metres every five years from
unnamed industry sources, noting that sup- 304 bcm in 2019, effectively doubling by 2035.
plies are expected to start from 2023. Sinopec is The transportation sector is expected to be the
understood to have paid at a slope of 10.19% – fastest growing segment, owing to gas’ use as a
a slope of 16.67% is considered on par with oil fuel for heavy-duty trucks.
prices. Even China’s short-term demand projects are
The Chinese major issued the tender in July, positive, with S&P Global Platts Analytics hav-
with reports noting at the time that Sinopec was ing forecast in August that national gas demand
seeking a hybrid pricing basis for the tender. will grow by 7.7% year on year to 337 bcm in
Sinopec is understood to be looking to capi- 2020, with LNG anticipated to grow by 9% y/y
talise on both low oil prices as well as depressed and pipeline imports by 7.6%.
global demand for the fuel. China’s long-term The economic giant’s imports of LNG
demand forecasts remain strong, given the gov- climbed by 3.1% y/y in July to 5.03mn tonnes,
ernment’s drive to bolster gas consumption by according to data from the General Administra-
switching coal for gas in industrial and residen- tion of Customs (GAC). Reuters, meanwhile, has
tial applications. cited Refinitiv Eikon data as showing that Chi-
Russia’s state-owned Gazprom projected in nese LNG imports in August are on track to hit
July that the East Asian country’s demand would nearly 6.4mn tonnes.™

P8 www. NEWSBASE .com Week 36 10•September•2020